TMI Tax Updates e-Newsletter
Jun 11,2026

Parallel GST regime - GST registration in another State - State-wise tax compliance default - Non complying with return-filing obligations -HELD THAT: - The Court held that the CGST Act operates in parallel with the State GST enactment and, though registration is sought State-wise, compliance under the statutory scheme cannot be avoided by shifting to another State. Where a company, after obtaining registration in one State, fails to file returns and its registration is cancelled or kept in abeyance, it remains a defaulter under the Act. Such default disentitles it from obtaining registration in another State merely to bypass non-compliance in the earlier State. [Paras 5, 6]

Denial of GST registration in Rajasthan on account of non-compliance in Tamil Nadu was upheld.

Final Conclusion: The writ petition was dismissed. The Court upheld that a registered person in default in one State under the GST regime cannot secure registration in another State without first complying with the statutory requirements applicable to the earlier registration.

Denial of input tax credit to a purchasing dealer solely on the ground that the supplying dealer failed to deposit the tax collected from the purchaser -Bona fide purchase transactions and collusion- wrongly availed and utilized the ITC - Reading down - Natural justice - Vicarious liability -HELD THAT: - The Court held that the controversy stood concluded by the Division Bench decision in National Plasto Moulding Vs. State of Assam & Ors. [2024 (8) TMI 836 - GAUHATI HIGH COURT], which had adopted the principle stated in On Quest Merchandising India Pvt. Ltd. Vs. Government of NCT of Delhi [2017 (10) TMI 1020 - DELHI HIGH COURT] The determinative principle applied was that a bona fide purchasing dealer, who has transacted with a registered supplier and complied with the statutory requirements, cannot be denied input tax credit merely because the supplier failed to deposit the tax with the Government. In such a case, the Department's remedy lies against the defaulting supplier. At the same time, the Court preserved the Department's liberty to proceed in accordance with law where there is material showing that the transactions were not bona fide or were entered into in collusion with the suppliers. [Paras 15, 16, 17]

The impugned demand order and the appellate order were set aside, with liberty to the authorities to proceed afresh only if material exists indicating absence of bona fides or collusion in the transactions.

Final Conclusion: The Court held that input tax credit could not be denied to the petitioner solely because the supplier allegedly failed to deposit the tax, where the transactions were bona fide. The impugned original and appellate orders were quashed, while reserving liberty to the authorities to act in accordance with law if collusion or lack of bona fides is supported by material.

Jurisdiction to issue a consolidated show cause notice and pass a consolidated order covering more than one financial year under Sections 73 and 74 - Proper officer - Financial year-wise limitation in GST tax determination - Severability of multi-year tax demands- Doctrine of severability -HELD THAT: - The Court held that Sections 73(1) and 74(1) create jurisdiction to initiate determination of tax where the statutory conditions exist, and neither provision restricts the notice to a single financial year. The limitation provisions in Sections 73(2), 73(10), 74(2) and 74(10) operate financial year-wise only for the purpose of timeliness of notice and order, and not as a bar against a common notice or common adjudication. The scheme of Sections 73(3) and 74(3), which permits a statement for other periods on the same grounds and deems it to be notice, also indicates legislative acceptance of proceedings spanning multiple periods. The Court rejected the contention that proceedings under Sections 73 and 74 are merely part of assessment; it held that the Act distinguishes assessment under Chapter XII from adversarial adjudication under Chapter XV, which includes determination of tax, interest and penalty, and in Section 74 also involves fraud, wilful misstatement or suppression. The Court further held that if any year included in a consolidated notice is time-barred, the proceeding is not wholly void; since each financial year constitutes a distinct cause of action, barred periods can be separated by applying the doctrine of severability. On that reasoning, the consolidated notices and orders impugned in the three writ petitions were within jurisdiction. [Paras 68, 69, 70, 72, 73]

The jurisdictional challenge failed; consolidated show cause notices and consolidated orders for multiple financial years under Sections 73 and 74 were held legally permissible, and the petitioners were relegated to their statutory appellate remedies.

