TMI Tax Updates e-Newsletter
Jun 03,2026

Scope of application seeking Grant of anticipatory bail - summons issued for alleged fraudulent availment of Input Tax Credit without actual supply of goods- Custodial interrogation - HELD THAT: - The Court found that the case involved allegations of suspicious transactions with multiple high-risk suppliers and fraudulent availment of Input Tax Credit without actual supply of goods. It observed that the relevant entries and books of account would require examination and, in the peculiar facts and circumstances, held that the reasons on which the High Court had granted pre-arrest bail did not justify such protection. The Court therefore accepted the need for custodial interrogation to ascertain the truth and secure production of documents. [Paras 3, 5, 6]

The order granting anticipatory bail was set aside, and the respondent was directed to be taken into custody in the present case, without prejudice to his right to apply for regular bail.

Final Conclusion: The appeal was allowed and the High Court's order granting anticipatory bail was set aside. The respondent was directed to be taken into custody in the present case for custodial interrogation, while leaving open his remedy to seek regular bail.

Entitlement to Opening of the GST portal and consequential revocation of cancellation of registration on depositing the dues and complying with the requisite formalities - Cancellation of registration arose from non-submission of returns for consecutive months - HELD THAT:- On the petitioner's undertaking to deposit the entire tax, interest, late fee and penalty and comply with the required formalities, the Court directed reopening of the portal within seven days, payment within seven days thereafter, and revocation of cancellation of GST registration upon such compliance; failing compliance, the order was not to be given effect to.

Maintainability of writ petition - Alternate statutory remedy in GST adjudication - Distinct scope of proceedings under sections 73 and 74 of the CGST Act - Reappreciation of evidence - Pre-deposit - Opportunity to produce additional evidence - HELD THAT: - The Court held that sections 73 and 74 operate in different arenas and rest on altogether different considerations. Consequently, exoneration in proceedings under section 73 could not, by itself, preclude the Central GST authorities from proceeding under section 74 on the basis of the material before them. The Court further held that scrutiny, appreciation and reappreciation of the material placed in response to the show cause notice fall within the domain of the competent and appellate authorities, and the appellate remedy was wide enough to permit reconsideration of the evidence and, if required, additional evidence. The burden of statutory pre-deposit was not a ground to bypass the statutory appeal and invoke writ jurisdiction. [Paras 10, 11, 13, 14, 15]

The petitioner was relegated to the statutory appellate remedy and the writ petition was dismissed.

Final Conclusion: The Court declined to exercise writ jurisdiction against the adjudication order, holding that the controversy turned on matters open to examination in appeal and that proceedings under sections 73 and 74 were distinct. The petition was accordingly dismissed, leaving it open to the petitioner to pursue the statutory appeal on merits.

Entitlement to interim pre-arrest bail in connection with summons issued under Section 70 - HELD THAT:- The bail application was disposed of by directing the applicant to appear before the investigating authority, granting interim pre-arrest protection subject to conditions, and providing that if arrested he be produced before the competent court the same day for consideration of regular bail.

Entitlement to bail in a case alleging corruption, criminal conspiracy and acceptance of illegal gratification arising from CGST search proceedings -Charge-sheet not a standalone ground for bail - Prima facie circumstantial evidence of demand and facilitation of illegal gratification - HELD THAT: - In Netsity Systems (P) Ltd. v. State (NCT of Delhi) [2025 (9) TMI 1804 - SUPREME COURT], the Hon’ble Supreme Court was deciding twin appeals against a final order passed by the High Court of Delhi by which the petitions filed against an Order passed by the Additional Sessions Judge upholding the grant of bail to the accused persons by the Additional Chief Metropolitan Magistrate were dismissed by the High Court. The accusation against the accused husband and his co-accused wife was that they had taken Rs. 1,90,00,000/- and promised to transfer certain land in favour of the appellant. However, it was subsequently discovered that the said land had not only been previously mortgaged but had also been sold to a third-party. Both the accused had filed pre-arrest bail applications bearing Bail Applications, which had been dismissed by the Session Court. Thereafter, the private respondents approached the High Court seeking anticipatory bail, which granted them interim protection, which continued for almost four years, during which the matter was referred to mediation. In the course of the mediation proceedings, the private respondents gave an undertaking to pay Rs. 6,25,00,000/- to the appellant.

The Court held that filing of the charge-sheet, pendency of sanction against another accused, the length of the witness list, or the possibility of a prolonged trial could not by themselves justify bail. On the material placed, there was a prima facie chain showing the applicant's involvement: intercepted communications regarding settlement and quantified amounts, his presence at the meeting place fixed for transfer of the bribe money, recovery of seized firm records from a room near the garage of his residence, and the prosecution case that the recovered amount represented the share of all accused persons including him. The Court rejected the submission that the matter reflected only a lapse in official duty or that liability rested only on the co-accused from whose car the money was recovered, observing that even a public servant who does not directly receive the bribe can be tried if his role in the conspiracy and facilitation is prima facie disclosed. In these circumstances, the Court found a prima facie case of active participation in the alleged offences and declined to exercise bail discretion. [Paras 40, 49, 50, 51, 52]

The applicant was not entitled to bail and the bail application was rejected.

Final Conclusion: On the material collected during investigation, the Court found a prima facie case of active involvement of the applicant in the alleged corruption conspiracy and held that the filing of the charge-sheet or likely delay in trial did not warrant bail. The bail application was accordingly rejected.

Validity of the arrest, detention and remand - non-supply of the grounds of arrest - Habeas corpus against judicial remand - remand order passed mechanically without application of mind - Arrest under CGST Act -HELD THAT: - The Court applied the earlier decision in Hari Shankar Sharma [2026 (5) TMI 1805 - ALLAHABAD HIGH COURT], reproduced in the order, and noted that the averments in the writ petition were not controverted by the respondents. In the quoted decision, it had been held that the arrest memo did not show that the grounds of arrest were supplied as an annexure, the separate grounds of arrest did not bear the required system-generated identification, and the record did not establish due service of the material on the arrestee. The remand order was found to have been passed in a casual and mechanical manner without examining whether the statutory and constitutional safeguards attending arrest had been complied with. On that reasoning, the Court held that a habeas corpus petition remained maintainable despite judicial remand, since the remand itself was without application of mind, and the arrest, detention and remand were therefore illegal.

The remand order, detention and arrest were held illegal and the remand order was quashed, while leaving it open to the respondents to proceed afresh in accordance with law.

Final Conclusion: Following its earlier decision in the co-accused's case and in the absence of any controversion by the respondents, the Court held the petitioner's arrest, detention and judicial remand to be illegal and quashed the remand order. The respondents were left free to proceed afresh in accordance with law.

Imposition of Late Fee under Section 47 of the respective GST enactments in excess - belated filing of "Annual Return" in Form GSTR-9 - Amnesty Notification - General penalty in addition to late fee - authorities imposed both "Late Fee" under Section 47(2) and "General Penalty" under Section 125 of the respective GST Enactments for the same default - HELD THAT: - The Court held that the controversy stood covered by the earlier order of this Court in Ms. Kandan Hardware Mart [2026 (1) TMI 383 - MADRAS HIGH COURT]. Applying that decision, it held that where delayed filing of the annual return attracts a specific late fee, levy of general penalty cannot be sustained, and the late fee could not be demanded in excess of the limit recognised in that decision. On that basis, the demand of late fee beyond Rs. 10,000 each under the CGST and SGST enactments and the general penalty imposed under the impugned order were held unsustainable. [Paras 6]

The impugned order was set aside to the extent it imposed late fee in excess of the permissible limit and general penalty, while directing the petitioner to pay the admitted tax liability within the time granted.

Final Conclusion: Following the earlier decision of this Court, the writ petition was disposed of by setting aside the levy of late fee beyond the permissible limit and the general penalty under the impugned order. The petitioner was, however, directed to pay the admitted tax liability, with consequential directions regarding bank attachment and further recovery proceedings.

Anti-profiteering - Statutory mandate under Section 171 -Commensurate reduction in prices on GST rate reduction - Prospective operation of interest liability on profiteered amount - Prospective operation of penal provisions - Compensatory interest - Consumer welfare fund - Respondent failed to pass on the benefit of reduction of GST on cinema admission tickets priced at Rs.100 or less from 18% to 12% by way of commensurate reduction in prices.

Anti-profiteering on cinema admission tickets - Commensurate reduction in prices - HELD THAT: - The Tribunal held that Section 171(1) imposed a statutory obligation to pass on the benefit of tax reduction to recipients by a corresponding reduction in price. On the unrebutted DGAP material, the respondent increased the base price of tickets after 01.01.2019 so as to maintain the same cum-tax price, thereby denying consumers the benefit of the reduced GST rate. The Tribunal further held that any permission granted under the State regulatory framework to collect proposed fares was conditional and could not override the mandate of commensurate reduction under the CGST Act. In the absence of any material showing compliance with the conditions of such permission, and in view of the Telangana High Court decision in Sudarshan Theatre 35MM v. Union of India [2024 (7) TMI 1024 - TELANGANA HIGH COURT], the respondent's conduct amounted to profiteering. [Paras 20, 24, 25]

Profiteering in contravention of Section 171 was established.

Computation of profiteered amount - Inclusion of GST in profiteered amount - HELD THAT: - The Tribunal accepted the computation founded on the increase in base price during the period of investigation and held that, since the excess consideration collected from recipients was inclusive of GST, the amount to be returned necessarily included the GST component as well. It reasoned that GST charged on the additional realization was not lawfully due and therefore formed part of the profiteered amount. Relying on Reckitt Benckiser India Pvt. Ltd. v. Union of India [2024 (1) TMI 1248 - DELHI HIGH COURT], the Tribunal upheld the total profiteered amount determined by the DGAP. [Paras 27, 28, 29, 45]

The DGAP's computation was accepted and the total profiteered amount inclusive of GST was determined.

Ex parte adjudication - Due service of notice - HELD THAT: - The Tribunal recorded that copies of the DGAP report and hearing notices were served through multiple modes, including through the jurisdictional Commissionerate, and service was confirmed. Despite adequate opportunity and compliance with principles of natural justice, the respondent did not contest the proceedings or furnish material to rebut the DGAP findings. The Tribunal therefore proceeded on the basis of the available record and treated the DGAP findings as unrebutted. [Paras 32, 33, 34, 35, 36]

The proceedings were rightly adjudicated ex parte on the available material.

