TMI Tax Updates e-Newsletter
Jun 04,2026

Writ maintainability against show cause notice - Pre-deposits - Condonation of delay -Validity of the provisions under Section 16(2) - HELD THAT:- The Special Leave Petition was disposed of without interference with the impugned judgment/order(s) [2026 (5) TMI 1432 - RAJASTHAN HIGH COURT], while leaving all remedies open to the petitioner, including filing the appeal with the necessary pre-deposits within the permitted time, and directing that such appeal shall not be dismissed on the ground of delay if so filed.

Validity of arrest and detention - defects in the arrest memo and non-compliance with the stated requirement that the grounds of arrest document bear a CBIC-DIN, apart from non-disclosure of the place of arrest -HELD THAT: - The Court found that the arrest memo did not disclose the place of arrest, which was contrary to the requirement recognised in D.K. Basu vs. State of West Bengal [1996 (12) TMI 350 - SUPREME COURT] It further noticed that the grounds of arrest did not bear any CBIC-DIN, and the respondents failed to controvert the petitioner's submission that, under the departmental circular relied upon, every such document was required to bear a CBIC-DIN. Since the respondents did not place any material on record to rebut these defects, the Court concluded that the petitioner's detention by the concerned respondents was in violation of law. [Paras 6, 7, 8, 9, 10]

The arrest and detention were declared illegal, the petitioner was directed to be released forthwith, and liberty was reserved to the respondents to proceed afresh strictly in accordance with law.

Final Conclusion: The writ petition was allowed. The Court declared the petitioner's arrest and detention illegal for non-compliance with the legal requirements governing arrest documentation and directed his immediate release, while leaving it open to the respondents to proceed afresh in accordance with law.

Blocking of input tax credit in the electronic credit ledger under Rule 86-A - Mandatory pre-condition - Recording of reasons in writing - Supplementing reasons by affidavit or instructions - Jurisdictional defect - Application of mind - HELD THAT: - The Court held that the statutory power to block ITC under Rule 86-A can be exercised only after the competent authority records its reasons to believe in writing, and that requirement is mandatory. The impugned order merely recorded the conclusion that the petitioner had fraudulently availed ITC, but did not disclose the reasons forming that belief. Written instructions later produced by the revenue, referring to surveys, reports and other material, could not cure that defect, because the validity of a statutory order must be judged by the reasons stated in the order itself and cannot be supplemented subsequently. Since the pre-condition for assumption of jurisdiction had not been fulfilled, the order was jurisdictionally deficient. [Paras 8, 9, 10, 11, 12]

The impugned order was set aside, with liberty to the authority to pass a fresh order strictly in accordance with law.

Final Conclusion: The writ petition was allowed to the extent that the order blocking ITC under Rule 86-A was held unsustainable for want of recorded reasons to believe. Liberty was reserved to the competent authority to pass a fresh order in accordance with law.

Maintainability of Writ petition after expiry of statutory appeal limitation - Alternative statutory remedy under GST law - Laches in invoking writ jurisdiction in tax matters - Jurisdictional Error - breach of natural justice - Circumvention of statutory limitation through writ jurisdiction - HELD THAT: - t A co-ordinate Bench of this Court in Atlantis Intelligence Ltd. vs. Union of India and others [2025 (8) TMI 887 - ALLAHABAD HIGH COURT], wherein one of us (Shekhar B. Saraf) upon sifting through the ratios laid down by the Supreme Court and High Courts in various judgments, has extracted the principles with regard to maintainability of the writ petitions after expiry of the time frame for filing appeal stipulated in the special statute.

The Court held that no ground for interference under Article 226 was made out because the petitioner had responded to the show cause notice and had also been afforded an opportunity of hearing; hence, neither want of jurisdiction nor breach of natural justice stood substantiated. The petition was found to have been filed belatedly, after the limitation for the statutory appeal had expired, and the challenge to the validity of the proceedings under the GST provision was treated as an attempt to use the writ court as an appellate forum. The determinative principle applied was that, though limitation may not apply to writ jurisdiction in the strict sense, the High Court will not exercise its extraordinary jurisdiction to defeat or bypass a statutory appellate scheme containing a specific and limited condonable period, particularly in tax matters where diligence and expedition are integral. In the absence of any proper explanation for the delay, and as the case did not disclose gross violation of natural justice or patent illegality, the Court declined to entertain the writ petition. [Paras 6, 8, 9, 11, 12]

The writ petition was dismissed, leaving it open to the petitioner to proceed in accordance with law, and clarifying that the appellate forum would decide any appeal uninfluenced by the observations in the order.

Final Conclusion: The High Court declined to entertain the writ petition against the GST show cause notice and assessment order, holding that the petitioner could not invoke writ jurisdiction to bypass the expired statutory appellate remedy in the absence of jurisdictional error, breach of natural justice, or patent illegality. The petition was dismissed, with liberty to proceed in accordance with law.

Entitlement to bail in a prosecution under Section 132 - tax evasion through online gaming transactions - Bail is the rule and jail the exception - Pre-trial detention not punitive - Presumption of innocence - HELD THAT: - The Court held that, at the pre-conviction stage, liberty could be curtailed only on just and reasonable grounds, and that bail must ordinarily follow unless exceptional circumstances are shown. It found that the maximum punishment under Section 132 of the CGST Act was five years, the case was triable by a Magistrate, investigation had been completed and complaint had already been filed, there was no criminal history, no allegation of non-cooperation in investigation, and no material to show likelihood of tampering with evidence, intimidating witnesses, fleeing from justice, or otherwise subverting the trial. The Court further noted that the prosecution case was essentially based on documentary material, charge had not yet been framed, and trial was not likely to conclude within a reasonable time. Applying the principle stated in Satyendra Kumar Antil [2022 (8) TMI 152 - SUPREME COURT], Sanjay Chandra [2011 (11) TMI 537 - SUPREME COURT], Ratnambar Kaushik [2022 (12) TMI 263 - SUPREME COURT], Vineet Jain [2025 (5) TMI 925 - SC ORDER], Atul Mehra [2026 (1) TMI 640 - SC ORDER] and Manish Sisodia [2024 (8) TMI 614 - SUPREME COURT], the Court held that continued custody would amount to punitive detention rather than a necessity for securing trial. [Paras 9, 10, 12, 16, 18]

Bail was granted subject to conditions, as no exceptional circumstance was shown to justify continued detention pending trial.

Final Conclusion: The Court allowed the bail application in the prosecution under Section 132 of the CGST Act, holding that in the absence of exceptional circumstances, continued pre-trial detention was not justified. Release was directed on bail subject to conditions intended to secure the applicant's presence and protect the trial process.

Entitlement to input tax credit under Section 16(5) - objection based on Section 16(4) - Cut-off date - Non-obstante override under Section 16(5) - HELD THAT: - The Court held that the impugned order itself recorded that the returns for the disputed months had been submitted within the cut-off date contemplated under Section 16(5). Since Section 16(5) contains a non-obstante clause operating against Section 16(4), compliance with the former provision displaced the time restriction under Section 16(4). On that reasoning, the petitioner was held entitled to the benefit of Section 16(5), subject to being otherwise eligible.

The impugned order declining input tax credit and the recovery notice were quashed, and the matter was directed to be reconsidered by granting the benefit of Section 16(5) if the petitioner was otherwise entitled.

Final Conclusion: The Court held that where the returns had been filed within the cut-off date under Section 16(5), denial of input tax credit by applying Section 16(4) was unsustainable. The impugned order and recovery notice were therefore quashed, with a direction for fresh consideration on that basis.

BOT toll concession as works contract supply- Concession agreement for construction and operation of the road, coupled with the right to collect toll and payment of premium - taxable supply/works contract under GST - Barter as taxable consideration under GST - Exemption for toll access service vis-a-vis construction service - demand on the grounds of exemption, double taxation, or parity with alleged contrary departmental decisions. - Alternative remedy where statutory tribunal is non-functional

Alternative remedy where statutory tribunal is non-functional - Maintainability of writ petition - HELD THAT: - The Court held that though an appeal lay under the statute, the remedy could not be treated as efficacious when the tribunal had not yet become functional. In those circumstances, the petitioner could not be left remediless and the matter was therefore examined on merits. [Paras 18]

The objection based on alternative remedy was rejected.

BOT toll concession as works contract supply - Barter as taxable consideration under GST - Sub-contract and distinct taxable supplies - HELD THAT: - On examining the statutory definitions and the concession agreement, the Court found that the petitioner had undertaken construction, operation and maintenance obligations in relation to immovable property and thus the arrangement answered the description of a works contract. The right to collect toll, coupled with leave and licence over the site and other contractual rights, constituted consideration otherwise than in money and therefore the transaction fell within the scope of supply, including barter. The Court further held that there were two separate contracts, one between NHAI and the petitioner and another between the petitioner and the EPC contractor, with no privity between NHAI and the sub-contractor. Tax paid by the sub-contractor on the services rendered to the petitioner did not extinguish the petitioner's separate tax liability arising from the concession agreement with NHAI. For that reason, the principle in State of Andhra Pradesh v. Larsen and Toubro Ltd. [2008 (8) TMI 21 - SUPREME COURT], rendered in the VAT context, was held inapplicable to the GST levy on the petitioner's supply of services. [Paras 35, 36, 43, 44, 45]

The petitioner's activity under the concession agreement was held taxable as a supply of works contract services, independent of the sub-contract.

Exemption for toll access service vis-a-vis construction service - Toll collection as deferred consideration - Strict interpretation of exemption notifications - HELD THAT: - The Court held that the exemption under the notification covers only the service of access to a road or bridge under Heading 9967. It does not extend to construction of roads falling under Heading 9954, even where consideration is received in a deferred form. Applying the departmental circular and agreeing with the reasoning in GMR Pochanpalli Expressways Limited v. Additional Director, DGGI and Ors. [2024 (10) TMI 1809 - TELANGANA HIGH COURT], the Court treated the toll collection rights under the concession as part of the deferred consideration or annuity for the construction service and not as exempt toll collection simpliciter. The Court also held that exemption notifications must be construed strictly in terms of Commr. of Customs v. Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT (LB)] and Commr. (CGST) v. Safari Retreats (P) Ltd.[2024 (10) TMI 286 - SUPREME COURT]. The plea founded on parity with orders passed in Gujarat and Karnataka was rejected, since those matters concerned different issues and, in any event, alleged contrary departmental action could not govern the Court's determination of the legal position. [Paras 51, 52, 53, 54, 55]

The claimed exemption was denied and the departmental orders were upheld.