Final Conclusion: The Court held that neither Section 73 nor Section 74 bars a consolidated show cause notice or a consolidated adjudication order covering multiple financial years, so long as limitation is satisfied separately for each period. The writ petitions were therefore disposed of by relegating the petitioners to the statutory appellate remedies, with protection against limitation and continuation of interim relief till consideration of their stay applications if appeals are filed within the permitted time.

Validity of detention and remand - Grounds of arrest - want of transit remand and for non-compliance with the mandatory requirements relating to the arrest memo and communication of grounds of arrest -Habeas corpus - Transit remand - Reason to believe -HELD THAT: - In the case of Radhika Agarwal v. Union of India and Others [2025 (2) TMI 1162 - SUPREME COURT (LB)] that as per the circular dated 13.1.2025, grounds of arrest must be explained to the arrested persons and also be furnished to him in writing as an Annexure to the arrest memo.

The Court found from the uncontroverted record that the petitioner was arrested at Dehradun and produced before the remand Magistrate at Meerut, but no order of transit remand had been brought on record. It held that an accused arrested in one State cannot be produced before the remand Magistrate of another State without obtaining transit remand. The Court further found that the arrest memo did not disclose the place of arrest and did not mention the grounds of arrest as an annexure, although the respondents relied on a written endorsement that such grounds and reasons to believe had been furnished. Referring to the requirement that grounds of arrest must be furnished in writing as an annexure to the arrest memo, the Court held that the respondents had not complied with their own circular. These defects rendered the remand order illegal, and consequently the arrest and detention could not be sustained. [Paras 9, 10, 11, 12]

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

Final Conclusion: The habeas corpus petition was allowed. The Court held the petitioner's arrest and detention to be illegal for want of transit remand and non-compliance with the requirements governing the arrest memo and written grounds of arrest, and directed his immediate release while leaving it open to the respondents to proceed afresh in accordance with law.

Rejection of the refund claim without granting reasonable time to respond to the show-cause notice and produce relevant documents - Principles of natural justice - HELD THAT: - The Court held that, although grant of further time was within the Department's discretion, that discretion had to be exercised fairly in the facts of the case. Since the petitioner sought extension on the very next day after receipt of the show-cause notice in order to collect documents and submit its reply, the Department acted with unwarranted haste in passing the order immediately on expiry of the short period granted. The defect lay in denial of a reasonable opportunity before deciding the refund application, and on that ground the impugned order was quashed with liberty to the Department to decide the matter afresh after receiving the reply. [Paras 6, 7]

The impugned refund rejection order was quashed, the petitioner was granted two weeks to file reply with documents, and the Department was left free to pass a fresh order thereafter.

Final Conclusion: The writ petition was allowed on the ground that the refund application had been rejected with undue haste without affording reasonable time to answer the show-cause notice. The matter was restored for fresh consideration after permitting the petitioner to file its reply and supporting documents.

No Opportunity of hearing in GST adjudication - Inadvertent excess input tax credit availment and voluntary reversal - Suspension of the GST registration -HELD THAT: - The Court found that, despite rejection of the rectification request, the assessment order required interference so that the proceedings could be restored to the assessing authority for due consideration. The determinative reason was that the petitioner's defence, as disclosed in the rectification application, required examination on facts, namely, whether the input tax credit was claimed inadvertently under the IGST column, whether it was voluntarily reversed, and whether such reversal could have a bearing on the liabilities sought to be imposed. The Court therefore directed that the petitioner be given an opportunity to file a detailed response with supporting documents and that the authority adjudicate the matter in the light of that defence, subject to the statutory provisions. [Paras 4, 5]

The assessment order was quashed and the proceedings were restored to the second respondent for fresh consideration after giving the petitioner an opportunity to file a detailed response and documents.

Final Conclusion: The writ petition was allowed in part. The assessment order was set aside and the matter remitted for fresh adjudication on the petitioner's plea of inadvertent availment and voluntary reversal of input tax credit, while the petitioner was left at liberty to seek revocation of suspension of registration by separate representation.