Interest on profiteered amount - Prospective operation of delegated legislation - HELD THAT: - The Tribunal held that the provision for interest under Rule 133(3)(c) was inserted with effect from 28.06.2019 and could operate only prospectively. Referring to DGAP v. Proctor & Gamble Group [2025 (9) TMI 732 - GSTAT NEW DELHI], which in turn noticed Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT (LB)], it held that interest could not be imposed for the period prior to the coming into force of the provision. Since the profiteering period extended beyond 28.06.2019, interest at 18% per annum was directed only from that date until actual refund or deposit. [Paras 38, 39, 40, 41]

Interest was payable at 18% per annum only from 28.06.2019 till the date of actual refund or deposit.

Penalty for profiteering - Prospective operation of penal provision - HELD THAT: - The Tribunal held that Section 171(3A), having been brought into force only from 01.01.2020, could not be applied retrospectively to conduct alleged during 01.01.2019 to 30.09.2019. Applying the settled principle that penal provisions operate prospectively unless expressly made retrospective, it declined to impose penalty notwithstanding the finding of profiteering. [Paras 42, 43, 44]

No penalty under Section 171(3A) was leviable.

Final Conclusion: The Tribunal held that the respondent had profiteered by retaining the benefit of the GST rate reduction on cinema admission tickets during 01.01.2019 to 30.09.2019 and upheld the computed profiteered amount inclusive of GST. It directed deposit of the amount in the Consumer Welfare Funds with interest only from 28.06.2019, while holding that no penalty was leviable for the period in question.

Validity of notice u/s 148 issued post Faceless Reassessment Scheme - mandatory issuance of notices through automated allocation under the Faceless Reassessment Scheme - jurisdictional competence to issue notice - notice issued by Jurisdictional Assessing Officer without faceless allocation

HELD THAT:- These matters are covered by our order passed in [2026 (5) TMI 54 - SC ORDER (LB)] and connected matters, read with order [2026 (5) TMI 855 - SC ORDER] passed with connected matters.

The petitions are, thus, disposed of in the same terms. The matters are remitted to the High Court to be decided accordingly.

All pending applications, if any, also stand disposed of.

Review petition filed with substantial delay and without curing defects - Tax Deducted at Source - External Development Charges (EDC) - obligation to withhold TDS under Section 194-I - characterisation of payment (nature of payment) - curability of erroneous statutory reference in taxing orders

HELD THAT:- Review Petition is defective. The defects were notified to the learned counsel but the same have not been cured.

There is a delay of 573 days in filing this Review Petition which has not been satisfactorily explained.

Even otherwise, having carefully gone through the Review Petition, the order under challenge and the papers annexed therewith, we are satisfied that there is no error apparent on the face of the record or any merit in the Review Petition, warranting reconsideration of the order impugned. [2024 (4) TMI 208 - SC ORDER]

Accordingly, the Review Petition is dismissed both on the ground of delay as well as on merits.

Salary income under tax treaty - Per-diem received for overseas employment in India - Treaty override under section 90 - Article 16 of India-UK DTAA - Per-diem for employment exercised in UK - Non-resident employee -amount has been paid to the assessee by virtue of his assignment with Ernst & Young UK during the period in which the assessee was a non-resident.

HELD THAT: - The Tribunal found that the assessee was assigned to work in the United Kingdom for the relevant period, had stayed in India for less than the prescribed period, and had also produced the United Kingdom tax residency certificate. It held that the only surviving dispute concerned the per-diem amount received in India during such overseas assignment. Since that amount was received by virtue of employment exercised in the United Kingdom, Article 16(1) of the India-UK DTAA applied, and by operation of section 90, such remuneration, if taxable, was taxable in the United Kingdom and not in India. On that basis, the addition made by treating the disputed amount as taxable in India was held unsustainable. [Paras 7]

The addition made on account of the per-diem and the related salary adjustment was deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the per-diem received for employment exercised in the United Kingdom by the assessee, being a non-resident, was not chargeable to tax in India under Article 16(1) of the India-UK DTAA read with section 90. The impugned addition was accordingly deleted.

Transfer pricing adjustment - benchmarking of ITES transactions - Notional interest on delayed receivables from associated enterprises - Arm's length valuation of imported fixed assets

ITES transfer pricing - arm's length price adjustment in the ITES segment - HELD THAT: - The Tribunal held that the facts for the year under appeal were identical to those considered in the assessee's own case [2022 (5) TMI 272 - ITAT DELHI]. It therefore applied the same view already taken by the Tribunal, including the benchmarking approach accepted therein for the ITES segment, and treated the grounds relating to that segment as covered. [Paras 6, 9]

The assessee's challenge to the transfer pricing adjustment in the ITES segment was allowed in terms of the earlier orders in its own case.

Interest on receivables from associated enterprises - Benchmark for delayed receivables - transfer pricing adjustment on account of alleged delay in realization of receivables from the associated enterprise - HELD THAT: - The Tribunal found that this issue also stood covered by the earlier order in the assessee's own case[2022 (5) TMI 272 - ITAT DELHI]. Following that decision, it adopted the direction that interest on receivables beyond 90 days be benchmarked by applying 3 months average Euribor plus 200 basis points, instead of sustaining the adjustment as made by the transfer pricing authorities. [Paras 7, 9]

The adjustment on delayed receivables was allowed in favour of the assessee on the same basis as directed in the earlier year.

Valuation of imported fixed assets - Customs value as fair value - arm's length value of fixed assets purchased from the associated enterprise taken at nil where customs authorities had assigned value to the imported assets - HELD THAT: - Following the Tribunal's order in the assessee's own case [2022 (5) TMI 272 - ITAT DELHI], it was held that the fixed assets imported by the assessee could not be assigned a nil value for transfer pricing purposes. The value determined by the customs authorities was accepted as the fair value of the imported fixed assets, and the contrary approach adopted by the transfer pricing authorities was not sustained. [Paras 8, 9]

The transfer pricing adjustment made by taking the value of imported fixed assets at nil was set aside in favour of the assessee.

Final Conclusion: Following its own orders in the assessee's case for the adjacent assessment years, the Tribunal held that the same transfer pricing treatment would govern the year under appeal. The appeal was accordingly allowed in favour of the assessee.

Deduction u/s80P(2)(a)(i) to co-operative credit society providing credit facilities to members - Eligibility of interest income for deduction as profits attributable to business - Distinction between deduction for business income from member-credit activities and deduction for interest from investments with co-operative societies

Deduction to co-operative credit society providing credit facilities to members - Section 80P benevolent construction - Dealings with non-members - The assessee is a co-operative society carrying on borrowing and lending activities only with its members - HELD THAT: - The Tribunal found that the record did not show any dealing by the assessee with non-members. Proceeding on that factual basis, it applied the principle stated in Mavilayi Service Co-operative Bank Ltd. [2019 (9) TMI 782 - SC ORDER] that section 80P is a benevolent provision, that section 80P(4) excludes only co-operative banks of the kind specified therein, and that deduction under section 80P(2)(a)(i) remains available to a co-operative society providing credit facilities to its members, subject only to exclusion of profits attributable to loans advanced to non-members where such cases exist. Since no such dealing with non-members was established here, the claim satisfied section 80P(2)(a)(i). [Paras 12, 13, 15]

Deduction under section 80P(2)(a)(i) was allowable to the assessee on income from its member-credit business.

Eligibility of interest income for deduction as profits attributable to business - Attributable to business of providing credit facilities - Distinction between section 80P(2)(a)(i) and section 80P(2)(d) - HELD THAT: - The Tribunal held that the interest income formed part of the profits attributable to the assessee's business as a credit co-operative society, and therefore fell within the deduction contemplated by section 80P(2)(a)(i). In reaching that conclusion, it relied on the Karnataka High Court decisions in Principal Commissioner of Income-tax, Hubli vs. Totagars Co-operative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT], Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] and Guttigedarara Credit Co-operative Society Ltd. [2015 (7) TMI 874 - KARNATAKA HIGH COURT] which had considered the Supreme Court decision in Totgars, Co-operative Sale Society Ltd.[2010 (2) TMI 3 - SUPREME COURT] . The Tribunal further held that the decisions cited by the Revenue concerning deduction under section 80P(2)(d) dealt with a different statutory question, namely whether interest from investments with a co-operative bank qualified under that clause, and therefore had no application to a claim under section 80P(2)(a)(i). [Paras 16, 18, 20]

The assessee was held entitled to deduction on the interest income as well, and the contrary reliance on authorities dealing with section 80P(2)(d) was rejected.

Final Conclusion: The Tribunal deciding the merits held that the assessee was entitled to deduction under section 80P(2) on income from providing credit facilities to members, including the interest income held attributable to that business. The Revenue's reliance on decisions concerning section 80P(2)(d) was held misplaced, and both appeals were allowed.

Rectification limitation from operative reassessment order - DTVSV settlement and continued legal existence of reassessment order - Capital or revenue character of fertilizer subsidy under Nutrient Based Subsidy Policy - Pure legal claim in rectification and appellate proceedings without revised return - Exclusion of non-taxable capital receipt from book profit u/s 115JB

Rectification limitation from operative reassessment order - DTVSV settlement and continued legal existence of reassessment order - limitation for rectification to be reckoned from the reassessment order, and settlement of the reassessment dispute under the DTVSV Scheme did not render that reassessment order non est - HELD THAT: - The Tribunal held that the DTVSV Act is only a dispute-resolution mechanism and does not extinguish or efface the assessment or reassessment order itself. What stands settled is the tax dispute covered by the declaration; the order continues to exist for collateral and incidental purposes. Once the reassessment order was passed, it became the latest operative order, and under the doctrine of merger limitation under section 154(7) had to run from that order and not from the original assessment. The rectification application filed after the reassessment was therefore within time. The Tribunal also noted that the Assessing Officer had in fact entertained the same rectification application and granted relief on another component, which was inconsistent with treating the application itself as time-barred. [Paras 9, 10, 11, 12, 16]

The finding that the rectification application was barred by limitation, or that the reassessment order had ceased to exist because of DTVSV settlement, was set aside.

