TMI Tax Updates e-Newsletter
May 28,2026

Writ jurisdiction - Alternate statutory remedy - Section 6(2)(b) bar under GST

Writ jurisdiction - Alternate statutory remedy - Section 6(2)(b) bar under GST - Interference against the adjudication order under Article 226 was declined because the challenge involved matters capable of examination in statutory appeal, including the objection based on section 6(2)(b) and the factual dispute as to sufficiency of material. - HELD THAT: - The Court held that no firm conclusion could be reached in writ proceedings on the factual objection regarding adequacy of material with the adjudicating authority to sustain the demand, and such issue did not warrant examination in the presence of an effective statutory appeal. On the objection founded on section 6(2)(b), the Court noted the State's stand that the impugned proceedings concerned only those suppliers in respect of whom no proceedings had been drawn by the Central authority, and therefore considered that question also fit for detailed examination by the appellate forum rather than in writ jurisdiction. [Paras 6, 7, 10]

The writ petition was disposed of without interference, leaving the petitioner to pursue the statutory appeal, which was directed to be entertained on merits if filed within the time granted, without objection on limitation.

Final Conclusion: The Court declined to exercise writ jurisdiction against the GST order and relegated the petitioner to the statutory appellate remedy. It directed that if the appeal is filed within two weeks, it shall be entertained on merits without objection as to limitation.

Personal hearing under Section 75(4) of U.P. G.S.T. Act - Mandatory compliance with natural justice - Dual requirement of written reply and oral hearing - Failure to specify and grant a personal hearing in proceedings initiated under Section 73(1)

HELD THAT: - The Court held that Section 75(4) of the Act mandates grant of personal hearing before any adverse decision is taken. The show cause notice only called for a written reply and, by recording "NA" against the columns relating to date, time and venue of personal hearing, disclosed that no oral hearing was proposed at all. The statutory requirement embodies two independent facets of natural justice, namely submission of written reply and grant of oral hearing, and non-availment of one cannot result in denial of the other. Since the impugned order had been passed contrary to this mandatory procedure, the procedural defect was self-evident and went to the root of the matter. [Paras 3, 4, 5, 7]

The impugned order was set aside and the matter was remitted for fresh decision after permitting the petitioner to file a final reply and after affording personal hearing.

Final Conclusion: The writ petition was allowed on the ground that no personal hearing, as mandatorily required by Section 75(4), had been afforded before passing the adverse order. The matter was remitted to the assessing authority for a fresh reasoned order after compliance with that requirement.

Confiscation proceedings - Prior determination of tax liability - Writ maintainability against jurisdictionally defective show cause notice

Confiscation proceedings - Prior determination of tax liability - Jurisdictional error - Proceedings under Section 130 read with Section 122 of the Act, 2017 could not be initiated for alleged violation of Section 35 of the Act, 2017 without prior determination of tax liability under Sections 73 or 74. - HELD THAT: - The Court held that the legal position stood settled that confiscation proceedings under Section 130 of the Act, 2017 cannot be invoked merely on an alleged violation of Section 35, and that such proceedings cannot be initiated without prior determination of tax liability under Sections 73 or 74. Since the impugned show cause notice had been issued in disregard of that requirement, it was held to be without jurisdiction. On that footing, the Court held that interference at the show cause notice stage was justified. [Paras 8, 9, 10, 11]

The show cause notice and the consequential confiscation order were quashed, with liberty to the department to proceed afresh in accordance with law under the relevant provisions.

Final Conclusion: The Court held that the impugned notice under Section 130 read with Section 122, founded on an alleged violation of Section 35 without prior determination under Sections 73 or 74, was without jurisdiction. The notice and consequential confiscation order were quashed, while leaving it open to the department and to the petitioner to pursue their remedies in accordance with law.

Regular bail in a GST prosecution - Documentary evidence - Magisterial trial

HELD THAT: - The Court granted bail having regard to the stage and nature of the prosecution. It noted that the petitioner had remained in custody for 3 months and 29 days; the case rested on documentary evidence; the complaint and supplementary complaint had already been filed; the matter was fixed for pre-charge evidence; the offence carried a maximum sentence of 5 years and was triable by the Magistrate. In these circumstances, and following the approach adopted in similar matters, the Court held that continued incarceration would not serve any useful purpose. [Paras 5, 6]

Regular bail was granted subject to furnishing bail bonds and surety to the satisfaction of the trial Court/Duty Magistrate, with liberty to seek cancellation in case of breach of conditions.

Final Conclusion: The petition was allowed and the petitioner was ordered to be released on regular bail, the Court holding that, at the present stage of the case, further custody was unwarranted.

Bail - GST recovery mechanism

Bail - GST recovery mechanism - Bail was granted in a case arising from allegations connected with unrecovered GST dues. - HELD THAT: - The Court noted that the F.I.R. had been lodged nearly seven years after the alleged incident and that the allegation in substance was that substantial GST arrears could not be recovered from the applicant. It further observed that the GST Act provides a statutory mode of recovery of assessed tax, with Section 78 providing for initiation of recovery proceedings on failure to pay after service of the order and Section 79 prescribing the modes of recovery, including recovery through the Magistrate as if it were a fine. On that basis, and considering the overall circumstances, the Court held that a case for bail was made out.

The applicant was directed to be released on bail subject to the conditions imposed by the Court.

Final Conclusion: The bail application was allowed. The Court granted bail, taking into account the delay in lodging the F.I.R. and the existence of a statutory mechanism under the GST Act for recovery of the assessed dues.

Grounds of arrest - Validity of arrest memo - Electronic DIN compliance - Illegal arrest and remand

Grounds of arrest - Arrest memo compliance - Electronic DIN - Remand legality - The legality of the petitioner's arrest, detention and remand under the CGST Act was decided on the basis of defects in the arrest documentation and non-compliance with the requirements governing communication of the grounds of arrest. - HELD THAT: - The Court held that the respondents failed to establish lawful compliance with the mandatory requirements attending arrest. Though a system-generated form was later produced, the Court found the document prima facie suspicious, and also noted that the grounds of arrest were not shown as an annexure to the arrest memo. It further found that the place of arrest had not been mentioned in the arrest memo, which amounted to violation of the law governing arrest procedure. On that basis, the Court accepted the challenge founded on non-compliance with the requirements relating to grounds of arrest, proper arrest documentation and electronic DIN-backed communication, and treated the arrest, detention and consequent remand as unlawful. [Paras 5, 6, 8, 9]

The remand order was quashed, and the arrest, detention and remand were held to be illegal and unconstitutional, with liberty to the respondents to proceed afresh in accordance with law.

Final Conclusion: The Court allowed the writ petition and quashed the remand order, holding the petitioner's arrest, detention and remand to be illegal and unconstitutional. The petitioner was directed to be released forthwith, while leaving it open to the respondents to proceed afresh in accordance with law.

Statutory cap on general penalty

General penalty - Maximum penalty limit - Penalty could not be separately imposed under CGST and SGST beyond the maximum limit contemplated for the contravention in question. - HELD THAT: - The Court held that, having regard to the mandate of Section 125 of the GST Act, levy of penalty of Rs. 25,000/- under CGST and a further Rs. 25,000/- under SGST was not justified, since the provision prescribed a maximum penalty of Rs. 25,000/-. On that interpretation, the original penalty order was unsustainable; the appellate order, being consequential, also could not survive. The matter was remitted to the competent authority for passing a fresh order in accordance with law, while leaving it open to the petitioner to raise all available grounds. [Paras 4, 5, 6]

The penalty order and the consequential appellate order were set aside, and the matter was remanded for fresh consideration in light of the statutory maximum under Section 125.

Final Conclusion: The writ petition was allowed. The Court held that penalty in excess of the statutory maximum permissible under Section 125 of the GST Act could not be sustained and remanded the matter for a fresh order in accordance with law.

GST on royalty along with interest and penalty - demand order passed under Section 73 of the CGST/RGST Act - consequential recovery notices attaching the bank account

HELD THAT:- The issue in question has been adjudicated by the Hon’ble Apex Court in the matter of Mineral Area Development Authority & Anr. v. M/s. Steel Authority of India & Anr. [2024 (7) TMI 1390 - SUPREME COURT (LB)]

Accordingly, since both sides are ad idem, the Order and Notices are set aside. The matter is remanded back to the Competent Authority of the respondents to re-examine the entire issue afresh in light of Hon’ble the Supreme Court judgment, ibid. It shall be open to the parties to take respective stand before the Competent Authority.

Application of advance ruling where question is already pending in proceedings- rules for maintainability of advance ruling application - bar on admission of the question already pending in other proceedings

HELD THAT: - The Authority found that, prior to the filing of the application, the jurisdictional authority had already initiated enforcement proceedings on the very question of admissibility of input tax credit in respect of the construction of the hotel building and had called upon the applicant to reverse such credit. In view of the proviso to section 98(2), no advance ruling could be admitted where the question raised is already pending in any proceedings in the applicant's case under the Act. The applicant's representative admitted knowledge of the said proceedings and did not dispute the factual position. The Authority therefore held that the application was hit by the statutory bar and that no ruling on the merits of the input tax credit questions could be given. [Paras 1]

The application was rejected as barred by the proviso to section 98(2), without any ruling on the merits of the questions raised.

Final Conclusion: The Authority declined to answer the input tax credit questions on merits and rejected the application, holding that the same questions were already pending in enforcement proceedings against the applicant.

Tariff classification of plastic packing articles - Classification of stoppers, lids, caps and closures of plastics

Tariff classification of plastic packing articles - Articles for the conveyance or packing of goods of plastics - HELD THAT: - The Authority held that the goods answered the description of plastics within Chapter 39, since the material used was polypropylene and the manufacturing process resulted in moulded plastic articles. Having found that the product was a plastic article for packing of goods, the Authority placed it under heading 3923. As the product was in the nature of boxes, cases, crates and similar articles, and did not fall within any of the specific tariff items under sub-heading 392310, it was held classifiable under the residuary tariff item 39231090. [Paras 4]

PP packing boxes are covered by tariff item 39231090.

Classification of stoppers, lids, caps and closures of plastics - HELD THAT: - The Authority separately considered the plastic stoppers, lids, caps and closures associated with the boxes. Since heading 3923 specifically provides a distinct sub-heading for stoppers, lids, caps and other closures of plastics, those items were held to fall under sub-heading 392350, and in the absence of any more specific entry, under tariff item 39235090. [Paras 4]

The lids, caps and covers of the boxes are covered by tariff item 39235090.

Final Conclusion: The Authority ruled that the applicant's PP packing boxes are classifiable under tariff item 39231090, while the lids, caps and covers of such boxes fall under tariff item 39235090.