Validity of Cancellation of GST registration - Restoration of registration after ex parte cancellation - Non-filing of returns - Cancellation was ex parte and the assessee expressed willingness to file all pending returns and discharge tax, interest and penalty. - HELD THAT: - The Court recorded its consistent view that where registration is cancelled by an ex parte order and the assessee is willing to regularise the default by filing up-to-date returns and paying the consequential tax, interest and penalty, restoration should be granted subject to compliance within a reasonable time. On that basis, the cancellation order and the appellate order confirming it were quashed conditionally.

Registration was directed to be restored subject to the petitioner uploading all pending returns and paying tax, interest and penalty within the time granted after the portal is enabled, with liberty to the authorities to proceed in accordance with law in case of default.

Final Conclusion: The writ petition was allowed in part. The orders cancelling the GST registration and dismissing the appeal were quashed, subject to the petitioner's compliance with the condition to file pending returns and pay tax, interest and penalty within the stipulated time.

Seeking issuance / passing the show-cause Notice - absence of digital signature in the Summary of Order in Form GST DRC-07 - Statutory pre-deposit - application for condonation of delay - HELD THAT:- The writ petition was disposed of as the petitioner sought liberty to file an appeal against the impugned order, with a direction that if the appeal is filed within two weeks along with statutory pre-deposit and an application for condonation of delay, the Appellate Authority shall consider it in accordance with law keeping in view that the petitioner had been pursuing the writ remedy.

Maintainability of writ petition against GST adjudication order - Condonation of delay - Delay in invoking writ jurisdiction - Statutory appellate remedy under the GST Act - petition filed after more than 14 months from the date of the order uploaded on the portal - HELD THAT: - The Court held that, there being no dispute that the impugned order had been uploaded on the portal, the petitioner could not avoid the consequence of delay by asserting lack of knowledge, particularly when no periodic check of the portal or follow-up with the department was shown. The writ petition, filed after more than 14 months, was therefore not liable to be entertained. The Court further held that even on the petitioner's own case that knowledge of the order was gained later, the proper course was to avail the statutory appeal under Section 107 of the GST Act, with an application for condonation of delay. On that basis, without examining the merits of the tax dispute, the Court declined to exercise writ jurisdiction and left it open to the appellate authority to consider the appeal and delay petition on their own merits, including the time spent before the writ court. [Paras 3, 4, 5]

The writ petition was dismissed as not fit to be entertained in view of the delay and the availability of the statutory appellate remedy, while reserving liberty to the petitioner to file an appeal with a delay condonation application.

Final Conclusion: The Court declined to entertain the writ petition against the GST order on account of unexplained delay and the availability of the statutory appellate remedy. Liberty was reserved to the petitioner to prefer an appeal, and the appellate authority was directed to consider the delay aspect on its own merits, including the period spent before the writ court.

Service of show cause notice through common portal - barred by limitation - Extended limitation for short payment of tax by suppression - extension of time for annual returns by Notification No. 6/2020 - Best judgment assessment

Service of show cause notice through common portal - Best judgment assessment on non-response to notice - The challenge to the order on the ground of non-service of show cause notice was rejected. - HELD THAT: - The Court held that the plea of non-service was not tenable on facts, since the petitioners themselves admitted that the show cause notice was available on the official portal when they made enquiries after receipt of the garnishee notice. In that view, service was treated as proper in terms of the statutory mode of service through the portal, and the failure of the petitioners to respond justified the proper officer in proceeding to pass the best judgment assessment order. [Paras 5]

The ground founded on absence of service of notice failed, and the assessment was not liable to be interfered with on that basis.

Extended limitation for short payment of tax by suppression - Computation of limitation with reference to extended due date of annual return - The objection that the proceedings for Assessment Year 2017-18 were barred by limitation was rejected. - HELD THAT: - The Court held that the case attracted the extended period under Section 74(1) of the Act, since the petitioner firm was found to have paid lesser tax despite being aware of the applicable rate of tax, amounting to suppression. It further accepted that, in view of the notification extending the last date for furnishing annual returns for Financial Year 2017-18 up to 07.02.2020, the outer date for passing the order stood extended up to 07.02.2025. As the impugned order had been passed before that cutoff date, the plea of limitation was held to be unsustainable. [Paras 5]

The proceedings were held to be within limitation and validly initiated and concluded under the extended period.