Pure legal claim in rectification and appellate proceedings without revised return - Mistake of law apparent from record - whether assessee was entitled to raise the claim that the fertilizer subsidy was a capital receipt in rectification and appellate proceedings, notwithstanding that no revised return had been filed, because the claim was purely legal and rested on facts already on record? - HELD THAT: - The Tribunal explained that section 154 is not confined to clerical or arithmetical errors and can extend to a mistake of law apparent from the record where no fresh factual enquiry is needed. Here, the subsidy receipt, the governing scheme, the accounting treatment and the relevant foundational facts were already part of the record; only the correct legal character of the receipt was in issue. In such a case, absence of a revised return did not bar adjudication. The restriction in Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] was held inapplicable to appellate authorities and could not justify taxation of a receipt contrary to law. The same principle also governed the Revenue's objection for assessment year 2014-15, where the Assessing Officer had examined the scheme on merits but rejected relief only on a technical ground. [Paras 13, 14, 22, 30, 31]

The subsidy claim was maintainable in rectification and appellate proceedings, and the technical objection based on non-filing of a revised return was rejected.

Capital or revenue character of fertilizer subsidy under Nutrient Based Subsidy Policy - Purpose test for subsidy characterization - Exclusion of non-taxable capital receipt from book profit under section 115JB - HELD THAT: - Applying the settled purpose test, the Tribunal found that the dominant object of the Nutrient Based Subsidy Policy was not reimbursement of operational cost or supplementation of trading profits, but modernization, balanced fertilization, product innovation, competitiveness, fresh investment and long-term strengthening of the indigenous fertilizer industry. Those objectives were structural and developmental in character, and therefore the subsidy assumed the character of a capital receipt. The Tribunal also relied on consistency with the earlier order in the assessee's own case on the same policy. Having held that the receipt was not income in law under the normal provisions, the Tribunal further held that it could not be brought to tax through the machinery of section 115JB, since a non-taxable capital receipt cannot be artificially treated as book profit income. [Paras 28, 29, 32, 33, 34]

The subsidy was held to be a capital receipt; for assessment year 2012-13 the claim was directed to be allowed, and for assessment year 2014-15 the relief granted by the CIT(A), including exclusion from book profit under section 115JB, was upheld.

Final Conclusion: For assessment year 2012-13, the assessee's rectification application was held to be within limitation and maintainable, and the claim that the fertilizer subsidy was a capital receipt was directed to be allowed. For assessment year 2014-15, the order granting the same treatment to the subsidy, including its exclusion from book profit under section 115JB, was upheld; accordingly, the assessee's appeal was allowed and the Revenue's appeal was dismissed.

Unexplained money u/s 69A - Cash deposits during demonetisation in money transfer business - Business correspondent deposits on behalf of customers

Cash deposits in M-Pesa money transfer business - Business correspondent acting under RBI guidelines - Section 69A addition for customer cash collections - Cash deposits received by the assessee in the course of acting as a business correspondent for Vodafone M-Pesa and thereafter transferred to the respective M-Pesa accounts treated as unexplained money - HELD THAT: - The Tribunal found from the agency agreement, Form No. 26AS and the nature of the assessee's business that he was functioning as a business correspondent or regulated entity for Vodafone M-Pesa, receiving cash from customers, depositing it in his bank account and thereafter transferring it to the respective M-Pesa accounts while earning only commission income on such transactions.

Tribunal held that these deposits were made in the normal course of the authorised money transfer business and, in light of the RBI circulars and the agency arrangement, the cash so deposited could not be regarded as unexplained u/s 69A. Following the co-ordinate bench decisions on similar facts Suraj Somaru Varma [2025 (9) TMI 1803 - ITAT MUMBAI] and Mahamedsuhel Abdulkadir Kaduji [2025 (11) TMI 2007 - ITAT SURAT] Tribunal held that the addition sustained by the appellate authority was unsustainable. [Paras 7]

The addition made in respect of the cash deposits was deleted and the assessee's appeal was allowed.

Final Conclusion: The Tribunal held that the impugned cash deposits were customer collections received and routed in the ordinary course of the assessee's authorised money transfer business, and therefore could not be assessed as unexplained money. The addition was deleted and the appeal was allowed.

Proportionate deduction u/s 80IB(10) for housing project - Deduction for approved housing project on land acquired in stages - Section 14A in absence of exempt income - Disallowance of personal use expenses in case of company - Incriminating material in unabated search assessment - Notional rent on unsold stock in search assessment

Proportionate deduction u/s 80IB(10) for housing project - Approval in name of previous owner - Retrospective operation of enhanced commercial area limit - acquisition of the project land in two stages, approval standing in the name of the previous owner, existence of units exceeding the prescribed built-up area, and the objection regarding commercial area - HELD THAT: - The Tribunal held that the provision requires an undertaking engaged in development and construction of a housing project approved by the local authority, and does not mandate that the entire land must be acquired in one transaction. Since the land first acquired itself exceeded one acre, the deduction could not be denied on that ground. Where there are multiple approvals, the date of the first approval governs; therefore, the later revised approval did not defeat eligibility, and approval obtained by the previous owner also did not matter because the assessee purchased the land along with the approved plan. As to the alleged commercial area, the Assessing Officer had not quantified it, and the approved plan showed only convenient shopping; the Tribunal further held that the enhanced limit introduced for commercial area was clarificatory and retrospective for projects approved on or before the cut-off date. For units exceeding 1000 square feet, the Tribunal accepted that exclusion of such larger units still left a qualifying project satisfying the statutory conditions, and therefore deduction was allowable on a proportionate basis in respect of the eligible residential units. [Paras 3]

The disallowance of deduction was reversed to the extent of the eligible portion, and proportionate deduction was directed to be allowed.

Section 14A in absence of exempt income - HELD THAT: - The Tribunal recorded that absence of exempt income was undisputed and applied the settled principle that section 14A cannot be invoked in such a case. [Paras 4]

The disallowance under section 14A was deleted.

Disallowance of personal use expenses in case of company - Ad hoc disallowance of motor car expenses and depreciation - An ad hoc disallowance of vehicle repairs, maintenance and depreciation on the footing of personal use by directors in the case of a company. - HELD THAT: - The Tribunal held that personal expenditure cannot be attributed to a company and therefore the ad hoc disallowance made on the assumption of personal use of company-owned vehicles by directors could not stand. [Paras 5]

The ad hoc disallowance of vehicle-related expenditure and depreciation was deleted.

Incriminating material in unabated search assessment - Addition for bogus purchases in section 153A assessment - HELD THAT: - The Tribunal noted that the assessment year was unabated on the date of search and therefore could be disturbed only on the basis of incriminating material found during the search. The appellate finding that no such incriminating material existed for the year under consideration or for the impugned bogus purchase addition was not rebutted by the revenue. On that basis, the deletion of the addition was upheld. [Paras 7]

The deletion of the addition for alleged bogus purchases was affirmed.

Notional rent on unsold stock in search assessment - Absence of incriminating material - Addition of notional rent on unsold completed construction held as stock could made in the search assessment for an unabated year without incriminating material on that issue - HELD THAT: - The Tribunal upheld the appellate finding that no incriminating material was found during search concerning the proposed notional rental addition for the relevant unabated year. In the absence of any contrary material from the revenue, the addition could not survive in proceedings under section 153A. [Paras 8]

The deletion of the notional rent addition was sustained.

Final Conclusion: The assessee's appeal for AY 2010-11 was partly allowed by granting proportionate deduction for the eligible housing project and deleting the disallowances under section 14A and on account of vehicle expenses and depreciation. The revenue's appeal for AY 2011- 12 was dismissed, the Tribunal holding that in the absence of incriminating material no additions for alleged bogus purchases or notional rent could be sustained in the unabated search assessment.

Deduction u/s 80IB - Deduction for cold chain business profits - Interest on mandatory fixed deposits linked to subsidy - Business income versus income from other sources

Deduction for cold chain business profits - Interest on mandatory fixed deposits linked to subsidy - Business income versus income from other sources - Interest earned on fixed deposits created compulsorily under the subsidy sanction conditions for the cold chain facility eligibility for deduction u/s 80IB(11) - HELD THAT: - The Tribunal found from the subsidy sanction letter that the fixed deposits were not made as an investment or savings arrangement, but were mandatorily required under the governmental, banking and RBI conditions for availing the subsidy. Since the subsidy amount was not directly adjusted against the loan account and had to be parked in fixed deposits under those conditions, the resulting interest had a direct nexus with the assessee's business activity of operating the cold chain facility. On that footing, the interest could not be assessed as income from other sources and had to be treated as business income. Applying the same principle, the Tribunal held that such interest formed part of the profits eligible for deduction under section 80IB(11). [Paras 10, 11]

The disallowance of deduction on the fixed deposit interest was deleted and the Assessing Officer was directed to allow deduction under section 80IB(11) on that amount.

Erroneous addition of non-business interest items - Factual mistake in disallowance - additions relating to alleged savings bank interest and interest on income-tax refund - HELD THAT: - The Tribunal recorded that the addition of savings bank interest was factually incorrect because the assessee-company did not have a savings bank account in its name. It further found that no deduction had been claimed by the assessee in respect of the interest on income-tax refund. On these recorded facts, both items were directed to be deleted. [Paras 11]

The additions relating to savings bank interest and interest on income-tax refund were deleted.

Final Conclusion: The Tribunal allowed the appeal. It held that interest on fixed deposits compulsorily created under the subsidy conditions formed part of the assessee's business income and qualified for deduction under section 80IB(11), and it also deleted the separate additions made on account of savings bank interest and interest on income-tax refund.

Fair market value of unquoted shares - Section 50CA deemed consideration - Rule 11UA valuation of unrealisable assets - Commercial reality in distress auction valuation - Beneficial ownership of assets - Distress auction under insolvency process -

Computation of fair market value of unquoted shares transferred by the assessee, where the company whose shares were sold had substantial balance-sheet assets that were unrealizable or not beneficially available to the assessee due to insolvency proceedings and contractual stipulations in the share purchase agreement - HELD THAT: - The Tribunal held that the AO had applied Rule 11UA mechanically by adopting book figures without examining whether the underlying assets had any real economic value or were capable of realization. It found from the insolvency records, auction material and valuation documents that major receivables, investments, immovable assets and advances were commercially worthless or unrealizable, since the concerned entities were themselves under insolvency or liquidation.