Classification of laundry soap and toilet soap - GST rate on laundry soap under rate notification - Common parlance and tariff-based classification

Classification of laundry soap and toilet soap - Common parlance test - Customs Tariff-based classification - laundry soap bars weighing less than 500 grams under HSN 34011942 - HELD THAT: - The Authority held that the concessional entry for toilet soap and the residual entry for other soap under the notification are mutually distinct, and the controversy turned on whether laundry soap could be treated as toilet soap. On common understanding, toilet soap is meant for personal cleansing, whereas laundry soap is meant for washing clothes, and a consumer and trader distinguish one from the other; occasional dual use by some consumers does not alter the product identity. The BIS specifications also showed material differences in characteristics and composition between toilet soap and laundry soap, so similarity in total fatty matter alone could not convert laundry soap into toilet soap. The Customs Tariff separately places toilet soap under the tariff line for toilet use and laundry soap under a specific tariff item for household and laundry soaps; applying that tariff structure, laundry soap cannot be included within toilet soap. [Paras 4]

Laundry soap was held to be outside the scope of the entry for toilet soap and therefore not eligible for GST at 5 per cent.

GST rate on laundry soap under rate notification - Specific tariff item 34011942 - The applicable GST rate on the applicant's laundry soap weighing less than 500 grams was determined under the entry covering other soap and not under the concessional entry for toilet soap. - HELD THAT: - Having found that laundry soap is distinct from toilet soap, the Authority applied the Customs Tariff classification noted in the ruling and held that laundry soap weighing less than 500 grams falls under tariff item 34011942. Since the notification grants the concessional rate only to toilet soap in the specified forms and excludes other soap from that entry, the applicant's product falls under serial no. 66 of Schedule II. [Paras 4]

The applicant's laundry soap weighing less than 500 grams is taxable at 9 per cent CGST and 9 per cent SGST under serial no. 66 of Schedule II.

Final Conclusion: The Authority ruled that laundry soap is distinct from toilet soap and cannot be brought under the concessional entry for toilet soap. Accordingly, laundry soap weighing less than 500 grams, classifiable under tariff item 34011942, attracts GST at 9 per cent CGST and 9 per cent SGST under serial no. 66 of Schedule II of Notification No. 01/2017-Central Tax (Rate) Dated 28.06.2017, as amended by Notification No. 09/2025-Central Tax (Rate) Dated 17.09.2025..

Import of services - Reverse charge on services received from abroad - Intermediary services - Place of supply of services

Import of services - Reverse charge on services received from abroad - Place of supply of services - Commission paid to a foreign director for marketing and sourcing export orders attracts GST under reverse charge. - HELD THAT: - The Authority held that the director, being located outside India, supplied services to the applicant in India, and under Section 13(2) the place of supply was the location of the recipient. As the supplier was outside India, the recipient was in India, and the place of supply was in India, the transaction satisfied the requirements of import of services. Since imported services are treated as inter-State supplies and the supplier was in a non-taxable territory while the recipient was in taxable territory, tax was payable by the applicant on reverse charge. [Paras 5]

GST is payable under reverse charge on the commission paid to the foreign director.

Intermediary services - Place of supply of services - Import of services - Commission paid to foreign marketing agents for sourcing orders does not attract GST under reverse charge. - HELD THAT: - The Authority found that the foreign marketing agents merely facilitated the supply of goods between the applicant and overseas buyers and therefore answered the description of intermediary services. For intermediary services, the place of supply is the location of the supplier under Section 13(8). Since the suppliers were located outside India, the place of supply was outside India, and one of the essential conditions for import of services was not fulfilled. The commission paid to such agents therefore fell outside the ambit of import of services and was not liable to GST under reverse charge. [Paras 6]

GST is not payable on commission paid to foreign marketing agents.

Import of services - Reverse charge on services received from abroad - Logistics services on own account - Charges paid to foreign clearing and forwarding agents for services rendered abroad attract GST under reverse charge. - HELD THAT: - The Authority found from the invoices that the foreign clearing and forwarding agents were charging for arrival, customs clearance, terminal handling and allied services on their own account in the non-taxable territory. Treating such services on the same footing as services qualifying as import of services, it held that the applicant, as recipient in India, was liable to pay GST under reverse charge in terms of Notification No. 10/2017-Integrated Tax (Rate). [Paras 7]

GST is payable under reverse charge on charges paid to foreign clearing and forwarding agents.

Final Conclusion: The Authority ruled that commission paid to the foreign director and charges paid to foreign clearing and forwarding agents are taxable as import of services and are liable to GST under reverse charge. Commission paid to foreign marketing agents was held not taxable, since their services were intermediary services with place of supply outside India.

Maintainability of new plea in appeal - Diminution in value of investments - Binding precedent in assessee's own case

HELD THAT:- We do not find a good ground to interfere with the impugned order/judgment [2025 (8) TMI 1815 - KARNATAKA HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed.

Deduction of interest on borrowed capital - Borrowed funds invested as partner's capital in firm - Partner's capital contribution - Interest paid by the assessee on funds borrowed and invested by her as capital in a partnership firm disallowed u/s 36(1)(iii) - HELD THAT: - The Court held that deduction under Section 36(1)(iii) is confined to interest paid in respect of capital borrowed for the purpose of the assessee's own business or profession. On the appellant's own case, the borrowed funds were not used for any business carried on by her, but were invested as her capital in a firm, and the business was being run by that firm. Since she had no case that she was herself carrying on any business for which the borrowing was made, the statutory requirement was not satisfied.

The Court therefore accepted that, if at all any such claim were available, it could only arise at the level of the firm and not in the appellant's individual assessment. [Paras 7, 8]

The claim for deduction was rightly rejected and no interference with the Tribunal's order was warranted.

Final Conclusion: The appeal was dismissed. The Court upheld the Tribunal's view that the appellant was not entitled to deduction of interest on monies borrowed by her and invested as capital in the partnership firm.

Revision u/s 263 - income of the assessee being a Trust registered u/s 12A - HELD THAT:-Appeal admitted for following substantial questions of law arise for consideration:

(i) Whether the order of the Tribunal whereby the order of the Commissioner Income Tax (Exemption) passed under Section 263 of the Income Tax Act, 1961 has been set aside is legally correct, as no findings have been recorded by the Tribunal regarding absence of inquiry?.

(ii) If the answer to question no. (i) is in affirmative, whether the assessment order passed in the case of respondent-assessee can be held to be prejudicial to interest of Revenue, particularly when the income of the assessee being a Trust registered under Section 12A of the Income Tax Act, 1961 was exempted?.

(iii) In case answer to question no. (i) as framed above is in affirmative, whether the assessment order suffers from absence of requisite inquiry as contemplated under Section 263 of the Income Tax Act, 1961?

Review jurisdiction - Error apparent on the face of the record - Non-consideration of circular No. 19/2024 and the claim that the earlier order ought to have taken a different view on the rectification application and the revised Form-2 - chronology of the DTVSV proceedings

Whether review petitioners established any error apparent on the face of the record in the earlier order which had quashed the revised Form-2 and directed consideration of the assessee's rectification application? - HELD THAT: - The Court held that the order under review had already considered the rival contentions and was founded on undisputed circumstances, namely, that the declaration under the DTVSV Scheme had been filed, Form-2 had initially been issued, the rectification application had been filed earlier and remained pending, and the later revised Form-2 had been issued by relying upon the order giving effect while the departmental appeal was still pending before the Court. In that background, the earlier direction to consider the rectification application without reference to the order giving effect was found to be proper.

The omission to cite Circular No.19/2024 at the time of disposal did not disclose any error apparent; nor could review be used to reopen or reargue matters already considered. Applying the settled limits of review jurisdiction, the Court held that the petition was an attempt to seek a rehearing on merits, which is impermissible. [Paras 6, 7, 8]

The review petition was dismissed, the Court holding that no ground for review was made out.

Final Conclusion: The Court dismissed the review petition, holding that the earlier order contained no error apparent on the face of the record. The subsequent reliance on the circular did not justify review, since the original direction to consider the pending rectification application was otherwise correct in law.

Depreciation on HTM securities - binding precedent - covered issue - HELD THAT: - The Court held that the questions raised by the Revenue stood answered by its earlier decisions in Karnataka Bank Ltd. [2013 (7) TMI 656 - KARNATAKA HIGH COURT] and Vijaya Bank [2013 (10) TMI 1030 - KARNATAKA HIGH COURT] upholding the Tribunal's allowance of the depreciation claim by treating the 'held on maturity' investments as stock-in-trade and permitting valuation at the lower of cost or market.

Since the controversy regarding allowability of depreciation on HTM securities was already concluded by those judgments, the pendency of the issue before the Supreme Court did not warrant re-examination in the present appeal. [Paras 5, 6]

The Revenue's challenge to allowance of depreciation on HTM securities failed and the appeal was dismissed.

Final Conclusion: Following its earlier decisions on the same controversy, the Court held that no substantial question of law arose on the Revenue's challenge to depreciation allowed on HTM securities for the assessment year in question. The appeal was accordingly dismissed.

TP Adjustment -Advertisement, marketing and promotion expenditure - International transaction - Disallowance under section 14A - Correction of computation errors

Advertisement, marketing and promotion expenditure - International transaction - Transfer pricing adjustment - HELD THAT: - The Tribunal held that the controversy stood covered by the jurisdictional precedents in the assessee's own case. It noted that, on the material placed, there was no agreement, arrangement or understanding between the assessee and its associated enterprise for sharing AMP expenditure or for incurring such expenditure for the sole benefit of the associated enterprise. In that situation, the Transfer Pricing Officer had wrongly invoked Chapter X in respect of the AMP spend, and the adjustment made on that basis was unsustainable. [Paras 8, 9]

The jurisdictional challenge was accepted and the transfer pricing adjustment on account of AMP expenditure was deleted; the remaining AMP-related grounds were left unadjudicated as unnecessary.

Disallowance u/s 14A - HELD THAT: - The Tribunal expressly recorded that the grounds relating to section 14A were consequential in nature and accepted them accordingly. [Paras 11]

The assessee's grounds against the section 14A disallowance were accepted.

Correction of computation errors - HELD THAT: - The Tribunal allowed the ground relating to mistakes in the computation sheet and directed the Assessing Officer to correct the computation errors as per law. [Paras 12]

The computation-related ground was allowed with a direction to make the necessary corrections in accordance with law.

Final Conclusion: The appeal was allowed. The Tribunal held that, in the absence of any arrangement or understanding showing AMP expenditure to be an international transaction with the associated enterprise, Chapter X could not be invoked for making the transfer pricing adjustment; the section 14A ground was accepted as consequential, and the Assessing Officer was directed to rectify the computation errors in accordance with law.