Final Conclusion: The writ petition was dismissed. The Court held that the BOT concession involved a taxable supply of works contract services to NHAI, that toll collection rights formed part of the consideration and were not covered by the claimed exemption, and accordingly affirmed the original and appellate orders.

Scope of "initiation of proceedings" and "same subject matter" under Section 6(2)(b) - Parallel adjudicatory proceedings under GST - Same subject matter - Multiplicity of proceedings - Inter-se coordination between tax authorities - Fresh consideration of input tax credit claim.

Parallel adjudicatory proceedings under GST - Same subject matter under Section 6(2)(b) - Inter se coordination between Central and State GST authorities - HELD THAT: - Relying on M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. [2025 (8) TMI 991 - SUPREME COURT], the Court held that once proceedings on the same subject matter are initiated by one authority, the other authority cannot continue parallel adjudicatory proceedings. The expression concerning the same subject matter was treated in terms of the law declared by the Supreme Court, and the authorities were directed to communicate and coordinate inter se to determine which authority would continue, while ensuring that the assessee is not exposed to duplicate adjudication for the same liability or contravention. [Paras 11, 12, 13, 14]

The authorities were directed to act in accordance with the law laid down in Armour Security and to ensure that only the competent authority proceeds further for the same period and subject matter.

Fresh consideration of input tax credit claim - Consideration of reply and supporting documents - Speaking order - HELD THAT: - The challenge to the constitutional validity of the provision was not pressed. On the petitioner's request for reconsideration of the notices after taking into account the replies and documents, and in view of the statement on behalf of the respondents that such response would be decided within a reasonable time, the Court directed the petitioner to file fresh responses before the concerned authorities. The adjudicatory authority was then directed to proceed in accordance with law, after deciding which authority would continue, and to pass a speaking and reasoned order after affording opportunity of hearing. The merits of the input tax credit claim were not adjudicated. [Paras 2, 6, 14]

Fresh responses were permitted and the competent authority was directed to consider the petitioner's claim on merits in accordance with law by a speaking order, leaving the substantive claim open.

Final Conclusion: The petition was disposed of by directing the petitioner to file fresh responses before the concerned GST authorities and by requiring the Central and State authorities to coordinate so that no parallel adjudicatory proceedings continue for the same subject matter. The merits of the input tax credit claim and the constitutional challenge were left open.

Writ against GST adjudication despite statutory appellate remedy - Challenge to validity of extension notification kept open pending Supreme Court scrutiny.

Alternative statutory remedy - Appeal to GST Tribunal - HELD THAT: - The Court held that, since the Tribunal had started functioning, the petitioner had an effective further appellate remedy under Section 112 of the Act of 2017. Following its earlier order in a similar matter in Eagle Trans Shipping and Logistics India Private Limited Vs. Union of India & Ors.[2025 (9) TMI 1046 - RAJASTHAN HIGH COURT], it declined to examine the merits of the adjudication order and the appellate order in writ jurisdiction, leaving the petitioner to pursue the statutory remedy. [Paras 3, 5]

The writ petition was not entertained on merits, with liberty to pursue the statutory appeal before the Tribunal.

Validity of extension notification under GST - Question kept open pending Supreme Court - HELD THAT: - The Court recorded that the validity of the notification issued under Section 168A of the CGST Act, and the related challenge to the statutory provision, was the subject matter of pending scrutiny before the Supreme Court in Special Leave to Appeal [2025 (4) TMI 60 - SC ORDER]. Applying the same course as adopted in its earlier decision, the Court left that question open, observing that the effect of the impugned order on that aspect would abide by the decision of the Supreme Court. [Paras 3, 5]

No ruling was rendered on the validity challenge, and the issue was left open to be governed by the Supreme Court's decision.

Final Conclusion: The writ petition was disposed of in terms of the earlier decision relied on by the Court. Relief on merits was declined in view of the available statutory appeal, while the challenge relating to Section 168A was left open pending consideration by the Supreme Court.

Reasoned Quasi-judicial orders - Defective show cause notice - No Opportunity of hearing - Breach of Natural justice - Writ maintainability despite alternative statutory appeal - Cancellation of GST registration and rejection of the revocation application.

Non-speaking order - Defective show cause notice - Opportunity of hearing - Revocation of cancellation of registration -HELD THAT: - The Court held that once a reply had been invited and was submitted, the competent authority was bound to consider the grounds raised therein and record reasons for rejecting them. An order rejecting the revocation application by merely stating that the supplier was found non-existing, without dealing with the defence raised, was a cryptic and arbitrary order. The Court further found that both the cancellation notice and the notice issued in revocation proceedings were defective because, though seven days' time was granted for filing reply, the date of personal hearing was fixed before expiry of that period. Such scheduling denied a meaningful opportunity of hearing and violated the requirement of fair adjudication. [Paras 7, 9, 13, 14, 15]

The impugned orders cancelling the registration and rejecting revocation were set aside.

Alternative remedy - Article 226 jurisdiction - Patent illegality - HELD THAT: - The Court accepted the general rule that, in tax matters, parties should ordinarily be relegated to the statutory remedy. It nevertheless held that this rule does not bar exercise of jurisdiction under Article 226 where the impugned order is patently illegal or arbitrary, or where fair hearing is denied, or where reasons are absent. Since the impugned orders suffered from these defects, the objection as to maintainability was rejected. [Paras 11]

The objection based on availability of appeal was rejected and the writ petition was entertained.

Final Conclusion: The High Court allowed the writ petition, holding that the cancellation and revocation orders were vitiated by absence of reasons and denial of a meaningful opportunity of hearing. The statutory appellate remedy was held not to bar writ jurisdiction in the face of such patent procedural illegality.

Maintainability of writ petition in tax matters - Alternative statutory remedy under the CGST Act - Service of notice - Validity of order, passed by the Deputy Commissioner, CGST & Central Excise, Division - I, Lucknow thereby imposing penalty on the petitioner under Section 122(1) (A) -HELD THAT: - The Court noted that service by registered post is one of the recognised modes under the Act and, irrespective of the dispute raised by the petitioner as to receipt of the show cause notice, an effective appellate remedy was available under Section 107 of the CGST Act. The Court held that all grounds, including the plea regarding absence of hearing, could be raised in appeal. Relying on Commissioner of Income Tax and others vs Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT], the Court reiterated that in tax matters, where the statute provides a remedy, the aggrieved person should ordinarily be relegated to that remedy instead of invoking writ jurisdiction. [Paras 7, 8, 9, 10]

The writ petition was dismissed on the ground of availability of an alternative statutory remedy, leaving it open to the petitioner to raise all permissible grounds in appeal.

Final Conclusion: The Court declined to entertain the writ petition against the GST penalty order and relegated the petitioner to the statutory appellate remedy. All grounds available in law were left open to be urged in such appeal.

Entitlement to bail in a prosecution alleging wrongful availment and passing on of input tax credit through transactions linked to a non-existent firm - GST irregularities - Documentary evidence -HELD THAT: - The Court found that no notice under Section 74 of the GST Act, 2017 had been issued to the applicant's firm and no proceedings for cancellation of its registration had been taken. It also noted that the supplier firm's registration was cancelled only subsequently to the dates of the transactions in question, and that, at this stage, those transactions could not be doubted in view of the tax invoices, e-way bills and freight bills brought on record. Relying on the principle noticed from Vineet Jain Vs. Union of India [2025 (5) TMI 925 - SC ORDER] that in offences of this nature founded on documentary evidence, bail should ordinarily follow in the absence of extraordinary circumstances, and considering the larger mandate of Article 21 along with the absence of criminal antecedents, the Court held that the applicant had made out a case for bail.

Bail was granted subject to conditions.

Final Conclusion: The Court held that, at the stage of bail, the material on record did not justify continued custody in the GST-related prosecution, particularly when the case rested on documentary material, no action under Section 74 had been taken against the applicant's firm, and no criminal history was shown. The applicant was therefore directed to be released on bail on conditions.

Seeking withdrawal of application - HELD THAT:- The writ petition was dismissed as withdrawn on the petitioner's withdrawal application.

Reversal of input tax credit - time limit for specified financial years -Retrospective extension for availing input tax credit - HELD THAT: - The Court disposed of the writ petition by applying its earlier common order [2024 (10) TMI 1631 - MADRAS HIGH COURT] on the same question. It accepted that, in light of the subsequent amendment inserting sub-section (5) in Section 16 of the CGST Act with retrospective effect, input tax credit relating to the specified financial years could be availed in returns filed up to 30.11.2021 notwithstanding the limitation under sub-section (4). On that basis, the impugned order was held unsustainable to the extent it denied the petitioner's ITC claim solely on limitation. At the same time, the Court preserved the Department's liberty to proceed in accordance with law on distinct issues such as discrepancies, wrong availment, excess claim or fake ITC claim, if any. [Paras 5, 6]

The impugned order was quashed insofar as it reversed ITC on limitation despite the claim being within the period saved by Section 16(5), with consequential protection against coercive action on that ground alone.

Final Conclusion: Following the earlier common order of the Court, the writ petition was allowed and the reversal of ITC on limitation was set aside to the extent the claim was protected by the amended provision. Liberty was reserved to the Department to proceed on other independent grounds, if any, in accordance with law.

Scope of work in the construction and commissioning of an underground sewerage scheme - Pure service Or a composite supply in the nature of works contract - Katol Nagar Parishad - Local authority for the purposes of Entry 3A - Municipal functions under Article 243W - Eligibility for exemption under Entry 3A of Notification No. 12/2017-Central Tax (Rate), as amended - Strict construction of exemption notifications.

Whether the supply being made is pure service or composite supply, where supply of goods does not exceed more than 25% of the value of the supply ? - HELD THAT: - The Authority found that the contract covered construction of sewer networks, wet-well, pump-house, rising main, sewerage treatment plant, and supply, erection, testing and commissioning of pumps and allied electrical and mechanical equipment, thereby involving both service elements and transfer of property in goods in execution of immovable property works. It therefore squarely answered the definition of works contract and, by statutory design, remained a supply of service that is also a composite supply, which necessarily excluded it from Entry 3 meant for pure services. On the quantitative condition in Entry 3A, the Authority held that the expression referring to the value of goods in 'the said composite supply' required computation at the level of the composite supply as a whole and not sub-unit-wise, since the tender and work order constituted one integrated sewerage contract with a single recipient and single contract price. On the material before it, the aggregate goods component was below 25 per cent, though the Authority added that final entitlement had to depend on the actual ratio at conclusion of the contract. [Paras 5]

Entry 3 was held inapplicable, and the supply was treated as a composite works contract eligible for consideration under Entry 3A, subject to the goods component not exceeding 25 per cent on the final aggregate value of the contract.