Tribunal further held that Clause 3.2.1 of the Share Purchase Agreement was material, as specified realizations were contractually payable to the company under liquidation and did not belong beneficially to the assessee. In that view, such assets could not be loaded into the valuation merely because they appeared in the balance sheet.

The expression fair market value was held to require a realistic and commercially viable valuation, and the deeming fiction under Section 50CA could not be extended to tax hypothetical gains. Since the shares had been acquired shortly earlier in an NCLT-supervised distress auction and there was no improvement in the financial position of the company, the auction-discovered price was treated as the more reasonable basis for valuation. [Paras 41, 42, 43, 44, 45]

The fair market value adopted by the Assessing Officer at the higher book-value based figure was rejected, and the Assessing Officer was directed to recompute the capital gains by adopting the fair market value at the contemporaneous acquisition price discovered in the NCLT-supervised auction, namely Rs. 3.59 per share.

Final Conclusion: The Tribunal partly modified the appellate order and held that, for the transfer of the unquoted shares in question, valuation under Section 50CA read with Rule 11UA could not be made on a purely book-value basis ignoring insolvency realities and lack of beneficial ownership in certain assets. The capital gains were directed to be recomputed by taking the fair market value at the auction-discovered acquisition price of Rs. 3.59 per share.

Exemption u/s 11 - Dominant purpose test - Charitable trust engaged in education and relief to the poor - Incidental income from letting out hall or auditorium- scope of proviso to section 2(15) - Scope of section 11(4A) - Consistency in assessee's own case

Exemption u/s 11 denied to the assessee-trust merely because substantial receipts arose from letting out its hall and auditorium - HELD THAT: - The Tribunal held that the controversy had to be examined from the true and dominant character of the institution, its objects, actual activities and the manner of application of income, and not by isolating one stream of receipts. On the material on record, the trust was found to be predominantly engaged in structured educational programmes, scholarships, library and research activities, and welfare measures for weaker sections, thereby falling within the charitable limbs of education and relief to the poor, and not within the residuary limb of general public utility.

The auditorium and allied facilities formed part of the property held under trust, and the receipts derived therefrom were applied towards maintenance of the trust property and its charitable activities, with no allegation of diversion for private benefit or profit motive.

Tribunal held that the AO had committed a conceptual error in treating the proportion of hall receipts as conclusive, since the source of income cannot be equated with the objects of the trust, and substantial receipts from one source do not by themselves convert the trust into a business concern.

As the hall was let out only when not required for trust activities and the receipts were used to sustain subsidised or free educational and welfare programmes, the activity remained merely incidental and ancillary to the charitable objects. The restrictive proviso to section 2(15) was held inapplicable because the assessee was engaged in per se charitable categories, and section 11(4A) was also held not attracted. Tribunal further noted that on materially identical facts in earlier years the assessee's claim had been consistently accepted, and no change in objects, activities or factual pattern had been shown by the Revenue. [Paras 28, 29, 30, 31, 32]

The order deleting the addition was upheld, and the receipts from letting out the hall and auditorium were held not to be business income disentitling the assessee from exemption under section 11.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the grant of exemption under section 11. It held that the assessee remained a charitable trust engaged predominantly in education and relief to the poor, and that receipts from letting out the hall and auditorium were only incidental to its charitable objects and could not be treated as business income for invoking section 11(4A) or the proviso to section 2(15).

Nature of land sold - Agricultural land v/s capital asset - Applicability of deeming valuation u/s 50C - Taxability of alleged on-money from sale of agricultural land - Consistency in treatment of co-owners in same land transaction

Nature of land sold - Agricultural land outside capital asset - Consistency in treatment of co-owners - whether land sold by the assessee was agricultural land situated beyond the specified municipal limits and therefore did not constitute a capital asset for levy of capital gains? - HELD THAT: - The Tribunal found from the Talati certificate, 7/12 extracts, Google Map and details of agricultural produce that agricultural operations were being carried out on the land and that it retained its agricultural character up to the date of transfer. It held that the Assessing Officer was not justified in treating the land as non-agricultural merely because the purchaser was a company or because permission for industrial use may later have been sought under local land laws. The relevant test was the character and location of the land on the date of sale. The Tribunal also treated as significant that, in the case of co-owners arising from the same transaction, the Revenue had accepted the very same land as agricultural land; in the absence of distinguishing facts, inconsistent treatment in the assessee's case was not permissible. On that basis, the addition under the head long-term capital gain was unsustainable. [Paras 16, 17, 18, 19, 20]

The addition made on account of long-term capital gain was deleted and the assessee's claim that the land was not a capital asset was accepted.

Applicability of deeming valuation u/s 50C - Reverse calculation of stamp value - HELD THAT: - The Tribunal held that the deeming fiction under section 50C applies only where the asset transferred is a capital asset. Since the land had already been held to be agricultural land outside section 2(14), section 50C had no application.

Tribunal additionally noted that the AO had worked out the stamp valuation only by reverse calculation from the stamp duty amount, without direct adoption of a value from the stamp authority. It further observed that any enhanced stamp duty treatment under local land laws for intended industrial use could not determine the nature of the land under the Income-tax Act. The absence of any such addition in the case of co-owners from the same transaction reinforced the impropriety of the addition. [Paras 21, 23, 24, 25, 26]

The invocation of section 50C was held inapplicable and the addition founded on deemed stamp duty valuation was deleted.

Taxability of alleged on-money from sale of agricultural land - Addition under section 69A on alleged cash receipt - HELD THAT: - The Tribunal held that once the underlying land transaction was found to relate to agricultural land not constituting a capital asset, the source of the alleged cash receipt was the same exempt transaction. Applying the principle stated in ACIT vs. Kamlesh Kumar Rathi [2023 (5) TMI 736 - ITAT DELHI], it held that where the sale itself is of agricultural land outside the charging provision for capital gains, any alleged on-money arising from that very sale partakes of the same character and cannot be brought to tax separately. On that reasoning, the addition for unexplained money based on alleged cash receipt from the land sale could not survive. [Paras 28, 29, 30, 31, 32]

The addition under section 69A read with section 115BBE on account of alleged on-money was deleted.

Final Conclusion: The Tribunal partly allowed the appeal. It held that the land sold was agricultural land outside the definition of capital asset, deleted the capital gains addition, held section 50C inapplicable, and also deleted the separate addition made for alleged on-money from the same transaction.

Notice u/s. 143(2) issued by non jurisdictional AO -Challenge to Assessing Officer's jurisdiction - Bar under section 124(3) to belated objection - Unexplained money addition

Notice u/s. 143(2) issued by non jurisdictional AO -HELD THAT: - The Tribunal noted from the record that the officer who issued the notice had himself expressed inability to complete the assessment and had sought transfer of jurisdiction, and that the case was thereafter transferred under section 127. Even so, the determinative consideration was that, under section 124(3)(a), an objection to the jurisdiction of the Assessing Officer had to be raised within the prescribed time from service of notice or before completion of assessment. Since no such objection was taken during assessment proceedings or before completion of the assessment, and the point was raised only by way of additional ground before the Tribunal, the challenge stood barred. [Paras 10]

The additional ground questioning the validity of the notice and assessment on jurisdictional grounds was rejected as barred by section 124(3)(a).

Unexplained money - Cash found in possession of assessee - Cash book not supporting availability of cash on date of seizure - HELD THAT: - The Tribunal found that, although the cash book showed sufficient balance on an earlier date, the last entry therein was several days before the cash was found. There were no entries for the intervening period, and the cash book therefore did not show that the firm had the requisite balance on the date of seizure or that the assessee had withdrawn that cash for purchase of machinery parts. On that basis, the explanation that the cash belonged to the firm remained unsubstantiated. [Paras 11]

The addition under section 69A was upheld on merits.

Final Conclusion: The appeal was dismissed. The Tribunal held that the objection to the issuing officer's jurisdiction was barred for having been raised belatedly, and it also affirmed the addition on the ground that the cash book did not support the assessee's explanation on the relevant date.

Addition u/s 69A on differential bank credits - Commission agency sale proceeds and taxable income - Consignment sale proceeds of del-credere commission agent - differential amount between aggregate bank credits and the turnover disclosed in the profit and loss account treated as unexplained money

HELD THAT: - The Tribunal found that the assessee had placed on record audited books of account, cash book, ledger accounts, bank statements, invoices, lorry receipts, commission statements and a reconciliation between bank credits and disclosed turnover. These materials prima facie supported the explanation that a substantial part of the deposits represented circulation of sale proceeds belonging to principal suppliers, out of which only the commission element accrued as the assessee's income and the balance was remitted through banking channels after deducting incidental expenses.

AO had made the addition merely by comparing gross bank credits with disclosed turnover, without pointing out any specific defect in the books, without rejecting the books, and without disproving the reconciliation or bringing contrary material to show that the deposits were the assessee's unaccounted money.

In such circumstances, the statutory requirement for invoking section 69A was not satisfied, since the assessee had offered a supported explanation regarding the nature and source of the deposits. The appellate authority also failed to independently examine the evidentiary material. The addition was therefore held to be unsustainable in law and on facts. [Paras 15, 16, 17, 18, 19]

The addition made u/s 69A on the differential bank credits was deleted.

Final Conclusion: For A.Y. 2020-21, the Tribunal held that the excess of bank credits over disclosed turnover, in the facts of the assessee's del-credere commission agency business, could not be assessed as unexplained money under section 69A. The assessee's appeal was allowed and the addition was directed to be deleted.