Final Conclusion: The writ petition was dismissed. The Court upheld the impugned Order-in-Original, holding that the show cause notice had been duly served through the portal and that the proceedings for the relevant period were not barred by limitation.

Validity of an assessment order passed under Section 73 - Assessment on corporate guarantee- Failure to consider applicable GST circulars - Remand for fresh consideration of taxable value - The assessment on the corporate guarantee issue was not sustained, since the petitioner's specific plea that only 1% of the turnover was liable to tax, along with reliance on the cited circulars and the judgment in M/s. Amman Try Trading Company Private Limited v. The State Tax Officer [2025 (10) TMI 1178 - MADRAS HIGH COURT], required fresh consideration by the assessing authority.

HELD THAT: - The Court found that the major component of the tax liability arose from the levy on corporate guarantee provided to a related person. It noted that the petitioner's contention that only 1% of the turnover was taxable at the applicable rate could not be seriously disputed at that stage, and that the petitioner had also specifically relied upon certain circulars and an earlier judgment of the Court. Since these aspects required examination by the assessing authority, the Court held that the impugned order could not stand on that issue and directed a fresh consideration confined to the corporate guarantee dispute alone. [Paras 7, 8, 9, 10]

The impugned assessment was set aside only to the limited extent of the corporate guarantee issue and the matter was remitted for fresh orders after giving the petitioner an opportunity to submit its reply and supporting material; the findings on all other items were left undisturbed.

Final Conclusion: The writ petition was allowed in part. The assessment was interfered with only on the issue of taxability of the corporate guarantee, which was remitted for fresh consideration, while the findings on the remaining issues were allowed to stand.

Best judgment assessment for non-filing of returns - time-limit for belated return under proviso to Section 62 - HELD THAT: - The Court held that this Court had consistently taken the view that the time-limit contemplated in the proviso to Section 62 is only directory. Since the assessment under that provision is provisional in nature, once the return is filed even belatedly, the best judgment assessment should no longer survive. Finding no compelling reason to depart from the binding precedents cited before it, the Court applied the same view to the present case. [Paras 6]

The impugned best judgment assessment was quashed, and the respondent was directed to consider the matter appropriately while making further assessment for the year.

Final Conclusion: The writ petition was allowed. The Court quashed the best judgment assessment on the ground that, in view of the consistent precedents of this Court, belated filing of the return rendered the assessment unsustainable and the matter was left to be dealt with in the further assessment for the year.

Entitlement to regular bail in view of the stage of investigation, length of custody, and the nature and magnitude of the alleged offence - fraudulent availment and utilisation of input tax credit on the basis of fake invoices - Parity in bail jurisprudence - HELD THAT: - The Court held that the decisions cited on behalf of the petitioners did not assist them, since the facts were different and the period of custody in the present case was shorter. Taking into account the nature of the allegations, the magnitude of the alleged fraud, and the fact that the investigation was still at a crucial stage, the Court found no valid ground to enlarge the petitioners on bail. The medical condition of a relative of the petitioners was also held not to constitute a sufficient ground at that stage. [Paras 7]

Bail was refused and the criminal petitions were dismissed.

Final Conclusion: Having regard to the alleged fraudulent ITC claim, the magnitude of the alleged revenue loss, and the ongoing stage of investigation, the Court declined to grant bail. The criminal petitions were accordingly dismissed.

Entitlement to exemption from the statutory pre-deposit for filing an appeal under the GST regime -Challenged to penalty after payment of tax during adjudication - tax dues were already paid during adjudication and that penalty was not leviable - HELD THAT: - The Court held that under the GST regime there is no exemption available to a taxpayer from making the prescribed pre-deposit while filing an appeal. The correctness of the tax or penalty imposed, including the effect of payment made during adjudication on liability to penalty, is a matter for consideration by the appellate authority on merits and cannot itself furnish a ground to dispense with the statutory deposit. As the petitioner had been corresponding with the authorities on this issue and had missed the limitation period, liberty was granted to file the appeal with the statutory deposit along with an application for condonation of delay, to be considered sympathetically. [Paras 5]

The petitioner was permitted to file the appeal within the time granted, but only with the statutory pre-deposit and a delay condonation application.