Whether the recipient is Government, Local Authority, Governmental Authority or Government Entity? - HELD THAT: - The Authority held that a Nagar Parishad constituted for administration of a smaller urban area is a Municipality within the constitutional scheme and therefore falls within the definition of 'local authority' under section 2(69). It further noted that such body is legally entrusted with control or management of a municipal or local fund, and on either footing the recipient satisfied the recipient-condition in Entry 3A both before and after the amendment omitting Governmental Authority and Government Entity from the notification. [Paras 5]

The recipient was held to be a Local Authority within section 2(69), satisfying the recipient requirement of Entry 3A.

Whether supply is being made in relation to any function entrusted to a Panchayat or a Municipality under the Constitution? - HELD THAT: - The Authority held that construction and commissioning of an underground sewerage system, including sewer lines, wet-wells, pump-houses, rising mains and treatment plant, directly related to public health and sanitation in an urban area. Referring to the Twelfth Schedule, it concluded that the activity squarely fell within the municipal subject of public health, sanitation conservancy and solid waste management, and was in any event related to municipal infrastructure. The expression 'in relation to' in Entry 3A was treated as broad enough to cover such activity. [Paras 5]

The supply was held to be in relation to a municipal function under Article 243W, particularly public health and sanitation under Entry 6 of the Twelfth Schedule.

Whether the applicant is eligible for exemption of services being provided by way of pure service or composite supply based on Entry 3A w.e.f. 25.01.2018 vide Notification No. 2/2018-CT(R) which needs to he clarified by way of Advance Ruling? - HELD THAT: - After setting out that exemption notifications must be strictly construed and that the claimant must satisfy every condition, the Authority held that all four cumulative requirements of Entry 3A stood met on the present record: the supply was a composite supply, the aggregate goods component was below the prescribed limit, the recipient was a Local Authority, and the activity related to a municipal function. It rejected the view that exceedance of 25 per cent in some tender sub-units was decisive, since the statutory test applied to the composite supply itself. At the same time, because the contract was ongoing and the break-up on record was based on estimates, the Authority qualified the ruling by holding that the exemption would continue only if, at the time of conclusion of the contract, the actual value of goods in the composite supply did not exceed 25 per cent; otherwise, the exemption would cease and consequential action could follow. [Paras 5]

Exemption under Entry 3A was held available from 25.01.2018 on the facts presently disclosed, but only conditionally and subject to the final actual goods ratio remaining within 25 per cent at the conclusion of the contract.

Final Conclusion: The Authority held that the applicant's sewerage contract with the Nagar Parishad was not a pure service but a composite supply in the nature of a works contract. Since the recipient was a Local Authority and the activity related to municipal sanitation functions, exemption under Entry 3A was held available from 25.01.2018 on the facts on record, subject to the actual goods component on conclusion of the contract remaining within the statutory 25 per cent limit.

Reassessment limitation for AY 2017-18 - Exclusion of time for reply under section 148A(b) - First and fifth provisos to section 149(1) - Jurisdiction to issue notice u/s 148

HELD THAT:- No good ground to interfere with the impugned order passed by the High Court.[2026 (2) TMI 1426 - DELHI HIGH COURT]

The Special Leave Petition is, accordingly, dismissed. Pending application(s), if any, stands disposed of.

Notice under section 153C - Earlier quashing of section 148 proceedings with liberty to proceed in accordance with law - Limitation objection

As decided by HC [2025 (9) TMI 1805 - RAJASTHAN HIGH COURT] once the earlier proceedings under section 148 had been quashed in the petitioner's own writ petition on the footing that action, if any, ought to have been taken under section 153C, and liberty had been granted to the authorities to proceed in accordance with law, the petitioner could not thereafter object to initiation of proceedings under section 153C. Court declined to interfere with the notice under section 153C and the order rejecting objections, while leaving the petitioner free to raise all other available defences before the competent authority.

HELD THAT:- As petitioner-assessee submitted that these matters need not be now adjudicated on merits as the period to pass orders of assessment has already elapsed.

In such circumstances, all these three petitions stand disposed of in view of the aforesaid. However, the question of law is kept open.

Equalisation levy on reimbursement of online advertising expenses - Strict construction of charging provisions - Piercing the corporate veil for tax avoidance - Evidentiary value of statements recorded in survey

Equalisation levy on reimbursement of online advertising expenses - Specified service - Strict construction of charging provisions - Equalisation levy imposed on reimbursement made by the petitioner to its overseas subsidiary towards online advertising services obtained by that subsidiary from Google USA - HELD THAT: - The Court held that, on a plain reading of Sections 164 and 165 of the Finance Act, 2016, the levy is attracted only on consideration for a specified service received or receivable by a non-resident from a resident in India or from a non-resident having a permanent establishment in India. In the present case, the online advertising service was provided by Google USA to Zoho USA, both non-residents.

Court further held that reimbursement was not included within the statutory definition of specified service, though the E-Commerce Taxation Committee had expressly recommended its inclusion. Since Parliament did not incorporate that recommendation, reimbursement could not be brought within the charging provision by inference or by adopting a substance-over-form approach. [Paras 12, 13, 14, 15, 16]

Reimbursement of the overseas subsidiary's advertising expenditure did not attract equalisation levy under the law as it stood.

Piercing the corporate veil for tax avoidance - Separate corporate personality - piercing the corporate veil of the overseas subsidiary so as to treat the reimbursement as a tax-avoidance device - HELD THAT: - The Court held that piercing the corporate veil requires impropriety or misuse of the company structure as a device or facade to conceal wrongdoing. The materials placed on record showed that the overseas subsidiary had entered into the Google advertising arrangement much before the introduction of equalisation levy, that invoices had been raised on that subsidiary, and that the petitioner had been reimbursing such advertising costs even in the period prior to the levy. On that factual foundation, the continued reimbursement arrangement could not be characterised as a sham or as a structure created to evade equalisation levy. Mere control of the subsidiary or involvement of the holding company in its affairs was held insufficient, in the absence of evidence of impropriety, to justify lifting the veil. [Paras 18, 19, 20, 21, 25]

The overseas subsidiary could not be treated as a facade, and the corporate veil was not liable to be pierced.

Evidentiary value of statements recorded in survey - Survey under Section 133A - Whether Statements recorded during survey under Section 133A could be relied upon to fasten equalisation levy liability, and the factual finding in the impugned order itself showed payment from the subsidiary's bank account? - HELD THAT: - The Court held that, in view of the law declared on the evidentiary status of survey statements, statements recorded in the course of a survey do not by themselves have probative value to fix liability. The impugned order had relied on such statements to conclude that the petitioner had in substance made payment to Google. The Court also noted that the order itself recorded that payments to Google USA were made from the bank accounts of Zoho USA, though those accounts were operated by persons from the petitioner's office. That circumstance did not convert the payment into one made by the resident petitioner to the non-resident service provider and, instead, supported the petitioner's case that what followed was reimbursement. [Paras 22, 23, 24]

The survey statements could not sustain the levy, and the recorded facts did not establish payment by the petitioner to the non-resident service provider.

Final Conclusion: The Court held that equalisation levy was not chargeable on the petitioner's reimbursement to its overseas subsidiary for online advertising services obtained by that subsidiary from Google USA. The impugned order rejecting refund was set aside, and the refund claim for financial years 2016-17 and 2017-18 was directed to be reconsidered only for verification of the amount payable.

TDS refund - Section 194H on prepaid distributor discount - Adjustment against outstanding demand - department's assertion of outstanding demand under the TAN - HELD THAT: - The Court recorded the common position of counsel that the controversy stood covered by the Supreme Court decision [2024 (3) TMI 41 - SUPREME COURT] holding that Section 194H did not apply to discounts on prepaid services to distributors. It further noticed that the refund application had already been moved and that the respondents themselves admitted that refund was required.

Since the department's plea was only that certain outstanding demand under the TAN required adjustment, and that demand was disputed by the petitioner, the Court left it open to the department to pursue such demand separately and to the petitioner to raise its defence in accordance with law, but held that the TDS refund itself should be released forthwith. [Paras 2, 3, 4]

The respondents were directed to release the TDS refund forthwith, without prejudice to the department's right to pursue any separate demand and the petitioner's right to contest it.

Final Conclusion: The writ petition was disposed of by directing immediate release of the TDS refund, the controversy on applicability of Section 194H having been treated as covered by the Supreme Court decision. Any independent outstanding demand was left open to be pursued separately in accordance with law.

Reassessment notices u/ss 148/148A - Specified authority for sanction - Jurisdiction of Assessing Officer - Notice issued by the Jurisdictional Assessing Officer(s) (JAO) v/s prescribed faceless mechanism or competent Faceless Assessment Officer(s) (FAO) - Fresh consideration in view of insertion of section 147A

HELD THAT: - The Division Bench recorded that the Supreme Court, in an identical situation in TEJ PARTAP SINGH [2026 (5) TMI 54 - SC ORDER (LB)], had set aside judgments quashing reassessment notices on the limited ground that the statutory position had been altered by insertion of section 147A with retrospective effect, while expressly leaving all questions on validity, scope, retrospectivity and applicability open for consideration by the jurisdictional High Courts.

It also noticed the later Supreme Court direction that, where applicable, the High Court should first examine whether the matter pertains to Assessment Year 2015-16 and, if so, consider the question of limitation in light of Rajeev Bansal [2024 (10) TMI 264 - Supreme Court (LB)]. Since the parties sought disposal in terms of those orders, the Court declined to enter upon the merits, set aside the Single Judge's order, granted liberty to the assessee to amend the challenge so as to question section 147A and connected provisions, and kept all contentions open for determination by the learned Single Judge. [Paras 6, 7]

The writ appeal was allowed; the order under appeal was set aside and the matter was remitted to the learned Single Judge for fresh consideration with liberty to challenge section 147A and with interim protection continuing in terms of the Supreme Court directions.