Undisclosed foreign income and foreign asset under the Black Money Act - salary earned in Sweden and credited to a foreign bank account - Year of taxability of foreign salary credited to foreign bank account - Article 15 of the India-Sweden DTAA - Treaty protection against charge under the Black Money Act

Undisclosed foreign income and foreign asset under the Black Money Act - Year of taxability of foreign salary credited to foreign bank account - Foreign salary earned in Sweden and credited to a bank account in Sweden - HELD THAT: - The Tribunal held that, on a harmonious reading of sections 2(12), 3 and 4 of the Black Money Act, undisclosed foreign income and foreign asset are to be read together where the income is embedded in a foreign asset. Since the salary earned in Sweden stood credited to the foreign bank account, that account assumed the character of a foreign asset for purposes of the Act. In such a case, the proviso to section 3 became relevant, and the taxability, if any, would arise in the year in which the asset came to the notice of the AO. As the information came to the Department only in November 2021, taxation could not be sustained in AY 2016-17. [Paras 9, 10]

The addition for AY 2016-17 was held unsustainable on the ground that, if taxable at all under the Black Money Act, it could be brought to tax only in the year of detection and not in the year in which the salary was earned.

Article 15 of the India-Sweden DTAA - Treaty protection against charge under the Black Money Act - Salary derived by the assessee from employment exercised in Sweden under a Swedish resident employer chargeable to tax in India OR to be assessed under the Black Money Act - HELD THAT: - The Tribunal held that the case squarely fell under Article 15(1) of the India-Sweden DTAA, since the assessee was a resident of India, the employment was exercised in Sweden, and the employer was a tax resident of Sweden. Clause (2) was found inapplicable because the employer was a resident of Sweden. Applying section 90(2) of the Income-tax Act, the treaty provisions, being more beneficial, prevailed, and the income was held not chargeable to tax in India. The Tribunal further held that non-disclosure could not create a charge where none existed in law, and that the Black Money Act could not be invoked to tax income which, by virtue of the DTAA, was not chargeable in India. [Paras 9, 10]

The Tribunal held that the foreign salary was not taxable in India under the DTAA read with section 90(2), and consequently could not be treated as undisclosed foreign income under the Black Money Act.

Final Conclusion: The Tribunal allowed the assessee's appeals and deleted the additions for AY 2016-17 and AY 2018-19. It held that the foreign salary credited to the Swedish bank account was not taxable in AY 2016-17 under the Black Money Act and, in any event, was not chargeable to tax in India under Article 15 of the India-Sweden DTAA read with section 90(2) of the Income-tax Act.

BIS certification requirement - Misdeclaration of imported goods - customs valuation under transaction value regime - Appellate remedy despite assumption of proper officer functions by superior authority - Tribunal [2026 (3) TMI 1383 - CESTAT MUMBAI], held that the goods were neither prohibited for want of BIS certification nor misdeclared, that the enhanced valuation was unsustainable in law, and that the bills of entry as self-assessed were entitled to be processed for clearance under section 47 -HELD THAT: - Delay was condoned and the appeal was dismissed, the Court finding no error in the view taken by the Customs, Excise and Service Tax Appellate Tribunal [2026 (3) TMI 1383 - CESTAT MUMBAI].

Waiver of show cause notice and personal hearing - Show cause notice before confiscation of goods - Non- compliance with Section 124 - High Court[2025 (11) TMI 2002 - DELHI HIGH COURT], held that the alleged waiver of show cause notice and personal hearing was invalid and that, in any event, non-issuance of notice within the statutory period required release of the seized goods. Release was made subject to payment of applicable customs duty and warehousing charges, with no liability for penalty or redemption fine. - HELD THAT:- Delay was condoned and the Special Leave Petitions were dismissed as no ground for interference with the impugned order of the High Court was found.

Entitlement to the higher rate of duty drawback on export of netted garments - Reversal of CENVAT credit - Inadvertent availment of common input service credit- Doctrine of merger - HELD THAT: - The Court held that the objection founded on prior availment of CENVAT credit was unsustainable once the credit had been reversed on discovery of the mistake, even before initiation of proceedings. Relying on the principle recognised by the Supreme Court in Chandrapur Magnet Wires (P) Ltd. [1995 (12) TMI 72 - SUPREME COURT] and Commissioner of Central Excise and Customs vs. Precot Meridian Ltd. [2015 (11) TMI 323 - SUPREME COURT], the Court treated such reversal as wiping out the availment for the purpose of claiming the higher drawback. The Court also rejected the submission that Precot Meridian lacked binding force, holding that being an order of the Supreme Court, it was binding. Having regard to the export-promoting object of drawback schemes, the Court further held that a hyper-technical approach was unwarranted in the facts of the case. [Paras 7]

The impugned revisional order was set aside and the petitioner was held entitled to the appropriate rate of duty drawback applicable during the relevant period.

Final Conclusion: The writ petition was disposed of by setting aside the revisional order. The Court held that inadvertent CENVAT credit, having been reversed with interest before the show cause notice, did not disentitle the petitioner from the higher duty drawback admissible for the relevant export period.

Entitlement to re-export the seized imported goods - Conditional release pending adjudication - HELD THAT: - The Court declined to examine the merits of the allegations regarding misclassification, undervaluation or violation of minimum import price conditions. It proceeded on the undisputed position that the goods had remained under seizure for more than a year, samples had already been drawn and tested, and no useful purpose would be served by their continued retention. Since the respondents did not seriously object to re-export, the Court directed re-export subject to safeguards, namely execution of bond for the differential duty liability and furnishing of a bank guarantee equivalent to 5% of the re-determined value. [Paras 7, 8, 10, 11]

The petitioner was permitted to re-export the seized goods upon execution of bond for the differential duty payable and furnishing of a bank guarantee equivalent to 5% of the re-determined value.

Final Conclusion: The writ petition was disposed of by directing the respondents to permit re-export of the seized goods, without adjudicating the merits of the seizure allegations. The relief was made subject to execution of bond and furnishing of bank guarantee as directed by the Court.

Application seeking recall of the order -Inherent powers under Rule 11 of the NCLT Rules, 2016 - Distinction between recall and review - Recall limited to procedural error, fraud, lack of service or want of jurisdiction - Rule 11 as a savings clause to meet ends of justice and prevent abuse of process - NCLT [2025 (12) TMI 110 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI], refused to recall the order under Rule 11 of the NCLT Rules, 2016 was justified since the application sought impermissibly to reexamine merits rather than invoke limited procedural grounds for recall.

HELD THAT:- The appeal against dismissal of the recall application was dismissed, the Court finding no error in the view taken by the NCLAT (supra) that no ground for recall was made out.

Admission of insolvency application on proof of debt and default -Settlement negotiations and restructuring proposals - Acknowledgement of Debt - Corporate Insolvency Resolution Process - Counterclaim and reconciliation in insolvency proceedings - Corporate guarantor liability after recall of debt.

Debt and default - Settlement negotiations - Counterclaim and set-off - HELD THAT: - The Appellate Tribunal held that the material on record, including the corporate debtor's own statements before the Delhi High Court and the Adjudicating Authority seeking time to settle and proposing payment schedules, established subsisting debt and default. Mere assertion that the parties had discussed restructuring or that the corporate debtor was willing to pay under a proposed schedule did not displace the finding of default, particularly when no final settlement was concluded and the revival of the earlier withdrawn Section 7 proceedings had attained finality. The Tribunal further accepted the Adjudicating Authority's view that reconciliation of accounts, deductions, set-off, or counterclaims could not defeat admission under Section 7 and could, at best, be considered in the resolution process. [Paras 13, 14, 15]

The order admitting the Section 7 application against the principal borrower was affirmed.

Corporate guarantor liability - Recall notice - Admission of insolvency application - HELD THAT: - The Appellate Tribunal held that, after affirming the finding of debt and default against the principal borrower, and noting that the recall notice had already been issued to the corporate guarantor, no infirmity arose in admitting the insolvency application against the guarantor. The challenge to the guarantor's admission therefore failed as a consequence of the proved default and invocation of the guarantee liability. [Paras 15]

The order admitting the Section 7 application against the corporate guarantor was also affirmed.

Final Conclusion: The Appellate Tribunal found no ground to interfere with the admission of insolvency proceedings against either the principal borrower or the corporate guarantor. Both appeals were dismissed.

Loan recall on material adverse effect-Section 7 admission on proof of debt and default- barred by limitation -Debt and default - Abuse of process - Recovery mechanism - Continuing default - Corporate insolvency resolution process - Pending challenge to arbitral award - Fresh limitation from arbitral award or decree.

Loan recall on material adverse effect - Contractual event of default -HELD THAT: - The Tribunal held that the loan agreements expressly treated the guarantors as obligors and permitted recall on the occurrence of an event which, in the lender's opinion, was likely to have a material adverse effect on the obligors' ability to perform their obligations. Since the arrest of one of the personal guarantors and the commencement of criminal investigation were events capable of adversely affecting such ability, the lender was entitled to form that contractual opinion and invoke the recall clause. The contention that recall was contrary to the loan documents because the borrower had not otherwise defaulted in payment of interest was therefore rejected. [Paras 12, 13]

The challenge to the loan recall notices failed.

Section 7 admission on proof of debt and default - Pending challenge to arbitral award - IBC not a substitute for execution - HELD THAT: - The Tribunal found from the pleadings in the Section 7 application that the creditor had not relied solely on the arbitral award; the pleaded default first arose when the corporate debtor failed to repay within the period stipulated in the recall notice, and that default continued thereafter. On that basis, the objection founded on Regulation 2A and the pendency of the Section 34 petition was held inapplicable. The Tribunal further held that the mere fact that execution proceedings had also been initiated did not bar recourse to Section 7, since the inquiry under Section 7 is confined to the existence of financial debt and default, and once those are established admission must follow, the narrow exception discussed in Vidarbha not being attracted on the present facts. The plea that the insolvency process was being misused as a recovery mechanism was also rejected in the circumstances of the case. [Paras 20, 22, 24, 25, 28]

The pendency of the award challenge and parallel execution proceedings did not render the Section 7 applications non-maintainable.

Fresh limitation from arbitral award or decree - Continuing default - HELD THAT: - The Tribunal accepted the creditor's contention that, apart from the continuing default following the recall notice, the arbitral award in favour of the lender furnished a fresh cause of action for initiating proceedings under Section 7. Applying the principle that a decree or adjudicated recovery gives rise to a fresh period of limitation, it held that the application filed within three years from the award was not time-barred. [Paras 26, 27]

The limitation objection was rejected.

Final Conclusion: The Tribunal upheld both admission orders under Section 7 of the IBC and dismissed the appeals. It held that the loan recall notices were contractually valid, debt and default stood established independently of the arbitral award challenge, and the application founded on the award was also within limitation.