Exemption u/s 11 and 12 - assessee trust carrying on printing and publication of books -Proviso to charitable purpose u/s 2(15) - Limited scrutiny

Limited scrutiny - Scope of assessment - Denial of exemption on the footing that the assessee was not carrying on charitable activity - HELD THAT: - The Tribunal found that the case had been picked up only for examining the exemption claim in relation to accumulation u/s 11(2). The Assessing Officer, however, proceeded to hold that the assessee was not carrying on charitable activities at all and denied exemption on that basis. This adjustment was held to travel beyond the subject matter of the limited scrutiny. [Paras 13]

The denial of exemption on a ground outside the limited scrutiny could not be sustained.

Educational purpose - printing and publication of books -Proviso to section 2(15) - Consistency in tax treatment - whether Printing and publication of books by the assessee-trust constituted educational activity and not advancement of any other object of general public utility? - HELD THAT: - The Tribunal held that, on the facts, the assessee's activity of printing and publishing books was intrinsically connected with education. It also noted that in the earlier and subsequent scrutiny assessments the Revenue itself had accepted the assessee's claim to exemption after examining the same nature of receipts and activities, and applied the principle of consistency as explained in Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT].

Relying further on Delhi Bureau of Text Books vs. Director of Income-tax (E) [2017 (5) TMI 430 - DELHI HIGH COURT] the Tribunal held that publication and distribution of books contributing to the development of knowledge and character remains an educational activity merely because consideration is received or surplus arises. Since the assessee was carrying on educational activity, it was not to be treated as pursuing an object of general public utility, and the proviso to section 2(15) could not be invoked. [Paras 13, 14, 15]

The assessee was entitled to exemption under sections 11 and 12, including accumulation under section 11(2).

Final Conclusion: The Tribunal held that the Assessing Officer had travelled beyond the scope of limited scrutiny and, on merits, that the assessee's activity of printing and publishing books was educational in nature. The proviso to section 2(15) was held inapplicable, and exemption under sections 11 and 12, including accumulation under section 11(2), was directed to be granted.

Transfer pricing Adjustment - comparability - Government-controlled transactions - Functional comparability - Persistent loss making comparable

Transfer pricing comparability - Government-controlled transactions - Functional comparability - marketing support services segment - EDCIL (India) Ltd., Just Dial Ltd., Info Edge (India) Ltd. and India Exposition Mart Ltd. - HELD THAT: - The Tribunal held that EDCIL (India) Ltd., being a Government company deriving revenue from Government entities, could not be treated as a proper comparable because such dealings were with controlled entities, and relied on the settled principle noticed in WSP Consultants India Pvt. Ltd. . Just Dial Ltd. was excluded because it operated as a local search engine and payment gateway, had diversified activities, owned intangibles and lacked segmental data. Info Edge (India) Ltd. was excluded for its dissimilar service profile, ownership of multiple web-based businesses, absence of relevant segmental details and materially different FAR profile. India Exposition Mart Ltd. was also excluded as it was engaged in exhibitions, fairs, conferences and maintenance services, with a markedly different employee-cost structure and business profile. The Tribunal thus accepted the assessee's challenge to inclusion of these companies. [Paras 12, 13, 14, 15]

These four companies were directed to be excluded from the final set of comparables for the marketing support services segment.

Persistent loss making comparable - Cyber Media Research & Services Ltd. - HELD THAT: - The Tribunal found that the record contained two different profit and loss statements for the relevant periods and that the assessee's contention was that the company had earned profits in the current and preceding financial years, contrary to the TPO's view that it was loss making. Since these financial statements required verification and examination, the Tribunal did not decide the inclusion on merits and restored the matter for fresh consideration. [Paras 16]

The rejection of Cyber Media Research & Services Ltd. was set aside and the matter was remanded to the TPO for verification, examination and fresh decision after giving fair opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal by accepting the assessee's objection to inclusion of EDCIL (India) Ltd., Just Dial Ltd., Info Edge (India) Ltd. and India Exposition Mart Ltd. as comparables in the marketing support services segment. The question of inclusion of Cyber Media Research & Services Ltd. was restored to the TPO for fresh verification and decision.

Estimation of profit on unaccounted sales - Net profit rate vis-a-vis gross profit rate - Telescoping of cash found during search - Double addition - Separate addition for unexplained expenditure after profit estimation

Estimation of profit on unaccounted sales - Net profit rate vis-a-vis gross profit rate - Profit embedded in the alleged unaccounted sales estimation by applying a net profit rate OR gross profit rate - HELD THAT: - The Tribunal found that the seized material itself showed not only purchases and other direct costs but also indirect expenses such as salary and other expenditure relatable to the unaccounted activity. In such circumstances, taxing the entire gross profit element was not justified, and only the net profit embedded in the unaccounted sales could be brought to tax.

Applying the principles stated in Balchand Ajit Kumar [2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT], President Industries [1999 (4) TMI 8 - GUJARAT HIGH COURT] and India Seed House [2000 (1) TMI 146 - ITAT DELHI-B] the Tribunal held that the rate adopted by the first appellate authority was still excessive and fixed the net profit rate at 2%. [Paras 9, 14, 15]

The addition on account of unaccounted sales was sustained only to the extent of profit computed by applying a net profit rate of 2%, and the corresponding Revenue grounds were dismissed as infructuous.

Telescoping of cash found during search - Set off against income already sustained - HELD THAT: - The Tribunal recorded that income had already been upheld in the assessee's hands on estimated basis in the year under appeal as well as in preceding years, and the Revenue had not established that such income had been applied elsewhere. On that footing, the cash found could safely be presumed to be available out of such already taxed income. The absence of a separate explanation for the source of the cash did not disentitle the assessee from telescoping in the facts found. [Paras 17, 18]

The addition made on account of unexplained money was deleted by granting the benefit of telescoping.

Separate additions for alleged unexplained expenditure under section 69Cafter profit estimation - Double addition - HELD THAT: - The Tribunal held that where income from the unaccounted sales is determined by applying a profit rate, the expenditure embedded in that business activity stands subsumed in such estimation. A further addition of the same expenditure as unexplained expenditure would result in double addition, once as expenditure and again through profit estimation. Following Indeo Airways (P.) Ltd [2012 (9) TMI 97 - DELHI HIGH COURT] the Tribunal upheld the deletion of the additions made under section 69C. [Paras 22, 23]

The Revenue's challenge to deletion of the additions for unexplained expenditure failed.

Final Conclusion: The assessee's appeal was partly allowed by reducing the addition on unaccounted sales to profit computed at a net profit rate of 2% and by deleting the addition on account of cash found through telescoping. The Revenue's appeal challenging deletion of the expenditure additions and enhancement of profit was dismissed.

Reopening of assessment - Reason to believe - Borrowed satisfactionV/S independent application of mind -Live link between material and escapement of income - Vague reasons - adequate material linkage - reasons recorded proceeded on information from the Insight Portal and investigation material alleging fictitious profit in the scrip - HELD THAT: - The Tribunal held that the recorded reasons alleged escapement of income on account of fictitious profit in PMC Fincorp shares for a stated amount, whereas, in the reassessment order, the Assessing Officer treated that figure as the cost of the scrip and disallowed the business loss instead.

This showed that the very belief on which jurisdiction was assumed was not maintained when the assessment was framed. The reasons did not disclose proper material particulars linking the assessee's transactions with escapement of income and the Assessing Officer had merely relied on the investigation report and portal information without establishing any adverse material against the documentary evidence produced by the assessee, including purchase and sale bills, bank statements and D-Mat statements.

Following Abha Gupta [2025 (5) TMI 34 - DELHI HIGH COURT], M/s. Alosha Marketing Private Limited [2025 (6) TMI 1414 - CALCUTTA HIGH COURT] and Nita Rastogi [2026 (1) TMI 871 - ITAT DELHI] the Tribunal held that the reasons were vague and reflected borrowed satisfaction rather than an independent formation of belief based on a live nexus between material and escapement. [Paras 11, 12, 16, 18, 19]

The notice issued under section 148 and the consequent reassessment were held unsustainable; the assessee's grounds challenging reopening were allowed, and the merits of the additions were not required to be examined.

Final Conclusion: The Tribunal quashed the reassessment for Assessment Year 2013-14, holding that the Assessing Officer had assumed jurisdiction on vague and factually inconsistent reasons founded on borrowed satisfaction from portal and investigation information. The assessee's appeal was accordingly allowed.

Disallowance for non-deduction of tax at source- JCB rent payment - Interest-free advances to relatives - Commercial expediency - Diversion of borrowed funds

Disallowance for non-deduction of tax at source - JCB Rent payment - HELD THAT: - The Tribunal held that the assessee had admittedly claimed expenditure towards JCB rent paid to its sister concern without deducting tax at source under section 194-I. No evidence was produced either before the authorities or before the Tribunal to justify the non-deduction. The further plea that the payee had offered the receipt to tax was treated as a bare assertion, since no documentary material was placed on record to establish payment of tax by the payee. On that basis, the statutory consequence of disallowance under section 40(a)(ia) was held to apply and the finding of the first appellate authority was affirmed. [Paras 7, 8]

The disallowance under section 40(a)(ia) on the rent payment was upheld.

Interest-free advances to relatives - Commercial expediency - Diversion of borrowed funds - HELD THAT: - The Tribunal accepted the finding that the assessee had paid interest on unsecured loans while advancing interest-free amounts to relatives. It found that no evidence had been furnished to demonstrate any commercial expediency for such advances. There was also no material to show that the advances were wholly out of non-interest-bearing funds. In the absence of such proof, the proportionate disallowance of interest was held to be justified. [Paras 11]

The disallowance of interest on account of interest-free advances to relatives was upheld.

Final Conclusion: The Tribunal dismissed the assessee's appeal for Assessment Year 2014-15. It upheld both the disallowance of rent expenditure for failure to deduct tax at source and the disallowance of interest attributable to interest-free advances made to relatives without proof of commercial expediency.

Penalties u/s 271D for alleged acceptance of cash loans - Survival of penalty after quashing of reassessment - Foundational satisfaction for penalty proceedings - Proof of contravention of cash loan prohibition

Survival of penalty after quashing of reassessment - Foundational satisfaction for penalty proceedings - HELD THAT: - The Tribunal held that, though penalty under section 271D may be independent for certain procedural purposes, that principle does not permit the penalty to stand where the very proceedings and allegations from which it arose have been held invalid.