Final Conclusion: Following the subsequent Supreme Court orders concerning the retrospective insertion of section 147A, the Court declined to decide the reassessment controversy on merits. The order of the learned Single Judge was set aside and the matter was remitted for fresh consideration, with liberty to the assessee to challenge section 147A and all contentions left open.

Taxability of interest on non-performing assets - application of Section 43D to co-operative banks - retrospective operation of tax amendments - curative amendment principle - mercantile system versus cash/receipt basis for doubtful debts

HELD THAT:- Admittedly, the issue involved in present case has already been decided in Kangra Central Co-op Bank Ltd. [2022 (12) TMI 449 - HIMACHAL PRADESH HIGH COURT]

With the consent of the parties, these appeals are disposed of with the observation that the findings returned in the judgment dated 07.12.2022 (supra) shall mutatis mutandis apply to the present appeals for all intents and purposes.

At this stage, it has been pointed out that judgment of Kangra Central Co-op Bank Ltd.which is pending adjudication in the Hon’ble Supreme Court.

Parties shall abide by the final verdict of the Supreme Court with respect to the issue involved as well as the present ITA in all respects.

Estimated of income - unverifiable purchases - rejection of books of account - CIT(A) restricted the disallowance to 8% of the impugned purchases

HELD THAT:- The Tribunal found that the Assessing Officer had proceeded mainly on database information regarding the suppliers' non-filing status, certain banking patterns and deficiencies in e-way bill particulars, while the assessee had produced audited books, stock tally, GST returns, invoices, ledger accounts, transport receipts and bank statements. At the same time, no independent enquiry from the suppliers was undertaken under the Act, nor was there any meaningful verification of quantitative reconciliation, transportation trail or movement of goods.

Appellate authority also reduced the disallowance to 8% only on estimation, without any specific benchmark, comparable material or remand report despite reliance on extensive documentary material.

Since both authorities had proceeded primarily on estimates without complete factual verification, and the assessee was entitled to adequate opportunity to substantiate the purchases and explain discrepancies, the entire matter required de novo examination by the AO through independent verification of purchases, GST records, movement of goods, transportation, stock records and banking transactions. [Paras 11]

The assessment order and the appellate order were set aside, and the matter was restored to the AO for fresh adjudication after proper enquiry and reasonable opportunity of hearing.

Final Conclusion: Both the Revenue's appeal and the assessee's appeal were disposed of by setting aside the estimated disallowance and remitting the matter to the Assessing Officer for de novo adjudication. The appeals were treated as allowed for statistical purposes.

Taxability of interest on enhanced compensation - Exemption for compulsory acquisition of agricultural land - Reassessment challenge for non-supply of reasons and faceless transfer intimation

Interest on enhanced compensation - amount received under section 28 of the Land Acquisition Act - Interest received under section 28 of the Land Acquisition Act on enhanced compensation held taxable under the head "Income from Other Sources" or exempt as part of compensation u/s 10(37) - HELD THAT: - The Tribunal held that the controversy stood covered by decision in Shri Ajay Kumar Vs. ITO [2025 (11) TMI 1310 - ITAT CHANDIGARH] which had examined the post-Finance Act, 2009 scheme comprising sections 56(2)(viii), 57(iv) and 145B. Following that decision, it was held that interest received on compensation or enhanced compensation is specifically taxable under the head "Income from Other Sources", with only the statutory deduction of 50% being permissible. The earlier Supreme Court decisions relied upon by the assessee were noted as having been considered in that Coordinate Bench ruling, which had concluded that, after the statutory amendments, the issue stood in favour of the Revenue. [Paras 8]

The addition made by taxing the receipt as income from other sources, after statutory deduction, was upheld and the claim of exemption under section 10(37) was rejected.

Faceless assessment procedure - Non-supply of reasons for reopening - Prejudice in reassessment proceedings - challenge to the reassessment on the grounds of absence of transfer intimation under the faceless procedure and non-supply of recorded reasons - HELD THAT: - The Tribunal found that the assessee had participated in the reassessment proceedings and had not demonstrated any prejudice. It further recorded that no material had been placed on record to show any incurable jurisdictional defect in the reassessment proceedings warranting annulment of the assessment. On that basis, the procedural and jurisdictional objections were dismissed. [Paras 8]

The legal grounds assailing the reassessment proceedings were dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the assessment. It held that interest received on enhanced compensation was taxable as income from other sources subject to the statutory deduction, and found no ground to invalidate the reassessment proceedings.

Taxability of fees for technical services under India-Thailand DTAA - Scope of residuary article for other income - Business income in absence of permanent establishment - Interest u/s 234A - Prematurity of challenge to penalty initiation

Fees for technical services under treaty - Residuary article of the India-Thailand DTAA - Business income without permanent establishment - Amounts received by the Thailand resident assessee from Indian group companies for management and related services taxability in India under Article 22 of the India-Thailand DTAA merely because that treaty contains no specific article for fees for technical services - HELD THAT: - The Tribunal held that Article 22, being a residuary provision, can operate only where the item of income does not fall for consideration under any other express treaty provision. Where the receipts are admittedly in the nature of fees for technical services, the absence of a specific FTS article in the India-Thailand DTAA does not permit their automatic taxation under Article 22 read with section 9(1)(vii).

Following the consistent view taken in the assessee's own cases [2024 (6) TMI 1588 - ITAT DELHI] and [2025 (10) TMI 1421 - ITAT DELHI] and noticing that no distinguishing facts were shown for the year under appeal, the Tribunal accepted that such receipts are to be considered in the character of business income and, in the absence of any permanent establishment in India, are not taxable in India. [Paras 8, 9]

The addition made by taxing the receipts as fees for technical services under Article 22 and section 9(1)(vii) was deleted, and the assessee succeeded on this controversy.

Interest for delay in filing return - Verification of timely return filing - whether the return for the impugned assessment year had been filed within the prescribed or extended time? - HELD THAT: - The Tribunal did not adjudicate the levy on the existing record and restored the matter to the Assessing Officer for examination of the actual date of filing of the return. It directed that if the return was filed within time or extended time, no interest under section 234A would be chargeable. Interest under section 234B was treated as consequential. [Paras 10]

The issue of interest under section 234A was remitted to the Assessing Officer for verification, while the challenge to section 234B interest was left consequential.

Initiation of penalty proceedings u/s 270A - Premature challenge - HELD THAT: - The Tribunal held that the assessee's objection was premature because only initiation of penalty proceedings had been challenged and no penalty order had yet arisen for adjudication. [Paras 11]

The ground challenging initiation of penalty proceedings under section 270A was dismissed as premature.

Final Conclusion: The Tribunal held that, in the absence of a specific fees for technical services article in the India-Thailand DTAA, the assessee's service receipts could not be brought to tax in India under the residuary Article 22, and the related addition was deleted. The issue of interest under section 234A was restored for verification of timely filing of the return, while the challenge to penalty initiation under section 270A was dismissed as premature.

Consolidated satisfaction note under search assessment - Revision founded on a void assessment - Jurisdictional defect in assumption of search assessment - assessment framed under the search assessment provisions for the year under consideration, having been initiated on the basis of a single consolidated satisfaction note covering multiple assessment years without year-wise identification of material - consequent revisionary order under section 263

HELD THAT: - The Tribunal held that the assessee was entitled to challenge the validity of the foundational assessment even in appeal against the revision order. On facts, it found that the satisfaction recorded for initiation of proceedings covered multiple assessment years in one consolidated note and did not bifurcate the amounts or identify year-wise material relating to the assessee for the year under consideration.

Following the jurisdictional High Court decision in Saksham Commodities Ltd. [2024 (4) TMI 461 - DELHI HIGH COURT] and SRS Panchratan Diamonds Pvt. Ltd.[2025 (12) TMI 1420 - ITAT DELHI] Tribunal held that such a consolidated satisfaction note was fatal to the assumption of jurisdiction under the search assessment provisions.

Since the original assessment itself was void, the revision order could not stand independently, as revision cannot survive when the foundational proceedings are legally unsustainable. [Paras 11, 12, 13, 14, 15]

The additional ground was admitted and allowed; the original assessment was treated as void for lack of valid jurisdiction, and the revision order was set aside.

Final Conclusion: The Tribunal held that the search assessment for Assessment Year 2018-19, having been founded on an invalid consolidated satisfaction note, was void in law. As the foundational assessment itself was unsustainable, the revision order passed against it was set aside and the assessee's appeal was allowed.

Scope of limited scrutiny assessment - Disallowance of expenditure relating to exempt income u/s 14A read with Rule 8D - HELD THAT: - The Tribunal admitted the additional ground as a pure legal ground since the material necessary for its adjudication was already on record. On examining the reason for which the case had been selected for limited scrutiny, it found that the selection was confined to large deduction claimed u/s 57. The disallowance made u/s 14A read with Rule 8D did not fall within that limited scrutiny issue.

Revenue also did not produce any approval or material showing conversion of the case from limited scrutiny to complete scrutiny. In these circumstances, the Assessing Officer had travelled beyond the permissible scope of the scrutiny, and the disallowance could not be sustained. [Paras 7]

The additional ground was allowed and the disallowance under section 14A read with Rule 8D was directed to be deleted.

Final Conclusion: The Tribunal held that the impugned disallowance was beyond the scope of the limited scrutiny for A.Y. 2016-17, there being no material to show conversion into complete scrutiny. The assessee's appeal was accordingly allowed and the disallowance was deleted.

Assessment u/s 147 v/s 153C -Reassessment based on third-party search material - Scope of assessment of other person under search provisions - Satisfaction requirement for invoking special search assessment machinery

Whether Reopening u/s 147 was valid notwithstanding that the information originated from documents seized in a search on third parties, since the statutory conditions for proceeding against the assessee u/s 153C were not shown to exist? - HELD THAT: - The Tribunal held that section 153C can be invoked only where the Assessing Officer of the searched person is satisfied that the seized money, assets, books or documents belong to, pertain to, or relate to a person other than the searched person, and such material is then handed over to the AO of that other person for further satisfaction and action.

On the facts, there was no such satisfaction of the AO of the searched person, and the seized diaries did not directly contain material clearly showing that they belonged to, pertained to, or related to the assessee. The assessee had himself denied that the seized material contained his name or reflected his transactions, and had asserted that the notings related to another person. In that situation, the special machinery of section 153C was not capable of being triggered.