Misrepresentation of jurisdictional facts - Personal guarantor insolvency proceedings - Foundational guarantee documents - Whether the Learned Adjudicating Authority committed any illegality or jurisdictional error in passing the impugned order dated 04.02.2026 under Section 97 of the Insolvency and Bankruptcy Code, 2016 by appointing a Resolution Professional in proceedings initiated under Section 95 of the Code against the Appellant, particularly when the Appellant contends that he is merely a co-borrower and not a personal guarantor and that no formal deed of guarantee exists ? -HELD THAT: - The case of the Appellant, in brief, is that the loan facility dated 18.11.2011 was sanctioned in favour of M/s L.R. Builders Pvt. Ltd., and Mr. Pawan Gupta and Mr. Kamal Gupta were co-borrowers and not the guarantors. Even the loan sanction documents and subsequent proceedings before the DRT described the Appellant only as a co-borrower. The Appellant has argued that the sanction letter itself records “Guarantors: NIL” and that no deed of guarantee or invocation letter was ever executed or placed on record. It has further been argued that despite absence of a valid guarantee, Respondent No.1 initiated proceedings under Section 95 of the Code by wrongly portraying the Appellant as a personal guarantor and thereby obtained the impugned order appointing the Resolution Professional. According to the Appellant, since proceedings under Part III of the Code presently apply only to personal guarantors to corporate debtors, initiation of proceedings against a co-borrower is wholly without jurisdiction and the impugned order deserves to be set aside.

The record reflects that the impugned order dated 04.02.2026 appoints a Resolution Professional under Section 97 and directs submission of a report under Section 99 of the Code. Subsequent to impugned order the RP has submitted its report under section 99 of the Code. More importantly, the Ld. Adjudicating Authority records that the Applicant who is the Respondent 1 here, has placed Deed of Guarantee and Letter of Invocation on record.

The Appellate Tribunal confined itself to the validity of the impugned order under Section 97 and did not adjudicate the broader merits of the appellant's status as co-borrower or guarantor. It found from the assignment documents that guarantors were shown as nil, and from the demand notice and the Section 95 application that neither a deed of guarantee nor an invocation of guarantee was relied upon as part of the creditor's foundational documents. The financial creditor subsequently admitted before the Adjudicating Authority that no deed of guarantee or letter of invocation had been placed on record, and the Adjudicating Authority itself recorded dissatisfaction that incorrect facts had been presented. Since the impugned order expressly proceeded on the footing that those documents had been filed, the order was held to be vitiated by misrepresentation of relevant jurisdictional facts. Treating the deed of guarantee and invocation as foundational in proceedings under Section 95, the Tribunal held that findings rendered on such misrepresentation were void ab initio. The principle in A.V. Papayya Sastry v. Government of A.P. [2007 (3) TMI 735 - SUPREME COURT], that an order obtained by fraud or misrepresentation may be set aside, was applied. [Paras 45, 46, 47, 48, 49]

The impugned order was set aside as having been passed on misrepresentation of foundational jurisdictional facts, with liberty to the financial creditor to file a fresh application under Section 95 with all relevant documents.

Final Conclusion: The Appellate Tribunal set aside the order appointing the Resolution Professional, holding that it had been made on the basis of misrepresentation that a deed of guarantee and invocation letter were on record. Liberty was reserved to the financial creditor to institute a fresh application under Section 95 with the relevant documents.

Commencement of Corporate Insolvency Resolution Process - Unauthorised Occupation​​​​​​​ - Control and custody of corporate debtor's assets during CIRP - Eviction from corporate debtor's premises - Possession and Custody of Corporate Debtor Assets - Unregistered occupancy arrangement in immovable property - Related party claim in insolvency process - Time-bound Insolvency Process.

Control and custody of corporate debtor's assets during CIRP - Unregistered occupancy arrangement in immovable property - Related party claim in insolvency process - HELD THAT: - The Appellate Tribunal held that, once CIRP had commenced, it was the Resolution Professional's obligation to take possession and control of assets over which the corporate debtor had ownership rights, and the hotel's ownership by the corporate debtor was undisputed. The alleged MoU was an unregistered and unstamped document and, in law, could not create or sustain any occupancy right in immovable property. At the highest, the arrangement could give rise only to a monetary claim, which had to be lodged in the CIRP; it could not justify continued possession of the corporate debtor's premises so as to obtain priority over financial creditors and other stakeholders. The Tribunal also found the reliance on the arbitral award untenable, since the MoU itself could not confer such a right and both the MoU and the award did not form part of the corporate debtor's records or disclosures, thereby casting serious doubt on their contemporaneous existence. The alleged occupancy claim was, therefore, incapable of defeating the statutory mandate under the Code. [Paras 18, 25, 26, 28]

The direction to vacate the 9th floor premises was upheld, with only further time being granted for handing over possession.

Eviction from corporate debtor's premises - Relatives occupying corporate debtor's assets - HELD THAT: - The Appellate Tribunal held that the application filed by the Resolution Professional expressly sought eviction of the suspended director along with family members, friends, relatives and acquaintances. The appellant in the connected appeal asserted no independent legal right of occupation apart from the claim set up through Mrs. Raman Khangura. Once that foundational claim failed, no separate defence survived. In these circumstances, the challenge based on absence of separate notice or impleadment did not furnish any ground to interfere with the eviction direction. [Paras 23, 24, 27]

The connected appeal by the relative in occupation was also dismissed.

Final Conclusion: The Appellate Tribunal upheld the order directing the appellants to vacate the corporate debtor's hotel premises, holding that no enforceable occupancy right could be claimed during CIRP on the basis of the alleged MoU and arbitral award. Both appeals were dismissed, with limited additional time granted to hand over possession.

Resolution Professional's power to recover possession of corporate debtor's assets - Unregistered profit-sharing agreement and occupancy rights in immovable property - Commencement of CIRP - Eviction of unauthorised occupant during CIRP - Entitlement to seek eviction and repossession before the Adjudicating Authority.

Profit-sharing agreement - Occupancy rights in immovable property - Unregistered agreement -HELD THAT: - The Tribunal held that the documents relied on by the appellant were only profit-sharing agreements and not instruments creating any leasehold or licence rights in the hotel premises. It found that any right to remain in possession of immovable property must arise through a valid lease or licence, and that the unregistered agreements relied on by the appellant could not create any interest in immovable property. The record further showed that no profit-sharing amount had ever been paid to the corporate debtor under those arrangements, and the appellant had failed to establish any enforceable right to resist recovery of possession after commencement of CIRP. [Paras 17, 21, 31]

The appellant failed to prove any legal right to continue in possession of the second and third floor premises, and its claim founded on the profit-sharing agreements was rejected.

Corporate debtor's assets - Jurisdiction to direct handing over of possession - Unauthorised occupation during CIRP - HELD THAT: - The Tribunal held that once CIRP commenced, it was the Resolution Professional's obligation to take possession and control of assets admittedly owned by the corporate debtor. Since the appellant could not establish any valid legal basis for its occupation, its possession was treated as unauthorised. In that situation, an application by the Resolution Professional to recover possession of the corporate debtor's assets was maintainable, and the Adjudicating Authority rightly granted relief for handing over possession rather than requiring the Resolution Professional to pursue separate civil proceedings. [Paras 17, 29, 30, 31]

The challenge to the maintainability of the Resolution Professional's application and to the Adjudicating Authority's power to order vacation of the premises was rejected.

Final Conclusion: The appeal was dismissed. The Tribunal upheld the order directing the appellant to vacate the corporate debtor's premises, holding that the unregistered profit-sharing agreements did not confer any right to remain in occupation and that the Resolution Professional was entitled to recover possession of the corporate debtor's assets during CIRP.

Eligibility to claim a higher entitlement from the corporate debtor or resist receipt of the amount provided under the approved resolution plan after the plan approval and subsequent orders had attained finality - Res judicata in repeated challenge to resolution plan implementation - Constructive Res Judicata - Unconditional implementation of resolution plan - Secured Operational Creditor.

Finality of approved resolution plan - Res judicata - Secured operational creditor claim after plan approval - HELD THAT: - The Appellate Tribunal held that the challenge was directed against the same set of issues already raised earlier in proceedings arising from the approval and implementation of the resolution plan. The order approving the plan had attained finality, the appellant's earlier appeal against plan approval had failed on limitation, and a further appeal arising from the common order directing acceptance of the escrow amount had also been dismissed, followed by dismissal of the civil appeal. In that background, the appellant could not, through another appeal against the same common order, seek to reagitate its status or quantification of dues on the footing of being a secured creditor. The Tribunal treated the renewed challenge as barred by res judicata and constructive res judicata, and held that the appellant's continued refusal to accept the amount earmarked in the plan was obstructing implementation of the concluded insolvency process. [Paras 49, 50, 51, 52, 53]

The appeal was dismissed as barred by res judicata, and the appellant was directed to comply with the directions necessary for implementation of the approved resolution plan, including acceptance of the plan amount and issuance of the requisite no-objection certificate.

Unconditional implementation of resolution plan - Additional burden after plan approval - HELD THAT: - The Tribunal noted the stand of the erstwhile resolution professional and the monitoring committee that the approved resolution plan was unconditional and carried stipulated implementation timelines. It further observed that, after approval of the plan, the successful resolution applicant could not be saddled with liabilities outside the plan; equally, implementation could not be converted into a conditional exercise by seeking clarifications that payment obligations would arise only upon acceptance of the amount by the appellant, issuance of no-objection certificate, or completion of other steps. Treating the interlocutory application as an attempt to alter the unconditional character of the approved plan, the Tribunal declined the requested modifications. [Paras 47, 48, 49, 54]

The interlocutory application filed by the successful resolution applicant was rejected.

Final Conclusion: The Appellate Tribunal dismissed the appeal holding that the appellant's attempt to reopen its claim after final approval of the resolution plan was barred by res judicata and was obstructing implementation of the plan. The interlocutory application of the successful resolution applicant was also dismissed, costs were imposed on the appellant, and directions were issued for immediate compliance with the approved plan.

Exclusion from e-auction on technical glitch- non-availability of the pre-qualification link - bona fide bidder - Fresh auction in liquidation for value maximization - Sanctity of concluded auction and its exceptions.