Once the reassessment orders were quashed and the consequential additions ceased to exist, the substratum for the alleged violation of section 269SS disappeared. The distinction drawn by the appellate authority between quashing on jurisdictional grounds and setting aside on other grounds was rejected, the Tribunal holding that once the parent reassessment order does not survive, the satisfaction recorded therein for initiation of penalty also cannot survive. [Paras 35, 36, 38, 40, 42]

The penalty proceedings were held unsustainable as the foundational reassessment orders and the satisfaction recorded therein no longer survived.

Proof of contravention of cash loan prohibition - Independent evidence of cash loan - assessee accepted cash loans in contravention of section 269SS - HELD THAT: - Tribunal held that levy of penalty u/s 271D requires reliable evidence of actual acceptance of loan or deposit in cash. In the present case, apart from third-party statements and alleged coded entries recovered in the search of another concern, no independent incriminating material showing actual receipt of cash loan by the assessee was brought on record, nor was any corresponding entry found in the assessee's books. Tribunal also noted that the additions made on the same allegations had already been deleted and that an identical penalty in the assessee's own case arising from the same search action had been deleted. On that factual and legal position, the alleged breach of section 269SS was not shown to exist. [Paras 46, 47, 48, 49, 50]

The penalties for both assessment years were directed to be deleted.

Final Conclusion: Tribunal allowed both appeals and held that the penalties u/s 271D for Assessment Years 2013-14 and 2017-18 were unsustainable. Since the reassessment proceedings and the additions forming their basis had already been quashed, and no independent evidence established actual acceptance of cash loans by the assessee, the penalties were directed to be deleted.

Unverifiable purchases - Profit element in accommodation bills - Section 69C addition - HELD THAT: - The Tribunal held that the addition had been made mainly on the basis of Sales Tax Department information and the assessee's failure to produce transport and delivery evidence, but the Revenue had not doubted the declared sales, turnover or manufacturing activity. Since purchases formed part of the accepted business cycle and payments were stated to have been made through banking channels, taxing the whole purchase value would distort the computation of business income.

At the same time, complete deletion was not warranted because the assessee failed to conclusively prove the genuineness of the suppliers and the possibility of procurement from the grey market through accommodation bills could not be ruled out.

The Tribunal distinguished Principal Commissioner of Income-tax v. Kanak Impex (India) Ltd.[2025 (3) TMI 230 - BOMBAY HIGH COURT] on facts, noting that in the present case the assessee had participated in the proceedings, furnished purchase bills and bank statements, and the sales and books had substantially been accepted. Following the approach applicable where only the source parties remain unverified, and also noticing reversal of VAT credit and the peculiar circumstance that the assessee had died and the legal heir could not retrieve old records, the Tribunal held that only the additional profit embedded in the disputed purchases was taxable. [Paras 30, 31, 32, 33, 34]

The addition was restricted to 8% of the disputed purchases and the balance addition under section 69C was directed to be deleted.

Final Conclusion: The Tribunal partly allowed the appeal by holding that, in the facts of the case, the entire disputed purchases could not be added under section 69C. It directed that only 8% of such purchases be taxed as additional profit and the remaining addition be deleted.

Unexplained money u/s 69A - loan transactions - Ownership of unexplained money

HELD THAT: - The Tribunal held that Section 69A applies where the assessee is found to be the owner of money or other valuable article not recorded in its books of account. In the present case, the advance of the unsecured loan and its repayment were admittedly recorded in the assessee's books.

Even accepting the Revenue's case based on the seized 'Personal Tally' that the transaction was in the nature of an accommodation entry, the source of the alleged cash remained the funds transferred through banking channels by the assessee and recorded in its books.

The finding of the appellate authority that the transaction was recorded under a false description as a loan did not satisfy the statutory requirement that the assessee be found owner of money not recorded in the books. On these facts, the basic condition for invoking Section 69A was held not to exist. [Paras 13, 14, 15, 16]

The addition under Section 69A was deleted and the assessee's ground on merits was allowed.

Final Conclusion: The Tribunal held that Section 69A was inapplicable because the impugned loan transactions and their repayment were recorded in the assessee's books and the assessee was not found to be the owner of any unrecorded money. The addition was therefore deleted, and the challenge to the reassessment proceedings was dismissed as academic.

Unexplained money - Commission income estimation - Money transfer agent

Unexplained money - Collection agent receipts - Beneficial ownership of deposits - Cash deposited in specified bank notes by the assessee as collection agent for money transfer companies assessed as unexplained money in his hands - HELD THAT: - The Tribunal found that the amounts deposited in SBN were received by the assessee in the course of his activity as collection agent for the principal money transfer companies and were subsequently transferred to their accounts. Since the Assessing Officer had accepted that the assessee earned commission from such activity, the character of the assessee as an intermediary stood accepted. In that situation, where the money belonged to the principals and was ultimately passed on to them, the deposits could not be treated as the assessee's unexplained money. [Paras 8]

The addition made u/s 69A in respect of the SBN deposits was deleted.

Commission income estimation - Reasonable rate of commission - Agency business receipts - HELD THAT: - The Tribunal noted that the nature of the assessee's business and the source of the deposits were not doubted, and that the surviving controversy was only the reasonable rate of commission on the routed transactions. It also noticed that the appellate authority had already confined the deposits to the two bank accounts of the assessee, but the assessee had shown commission income on a lower figure of gross receipts than the total deposits from the commission agency business appearing in those accounts. Considering these aspects, the Tribunal held that commission should be computed at 1% on the gross deposits of the relevant bank accounts instead of 2%. [Paras 10]

The Assessing Officer was directed to recompute the income by applying commission at 1% on the gross deposits of INR 3,69,29,500/-, and the ground was partly allowed.

Final Conclusion: For Assessment Year 2017-18, the Tribunal deleted the addition treating the SBN deposits as unexplained money and modified the estimation of commission income by directing recomputation at 1% of the gross deposits considered for the assessee's agency business. The appeal was partly allowed.

Tariff classification of "n-Hexane" or “Exxsol Hexane”-Separate chemically defined compound - Specific heading preferred over general heading - Motor spirit classification test - Burden of proof in classification - HSN Explanatory Notes support

Whether the imported product, viz, “n-Hexane” or “Exxsol Hexane”, is to be treated as a Petroleum Oil and is to merit classification under Customs Tariff Heading 2710.00 ( ‘CTH 2710.00’) and Central Excise Tariff Heading 2710.12 (‘CETH 2710.12’) as contended by the Appellant-Revenue OR as a Pure Hydrocarbon existing as a Separate Chemical Compound under Customs Tariff Heading 2901.10 (‘CTH 2901.10’) and Central Excise Tariff Heading 2901.90 (‘CETH 2901.90’) as claimed by the Respondent – Assessee? - HELD THAT: - The Court held that the burden to establish classification under Chapter 27 lay on the Revenue, and that burden was not discharged merely by showing that the product had a distillation range of 63 C to 70 C and a flash point below 25 C. For classification as motor spirit under the relevant tariff entry, all conditions had to be satisfied, including proof that the product was suitable for use as fuel in spark ignition engines; no such evidence was produced. Applying Rule 3(a) of the General Rules of Interpretation, the Court preferred the more specific description, noting that Hexane is specifically covered in the HSN under Chapter 29 as an acyclic saturated hydrocarbon.

The Court further held that n-Hexane satisfies the test of a separate chemically defined compound, since it has a constant ratio of elements and a definitive structural diagram, and that the presence of impurities arising from manufacture did not convert it into an excluded mixture of isomers because no other substance was deliberately added or retained to make it suitable for a specific use. The DGFT policy circular clarifying that import of Hexane falls under Chapter 29 was also treated as binding support for the same conclusion. [Paras 65, 66, 69, 71, 72]

N-Hexane was held classifiable under CTH 2901.10 and CETH 2901.90, and the Revenue's claim for classification under CTH 2710.00 and CETH 2710.12 was rejected.

Final Conclusion: The appeal filed by the Revenue was dismissed. The Court affirmed the CESTAT order and held that the imported n-Hexane falls under Chapter 29, not Chapter 27.

Classification of imported Zinc-EDTA - to be classified under Customs Tariff Item 3105 0000 or under CTI 2922 4990? - chargeability and the burden of proof on Revenue or not

HELD THAT:- The order relied upon in the impugned order [2025 (12) TMI 382 - CESTAT CHENNAI] has not been subjected to a challenge and, therefore, has attained finality.

In such circumstances, the appeal(s) are dismissed.

Nature of communication issued during customs investigation - Statutory adjudication of customs liability - Appropriation of amounts paid during investigation

Investigation-stage communication - Demand notice - Show cause notice - communication dated 12.12.2025 to be treated as a formal demand notice under the statutory scheme or follow-up letter issued during investigation pursuant to the petitioner's representative expressing willingness to pay differential duty and seeking issuance of a letter to that effect - HELD THAT: - The Court held that the petitioner's challenge on the footing that the impugned communication itself fastened liability as a statutory demand could not be accepted, since the communication had been issued in continuation of the statement of the petitioner's authorised representative. At the same time, the Court made it clear that such position did not dispense with the requirement of the statutory process of adjudication, and the petitioner's liability, if any, had still to be determined through a show cause notice and adjudicatory process. [Paras 15, 17, 18, 19]

The impugned communication dated 12.12.2025 was quashed, and the respondents were bound to initiate regular adjudicatory proceedings by issuance of a show cause notice.

Payment during investigation - Refund - Appropriation towards final liability - HELD THAT: - The Court noted that the petitioner's own letter disclosed an admission of error in the department's duty computation sheet to a limited extent, following which the petitioner recomputed the differential duty and made payment of the recomputed amount. On that basis, the Court declined to order refund. However, it expressly held that payment made during investigation, whether under protest or otherwise, does not bar recourse to adjudication, and such amount may be appropriated only towards the final liability determined upon adjudication. [Paras 16, 17, 18]

Refund was declined, but the deposited amount was directed to remain subject to appropriation only against the demand, if any, eventually raised in the adjudicatory order.

Final Conclusion: The writ petition was partly allowed by quashing the communication dated 12.12.2025, without adjudicating the merits of the petitioner's customs liability. Refund of the amount deposited during investigation was refused, but the respondents were required to issue a show cause notice within four weeks, and no further demand or recovery was to be made in the meantime.