Tribunal further held that information developed by the Investigation Wing from third-party search material, and then passed to the AO, could validly form the basis for reopening u/s 147. The non obstante structure of section 153C did not displace section 147 here because the foundational jurisdictional requirement for section 153C itself was absent. [Paras 11, 12, 14, 15, 16]

The order quashing the reassessment on the footing that action ought to have been taken only under section 153C was reversed, and the reassessment under section 143(3) read with section 147 was upheld as valid.

Final Conclusion: The Tribunal held that, in the absence of satisfaction and direct seized material attracting the special search assessment provisions against the assessee, the Assessing Officer was justified in resorting to reassessment under section 147 on the basis of information developed from the third-party search. The order of the CIT(A) quashing the reassessment was set aside and the Revenue's appeal was allowed.

Reassessment proceedings - Non-application of mind in sanction for reopening - Mechanical approval u/s 151 - Reference to non-existent provision in approval proforma - Reference to section 147(b) in approval proforma

HELD THAT: - The Tribunal confined adjudication to the jurisdictional challenge. It found that in the approval proforma the Assessing Officer answered the relevant column by referring to section 147(b), though that provision had ceased to exist from 01.04.1989. This, according to the Tribunal, disclosed clear non-application of mind by the Assessing Officer as well as by the approving authority.

Tribunal further held that the sanction under section 151, containing only the standard expression of satisfaction, was ritualistic and mechanical, since the approving authority failed to notice and correct the glaring errors and omissions in the proposal before according approval.

Following the decisions noticed by it, the Tribunal held that such defective and mechanical sanction vitiated the assumption of jurisdiction for reopening. The merits of the addition were therefore left open and not adjudicated. [Paras 11, 12, 13, 14, 15]

The reassessment proceedings were quashed and the legal grounds were allowed; the grounds on merits were left open without adjudication.

Final Conclusion: The Tribunal allowed the appeal on the jurisdictional grounds and quashed the reassessment. Since the reopening itself was held invalid for non-application of mind and mechanical approval under section 151, the grounds on merits were left open.

Unexplained expenditure based on WhatsApp chats - Corroborative evidence for electronic documents - Survey stock discrepancy where silo stock was not quantified - Addition on alleged unaccounted sales by applying gross profit rate

Unexplained salary expenditure - WhatsApp image as evidence - Need for corroborative material - Addition for alleged cash payment of salary merely on the basis of a WhatsApp image and the statement of an employee - HELD THAT: - The Tribunal found that the WhatsApp image contained only figures with a month heading and did not by itself disclose the nature of the entries or show that they represented cash salary payments. The addition had been made solely on the basis of the statement of an employee, but that employee himself admitted that he had not made any cash payment and the other concerned employee denied such payments. The Assessing Officer did not bring on record any employee-wise particulars, linkage with actual cash disbursement, or any other corroborative material, while the salary recorded in the books was higher than the figures noted in the image. In these circumstances, the electronic material was treated as insufficient by itself to support the addition. [Paras 12, 13, 14]

The addition sustained by the first appellate authority on account of alleged cash salary payment was deleted.

Stock shortage during survey - Silo stock not physically verified - Gross profit on alleged bogus sales - HELD THAT: - On examination of the inventory sheets, the Tribunal found serious deficiencies in the survey stock-verification exercise. The material on record showed that a very large quantity of raw material and finished goods was stated to have been physically verified in an implausibly short span, and the work-in-progress figures appeared to have been taken from the assessee's own stock records. The person in charge during survey had specifically stated that stock lying in silos had probably not been quantified, yet no further verification was undertaken. The assessee later furnished reconciliation, silo-wise stock details, photographs, and supporting purchase records, but no effort was made by the Assessing Officer to verify them. Since the omission to quantify silo stock vitiated the very basis of the alleged shortage, the finding of short stock and the consequential treatment of the same as unaccounted sales by applying gross profit rate could not stand. [Paras 29, 30, 31, 32, 33]

The addition sustained by applying the gross profit rate on the alleged short stock was deleted, and the Revenue's challenge to that relief failed.

Unexplained salary and bonus expenditure - WhatsApp chats without corroboration - Telescoping - HELD THAT: - The Tribunal held that this issue was identical to the one decided for Assessment Year 2022-23, as the additions were based on the same WhatsApp images and the same employee statement. Applying the same reasoning, it held that such images could not by themselves constitute the sole basis for addition when no corroborative evidence of actual cash payment was brought on record and the salary and bonus expenditure recorded in the books exceeded the figures appearing in those images. [Paras 35, 36]

The addition confirmed by the first appellate authority on account of alleged cash salary and bonus payment was deleted and the Revenue's grounds on this aspect were dismissed.

Final Conclusion: For Assessment Year 2022-23, the addition for alleged cash salary payment based solely on a WhatsApp image and employee statement was deleted. For Assessment Year 2023-24, the Tribunal deleted both the addition on alleged stock shortage, holding that silo stock had not been properly quantified during survey, and the addition for alleged cash salary and bonus payments based on the same uncorroborated WhatsApp material; the assessee's appeals were partly allowed and the Revenue's appeal was dismissed.

Best judgment assessment after rejection of books - Reasonable estimation of profit in works contract business - Section 68 addition after rejection of books of account

Rejection of books of account - Estimation of net profit in government contract business - Past history as basis for profit estimation - HELD THAT: - The Tribunal held that the assessee had failed to furnish complete details and supporting evidence, and therefore rejection of the books under section 145(3) and assessment under section 144 could not be faulted.

Once the books are rejected, income must still be estimated on a reasonable and rational basis. AO had adopted a net profit rate of 10% without citing comparable cases, prevailing margins in similar business, or any basis for departure from the assessee's past results. Having regard to the nature of the assessee's government construction contracts in Naxalite-affected areas, the higher operational costs, fluctuation in margins depending on stage of contract completion, and the past net profit ratios, the Tribunal held that a net profit rate of 6% of gross turnover would be reasonable. [Paras 7]

The Assessing Officer was directed to recompute income by applying a net profit rate of 6% of the gross turnover after giving credit for income already declared; the Revenue succeeded only in part on this issue.

Addition u/s 68 - sundry creditors and unsecured loans addition survival after rejection of books and estimation of income - Telescoping of trading liabilities - HELD THAT: - The Tribunal held that once business income is determined on estimated basis after rejection of books of account, a separate addition in respect of trading liabilities arising from business transactions ordinarily cannot be sustained in the absence of independent incriminating material showing that such liabilities had no nexus with the business. The estimated income is available for telescoping against such trading liabilities. On the legal aspect, the Tribunal also accepted that after rejection of the books under section 145, entries therein cannot be relied upon for making additions under section 68, following CIT Vs. Dulla Ram . Applying that principle, the additions on account of sundry creditors and unsecured loans were held to be untenable. [Paras 7, 8]

The additions made under section 68 on account of sundry creditors and unsecured loans were directed to be deleted in entirety.

Final Conclusion: The Revenue's appeal was partly allowed. While rejection of the books and resort to best judgment assessment were upheld, profit estimation at 10% was reduced to 6% of gross turnover, and the separate additions under section 68 on account of sundry creditors and unsecured loans were deleted.

Entitlement to provisional release of the imported secondhand machinery - HELD THAT:- The writ petition seeking provisional release of imported second-hand digital multifunction printing, copying and scanning machines was disposed of by following the directions issued in an earlier batch of writ petitions [2025 (7) TMI 1350 - MADRAS HIGH COURT] with provisional release to be considered on the same terms.

Penalty on Customs Broker for import misclassification - Abetment in interpretational classification dispute - Penalty under Section 114AA for alleged false declaration - HELD THAT: - The Tribunal held that the foundation for penalty against the appellants failed once the importer's case had already been treated as involving an interpretational dispute on classification and the importer had been exonerated for want of mala fide intent. In such circumstances, a Customs Broker who merely filed the Bills of Entry on the importer's instructions could not be said to have abetted evasion, nor could the ingredients for penalty for false declaration be sustained on the same facts. The Tribunal further held that the objection regarding invocation of the larger period would equally apply to the appellants. [Paras 5, 6, 7]

The penalties imposed on both appellants under Sections 112(a) and 114AA were deleted.

Final Conclusion: The Tribunal set aside the impugned order insofar as it imposed penalties on the two appellants. Both appeals were allowed and the penalties under Sections 112(a) and 114AA were deleted.

Eligibility for the exemption under Notification No. 50/2017-Customs - imported refined oils and candelilla wax - condition of being of edible grade - additional end-use condition - CBEC circular cannot override exemption notification.

Whether it is of ‘edible grade’ or otherwise; and thereafter deciding on the applicability of the Notification No.50/2017-Customs dated 30.06.2017 ? - HELD THAT: - The Tribunal held that the dispute was confined to whether the imported oils were of edible grade, there being no dispute on tariff classification. The representative samples had been tested by an approved laboratory and the test reports confirmed conformity with edible grade standards under the FSSAI regulations. Reading the supplementary note to Chapter 15 with the applicable food standards, the Tribunal treated those test reports as sufficient evidence that the goods were of edible grade. Since the notification required only that the goods fall under the specified headings and be refined and edible grade, and did not prescribe any end-use condition, exemption could not be denied merely because the importer declared use in cosmetics or pharmaceutical products. [Paras 7, 8, 11]

The exemption was rightly allowed and the appellate order extending the benefit under Serial Nos. 64 and 71 was upheld.

CBEC circular cannot override exemption notification - No additional condition in exemption notification - HELD THAT: - Relying on Inter Continental (India) [2002 (2) TMI 129 - HIGH COURT OF GUJARAT AT AHMEDABAD], as affirmed by the Supreme Court [2008 (4) TMI 23 - SUPREME COURT], the Tribunal accepted the principle that a circular cannot add a condition which the exemption notification itself does not contain. The notification in question did not make human consumption or proof of end use a condition for the concessional rate. Therefore, the departmental case founded on the circular and on the declared industrial use of the oils could not curtail the scope of the exemption otherwise available on satisfaction of the stated conditions in the notification. [Paras 9, 10, 11]

The circular-based end-use objection was rejected and could not be used to deny the exemption.

Final Conclusion: The Tribunal upheld the appellate order granting exemption under Notification No. 50/2017-Customs to the imported oils. It held that the goods having been established as refined edible grade, and the notification containing no end-use condition, the Revenue's appeal was liable to be dismissed.

EPCG export obligation waiver for force majeure and unforeseen circumstances - Non-fulfilment of export obligation - Interest under exemption notification and bond on failure of export obligation - Doctrine of frustration - Confiscation and penalty for non-fulfilment of EPCG conditions.