Bona fide participation in e-auction - Technical glitch in auction portal - Pre-qualification on automated platform - HELD THAT: - The Tribunal found that the liquidator's emails of 03.04.2025 and 07.04.2025 emphasized registration on the BAANKNET platform, uploading of documents and redeposit of EMD, but did not specifically highlight a separate pre-qualification step or its deadline. The appellant had registered on the platform, uploaded documents in the document library, deposited the EMD in the e-wallet and made multiple logins before the auction. The contemporaneous communication to the BAANKNET support team before commencement of bidding, and the immediate post-auction email, showed that the appellant was attempting to participate and was complaining that the pre-qualification link was unavailable. In these circumstances, the Tribunal held that the Adjudicating Authority was not justified in inferring abandonment or lack of seriousness. It further held that, in the absence of any technical verification from BAANKNET, neither the liquidator nor the Adjudicating Authority could conclusively rule out a technical bottleneck merely because the system was automated or other bidders had participated successfully. Benefit of doubt therefore had to go to the appellant. [Paras 36, 37, 38, 39, 40]

The findings that the appellant had abandoned the auction process, was not a serious bidder, and had raised a false plea of technical difficulty were set aside.

Value maximization in liquidation sale - Re-auction on substantially higher offer - Inadequate pricing as ground to interfere with auction - HELD THAT: - The Tribunal held that the rule against reopening concluded auctions is not absolute, and interference remains permissible where the process is affected by grounds going to the core of the sale, including inadequate pricing or material procedural infirmity. The precedents relied on by the respondents were distinguished because they largely concerned higher offers from strangers or non-participants after a valid auction, whereas the present appellant had participated in the process but was excluded for reasons the Tribunal did not accept. The record further showed an enhanced offer before the Adjudicating Authority and thereafter deposit of a substantially higher amount with the liquidator pursuant to proceedings before the Delhi High Court. The Tribunal considered this a concrete and credible offer, not a speculative post-auction expression of interest. It also noticed that the liquidator had stated before the High Court that re-auction with the higher reserve price would serve value maximization. Applying the principle that liquidation sales must secure the best possible value through fair and competitive bidding, the Tribunal concluded that a fresh auction with reserve price fixed at the deposited amount was necessary. [Paras 52, 53, 54, 55, 56]

The impugned order was set aside and the liquidator was directed to conduct a fresh e-auction with reserve price of Rs. 54 Cr., open to all eligible bidders including the appellant, with consequential directions regarding treatment of the appellant's deposited amount and completion of liquidation.

Final Conclusion: The appeal was allowed. The Tribunal held that the appellant was a bona fide participant who had been wrongly excluded from the auction process, set aside the earlier e-auction and directed a fresh auction with reserve price fixed at the amount already deposited by the appellant so as to secure value maximization in liquidation.

Computation of limitation for e-filed appeals under Section 61 of the IBC - Meaning of "day" in statutory limitation -Condonation of delay within the statutory outer limit- Whether Appeal e-filed by the Appellant on 30.03.2026 at 9.00 P.M. i.e. after the working hours of the office can be treated to be filing on 30.03.2026 or it can be held to be filing on the next working day i.e. 31.03.2026 as contended by the Counsel for the Respondent ? - HELD THAT: - The Appellate Tribunal held that filing of appeals before it is governed by the NCLAT Rules, 2016 and the directions issued thereunder. Under the order issued on 24.12.2022 in exercise of power under Rules 103 and 104, limitation is to be computed from the date of e-filing. The respondent's reliance on Rule 14.2 of the Delhi High Court e-filing Rules was rejected because no material was shown to establish that those Rules had been notified as applicable to NCLAT. On the meaning of day, the Tribunal applied the principle stated by the Supreme Court in Raj Kumar Yadav vs. Samir Kumar Mahaseth and Ors. [2005 (3) TMI 785 - SUPREME COURT] that, unless the statute provides otherwise, a day runs for twenty-four hours beginning at midnight, and statutory limitation cannot be curtailed by procedural rules fixing court or filing hours. It also noticed that the Supreme Court in Sanket Kumar Agarwal & Anr. Vs. APG Logistics Pvt. Ltd. [2023 (5) TMI 901 - SUPREME COURT] had recognised the NCLAT order dated 24.12.2022 clarifying that limitation is computed with reference to e-filing. Consequently, an appeal e-filed at 9.00 p.m. on 30.03.2026, being the 45th day, was within the maximum condonable period under Section 61. The explanation furnished for the 15 days' delay was found sufficient, and delay was condoned. [Paras 22, 23, 24, 25, 26]

The appeals were held to be within the condonable limit, and the delay of 15 days was condoned.

Final Conclusion: The Appellate Tribunal held that, for purposes of Section 61 of the IBC, the appeals e-filed at 9.00 p.m. on the 45th day were not beyond the condonable period. The applications for condonation were allowed and the delay was condoned.

Operational debt for freight, demurrage and anchorage charges - Existence of undisputed operational debt - Pre-existing dispute in insolvency proceedings - Summary insolvency jurisdiction and disputed contractual claims - Plausible contention - Sham defence - Debt recovery mechanism​​​​​​​ - Whether the Appellant has been able to establish the existence of a clear and undisputed operational debt and default against the Respondent under Section 9 of the Code ? -HELD THAT: - The IBC is not intended to be used as a substitute for recovery proceedings in matters involving seriously disputed contractual claims. Once the material placed on record discloses existence of a genuine dispute requiring detailed investigation, the Adjudicating Authority is required to reject the Section 9 Application.

The Tribunal held that the controversy turned on the foundational question whether the freight attributable to the Respondent's cargo had already been discharged in 2019 through BST and Globechart, or whether that liability remained unpaid and was later settled by the Appellant. The record disclosed rival interpretations of contemporaneous emails, declarations, invoice entries, remittance details and accounting treatment, along with a dispute as to the authenticity and effect of the material relied on by the parties. In that background, the settlement agreement between the Appellant and Jaldhi could not conclusively establish the Respondent's liability, since the Respondent was not a party to that settlement and the alleged assignment arose long after the original transaction. The Respondent's stand that the freight stood paid could not be treated as an admission of a subsisting debt; rather, it showed a genuine dispute going to the very existence of liability. The Tribunal further held that, even assuming assignment is legally permissible, that principle did not assist the Appellant because the primary difficulty was the absence of a clear and crystallised debt. As adjudication would require detailed examination of disputed documents and facts, the matter fell outside the limited summary jurisdiction under Section 9 of the Code, and the insolvency process could not be invoked as a substitute for recovery of a seriously disputed contractual claim. [Paras 56, 57, 58, 59, 60]

The Section 9 application was rightly held to be not maintainable, as the alleged debt was disputed on substantial and contemporaneous material and required adjudication in an appropriate forum.

Final Conclusion: The appeal was dismissed. The Tribunal affirmed that the claim for freight and allied charges was not based on a clear and undisputed operational debt, but was entangled in substantial factual disputes incapable of determination in summary insolvency proceedings.

Entitlement to bail in a PMLA - Long incarceration and right to speedy trial - delay in initiation of ECIR proceedings - Belated arrest in money-laundering investigation - High Court allowed both bail applications [2025 (3) TMI 1665 - BOMBAY HIGH COURT] - HELD THAT:- Delay was condoned and the special leave petition was dismissed, the Court declining to interfere with the impugned judgment and order of the High Court.

Entitlement to regular bail - Prolonged incarceration under PMLA - Article 21 and speedy trial in bail - Twin conditions for bail under PMLA - HELD THAT: - It is the case of the applicant that since the FIR registered by the CBI against the applicant and other accused persons was also based on the fraud declaration made by the consortium banks, an application for amendment was moved in the pending writ petition seeking challenge to the said FIR as well. It is stated that vide order dated 12.12.2024, the High Court disposed of the writ petition while permitting continuation of investigation by the CBI, however directing that no final report be filed without further orders. It is also stated that eventually, a batch of petitions pertaining to the issue in question, was decided by the Hon’ble Supreme Court in CBI v. Surender Patwa [2025 (4) TMI 1592 - SUPREME COURT] wherein the Supreme Court held that the High Courts had exceeded their jurisdiction by quashing the FIRs and the subsequent criminal proceedings while quashing the declarations of ‘fraud’, and categorized cases arising out of such fraud declarations. It is contended that the present case falls within the category where investigation may continue, but no coercive steps are required to be taken against the accused persons during pendency of investigation.

It is well settled that while considering an application for bail under the PMLA, the Court is required to satisfy itself that there exist reasonable grounds for believing that the accused is not guilty of the offence alleged and that he is not likely to commit any offence while on bail. The satisfaction contemplated under Section 45 of the PMLA is in addition to the other considerations governing grant of bail. It is equally settled that at the stage of consideration of bail, a detailed appreciation of evidence or a mini trial is neither warranted nor permissible.

At the same time, it is also well settled that the rigours of Section 45 of the PMLA cannot be applied in isolation from the constitutional guarantee of personal liberty under Article 21 of the Constitution of India. The Hon’ble Supreme Court has repeatedly held that where an accused has undergone prolonged period of incarceration and there is no likelihood of the trial concluding within a reasonable period, the right to speedy trial becomes a relevant consideration while deciding an application for bail, in such case, the rigours of Section 45 of the PMLA do not operate with the same degree of severity and must be balanced against the fundamental right to personal liberty.

The Court held that though bail under the PMLA is governed by the rigours of Section 45, those requirements cannot be applied divorced from the guarantee of personal liberty under Article 21. It found that investigation qua the applicant stood concluded, the prosecution complaint had already been filed, cognizance had been taken, and the case remained at the stage of scrutiny and supply of documents. The predicate FIR had been registered years earlier, no coercive action had been taken against the applicant for a long period, and even in the predicate offence no chargesheet had yet been filed. Having regard to the number of witnesses, the volume of documentary material, and the absence of any realistic likelihood of the trial commencing and concluding within a reasonable period, the Court held that continued incarceration would not be justified. It also noted that the evidence relied upon by the prosecution was primarily documentary in nature and had already been collected, and therefore the rigours of Section 45 stood sufficiently addressed for the limited purpose of bail. [Paras 35, 36, 37, 38, 39]

The applicant was directed to be released on bail, subject to conditions, since further custody was held unwarranted at that stage.