Final Conclusion: The writ petition was disposed of by holding that no exemption from statutory pre-deposit is available for filing a GST appeal merely because tax was paid during adjudication or penalty is disputed. Liberty was granted to file the appeal with the statutory deposit and an application for condonation of delay.

Reopening of assessment on third-party seized material - Uncorroborated loose papers - Nexus between seized document and assessee - Agricultural land vis-a-vis non-agricultural land mismatch

HELD THAT: - The Court found that the reopening was founded only on a loose paper referring to Revenue Survey No. 581 as non-agricultural land and containing an illegible entry with the name of a person unconnected with the petitioner. The satisfaction note also did not establish any link between the petitioner and the searched entities. On record, the sale deed showed that the petitioner had sold the land as agricultural land.

Following Deepak Chinubhai Shah [2026 (1) TMI 1131 - GUJARAT HIGH COURT] the Court held that such vague and uncorroborated third-party material, lacking any direct or indirect connection with the petitioner, could not sustain the belief of escapement of income. The valuation assumed by the revenue was therefore only hypothetical. [Paras 8, 9, 10]

The notice issued under section 148 and the consequent assessment order were quashed.

Final Conclusion: The Court allowed the writ petition and held that the reopening for AY 2018-19 was based only on conjectures and surmises arising from an unconnected loose paper. The impugned notice under section 148 and the consequent reassessment order were quashed.

Condonation of delay - delay of 676 days in filing the appeal before the Tribunal - Bona fide explanation for delay in filing appeal

HELD THAT: - The Court held that, though the assessee had not produced documentary material to corroborate the explanation for delay, the averments were not vague and contained specific details regarding the earlier auditors, their withdrawal from the assignment, the engagement of a new firm, and the assessee's belief that the appeal would be filed.

Tribunal was justified in noting absence of corroboration, but its conclusion that the explanation lacked bona fides was not sustainable because the stated facts sufficiently probabilised the assessee's case. The Court further held that, even applying the caution indicated in Guruswamy H. v. A. Krishnaiah Since Deceased By Lrs. [2025 (1) TMI 1524 - SUPREME COURT] condonation was warranted, particularly as the matter concerned the assessee's first statutory appeal before a judicial forum. [Paras 8, 9, 10, 11]

The delay was condoned, the Tribunal's order refusing condonation was set aside, and the appeal was directed to be heard on merits after affording opportunity to both sides.

Final Conclusion: The Court allowed the appeal, held that the explanation for delay could not be rejected as lacking bona fides, and condoned the delay in filing the appeal before the Tribunal. The Tribunal was directed to consider the statutory appeal on merits.

Refusing exemption u/ss 11 & 12 - denial of exemption only because the earlier application was filed under a wrong section code (Section 10 instead of 12AB) violating the principle of ‘substance over form’ - effect of Circular No. 7/2024 -whether the benefit of Circular No. 7/2024 would lend strength to the request of the appellant?

HELD THAT: - The Court held that the real controversy was the effect of Circular No. 7/2024 on the appellant's claim. It noticed that the Tribunal had not examined that aspect at all, because the issue had not been raised before it, and that the appellant's earlier request had been rejected only on the footing that registration under the relevant provision could not operate retrospectively.

The Court declined to accept, on the existing record, the appellant's assertion of system error as an established fact, but found that the claim still required examination by the competent authority in the light of the undisputed circumstance that the appellant had earlier held registration under Section 12A, had later obtained registration under Section 10(23), and had surrendered that registration.

Since the Circular could have relevance to a case of application under a wrong section code, the competent authority was bound to assess whether, on the appellant's case, surrender of the wrongly issued registration and the fresh application brought the matter within the Circular. On that limited ground, the Court held that fresh consideration was necessary and expressly left the framed questions of law unanswered. [Paras 10, 11, 12, 13, 14]

The impugned orders were set aside and the Commissioner of Income Tax (Exemptions) was directed to reconsider the appellant's application, particularly its claim for registration from 01.04.2021 on the strength of Circular No. 7/2024, after affording opportunity of hearing; no opinion was expressed on the appellant's entitlement on merits.