EPCG export obligation waiver for force majeure and unforeseen circumstances - Interest under exemption notification and bond - Encashment of bank guarantee before show cause notice - HELD THAT: - The Tribunal held that paragraph 4 inserted in the notification specifically contemplates waiver where export obligation cannot be fulfilled because of force majeure or other unforeseen circumstances. In the present case, the appellant lost possession and control of the imported goods when the consortium of banks auctioned the capital goods along with the hotel premises before expiry of the first block period, making fulfilment of the export obligation impossible. Since the interest demand was founded on the notification and the bond, the principle applied in Union of India vs. Customs and Central Excise Settlement Commission, Additional Bench, Kolkata & Anr. [2009 (12) TMI 39 - BOMBAY HIGH COURT], Taurus Novelties Ltd. vs. Commissioner of Customs, Bangalore [2004 (7) TMI 162 - CESTAT, BANGALORE] and Commissioner of Customs (Port), Kolkata vs. M/s. B R Marbles Pvt. Ltd.[2023 (9) TMI 729 - CESTAT KOLKATA] governed the matter. The appellant had also acted bona fide by effecting exports through group companies to the extent permitted, and the bank guarantees had already been realised before the show cause notice. In these circumstances, interest could not be levied. [Paras 35, 36, 37, 39, 40]

The levy of interest under the notification and bond was set aside.

Confiscation under section 111(o) for breach of EPCG conditions - Penalty under section 112(a) and mens rea - Impossibility of performance -HELD THAT: - The Tribunal found that the same circumstances which rendered performance of the export obligation impossible also disentitled the department from sustaining confiscation under section 111(o). The appellant's failure was not deliberate; rather, the imported goods themselves had gone out of its possession on auction, and its conduct showed bona fides. The Tribunal further held that penalty could not be sustained both in view of the authorities relied upon and because mens rea is required for imposition of penalty under section 112, as noticed in Meirs Pharma (India) Pvt. Ltd. vs. Commissioner of Customs, Chennai . Once the goods were not liable to confiscation, penalty under section 112(a) could not survive. [Paras 41, 42, 43, 44]

The confiscation under section 111(o) and the penalty under section 112(a) were set aside.

Customs duty foregone under EPCG notification - HELD THAT: - The Tribunal expressly recorded the appellant's statement that it was not disputing the duty demand or its recovery through encashment of bank guarantees, and was confining the challenge to interest, penalty and confiscation. The duty demand therefore remained undisturbed. [Paras 30, 44]

The confirmation of the customs duty demand was upheld.

Final Conclusion: The appeal was partly allowed. While the customs duty demand under the notification was left undisturbed as not contested, the confiscation of goods, levy of interest and imposition of penalty were set aside.

Refund of court fee on withdrawal of suit after settlement - Purposive interpretation of settlement under Section 16 of the Court Fees Act - Acceptance of resolution plan payment as settlement of civil claim -HELD THAT: - The Court held that, although there was no bilateral settlement in the strict sense between the parties, the plaintiff had submitted its claim in the insolvency process, agreed to accept the amount payable under the approved resolution plan, and thereby brought quietus to its claim in the suit. On that basis, the case attracted the ingredients of settlement. Relying on the principle stated by the Supreme Court in High Court of Judicature at Madras through its Registrar General v. M. C. Subramaniam [2021 (2) TMI 1412 - SUPREME COURT] the Court applied a purposive construction of Section 16 of the Court Fees Act and held that refund of court fee is not confined only to settlements reached through a formal court referral under Section 89 CPC. Since the plaintiff had accepted the amount under the CIRP process towards full and final settlement and undertook not to pursue any further proceedings on the same cause of action, the suit was permitted to be withdrawn and full refund of court fee was directed. [Paras 16, 17, 18, 19, 21]

The plaintiff was permitted to withdraw the suit, and the entire court fee was directed to be refunded.

Final Conclusion: The Court treated the plaintiff's acceptance of the amount payable under the approved insolvency resolution plan as a settlement bringing the dispute to an end. The suit was therefore allowed to be withdrawn, and refund of the entire court fee was directed.

Execution of Appellate Tribunal order as decree of civil court - Transmission of execution to civil court having local jurisdiction - Entitleent to possession under its earlier release order - HELD THAT: - The Tribunal recorded that its common final order [2019 (1) TMI 1312 - ATPMLA] had already directed release of the attached properties and refund of the detained amount, and that the respondent's challenge to that order stood dismissed by the High Court [2026 (1) TMI 655 - BOMBAY HIGH COURT]. On that basis, it held that the appellants were entitled to possession of the properties. Referring to section 35 of the PMLA, the Tribunal held that its order is executable as a decree of a civil court and that, under sub-section (4), it is specifically empowered to transmit the order to a civil court having local jurisdiction for execution as if it were a decree of that court. Since the properties in respect of which possession had been taken by the Directorate were located within the jurisdiction of the District and Sessions Court, Raigad-Alibag, the Tribunal directed transmission of the order and original record to that court for execution, while keeping the remaining aspects of the execution petition pending before it. [Paras 7, 9, 10]

Execution was directed to proceed through transmission of the order and record to the District and Sessions Court having local jurisdiction over the properties for delivery of possession in accordance with law.

Final Conclusion: The Tribunal held that the appellants were entitled to possession under its earlier release order, which had been upheld by the High Court, and directed that the order be transmitted to the competent civil court at Raigad-Alibag for execution as a civil court decree. The execution petition was kept pending for remaining issues.

Money Laundering - Attachment of property as proceeds of crime - Burden to prove independent source of acquisition - Money Trail - failure to establish acquisition from lawful sources - HELD THAT: - The Tribunal held that the respondent had established the foundational case that the properties originally stood connected with M/s AGFVIL and were later transferred through intermediary namesake transactions without consideration. In the case of Mrs. Vadlamudi Naga Siromani, the Tribunal relied on the statements referred to in the order to hold that the property had originally been purchased by M/s AGFVIL and later shifted in name only, and that no documentary evidence of payment of consideration was produced. In the case of Shri Vadlamudi Balakrishna, the Tribunal found that, although a source chart and later material were relied on, no supporting documents proving the alleged loans, payment to the seller, or bank trail were produced, and the additional material could not displace the evidence collected by the respondent showing transfer of property originating from the proceeds of crime. In the case of Mrs. Parvathaneni Ramamani, the Tribunal held that her case stood on the same footing, and that her later explanation of source was inconsistent with her own statement and remained unsupported by material. The Tribunal therefore concluded that the appellants had failed to prove acquisition from independent lawful sources or payment of consideration, while the respondent's material showed that the transfers were effected only to change ownership and shield the properties. [Paras 26, 27, 28, 29, 30]

The challenge to the confirmation of the provisional attachment failed, and the attachment of the properties in the hands of all three appellants was sustained.

Final Conclusion: The Tribunal found no substance in the appellants' contention that the attached properties had been acquired from their own sources. As they failed to prove payment of consideration or independent lawful source, the confirmation of the provisional attachment was upheld and all three appeals were dismissed.

Money-laundering through fraudulent enhanced land compensation - Proceeds of crime - Attachment of equivalent value property - Provisional attachment under likelihood of concealment or transfer - Definition of “proceeds of crime” under Section 2(1)(u).

Money-laundering through fraudulent enhanced compensation - Projection of tainted money as untainted property -HELD THAT: - The Tribunal found that the appellants or their predecessors had received enhanced compensation even though their own claims for enhancement had already failed, and that the payment was secured by relying upon Supreme Court decisions unconnected with their cases. Since the appellants did not dispute receipt of such enhanced compensation, the amount so received represented proceeds of crime. The subsequent possession and claim over that amount as if it were untainted money fell within the scope of Section 3, which covers not merely concealment but also possession and projection of tainted property as untainted. [Paras 18, 19, 20]

The challenge to the attachment on the ground that no offence of money-laundering was made out was rejected.

Proceeds of crime - Equivalent value property - Ancestral property attachment - HELD THAT: - Rejecting the contention that only property directly purchased from the tainted amount could be attached, the Tribunal held that the expression proceeds of crime in Section 2(1)(u) includes not only property directly or indirectly derived from the scheduled offence, but also the value of such property. Relying on Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT], its own earlier decision in Sadananda Nayak Versus The Deputy Director, Directorate of Enforcement, Bhubaneswar [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI], and Arun Suri versus Enforcement of Directorate [2026 (2) TMI 1026 - DELHI HIGH COURT], the Tribunal held that if the actual tainted property is unavailable, vanished, or laundered, any other property of equivalent value can be proceeded against. On that construction, attachment was not invalid merely because in some cases the attached property was ancestral or had been acquired prior to the commission of the scheduled offence. [Paras 21, 22, 23]

The objection that the attached properties had no nexus with the scheduled offence because they were ancestral or acquired earlier was rejected, and the attachment of equivalent value property was upheld.

Provisional attachment - Likelihood of concealment or transfer - HELD THAT: - The Tribunal held that the word likely in Section 5(1) denotes an apprehended possibility and cannot be read to mean that attachment is permissible only after the property has in fact been transferred or otherwise dealt with. So long as the property remains with the person in possession, the possibility of its being dealt with so as to frustrate confiscation proceedings persists. On that interpretation, the absence of proof of an actual alienation did not invalidate the provisional attachment. [Paras 24, 25]

The challenge to the provisional attachment for want of basis under Section 5(1) was rejected.

Final Conclusion: The Tribunal upheld the confirmation of the provisional attachment orders. It held that the enhanced compensation fraudulently received after dismissal of the claimants' own proceedings constituted proceeds of crime, that equivalent value properties could validly be attached, and that the objection under Section 5(1) was without merit; consequently, all the appeals were dismissed.

Substantial question of law - Jurisdiction of the High Court - Rectification of mistake - Error apparent on the face of record - Taxability and classification of subvention income received by a bank from vehicle dealers - Tribunal dismissed the rectification application. It held that the controversy in the main appeal concerned taxability and classification of service, for which the statutory appeal lay to the Supreme Court, and that the plea based on non-acceptance of another Tribunal decision did not disclose any mistake apparent from the record but amounted to an attempt to seek review on merits. - HELD THAT:- Delay was condoned, but the civil appeals against the Tribunal's orders were dismissed as no substantial question of law arose for consideration, though the Court stated that it did not approve the Tribunal's observations questioning the jurisdiction of the High Court.