Final Conclusion: The Court granted regular bail to the applicant under the PMLA, holding that in the circumstances of prolonged incarceration, concluded investigation qua the applicant, and absence of any reasonable prospect of early trial, continued detention would unjustifiably trench upon Article 21. The release was made subject to conditions.

Maintainability of the appeal - Condonation of delay in re-filing under a statutorily time-bound appeal - Sufficient cause - release and retention of seized documents and digital devices - Enforcement of release directions under the prevention of money-laundering framework - HELD THAT: - The Court held that the explanation offered for the prolonged delay in curing defects was not satisfactory, particularly when the documents annexed with the appeal were largely typed copies of the Tribunal record. It further held that the appellate timeline under the prevention of money-laundering statute is strict, and such restriction cannot be bypassed by filing within time and then allowing the matter to remain under defects for several months. On merits, the Court found no infirmity in the Tribunal's directions, which had permitted retention of material forming part of the prosecution complaint and directed release of the remaining material subject to safeguards. Since the appellant was effectively seeking implementation of those directions, the proper course was to invoke the statutory remedy available for enforcement rather than pursue the present appeal. [Paras 6, 7, 11, 12, 13]

The appeal was dismissed both on the ground of delay in re-filing and on merits, with liberty to the appellant to pursue the remedy available in law for enforcement of the Tribunal's directions.

Final Conclusion: The Court declined to condone the delay in re-filing and also held that no interference with the Tribunal's order was warranted. As the appellant was in substance seeking enforcement of the Tribunal's release directions, liberty was reserved to avail the appropriate statutory remedy.

Validity of Confirmation of retention of the seized cash by the Appellate Tribunal under the PMLA - Reasoned order - Non-speaking order - Principles of natural justice - HELD THAT: - The Court held that the statement made on behalf of the appellants before the Tribunal, seeking liberty to approach the Special Court in the event the Tribunal was not inclined to interfere, was not an unconditional concession abandoning the challenge to retention. Such a submission did not dispense with the Tribunal's obligation to decide the appeals on merits by a reasoned order. The Court further held that, in view of the mandate of Section 26 of the PMLA, recording reasons was essential, and the absence of reasons also offended the principles of natural justice. As the impugned order had confirmed retention without disclosing reasons, it was liable to be set aside and the appeals restored for fresh adjudication, with all merits left open. [Paras 9, 10, 11, 12]

The impugned orders, insofar as they concerned the appellants, were set aside and the appeals were restored to the Tribunal for fresh decision uninfluenced by the earlier order.

Final Conclusion: The Court set aside the Tribunal's non-speaking order confirming retention of the seized cash, holding that the appellants' submission was not an unconditional concession and did not absolve the Tribunal from passing a reasoned order. The appeals were restored to the Tribunal for fresh adjudication, with all contentions on merits kept open.

Liability to pay interest on the belatedly deposited service tax -Mandatory compensatory nature of statutory interest- bureaucratic constraints -HELD THAT: - The Tribunal held that the delay in deposit of the admitted service tax for the disputed period was undisputed. On the plain terms of Section 75, interest becomes payable whenever tax is not credited to the Government within the prescribed time. The reason for delay, even if attributable to bureaucratic procedures or absence of intention to evade, could not displace the statutory consequence. Relying on Pratibha Processors [1996 (10) TMI 88 - SUPREME COURT], the Tribunal reiterated that interest is compensatory and distinct from penalty. The setting aside of penalties for absence of fraud or suppression, therefore, had no bearing on the independent liability to interest. The authorities cited on statutory interest were treated as supporting the position that once short or delayed payment is established, interest follows by operation of law. [Paras 4]

Interest on the delayed payment of service tax was held recoverable, and the challenge to the impugned order failed.

Final Conclusion: The Tribunal dismissed the appeal and upheld recovery of interest on the service tax deposited beyond the due date. It held that such interest is a mandatory and compensatory statutory levy, unaffected by the appellant's status as a government department or by the absence of intent to evade tax.

Construction of individual villas - Residential complex service - Gated community with common amenities - Extended Period of Limitation - Whether the construction undertaken by the Appellant in respect of villas/individual houses, though situated in a larger layout having common amenities, can be brought within the ambit of “construction of residential complex” so as to attract Service Tax ? -HELD THAT: - The dispute relates to eight projects, each of which has more than 12 units, with gated community features involving common utilities for the owners of the villas. The construction of villas are in two categories (i) outright construction and (ii) joint development. In outright construction the appellant enters into agreements with individual owners by paying advance towards the cost of land/ purchase the land. As and when prospective buyer approach the appellant they enter into an agreement of sale-cum-construction for the sale of undivided share of land and construction of villa. In joint development the appellant and the land owner enter into agreement by which the land owner hands over the land to appellant for the purpose of construction of villas. The appellant in turn agrees to handover the sale proceeds of villas equivalent to 40% of the constructed area and the remaining portion of built up area is allotted to the prospective buyer of constructed area as per Agreement for sale-cum-construction for the sale of undivided share of land and construction of villas.

The Appellant submits, without prejudice to their earlier submissions, that developers were brought within the service tax net only with effect from 01.07.2010 through the Explanation inserted in Section 65(105)(zzzh) by the Finance Act, 2010. That Explanation created a deeming fiction treating construction intended for sale, where consideration is received before completion certificate, as a taxable service. Prior to 01.07.2010, no such charge existed against developers.

The Tribunal held that the statutory requirement of a residential complex is not satisfied merely because the villas were part of a common layout, carried a common project identity, or had shared amenities. The determinative facts were that the plots were separately identified, approvals were obtained individually, and construction was contracted separately by each buyer. Such activity remained a series of independent constructions for individual owners and not construction of a building or buildings having more than twelve residential units. Common amenities and gated community features were held to be insufficient, by themselves, to expand the statutory definition. Following the co-ordinate Bench decisions in the case of Commissioner of Central Tax Hyderabad Vs C.S.K. Realtors Ltd.[2024 (3) TMI 351 - CESTAT HYDERABAD] and M/s. Priyadarshini Constructions Vs Commissioner of Central Goods and Service Tax, Excise and Customs, Bhopal [2025 (3) TMI 1063 - CESTAT NEW DELHI] which had treated similar construction of individual houses as outside the scope of taxable residential complex service, the Tribunal concluded that the demand had proceeded on an erroneous premise. [Paras 7, 8, 9, 10]

The service tax demand on the appellant's villa projects was unsustainable; the consequential interest and penalties also failed, and the filing of a declaration under the VCES scheme did not alter that conclusion.

Final Conclusion: The Tribunal held that the appellant's activity was construction of individual villas for separate owners and not construction of a residential complex within the taxable category. The impugned demand of service tax, with interest and penalties, was therefore set aside and the appeal was allowed.

Exemption for road construction services - Benefit under Serial No. 13(a) of Notification No. 25/2012-Service Tax - earthwork, embankment formation, road rolling and water filling undertaken as sub-contracted activities for road works - HELD THAT: - The Tribunal held that the work orders themselves showed that the appellant was entrusted with construction of embankment, filling earthwork on road berms, rolling and watering, all of which were required for execution of road construction. Such activities, though preparatory in one sense, were not distinct from construction of road, but were intrinsic, essential and foundational components of the construction activity itself. On a closer reading of serial No. 13(a), the expression relating to construction of a road was held to cover the entire chain of activities culminating in road construction and not merely the final stages such as surfacing. The exemption could not be denied by artificially severing site preparation and embankment work from the broader activity of road construction, especially when the appellant was executing those works as a sub-contractor in connection with road construction and maintenance. The Tribunal also noted earlier decisions including Quest Engineering & Consultant Pvt Ltd. vs. Commissioner, CGST & C.Ex., Allahabad [2021 (10) TMI 96 - CESTAT ALLAHABAD], GMR Project Pvt. Ltd. vs. Commissioner of Central Excise, Customs & Service Tax, Bangalore [2020 (7) TMI 3 - CESTAT BANGALORE] and SEM Construction vs. Commissioner of Central Excise, ST, Rajkot [2020 (8) TMI 739 - CESTAT AHMEDABAD] affirmed by the Apex Court, as supporting the view [2021 (3) TMI 1315 - SC ORDER] that activities integral to road construction remain within the exemption. [Paras 7, 9, 10, 11, 12]

The service tax demand on the appellant's road-related earthwork and embankment activities was unsustainable, and the related interest and penalty also did not survive.

Final Conclusion: The Tribunal held that the appellant's earthwork, embankment and allied activities formed an integral part of road construction and were covered by the exemption under Notification No. 25/2012-ST. The impugned order denying the exemption was set aside and the appeal was allowed with consequential relief.

Levy of service tax - Construction of residential complex - Individual houses constructed as part of a layout with common facilities fall - Definition of "residential complex" under the Finance Act, 1994 - Demand barred by limitation - Extended period of limitation - Reasonable belief based on prevailing precedent - HELD THAT: - The Tribunal examined the correctness of the view in Macro Marvel Projects Ltd. versus CST [2008 (9) TMI 80 - CESTAT, CHENNAI] and observed that the definition of residential complex included, by explanation, a single house as a residential unit; therefore, individual houses with common facilities could fall within that definition. It, however, did not finally decide the taxability issue on merits, noting that earlier decisions had followed that view. On limitation, the Tribunal held that since the said decision was already operating during the relevant period, the appellant could reasonably proceed on the basis that no service tax was payable. In that situation, non-registration, non-filing of returns and non-payment of tax could not justify invocation of the extended period. As the show cause notice was issued beyond the normal period of one year, the entire demand was time-barred. [Paras 11, 12]

The demand was held barred by limitation and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeal solely on limitation, holding that the extended period could not be invoked when a prevailing Tribunal decision had furnished a reasonable basis to believe that no service tax was payable. Consequently, the impugned order was set aside and consequential relief was granted.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption of legally enforceable debt or liability - Burden on the accused to rebut the presumption - reverse onus clause - Conviction under Section 138 - HELD THAT:- In view of the settlement between the parties, the impugned order [2020 (2) TMI 629 - SUPREME COURT] was set aside, subsequent orders were withdrawn, and the review petitions were disposed of.