Customs valuation - enhancement of the declared import value on the basis of NIDB data and contemporaneous imports -Challenge to reassessment despite acceptance of enhanced duty - Enhancement of the declared value of the imported scrap on the basis of NIDB data and contemporaneous imports, despite the importer having paid the enhanced duty for clearance - HELD THAT: - The Tribunal held that the controversy was already concluded by its earlier decision in the appellant's own case [2025 (12) TMI 245 - CESTAT CHANDIGARH] which had followed the Delhi High Court ruling in Niraj Silk Mills Vs. Commr of Customs (ICD) Patparganj [2024 (11) TMI 1361 - DELHI HIGH COURT] and the connected matter. The adopted ratio was that reassessment of imported goods cannot be sustained merely on the basis of NIDB data or contemporaneous import data without legally sufficient justification under the valuation scheme, and that payment of enhanced duty for securing clearance does not bar the importer from challenging the enhancement in appeal. Applying that binding view to the present appeals involving the same issue, the Tribunal found the impugned order legally unsustainable. [Paras 6, 7]

The impugned order was set aside and all six appeals were allowed with consequential relief according to law.

Final Conclusion: Following its earlier decision in the appellant's own case and the Delhi High Court view adopted therein, the Tribunal held that the enhancement of value was not sustainable. The common appellate order was therefore set aside and all six appeals were allowed with consequential relief.

Non-declaration of retained onboard (“ROB”) cargo of Butadiene carried onboard vessel - Penalty under Section 112(a) - Aiding and abetting - Mens rea - Retained onboard cargo - Imported goods liable to confiscation - Steamer agent's liability

Penalty u/s 112(a) of the Customs Act, 1962 against the steamer agent - HELD THAT: - The Tribunal held that the steamer agent had filed the IGM on the basis of the declarations furnished by the Master, and the Master himself admitted that non-disclosure of the retained onboard cargo was his own mistake. The appellant could not be faulted for that omission, particularly when it approached Customs on the same date for amendment of the IGM immediately after receiving confirmation regarding the retained onboard cargo. In the absence of any evidence of conscious involvement, intentional omission, connivance, aiding or abetting, or deliberate suppression by the appellant, the essential ingredients for penalty under Section 112(a) were held to be absent. Mere procedural lapse, inadvertent omission, or communication failure was held insufficient to attract penal liability.

We refer the decision of the Tribunal, Kolkata in the case of Century Star Shipping Ltd. [2023 (11) TMI 424 - CESTAT KOLKATA] wherein this Tribunal has categorically held that non-filing of IGM without fraudulent intent, at best being an inadvertent omission arising out of communication failure, would not attract penalty under Section 112 of the Act. The Tribunal further held that in view of Section 2(31) of the Act, the responsibility for filing full and correct manifest primarily rests upon the Master of the vessel and other agencies cannot step into the shoes of the Master for the purpose of penal consequences. [Paras 6]

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

Retained onboard cargo - Imported goods - Confiscability - Whether retained onboard cargo that remained continuously on the vessel, was never unloaded in India, and was ultimately discharged abroad could be treated as imported goods liable to confiscation? - HELD THAT: - The Tribunal found that the cargo had originally been exported from Haldia, remained continuously onboard the vessel, was never unloaded in India, and was ultimately discharged at foreign ports. No bill of entry had been filed by any person claiming to be the importer of that cargo. On these admitted facts, the Tribunal held that the retained onboard cargo never acquired the legal character of imported goods and therefore could not be treated as goods liable to confiscation under Section 111. [Paras 6]

The basis for treating the retained onboard cargo as confiscable imported goods was rejected.

Final Conclusion: The Tribunal held that the retained onboard cargo, having never been unloaded in India and having remained onboard for discharge abroad, did not become imported goods. As the steamer agent had acted on the Master's declaration and there was no evidence of mens rea, connivance, or abetment, penalty under Section 112(a) was unsustainable and was set aside.

Meaning of ores and concentrates- import of ‘Zircon Sand’ - Exemption to ores under Notification No. 4/2006-CE - HSN as guide to tariff classification - Strict interpretation of exemption notifications - Cross-examination of chemical examiner - Penalty under Section 112(a)

Meaning of ores and concentrates - Import of ‘Zircon Sand’ - Exemption to ores under Notification No. 4/2006-CE - HSN as guide to tariff classification - Strict interpretation of exemption notifications - Imported zircon sand was held to be zirconium ore concentrate OR ore for the purpose of claiming the benefit of Notification No. 4/2006-CE - HELD THAT: - The Tribunal held that, although ores and concentrates fall under the same tariff heading, the distinction for exemption purposes had to be drawn from Chapter Note 2, Chapter Note 4 and the HSN Explanatory Notes. Under the HSN, concentrates are ores from which part or all foreign matter has been removed by special treatment for subsequent metallurgical operations or economical transport. The determinative test was the process applied to the mined ore and not merely the percentage composition of the metal content. Since the material had undergone such treatment for removal of impurities and was imported for direct use as raw material without any further impurity-removal process, it answered the description of concentrate. The Board circulars were found to be in line with the HSN understanding. The Tribunal further held that HSN guidance could not be ignored in tariff interpretation, and that exemption notifications must be strictly construed; therefore, even assuming ambiguity, the benefit could not be extended to the importer. The earlier decisions cited by the appellant were not followed as, according to the Tribunal, they had not examined the meaning of ores and concentrates vis-a-vis the HSN notes, chapter notes and the circulars. [Paras 21, 22, 23, 24, 25]

The benefit of Notification No. 4/2006-CE was not admissible, and the duty demand with interest was upheld.

Cross-examination of chemical examiner - Natural justice - HELD THAT: - The Tribunal found no prejudice arising from refusal of cross-examination because the chemical report only recorded the composition of the sample, the appellant had not produced any contrary test report or shown any defect in the sampling or analytical procedure, and the adjudicating authority had not rested its conclusion solely on that report but also on other evidence and the applicable legal principles. In those circumstances, denial of cross-examination did not render the order invalid. [Paras 26]

The challenge based on denial of cross-examination was rejected.

Penalty under Section 112(a) - Interpretation of exemption notifications - HELD THAT: - The Tribunal held that the controversy related to the legal interpretation of the exemption notification and the distinction between ore and concentrate. Since the dispute was interpretational in nature, imposition of penalty under Section 112(a) was not justified. [Paras 27]

Penalty as set aside.

Final Conclusion: The Tribunal held that the imported zircon sand was concentrate and not ore, and therefore not entitled to the exemption under Notification No. 4/2006-CE. The demand of differential duty with interest was sustained, the plea based on denial of cross-examination was rejected, and only the penalty in one appeal was set aside as the dispute was interpretational.

Territorial jurisdiction - Forum conveniens - Cause of action - part of cause of action lies in New Delhi - show-cause proceedings linked to CIRP proceedings pending before the NCLT, Bengaluru

HELD THAT: - The Court held that the pending show cause proceedings against the resolution professional were intricately connected with the underlying CIRP proceedings pending before NCLT, Bengaluru, and could not be viewed in isolation from those foundational facts.

On a comprehensive reading of the grievance, the material, integral and substantial part of the cause of action had arisen outside Delhi. The mere location of the respondent authorities in New Delhi, or the fact that some part of the cause of action may have arisen there, was not by itself determinative; the Court applied the principle of forum conveniens and found it appropriate to decline jurisdiction and relegate the petitioner to the jurisdictional High Court. [Paras 6, 8, 9]

The petition was dismissed on the ground that the appropriate forum was the jurisdictional High Court and not the Delhi High Court.

Final Conclusion: The Court declined to entertain the writ petition for want of territorial appropriateness, holding that the substantial and integral cause of action lay outside Delhi. The petitioner was relegated to the jurisdictional High Court, with all rights and contentions left open.

Unlawful appropriation of corporate debtor's security deposit and adjusted CIRP-period payments towards pre-CIRP dues - violation of the moratorium under the Insolvency and Bankruptcy Code, 2016 -Pre-CIRP adjustment of security deposit - Finality of approved resolution plan

Moratorium under insolvency law - Security deposit adjustment - Pre-CIRP appropriation - electricity distributor's adjustment of the security deposit and the alleged adjustment of CIRP-period payments towards pre-CIRP dues - HELD THAT: - The Tribunal held that the bill dated 02.01.2023 and Form-B dated 06.01.2023 only reflected the adjustment in billing and claim records and did not by themselves establish that the decision to appropriate the security deposit was first taken after commencement of CIRP. On the material produced, particularly the office note dated 14.12.2022 and the approval recorded by the competent authority, the Tribunal accepted that the decision to adjust the security deposit had been taken before commencement of CIRP, and that later accounting entries were merely consequential. The disconnection notice under the Electricity Act was treated as part of a separate statutory mechanism for disconnection and not as preventing an independent commercial decision on adjustment of security deposit. The Tribunal further found that the allegation of wrongful appropriation of CIRP-period payments was unsupported by a clear and conclusive financial reconciliation, whereas the respondent's computation based on the November and December 2022 bills had been consistently disclosed and formed the basis of the admitted claim. [Paras 59, 60, 61, 67, 75]

The adjustment of the security deposit was treated as a pre-CIRP adjustment effective from 14.12.2022, and the allegation of impermissible post-CIRP recovery under Section 14 was rejected.

Finality of approved resolution plan - Commercial certainty in CIRP - Reopening settled claims - Relief seeking restoration of the adjusted amounts after the claim position had been accepted during CIRP and the resolution plan had been approved and implemented - HELD THAT: - The Tribunal noted that the respondent's adjusted claim had been filed during CIRP, accepted by the Resolution Professional, and carried into the information memorandum and the resolution plan. The application challenging the adjustment was filed only after approval of the plan by the Committee of Creditors, despite the Resolution Professional being aware of the adjustment during CIRP. The Tribunal also held that ratification by the Monitoring Committee could not substitute for concurrence or knowledge of the Committee of Creditors where the challenge related to admitted claims already dealt with in the plan. On this footing, and applying the principle of finality of an approved resolution plan, the Tribunal held that directing restoration of the amounts at that stage would necessarily disturb the settled financial assumptions and commercial rights under the approved plan and would amount to an impermissible modification of the plan. [Paras 66, 74, 76, 77, 78]

The challenge was held incapable of unsettling the adjusted claim position after approval and implementation of the resolution plan, and the dismissal of the application was upheld.

Final Conclusion: The Tribunal held that the security deposit adjustment had been decided before commencement of CIRP and that the alleged wrongful adjustment of CIRP-period payments was not conclusively proved. Since the adjusted claim position had been accepted during CIRP and the resolution plan had thereafter been approved and implemented, the attempt to secure restoration of the amounts could not be entertained, and the appeal was dismissed.

Order rejecting recall of the approved resolution plan suffered from illegality, procedural irregularity, fraud, suppression of material facts, or violation of mandatory provisions of insolvency law - Contingent classification of operational debt claim - Notice of committee of creditors meetings to operational creditors - Recall of approved and implemented resolution plan - Limited appellate interference under the Insolvency and Bankruptcy Code

HELD THAT: - The Appellate Tribunal held that interference with an approved resolution plan under Section 61 is confined to cases of patent illegality, material irregularity, violation of mandatory law, or perversity, and that mere dissatisfaction with the treatment of a claim cannot justify reopening a completed insolvency process. On the record, the appellant's claim was never finally admitted as an undisputed operational debt; from the stage of verification, it remained disputed in view of reciprocal contractual claims and the corporate debtor's asserted counter-claims.