Goods Transport Agency liability - person liable to pay freight under Rule 2(1)(d)(v) - Reverse charge on person liable to pay freight - Double taxation despite tax allegedly paid by the principal contractor - Sub-contractor arranging transportation on reimbursement basis-Extended limitation on previously disclosed facts - Suppression of facts​​​​​​​.

Demand results in double taxation​​​​​​​ - Whether, the appellant can be treated as an independent provider of taxable GTA service or as the person liable to pay freight under Rule 2(1)(d)(v) of the Service Tax Rules, 1994, despite the admitted contractual arrangement with M/s. Aspinwall & Co. Pvt. Ltd.? - HELD THAT: - The appeal records including copies of ST-3 Returns filed by M/s. Aspinwall & Co. Pvt. Ltd., with taxpayer’s counterfoil of the tax paid challans, related correspondence, undertaking letters and Form 16A certificates consistently support the appellant’s stand that service tax on the transportation component had already been discharged by Aspinwall. Despite repeated disclosures made by the appellant, the Department failed to verify the records of Aspinwall before confirming the impugned demand.

The principles emerging from Evergreen Suppliers [2007 (10) TMI 134 - CESTAT, BANGALORE] and the appellant’s own case reported in [2021 (8) TMI 1117 - CESTAT CHENNAI] clearly establish that once the Department was informed about the subcontracting arrangement and discharge of service tax by M/s. Aspinwall & Co. Ltd., it was duty-bound to verify the records of the principal contractor before proceeding against the appellant. The said decisions further show that in interpretational disputes involving subcontractor liability and revenue neutrality, wilful suppression cannot be readily alleged. Significantly, the Tribunal in the appellant’s own case had already rejected invocation of the extended period on the very same factual arrangement.

The Tribunal held that issuance of a consignment note is an essential statutory attribute of a Goods Transport Agency, and the records showed that such consignment notes were issued only by the principal contractor. The documentary material established that the appellant only coordinated cargo movement, arranged vehicles and received reimbursement of freight incurred on behalf of the principal contractor, without dealing with customers or undertaking carriage in its own name. Mere routing of freight payments through the appellant did not make it the person liable to pay freight under the reverse charge provision. The Tribunal further held that the Department, despite being put on notice that the principal contractor had paid service tax on the transportation component, failed to verify that contractor's records before confirming the demand. On these facts, levy on the appellant was held to be unsustainable and productive of impermissible double taxation of the same transportation activity. [Paras 16, 17, 18, 19, 20]

The demand under Transport of Goods by Road Service / Goods Transport Agency Service was set aside on merits.

Whether the extended period under the proviso to Section 73(1) of the Finance Act, 1994 is invocable in the facts of the present case and, consequently, whether interest and penalties imposed under Sections 75, 76, 77 and 78 are sustainable?​​​​​​​ - HELD THAT: - The Tribunal found that the appellant had disclosed, during audit itself, the entire nature of its arrangement with the principal contractor, including the stand that consignment notes were issued by the principal contractor and that service tax on transportation charges had been discharged by it. The same factual arrangement had also been examined in earlier show cause proceedings. In these circumstances, the statutory ingredients necessary for invocation of the extended period, namely fraud, wilful misstatement or suppression with intent to evade tax, were absent. The Tribunal also noted that the dispute involved a bona fide interpretational question regarding reverse charge liability in a subcontracting arrangement, and that mere non-payment or non-registration could not by itself establish suppression. Since the show cause notice covered a period substantially beyond the normal period, the extended demand was barred by limitation. Once both the merits and extended limitation failed, interest and penalties, including those requiring suppression with intent to evade, were held to be unsustainable. [Paras 25, 26, 27, 28, 29]

Invocation of the extended period was held unsustainable; the demand beyond the normal period was time-barred, and the interest and penalties were set aside.

Final Conclusion: The Tribunal held that the appellant, acting only as a sub-contractor/intermediary arranging transportation for the principal contractor, was not liable to service tax as a Goods Transport Agency or as the person liable to pay freight. The demand for the period 2007-08 to 2011-12, together with interest and penalties, was set aside, and the appeal was allowed.

Taxability of transfer of toll collection rights - Consideration received by NHAI - Franchise service - Sovereign Function - Reverse Charge Mechanism -Negative list negative list under Section 66D(a) or Section 66D(h) - exclusion for access to road or bridge on payment of toll - Sovereign functions - Extended period of limitation - Commercial Exploitation of Rights.

Transfer of toll collection rights - Franchise service - Taxable service - HELD THAT: - The Tribunal held that the contract did not merely permit assistance in toll collection but transferred to the contractor an exclusive and commercially exploitable right to collect user fee and retain the collections against a predetermined remittance to NHAI irrespective of actual traffic. The amount received by NHAI was therefore not the statutory toll collected from road users but contractual consideration for assignment of that right. For the period prior to 01.07.2012, the contractor was enabled to collect toll in the name of NHAI and thereby obtained a representational right, bringing the arrangement within franchise service. After 01.07.2012, the same assignment of rights for consideration remained a service under the negative list regime, there being no specific exemption for such activity. Following Navayuga Engineering Co. Ltd.[2020 (7) TMI 356 - CESTAT HYDERABAD], the Tribunal treated the method of payment, whether lump sum or otherwise, as immaterial once the right to provide the service and collect the consideration stood transferred. [Paras 22, 23, 26, 27, 31]

The consideration received by NHAI for assigning user fee collection rights was chargeable to Service Tax; the activity was franchise service up to 30.06.2012 and taxable service thereafter.

Negative list exclusion for access to road or bridge on payment of toll - Service by Government - Sovereign functions - HELD THAT: - The Tribunal distinguished between toll paid by road users for access to the road and the separate consideration paid by the contractor to NHAI for obtaining the right to collect that toll. Since the subject matter of the demand was the latter consideration, the exclusion relating to access to a road or bridge on payment of toll did not apply. The plea that the activity was a service by Government was also rejected because NHAI was found not to be acting merely as an executing arm of Government in this transaction; it had itself transferred the right to collect toll to contractors for commercial consideration. The Tribunal further held that, although NHAI is a statutory authority, it is a body corporate required to act on business principles, and assignment of toll collection rights through bidding is a business activity, not an inalienable sovereign function. Decisions concerning non-taxability of toll collected from road users, including Ideal Road Builders Pvt Ltd. [2013 (1) TMI 522 - CESTAT MUMBAI], were held inapplicable because the present dispute concerned transfer of collection rights and not toll as such. [Paras 24, 25, 28, 29, 31]

The negative list exclusions and the plea of sovereign immunity were rejected, and the activity remained taxable.

Extended period of limitation - Interest on delayed payment - Penalty - HELD THAT: - The Tribunal recorded that NHAI had neither obtained Service Tax registration nor filed returns nor paid tax despite receiving consideration over several years, and rejected the plea of bona fide belief in view of the statutory framework and the commercial character of the transaction. On that basis, it upheld invocation of the extended period. It also held that interest under Section 75 was compensatory and would follow the tax demand, and in its final finding affirmed the penalties imposed. [Paras 30, 31]

The extended period was upheld, and the demands of interest and penalties were sustained.

Final Conclusion: The Tribunal held that NHAI's assignment of user fee collection rights to contractors for fixed consideration was a taxable commercial arrangement, amounting to franchise service up to 30.06.2012 and taxable service thereafter. The negative list and sovereign function pleas were rejected, and the Service Tax demand with interest and penalties was sustained, resulting in dismissal of the appeals.

CENVAT credit on common input services - Abatement under Notification No. 1/2006-ST - Overriding effect of non obstante clause in Rule 6(5) - HELD THAT: - The Tribunal held that the proviso to Notification No. 1/2006-ST, which denies the notification where credit has been taken on inputs, capital goods or input services used for providing such taxable service, had to be read harmoniously with Rule 6(5) of the CENVAT Credit Rules, 2004. Rule 6(5), as it stood during the disputed period, contained a non obstante clause and allowed full credit of specified input services unless they were used exclusively for exempted services. The common input services in question were not alleged in the show cause notice to be outside the specified category under Rule 6(5), nor was there any allegation that they were used exclusively for exempted services. In that situation, once credit was legally admissible, its utilisation could not be denied for claiming the abatement. The demand founded on alleged wrongful availment of abatement therefore failed on merits. [Paras 6, 8, 9, 10, 11]

The demand, interest and penalty founded on denial of abatement were set aside on merits.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order. It held that abatement under Notification No. 1/2006-ST was not deniable merely because credit on common specified input services had been taken under Rule 6(5) during the relevant period.

Service tax on renting of commercial premises by religious body - Entitlement to exemption under Notification No. 25/2012-S.T. - Exemption for charitable activities under registered charitable trust - Renting of precincts of religious place meant for general public - Extended period and penalty in case of bona fide belief.

Service tax - Rental income from commercial shops situated within the church premises - HELD THAT: - The Tribunal held that mere registration under section 12AA was not sufficient to claim exemption under clause 4 of Notification No. 25/2012-ST; the entity must also establish that the service in question was by way of defined charitable activities, and no material was placed to show that the renting activity satisfied that requirement. It further held that renting of shops to private tenants for business could not be treated as renting of precincts of a religious place meant for general public under clause 5(a). Following M/s. Saint Patrick's Church [2026 (3) TMI 1634 - CESTAT BANGALORE], the Tribunal held that commercial letting of shops situated within church premises remained liable to service tax after 01.07.2012. [Paras 5, 6]

The demand of service tax on the rental income from commercial shops after 01.07.2012 was sustained, subject to limitation.

Extended period and penalty in case of bona fide belief - HELD THAT: - The Tribunal noted that the appellant had continued to avail exemption under a bona fide belief and that the transactions were reflected in the appellant's records, a circumstance already noticed by the Commissioner (Appeals) while reducing penalty. On that basis, the Tribunal found no justification to sustain the demand beyond the normal period and held that penalties were liable to be set aside altogether. [Paras 6]

The demand was confined to the normal period and all penalties were set aside.

Final Conclusion: The Tribunal held that the appellant church was not entitled to exemption under clauses 4 or 5 of Notification No. 25/2012-ST in respect of rent from commercial shops and that service tax was payable after 01.07.2012. However, the demand was restricted to the normal period and all penalties were set aside, resulting in partial allowance of the appeal.