Final Conclusion: The appeal was allowed only to the extent of remitting the matter for fresh consideration. The competent authority was directed to examine the appellant's claim in the light of Circular No. 7/2024 and all contentions raised, without the Court deciding the substantive questions of law or the entitlement to registration on merits.

Failure to adjudicate material grounds - Non-consideration of challenge to approval u/s 153D

Validity of Tribunal's order when a specifically recorded ground challenging the validity of the Joint Commissioner's approval u/s 153D for non-application of mind was not expressly considered, and another legal issue touching the validity of the notice u/s 153A had also not been examined by the Tribunal - HELD THAT: - The Court found that the Tribunal had itself recorded the assessee's grounds, including the challenge that the approval under section 153D had been granted mechanically and without application of mind, but had not specifically answered that issue. Even if the order could suggest that the Tribunal accepted the Department's stand regarding incriminating material, the absence of express adjudication on the section 153D challenge left the Court only to speculate as to the Tribunal's reasoning, which was impermissible.

Court further held that the additional legal contention raised before it regarding the notice under section 153A having been issued at the dictate of the Joint Commissioner had not been tested by the Tribunal, though the omission was because it had not been raised earlier.

Since all relevant issues had first to receive the Tribunal's consideration before the High Court could examine them in appeal, and since the approval order was stated to have been produced before the Tribunal, the impugned order was held unsustainable for want of proper forensic consideration. [Paras 13, 14, 15, 16, 17]

The impugned order was set aside and the matter was remitted to the Tribunal for fresh consideration of all relevant issues, with liberty to the assessee to file additional pleadings.

Final Conclusion: The High Court did not decide the merits of the additions or the validity of the notice and approval. It held that the Tribunal had failed to expressly consider a material ground and therefore set aside the order, remitting the appeal for fresh decision after permitting additional pleadings.

Prosecution for failure to furnish return of income - offence under Section 276CC -Benefit of monetary threshold under proviso to section 276CC - tax due was only Rs. 1,750/-

HELD THAT: - The Court noted that the complaint was based on alleged failure to file return under section 139(1) for the assessment year 2013-2014. It further recorded that, even according to the Department, the tax due was only Rs. 1,750/-. Though the Department contended that the proviso to section 276CC was inapplicable because the assessee was a company and no regular assessment had been completed when the complaint was filed, the Court held that such contention could not be accepted in the facts of the case, particularly when the default related to the period prior to the later amendment and the tax liability as determined was below the statutory monetary limit referred to in the proviso. The subsequent assessment order and pendency of penalty proceedings did not justify continuation of the criminal prosecution. [Paras 8, 9]

The criminal prosecution u/s 276CC was quashed.

Final Conclusion: The Court quashed the prosecution for non-filing of return for the assessment year 2013-2014, holding that in the facts of the case the continuation of proceedings under section 276CC was not sustainable when the tax due was only Rs. 1,750/-.

Condonation of delay in filing return of income - Genuine hardship u/s 119(2)(b) - Denial of Deductions to Primary Agricultural Cooperative Credit Society u/s 80-P and the benefit of Section 11

HELD THAT: - The Court noticed that under the governing CBDT circular, condonation is ordinarily available where the delay was caused by circumstances beyond the assessee's control and supported by documentary evidence, and also noted that the audit report had been ready and the return ought to have been filed earlier. Even so, having regard to the petitioner's status as a Primary Agricultural Cooperative Credit Society, the Court held that refusal to condone the delay would result in denial of the benefit of section 80-P and would not serve the interests of the society or its members. The Court further treated the failure to file the return in time, in the facts of the case, as at best a procedural lapse, observing that no assessee gains by deliberately not filing the return in time, and applied the principle that procedure is a handmaid of justice and not its mistress. [Paras 13, 14, 15, 16, 17]

The rejection of condonation was quashed, the delay stood condoned, and the respondent was directed to pass a fresh assessment order in the light of the return already filed, with the petitioner's claim to deductions left to be substantiated in the assessment.

Final Conclusion: The writ petition was allowed by quashing the order rejecting condonation of delay for Assessment Year 2018-19. The respondent was directed to make a fresh assessment on the basis of the return filed, and the petitioner's entitlement to the claimed deductions was left open to be established in such assessment.