The communication relied on by the appellant could not be read in isolation, since the same notice also recorded that the claim was being treated as contingent. As the appellant was not recognized as an admitted operational creditor with admitted dues above the threshold, the foundation for invoking Section 24(3)(c) itself was absent. The Tribunal further held that, in any event, the appellant failed to show any material prejudice affecting the resolution outcome.

Questions concerning termination, continuation or renewal of the contract, damages, and rights over leased machinery were treated as independent contractual disputes requiring adjudication in appropriate proceedings, and not as grounds to invalidate the CIRP. The allegations of fraud, suppression and manipulation were found unsupported by clear material. The appellant's failure to challenge the contingent classification during CIRP, and its attempt to do so only after approval and implementation of the plan, also weighed against granting recall. The precedents relied on by the appellant were distinguished on the ground that those cases concerned admitted claims or different legal contexts, unlike the present case where the claim remained disputed and contingent throughout. [Paras 71, 72, 73, 74, 75]

The impugned order rejecting recall was upheld, the challenge to the contingent classification and alleged Section 24(3)(c) violation was rejected, and no ground for interference with the approved and implemented resolution plan was found.

Final Conclusion: The Appeal was dismissed. The Appellate Tribunal held that the appellant's claim had been consistently treated as disputed and contingent, no violation of mandatory provisions or material irregularity in the CIRP was established, and an approved as well as implemented resolution plan could not be reopened on the appellant's contractual grievances.

Transfer of winding-up proceedings - winding-up petitions transferred from the High Court to the Tribunal -Maintainability of Section 9 application - Threshold under the Insolvency and Bankruptcy Code

HELD THAT: - The Tribunal held that the proviso to Section 434 of the Companies Act, 2013 makes it clear that once winding-up proceedings are transferred, they are to be dealt with as an application for initiation of CIRP under the Code. Consequently, the transferred matter does not continue on the earlier statutory footing of the winding-up petition, nor does prior institution before the High Court preserve the earlier threshold.

Tribunal reasoned that if the appellant's construction were accepted, no fresh judicial scrutiny for admission under the Code would be required, which would be contrary to the scheme of the Code. It further held that reliance on Section 6 of the General Clauses Act could not assist the appellant because the statutory language disclosed a different legislative intention, namely that the transferred proceedings must be examined as an insolvency application under the Code.

Following the earlier coordinate Bench view in Falcon Industries [2026 (3) TMI 108 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], and finding no reason to take a different view, the Tribunal concluded that the appellant was required to meet the threshold of Rs. 1 Crore applicable at the time of transfer and consideration by the Tribunal. [Paras 21, 23, 27, 28]

The petitions were not maintainable because the debt claimed in each transferred proceeding did not meet the threshold applicable under Section 4 of the Code at the time of transfer and consideration by the Tribunal.

Final Conclusion: The appeals were dismissed. The Tribunal upheld the rejection of the transferred proceedings on the ground that, once treated as Section 9 applications under the Code, they did not satisfy the monetary threshold applicable at the time of transfer and consideration.

Limitation for appeal under section 61 of the Insolvency and Bankruptcy Code - Commencement of limitation from pronouncement of order - Outer limit for condonation of delay - outer limit of 30 + 15 days prescribed under Section 61(2) of the IBC - Technical glitch in e-filing portal

Commencement of limitation from pronouncement of order - Date of upload or knowledge - Whether Limitation for filing an appeal under section 61 of the Insolvency and Bankruptcy Code runs from the date of pronouncement of the impugned order OR from the date of its upload on the portal OR the date of knowledge of the appellant? - HELD THAT: - The Appellate Tribunal held that, in view of the law declared by the Supreme Court, the starting point of limitation under section 61 is intrinsically linked to the date of pronouncement. Since the order was admittedly pronounced on 08.12.2025, limitation commenced from that date. The subsequent upload of the order on 24.12.2025 and the appellant's plea based on date of knowledge were held to be irrelevant for computation of limitation under the IBC, whose appellate scheme is strictly time-bound. [Paras 13, 14]

The appeal period was required to be computed from 08.12.2025, the date of pronouncement of the impugned order.

Outer limit for condonation of delay - Technical glitch in e-filing portal - Statutory bar on condonation beyond prescribed period - Whether an alleged technical glitch in the e-filing portal can justify condonation of delay when the appeal is filed beyond the maximum condonable period of 30 + 15 days? - HELD THAT: - The Appellate Tribunal examined the appellant's case that the appeal paper book was ready on the last condonable day and that filing could not be completed because the e-filing portal was unresponsive. On the material placed before it, including the Registry report based on NIC's response, it found that the portal was functional on 22.01.2026 and that multiple filings had been successfully made on that date. It further held that sending the papers by email could not substitute the prescribed requirement of e-filing. The Madras High Court decision [2024 (9) TMI 1928 - MADRAS HIGH COURT] cited by the appellant was distinguished because it arose in writ jurisdiction and on different facts. Applying the Supreme Court's rulings [2025 (5) TMI 661 - SUPREME COURT] on section 61(2), the Appellate Tribunal held that once the prescribed period of thirty days and the further condonable period of fifteen days expire, it has no jurisdiction to entertain the appeal on equitable, hardship, or technical considerations. As the appeal was e-filed on 28.01.2026, beyond the statutory outer limit, the delay was uncondonable. [Paras 20, 21, 22, 23, 24]

The application for condonation of delay was dismissed and, as a consequence, the appeal was rejected as barred by limitation.

Final Conclusion: The Appellate Tribunal held that limitation under section 61 of the Insolvency and Bankruptcy Code commenced from the date of pronouncement of the impugned order, and the appeal having been e-filed beyond the outer limit of thirty days plus the further condonable period of fifteen days was barred by statute. The plea founded on late upload of the order, date of knowledge, and alleged technical glitch in the e-filing portal was rejected, and the application for condonation of delay as well as the appeal were dismissed.

Monetary limits for departmental appeals - Substantial question of law - Storage and warehousing service - Terminal facility charges

Monetary limits for departmental appeals - Substantial question of law - Maintainability of appeal - HELD THAT: - The Court held that, though the aggregate disputed tax was below the monetary threshold prescribed for appeals before the High Court, the instructions themselves permitted adjudication where a substantial question of law arose. The controversy as to whether storage or warehousing of crude oil at Barauni was merely incidental to pipeline transport or constituted an independent taxable service had not been properly addressed by the Tribunal and directly affected the rights of the department. On that basis, the case involved a substantial question of law and was maintainable irrespective of the monetary limit. [Paras 9, 10, 15, 16]

The objection to maintainability on the ground of pecuniary limit was rejected and the appeal was held maintainable.

Storage and warehousing service - Terminal facility charges - Independent taxable service - whether the second step of transportation, namely storing or warehousing of crude oil at Barauni under the discharge or terminal facility arrangement, was incidental to pipeline transport or constituted an independent taxable service under the head of storage and warehousing? - HELD THAT: - The Court read the MOU, particularly the provision for discharge facility and separate consideration, with the statutory definition of storage and warehousing, and held that the facility at Barauni answered that description. Without such storage facility, the crude oil could not be transhipped to the next mode of transport, and separate charges were admittedly received for that facility apart from pipeline charges. The Tribunal's view that the entire movement was covered by a single transport contract was rejected because separate charging for discharge or terminal facility showed that it was not an inseparable part of pipeline transport. The Court further rejected the respondent's contentions of self-service and double taxation, holding that the crude oil belonged to BRPL, the service was rendered to BRPL for separate consideration, and no evidence was produced to show that the pipeline division had already discharged tax on the terminal charges. The Commissioner's order was therefore restored. [Paras 39, 40, 41, 43, 44]

The terminal or discharge facility was held liable to service tax as storage and warehousing service, and the Tribunal's order was set aside with restoration of the Commissioner's order.

Final Conclusion: The High Court allowed the department's appeal, held that the monetary-limit instructions did not bar the appeal because a substantial question of law arose, and ruled that the Barauni terminal or discharge facility was an independent taxable storage and warehousing service. The Tribunal's order was set aside and the Commissioner's order restoring tax, interest and penalties was affirmed.

Service tax demand based on income-tax returns - Fresh adjudication of show-cause notice - service tax order founded chiefly on inputs drawn from the petitioner's income tax returns - HELD THAT: - The Court took note that the impugned order-in-original had chiefly relied on inputs from the income tax returns and that, in an earlier Co-ordinate Bench order in [2024 (9) TMI 64 - KARNATAKA HIGH COURT] similar service tax adjudications based solely on such material had been remitted for reconsideration with a direction to examine issues such as whether the activity answered the definition of service, whether it fell in the negative list or exemption notifications, whether the liability was on some other person under the applicable rule and notification, and whether the demand was barred by limitation. Since the appellate order was not a decision on merits and had been rejected only for want of statutory deposit, the Court treated the matter as requiring restoration to the stage of reply to the show-cause notice, with all contentions kept open. [Paras 5, 6]

The order-in-original was set aside and the matter was remitted to the stage of reply to the show-cause notice for fresh consideration in terms of the earlier Co-ordinate Bench directions, with all contentions left open.

Final Conclusion: The writ petition was disposed of by setting aside the order-in-original and remitting the matter for fresh adjudication from the show-cause notice stage. The appellate dismissal, being not on merits but for non-payment of statutory deposit, did not stand in the way of such remand, and all contentions were kept open.

Exemption for services in relation to transmission and distribution of electricity - services of supply, erection, commissioning and allied activities undertaken for power substations and transmission lines - Goods transport agency liability and consignment note requirement

Services in relation to transmission and distribution of electricity - Retrospective exemption - Whether services provided by the respondent for supply, construction, erection and commissioning of power substations and transmission line towers were covered by the exemption for taxable services provided in relation to transmission and distribution of electricity? - HELD THAT: - The Tribunal held that Notification No. 45/2010-ST exempted not only transmission and distribution of electricity by a utility but also services provided in relation thereto. Accepting the Commissioner's reasoning, it found that the contracts, by their nature, purpose and scope, related to power substations and transmission line towers and included transportation, delivery, handling, storage, erection, installation, testing and commissioning of the goods supplied. On that basis, the services were treated as services relating to transmission and distribution of electricity, and, in view of the retrospective operation of the notification, the impugned services were not taxable. Once the exemption applied, the demand could not be sustained and no further examination of the other merits of the show cause notice was required. [Paras 7, 8, 9]

The exemption under Notification No. 45/2010-ST was held applicable and the service tax demand on the impugned services was rightly dropped.