Service tax on corporate guarantee without consideration - requirement of consideration under section 65B(44) of the Finance Act, 1994 in the post-negative list regime -Banking and other financial services - HELD THAT: - The Tribunal held that the controversy stood concluded by Edelweiss Financial Services Ltd [2022 (2) TMI 1359 - CESTAT MUMBAI] which recognised that, under the post-negative list regime, an activity becomes taxable only when there is both a provider-recipient relationship and flow of consideration. It further noted the consistent view in G 4 S Cash Solutions (India) Pvt Ltd [2025 (11) TMI 1277 - CESTAT CHANDIGARH], following M/s Sowar Pvt Ltd [2023 (5) TMI 193 - CESTAT NEW DELHI], that issuance of corporate guarantee by an entity not engaged in the business of financing is not exigible under banking and other financial services, and in any event a corporate guarantee given without commission, fee or interest lacks the element of consideration required for taxability. On the facts, the revenue had not identified any consideration received by the appellant; the show cause notices proceeded on the basis of commission paid to bankers, which could not be treated as consideration received by the appellant for furnishing the corporate guarantee. In that view, the appellate remand for quantification served no purpose because the very levy was unsustainable.

The levy of service tax on the corporate guarantee was held unsustainable, and the impugned order was set aside with the appeal allowed.

Final Conclusion: The Tribunal held that, in the absence of any consideration received by the appellant for issuing the corporate guarantee, the transaction was not exigible to service tax. The remand for mere quantification was therefore unwarranted, and the impugned order was set aside.

CENVAT credit on insurance services, works contract services and manpower supply services - Input service - Works contract services - procedural defects in the invoices under rule 9(2).

Marine cargo insurance services - Works contract services for repair and maintenance of plant and machinery - Manpower supply services for repair and maintenance -HELD THAT: - The Tribunal found that, insofar as marine cargo insurance was concerned, the adjudicating authority proceeded on an incorrect factual basis by treating the credit relatable to survey services as if it pertained to marine cargo insurance and by recording that no explanation or supporting documents had been furnished, though the break-up and documents had in fact been submitted. As regards works contract services, the Tribunal held that the exclusion in rule 2(l) of the CENVAT Credit Rules, 2004 applies to works contract services used for construction of a building or civil structure or for foundation and support structures, and not to services used for erection, repair, maintenance, painting or fabrication of existing plant and machinery. On the manpower supply credit, the invoices showed that the service was received for repair and maintenance of plant and machinery during factory shutdown and not for civil construction; such activity was integral to manufacture and therefore qualified as input service. [Paras 25, 26, 28, 29, 30]

The assessee was entitled to the disputed credit on all three categories of services, and the disallowance confirmed to that extent was set aside.

Validity of invoices for CENVAT credit - Procedural lapse vis-a-vis substantive conditions - Manpower supply services as input services - HELD THAT: - The Tribunal noted that the credit in dispute had been taken on manpower supply services received from the named service providers and that the invoices had been produced during audit. The adjudicating authority had itself found no dispute regarding receipt of the services in the assessee's manufacturing operations, payment of service tax by the service providers, and coverage of such services within rule 2(l) of the CENVAT Credit Rules, 2004. In these circumstances, once the substantive requirements under rule 4 stood satisfied, credit could not be denied for a merely procedural defect in the invoices. This view was also supported by M/s. Adbur Private Limited vs. CST, Delhi [2017 (5) TMI 101 - CESTAT NEW DELHI], relied upon by the Tribunal. [Paras 34, 35, 36, 37]

The order dropping the demand relating to this credit was upheld, and the department's appeal was dismissed.

Final Conclusion: The assessee's appeal was allowed and the disallowance of CENVAT credit was set aside, while the department's appeal against the credit allowed on manpower supply services was dismissed. The Tribunal held that the disputed services were eligible input services and that credit could not be denied for a procedural defect in the invoices when the substantive conditions stood satisfied.

CENVAT credit on erection and commissioning services, management consultant services, manpower supply services, and mediclaim or accidental insurance policy for employees - Input services- Extended period of limitation - Suppression of facts - Interest and penalty consequential to inadmissible credit demand.

CENVAT credit on input services - Input service nexus with business -HELD THAT: - The Tribunal recorded that it had considered the appellant's submissions and the case law cited on the disputed services and found that the demand of CENVAT credit on all the impugned services was not sustainable. On that basis, the confirmed demand relatable to those services was held liable to be set aside. [Paras 10]

CENVAT credit denied on the four categories of input services was allowed and the demand on that count was set aside.

Extended period of limitation - Suppression of facts - HELD THAT: - The Tribunal found that there was no specific allegation of suppression and that the availment of CENVAT credit was within the Department's knowledge in April 2009, whereas the show cause notice was issued later. In those circumstances, the extended period could not be invoked, and the confirmation of demand was unsustainable on limitation as well. [Paras 10]

The demand was barred insofar as it rested on the extended period of limitation.

Interest and penalty consequential to inadmissible credit demand - HELD THAT: - The Tribunal treated interest and penalty as consequential to the confirmation of the disputed CENVAT credit demand. Since the demand itself was found unsustainable, the levy of interest and the penalty imposed were also held to be unsustainable. [Paras 10]

Interest and penalty were set aside as a consequence of the failure of the underlying demand.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the denial of CENVAT credit on the disputed services was unsustainable, the extended period had been wrongly invoked, and the consequential interest and penalty could not survive.

Inter-State sale and consignment sale -Burden of proof under Form F declarations - Extrapolation of pre-agreement material to subsequent transactions - Penalty on mischaracterisation of post-transfer transactions.

Whether inter-State sale had taken place during the movement of the goods from the State of Tamil Nadu where the principal was located to other States where the agents were located ? - HELD THAT: - As seen from the terms of the Agreement, sale had not taken place when the goods moved from the location of the principal to the location of the agent. It needs to be noted that the aforesaid Agreement that was executed on 01.08.1995 for a period of 2 years has not been doubted by the Sales Tax Appellate Tribunal. The appellant had discharged the initial burden of proof by providing the relevant documents as well as statutory forms.

The Tribunal held that, for a transaction to fall under section 3(a) of the CST Act, the movement of goods from one State to another must be occasioned by a prior contract of sale. Examining the agency agreement effective from 01.08.1995, it found that the goods continued to remain the property of the principal, the agent was to sell on behalf of the principal, monthly accounts were to be rendered, and advances drawn on hundies were expressly not to be treated as sale value. The appellant had also produced the relevant documents and Form F declarations, thereby discharging the initial burden under section 6A. The Sales Tax Appellate Tribunal erred in treating the post-01.08.1995 transactions as inter-State sales by merely extrapolating material recovered on 26.07.1995 and relating to the period prior to 01.08.1995. Such pre-agreement material, including blank cheques, slips and debit notes, could not by itself establish that the later movement of goods was pursuant to a prior contract of sale. The reliance placed on Hyderabad Engineering Industries vs. State of Andhra Pradesh [2011 (3) TMI 1427 - SUPREME COURT] was accepted, while Sri Durga Distilleries vs. Commissioner of Commercial Taxes, Bangalore [2001 (1) TMI 929 - KARNATAKA HIGH COURT] was held distinguishable, since that decision did not govern the present controversy arising under sections 3 and 6A of the CST Act in the light of the subsequent agreement. [Paras 28, 31, 32, 33, 34]

The finding of the Sales Tax Appellate Tribunal treating the post-01.08.1995 turnover as inter-State sales was set aside, and the order of the Additional Appellate Assistant Commissioner treating the transfers as consignment sales was restored.

Penalty on alleged inter-State sales - Penalty surviving on balance tax difference - HELD THAT: - The higher penalty had been restored by the Sales Tax Appellate Tribunal only because it had restored the assessment on the disputed turnover as inter-State sales. Once that finding was set aside and the transfers were held to be consignment sales, the consequential restoration of the larger penalty could not stand. At the same time, the challenge to the reduced penalty imposed by the Additional Appellate Assistant Commissioner was rejected, since that authority had given cogent reasons for sustaining penalty on the remaining tax difference, and the Tribunal also noted that the appellant ought to have separately challenged the dismissal of its own appeal on that aspect. [Paras 35, 36, 37]

The penalty restored by the Sales Tax Appellate Tribunal on the disputed turnover was set aside, while the reduced penalty maintained in the appellant's own appeal was left intact.

Final Conclusion: The appeal was allowed in part. The post-01.08.1995 turnover in Assessment Year 1995-96 was held to be consignment sales and not inter-State sales, with the result that the enhanced penalty restored by the Sales Tax Appellate Tribunal was set aside; however, the reduced penalty sustained in the appellant's own appeal was maintained.

Suit for Recovery -Necessary and proper party - Cause of action - liability to remain on the array of parties despite being an agent of the intermediary in the transportation arrangement - Deletion of party under Order I Rule 10 - Partial rejection of plaint

Necessary and proper party - Deletion of party under Order I Rule 10 - Privity of contract - HELD THAT: - The Court held that, on the plaint averments themselves, the plaintiff's contract for supply of goods was with Defendant No. 3, while transportation was arranged through Defendant No. 2, who in turn engaged Defendant No. 1 as forwarding agent. There was thus no direct contractual relationship between the plaintiff and Defendant No. 1. The Court further noted that Defendant No. 2 had already been deleted from the array of parties, and once that was so, nothing survived against Defendant No. 1, who was only the agent engaged for transportation. On that basis, deletion of Defendant No. 1 from the suit was justified. [Paras 43, 44, 45, 48]

The deletion of Defendant No. 1 from the array of parties was upheld.

Partial rejection of plaint - Order VII Rule 11 - Deletion of party under Order I Rule 10 - HELD THAT: - The Court accepted that a suit cannot be rejected piecemeal. It clarified, however, that the present matter was not one of partial rejection of the suit but of deletion of a party who was not necessary or proper. Since the controversy concerning Defendant No. 1 stood resolved on that basis, the trial court's discussion on limitation and cause of action under Order VII Rule 11 was unnecessary and erroneous. Even so, that error did not affect the correctness of the deletion of Defendant No. 1. [Paras 46, 47, 48]

The order was sustained as one deleting Defendant No. 1 under Order I Rule 10, and not as a valid rejection of the plaint under Order VII Rule 11.

Final Conclusion: The appeal was dismissed. The Court upheld the deletion of Defendant No. 1 from the array of parties on the ground that it was not a necessary or proper party, while clarifying that the matter was not one for rejection of the plaint under Order VII Rule 11.