Goods transport agency - Consignment note requirement - separate demand under transport of goods by road service sustainability - HELD THAT: - The Tribunal endorsed the Commissioner's finding that the demand had been raised on freight and insurance collected from the clients, though liability in the case of goods transport by road had to be determined with reference to the consignment note and the person made liable under the rules. It was specifically noticed that there was nothing on record regarding the consignment notes, the actual goods transport agency, or whether the consignor or consignee was liable to pay service tax. In the absence of these foundational facts, the levy as framed could not be sustained. [Paras 8, 9]

The demand under transport of goods by road service was rightly rejected.

Final Conclusion: The Tribunal upheld the order dropping the entire demand. It held that the respondent's services were exempt as services in relation to transmission and distribution of electricity, and that the separate transport demand was also unsustainable on the record.

Refund of amount deposited during investigation - Payment under protest - Limitation for refund - Unjust enrichment - refund denied as formal procedure for recording protest was not followed

HELD THAT: - The Tribunal held that the Department's objection that the amount was voluntarily paid and not paid under protest was without force, since the appellate authority had recorded a finding that the letters addressed during investigation clearly stated that the deposits were made under protest. It further held that payments made during investigation under compulsion inherently carry the element of protest, even if the challans are not specifically marked as such. [Paras 7, 8]

The Department's challenge to the refund on the ground of absence of valid protest was rejected.

Limitation for refund - HELD THAT: - The Tribunal accepted the finding of the appellate authority that the refund application had been filed within one year from the date of receipt of the order dropping the demand. On that basis, the plea of limitation raised by the Department was not accepted. [Paras 9]

The refund was not barred by limitation.

Unjust enrichment - Refund claim - HELD THAT: - The Tribunal found that the assessee had not passed on the burden of the deposited amount to any other person or customer. This conclusion was supported by the certificate of the independent Chartered Accountant and the internal confirmation that no service tax had been collected or charged in the relevant invoices. [Paras 10]

The bar of unjust enrichment did not apply to the refund claim.

Final Conclusion: The Tribunal upheld the order allowing refund of the amount deposited during investigation and dismissed the Revenue's appeal. It held that the deposit was made under protest, the refund claim was within limitation, and unjust enrichment was not established.

Extended period of limitation - Service tax demand based on third party TDS/Form 26AS data - Willful suppression and bona fide belief

Validity of Invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994, solely on the basis of TDS/ITR data without independent inquiry or material establishing taxable service and willful suppression - HELD THAT: - The Tribunal held that the extended period is a penal exception and can be invoked only on clear material showing fraud, collusion, willful misstatement or suppression with intent to evade tax. Mere reliance on TDS/Form 26AS data was insufficient, since such material could at best furnish a starting point for inquiry and not conclusive proof that the receipts represented taxable consideration.

The Revenue had undertaken no independent verification from the parties reflected in the TDS data and had not brought any material in the show cause notice to establish non-payment of service tax by reason of any deliberate act of concealment. The Tribunal further held that income disclosed under the income-tax law does not by itself establish liability under the service tax law. On the facts, the assessee had disclosed the amounts in its books and income-tax returns and had asserted a bona fide belief that some services were exempt or not taxable; such disclosure and bona fide belief negatived willful suppression. The repeated reduction of the demand in successive proceedings also militated against any inference of fraud or deliberate concealment.

Applying the principle noticed in Homeopathic Medical Publishers vs. Commr. CGST & Central Excise, Mumbai[2025 (12) TMI 1248 - CESTAT MUMBAI] the Tribunal concluded that the ingredients necessary for invoking the extended period were absent. [Paras 8, 9, 10, 11, 12]

The show cause notice was held to be time-barred insofar as it invoked the extended period, and the demand confirmed on that basis was unsustainable.

Final Conclusion: The Tribunal held that the service tax demand could not be sustained by invoking the extended period merely on the basis of third-party TDS/ITR data, in the absence of independent inquiry or evidence of willful suppression. The impugned order was set aside and the appeal was allowed with consequential relief.

Statutory service of show cause notice through WhatsApp - Extended period of limitation - Willful suppression - Bona fide belief as to taxability

Statutory service of show cause notice through WhatsApp - Mode of service - valid mode of service under the statutory scheme applicable to service tax proceedings - HELD THAT: - The Tribunal held that the modes of service prescribed in Section 37C of the Central Excise Act, 1944, as applied to the Finance Act, 1994, are exhaustive. Since WhatsApp is not one of the statutorily recognised modes, and the department placed no material to show any prior attempt to serve the notice by registered post, speed post, approved courier, or by affixation as required by law, forwarding the notice through WhatsApp could not constitute valid service. The defect went to the root of the adjudication, though the Tribunal declined remand because the demand also failed on limitation. [Paras 7, 8, 12]

The proceedings were held vitiated by invalid service of the show cause notice, and no remand was ordered in the facts of the case.

Extended period of limitation - Time-barred demand - HELD THAT: - Proceeding on the alternative assumption most favourable to the department, the Tribunal computed limitation from the date on which the notice was communicated through WhatsApp. On that basis, the demand pertaining to the financial year 2013-14 still fell outside the five-year extended period. The demand for that year was therefore unsustainable on limitation itself. [Paras 9]

The demand for the financial year 2013-14 was set aside as time-barred.

Willful suppression - Extended period of limitation - Bona fide belief as to taxability - HELD THAT: - The Tribunal held that invocation of the extended period under the proviso to Section 73(1) required positive and cogent material showing fraud, collusion, wilful misstatement, suppression of facts, or intent to evade tax. The case rested only on third-party information from the Income Tax Department, without independent evidence of evasion or concealment. The appellant's stand that the services were covered by the negative list reflected a bona fide belief regarding non-taxability; such belief, even if mistaken, could not by itself amount to fraud or wilful suppression. On that basis, the residual demand for the financial year 2014-15 also failed, and remand was considered unnecessary. [Paras 10, 11, 12]

The extended period was held inapplicable for the financial year 2014-15, and the remaining demand was also set aside.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal with consequential relief. The demand failed because the show cause notice was not validly served, the demand for the financial year 2013-14 was time-barred, and the remaining demand for the financial year 2014-15 could not be sustained for want of material to invoke the extended period.

Statutory levy as consideration - 'consideration' for a taxable service - NPV payments made to CAMPA​​​​​​​[Compensatory Afforestation Fund Management and Planning Authority] -Declared service of agreeing to tolerate an act - Sovereign regulatory functions - Extended period of limitation

Statutory levy as consideration - Declared service of agreeing to tolerate an act - Sovereign regulatory functions - Reverse charge mechanism - mandatory payments deposited by the appellant - a transmission line company into the Compensatory Afforestation Fund as a statutory condition for obtaining permission for the use of forest land for non-forest purposes - HELD THAT: - The Tribunal held that 'consideration' requires a bilateral and consensual arrangement in which something is given as the price for a promise or act. NPV charges were not paid under any agreement with the Government but were imposed by statute as a mandatory precondition for non-forest use of forest land. The amounts were earmarked for compensatory afforestation, forest regeneration and wildlife protection, and not retained by the Ministry for any service to the appellant. Section 66E(e) also postulates an agreement to refrain from, tolerate, or do an act for consideration; such an element was absent because the Ministry acted only in its sovereign regulatory capacity while deciding forest clearance under the governing law. On that basis, the grant of forest clearance could not be treated as a declared service, and the NPV deposits could not be treated as consideration exigible to service tax under reverse charge. The Tribunal followed its earlier coordinate Bench decisions taking the same view. [Paras 19, 20, 21, 22, 24]

The service tax demand on CAMPA/NPV deposits was held unsustainable on merits.

Extended period of limitation - Suppression of facts - Penalty - HELD THAT: - The Tribunal found that the NPV payments were statutory deposits made in accordance with law, were on record, and had been disclosed in the appellant's books of account. Revenue produced no material showing willful suppression, misrepresentation, fraud or intent to evade tax. Since the factual foundation for invoking the extended period under Section 73(1) was absent, the extended period could not be applied. For the same reason, the penalties, including penalty under Section 78 which depends upon suppression or similar culpable conduct, and the related consequences could not survive. [Paras 23, 24]

The demand was also barred by limitation, and the interest and penalties were set aside.

Final Conclusion: The Tribunal held that NPV deposits made to CAMPA pursuant to statutory forest-clearance conditions are compulsory public law levies and not consideration for any service. Forest clearance was treated as a sovereign regulatory function, not a declared service under Section 66E(e); accordingly, the service tax demand under reverse charge, along with interest and penalties, was set aside both on merits and on limitation.

Goods Transport Agency service V/S Supply of tangible goods service - Transportation of ready mix concrete through transit mixers - Reverse charge liability - activity of transporting ready mix concrete through transit mixers, with consignment notes issued to the service recipient - classifiable as goods transport service OR supply of tangible goods service

HELD THAT: - The Tribunal recorded that the controversy was already concluded by its earlier decision on the same activity involving the same service recipient. Relying on that decision, it accepted that the transit mixers were not given on hire, but were used for transportation of ready mix concrete from one place to another as per the service recipient's directions, with consignment notes satisfying the statutory requirements. On that basis, the service rendered was goods transport service, and not supply of tangible goods service; consequently, the service tax liability was to be discharged by the service recipient under the reverse charge mechanism and no liability arose on the assessee. [Paras 5, 6]

The order dropping the demand was upheld and the Revenue's appeal was dismissed.

Final Conclusion: Following its earlier decision on the same activity and service recipient, the Tribunal held that the assessee had rendered goods transport service and not supply of tangible goods service. The service tax demand against the assessee was therefore unsustainable, and the Revenue's appeal was dismissed.

Pre-show cause notice consultation - Mandatory departmental circulars - Maintainability of writ against show cause notice - non-observance of pre-show cause notice consultation mandated by departmental circulars - whether the existence of an alternative statutory remedy barred writ interference? - HELD THAT: - The Court held that clause 5 of the circular dated 10.03.2017 expressly made pre-show cause notice consultation mandatory in cases involving the prescribed demand threshold, and the department could not treat that requirement as merely directory.

The subsequent clarificatory circular dated 11.11.2021 reiterated the same position and confined the exemption from pre-consultation to specified categories such as fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade tax.

On query, it was accepted that the present case did not fall within any such exempted category. In these circumstances, the Court rejected the revenue's stand that it could directly issue the show cause notice, and, following the view taken in L & T Hydrocarbons Engineering Ltd.[2022 (4) TMI 70 - GUJARAT HIGH COURT] held that the writ petition was maintainable because the notice, issued in breach of a mandatory procedural requirement, was ex facie not maintainable in law. The impugned notice was therefore set aside with liberty to the respondents to proceed afresh in accordance with law, including by issuing a pre-show cause notice, while keeping all merits open for adjudication by the competent authority. [Paras 12, 13, 14, 16, 17]

The impugned show cause notice was set aside for want of the mandatory pre-show cause notice consultation, with liberty to initiate fresh proceedings in accordance with law; all other issues were left open.

Final Conclusion: The writ petition was allowed to the extent of setting aside the impugned show cause notice on the ground that mandatory pre-show cause notice consultation had not been followed and the case did not fall within the recognised exceptions. Liberty was granted to the respondents to proceed afresh in accordance with law, and all merits were kept open.

Scope of input service - Admissibility of Cenvat credit on input services - Canteen-related manpower supply as input service

Scope of input service - Admissibility of Cenvat credit on input services - Cenvat credit on the disputed services other than manpower supply for canteen service - HELD THAT: - The Tribunal held that the controversy was no longer res integra, having already been settled by decisions of various Courts and by the Tribunal in the assessee's own case for different periods. On examining Rule 2(l) both prior to and after 01.04.2011, it found that the definition of input service contains a specific part and an inclusive part, and has consistently received a wide interpretation covering services having even an indirect connection with manufacture or output services. Since the impugned services had already been treated as eligible in the assessee's own earlier cases and the denial in the impugned order ran contrary to that settled position, the disallowance of credit could not be sustained. [Paras 6, 7, 8, 9, 10]

The denial of Cenvat credit on the disputed input services was set aside and the assessee's appeals were allowed.

Canteen-related manpower supply as input service - Mandatory factory canteen - Cenvat credit on manpower supply for canteen service - HELD THAT: - The Tribunal upheld the Commissioner's view that where the assessee was required under the Factories Act, 1948 to provide canteen facilities, manpower supply used for managing and preparing such canteen services bore the necessary nexus with manufacture and formed part of the cost of production. Relying on the Larger Bench decision in CCE, Mumbai vs. M/s GTC Industries Ltd [2008 (9) TMI 56 - CESTAT MUMBAI-LB] the Tribunal held that such service fell within the wide ambit of input service under Rule 2(l), and the Revenue's objection that it was outside the definition was without merit. [Paras 11]

Revenue's appeal was dismissed and the allowance of credit on manpower supply for canteen service was affirmed.

Final Conclusion: The Tribunal held that, in view of the settled interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 and the decisions already rendered in the assessee's own case, the denial of credit on the disputed input services was unsustainable. Accordingly, the assessee's appeals were allowed and the Revenue's appeal against allowance of credit on manpower supply for canteen service was dismissed.

Cenvat credit on sales commission - Clarificatory amendment with retrospective operation - Extended period of limitation- Personal Penalty under Rule 26

Cenvat credit on sales commission - Sales promotion - Clarificatory amendment with retrospective operation - Cenvat credit on service tax paid for commission agents engaged in procuring orders and promoting sales - HELD THAT: - The Tribunal held that the explanation inserted in Rule 2(l) clarifying that sales promotion includes services by way of sale of dutiable goods on commission basis is clarificatory in nature. On that basis, sales commission stood covered within sales promotion, and the benefit was available even for the disputed period. The Tribunal also relied on decision in Himadri Speciality Chemical Limited[2022 (9) TMI 1213 - CALCUTTA HIGH COURT] affirming the Tribunal's view that the amendment operated retrospectively, and on the Board Circular clarifying admissibility of credit on sale of dutiable goods on commission basis. [Paras 7]

The denial of Cenvat credit on sales commission was held to be legally unsustainable and was set aside.

Extended period of limitation - Suppression of facts - Bona fide belief - HELD THAT: - The Tribunal found that the appellant had availed the credit on a bona fide belief that such credit was admissible. In the absence of suppression of facts with intent to evade duty, the condition necessary for invoking the extended period was not established. [Paras 7]

Invocation of the extended period of limitation was rejected.

Penalty under Rule 26 - Personal penalty on the Deputy Manager-Accounts - HELD THAT: - The penalty had been imposed on the footing that he was aware of and involved in availment of inadmissible credit. Since the Tribunal held that there was no irregularity in availment of the credit, the foundation for personal penalty disappeared. [Paras 8]

The personal penalty imposed on the Deputy Manager-Accounts was set aside.

Final Conclusion: The Tribunal held that service tax paid on sales commission was eligible for Cenvat credit for the disputed period, the clarificatory explanation to Rule 2(l) being applicable retrospectively. The demand, interest and penalties, including the personal penalty on the employee, were therefore set aside and the appeals were allowed with consequential relief.

Industrial policy interpretation - concessional electricity charges under Clause 16(a) of the Himachal Pradesh Industrial Policy -incentive in the form of concessional rate of electricity charges under Clause 16(a) of the Industrial Policy of 2019, read with Rule 16(i)(a) of the 2019 Rules - Clarificatory amendment - Retrospective operation - Promissory estoppel in fiscal incentives

Industrial policy interpretation - Concessional rate of electricity charges - Clarificatory amendment - Retrospective operation - Whether the incentive in the form of concessional rate of electricity charges under Clause 16(a) of the Industrial Policy of 2019, read with Rule 16(i)(a) of the 2019 Rules, was ever intended to be provided to the existing industrial enterprises undergoing substantial expansion, and what effect the amendment notification dated 29.04.2022 has on the applicability of the said clauses? - HELD THAT: - The Court held that although the respondent was an eligible enterprise by reason of being an existing industrial enterprise which had undertaken substantial expansion, the scheme of Clause 16 drew a clear distinction between incentives meant for new units and those meant for existing units expanding their capacity. On a conjoint reading of Clause 16 with the contemporaneous tariff orders issued before and after the 2019 Policy, Clause 16(a) was intended to grant lower energy charges only to new industrial enterprises, while Clause 16(b) was intended to grant a rebate on incremental consumption to existing enterprises undergoing substantial expansion. Any other construction would confer overlapping benefits on the same class of enterprises and destroy the policy classification. The amendment dated 29.04.2022 substituting "eligible" with "new" in Clause 16(a) and Rule 16(i)(a), and inserting "substantial expansion" in Clause 16(b) and Rule 16(i)(b), merely clarified the original intent and therefore operated retrospectively. Only the prescription, for the first time, of a three-year duration for the benefit under Clause 16(b) and Rule 16(i)(b) was substantive and prospective. [Paras 46, 47, 48, 50, 51]

The respondent, being an existing industrial enterprise which had undertaken substantial expansion, was entitled only to the rebate contemplated by Clause 16(b) read with Rule 16(i)(b), and not to the concessional tariff benefit under Clause 16(a) read with Rule 16(i)(a).

Doctrine of promissory estoppel - Promissory estoppel in fiscal incentives - Vested right - Eligibility certificate - Whether doctrine of promissory estoppel did not entitle the respondent to claim the benefit under Clause 16(a)? - HELD THAT: - The Court reiterated that fiscal incentives are ordinarily defeasible and may be modified or withdrawn in public interest, though promissory estoppel may apply where a clear representation intended to induce action has led to an alteration of position. On the facts, the COP Certificate merely recognised that the respondent had undertaken substantial expansion; it did not sanction the concessional tariff benefit under Clause 16(a). Under Rule 27, sanction and disbursal of incentives required approval by the competent authority, and no such sanction for Clause 16(a) had been granted. Since Clause 16(a), properly construed, was never meant for existing industrial enterprises undergoing substantial expansion, promissory estoppel could not be invoked to create an entitlement contrary to the true scope of the Policy. The respondent had already received the benefit legitimately available to its category under Clause 16(b), and no enforceable equity survived in its favour.

As observed in J.K. Udaipur Udyog Ltd. [2004 (9) TMI 381 - SUPREME COURT]​​​​​​​ and other cases as discussed above, what is granted under an incentive scheme may ordinarily be withdrawn or regulated in public interest unless the Government is precluded from doing so on the ground of promissory estoppel. In the facts of the present case, we find no satisfactory ground of enforcing equity under promissory estoppel in favour of the respondent.[Paras 59, 60, 61, 62, 63]

No right to the concessional tariff under Clause 16(a) accrued to the respondent, and the plea of promissory estoppel was rejected.

Final Conclusion: The appeal was allowed. The Court held that the concessional tariff benefit under Clause 16(a) was confined to new industrial enterprises, the amendment of 29.04.2022 to that extent was clarificatory and retrospective, and the respondent, having already received the rebate available under Clause 16(b), could not invoke promissory estoppel to claim any further electricity concession.

Negotiable Instruments Act - Dishonour of cheque - Scope of Conviction under Section 138 - absence of a specific averment in the complaint regarding the power of attorney holder's direct personal knowledge of the transaction - Failure of justice under Section 465 CrPC - Sentencing in cheque dishonour.

Whether conviction under Section 138 of the Negotiable Instruments Act was liable to be reversed merely because the complaint filed through the complainant's power of attorney holder did not plead her direct personal knowledge of the transaction? - HELD THAT: - The Court held that the objection related only to an irregularity in the institution of the complaint and had to be tested on the touchstone of failure of justice under Section 465 CrPC. The petitioner had not challenged the order taking cognizance at the earlier stage, and during trial the complainant himself entered the witness box and deposed regarding the transaction, with full opportunity of cross-examination being afforded to the petitioner. In these circumstances, no actual failure of justice was shown to have been caused by the omission in the complaint, and the decisions relied on by the petitioner concerning pleadings as to the power of attorney holder's personal knowledge were held inapplicable to a case where the objection was not promptly raised and the complainant himself gave evidence at trial. [Paras 6, 7, 9, 10, 11]

The challenge to the conviction on the ground of incompetence of the power of attorney holder to institute the complaint was rejected, and the concurrent finding of guilt was sustained.

Sentencing in cheque dishonour - HELD THAT: - Having regard to the nature and gravity of the offence, the Court found it appropriate to reduce the sentence of simple imprisonment. While affirming the conviction and leaving intact the directions for payment of compensation and the default clause, the substantive custodial sentence was modified to imprisonment till the rising of the court. [Paras 12]

The sentence of six months' simple imprisonment was reduced to imprisonment till the rising of the court, while the remaining part of the sentence was left undisturbed.

Final Conclusion: The revision failed on the challenge to the conviction, as the defect alleged in the complaint filed through the power of attorney holder was held to be a curable irregularity that had caused no failure of justice. The conviction and compensation were upheld, with only the substantive sentence being reduced to imprisonment till the rising of the court.