Unexplained cash credits in bank - Source of cash deposits from agricultural income and loans from family and friends - Addition on alleged unexplained commission income

Unexplained cash credits in bank - Source of cash deposits from agricultural income and loans from family and friends - HELD THAT: - The Tribunal found that the assessee had furnished details of all the parties from whom cash was received, along with confirmations and supporting documentation. It noted that the Assessing Officer had not doubted the actual receipt of amounts from those parties, but had treated the receipts as unexplained merely on conjectures and surmises. Accepting the explanation that the assessee, being an agriculturist, required cash for cultivation activities and had received cash from family and friends which was then deposited in the bank accounts, the Tribunal held that the source of the deposits stood explained and that the Assessing Officer had failed to properly consider the material produced. [Paras 8]

The additions made on account of the bank credits were deleted.

Addition on alleged unexplained commission income - HELD THAT: - The Tribunal recorded that the assessee had furnished the relevant details relating to the commission income. On that basis, it held that the finding of the Assessing Officer on this aspect could not be sustained. [Paras 9]

The addition relating to commission income was deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the additions for unexplained bank credits and alleged unexplained commission income could not be sustained, as the assessee had furnished adequate details and supporting material explaining the receipts.

Deduction for CSR donations under Chapter VI-A - Section 14A disallowance in absence of exempt income - Prospective operation of the Finance Act, 2022 amendment to section 14A

Deduction for CSR donations under Chapter VI-A - CSR expenditure and section 80G - assessee has not claimed the CSR expenditure under section 37(1) of the Act, and its claim is only restricted to section 80G - HELD THAT: - The Tribunal held that the bar created by Explanation 2 to section 37(1) operates only while computing business income and cannot be imported to deny a deduction otherwise admissible under Chapter VI-A. It accepted the line of reasoning adopted in Allegis Services (India) Private Ltd. [2020 (5) TMI 378 - ITAT BANGALORE] and Societe Generale Securities India (P.) Ltd[2023 (11) TMI 1257 - ITAT MUMBAI] that only the specific exclusions written into section 80G(2) for donations towards Swatch Bharath Kosh and Clean Ganga Fund made in pursuance of CSR stand excluded, and no wider embargo can be read into the provision. Since the assessee had not claimed the CSR outlay under section 37(1) and the donation in question was not to either of those two funds, denial of deduction under section 80G was held to be unsustainable. [Paras 7, 8, 9]

The assessee's claim of deduction under section 80G on the CSR donation was allowed.

Section 14A disallowance in absence of exempt income - Prospective operation of the Finance Act, 2022 amendment to section 14A - HELD THAT: - The Tribunal found from the financial statements and computation of income that the assessee had not earned any exempt income and had claimed no exemption under section 10(34). Following Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] and PCIT vs. Kohinoor Project Pvt. Ltd. [2020 (1) TMI 1161 - BOMBAY HIGH COURT] it held that section 14A does not apply in such a case. It further noted that the amendment made by the Finance Act, 2022 inserting a non-obstante clause and Explanation to section 14A had been held in PCIT vs. M/s. Era Infrastructure (I) Ltd.[2022 (7) TMI 1093 - DELHI HIGH COURT] to operate prospectively from assessment year 2022-23 onwards, and therefore the amendment did not govern the year under appeal. [Paras 11, 12, 13]

The disallowance made under section 14A read with Rule 8D was directed to be deleted.

Final Conclusion: The Tribunal partly allowed the appeal. It held that deduction under section 80G could not be denied merely because the donation formed part of CSR expenditure, except in the statutorily excluded cases, and it also deleted the section 14A disallowance since no exempt income was earned in the year under consideration.

Draft assessment order u/s 144C - Jurisdictional defect in eligible assessee assessment - Demand notice and penalty notice accompanying draft order - Finality of assessment through demand notice - Assessment without jurisdiction - validity of purported draft assessment orders issued to the non-resident assessee where they were accompanied by computation of tax, notice of demand and initiation of penalty proceedings

HELD THAT: - The Tribunal held that, although the Assessing Officer described the orders as draft assessment orders, he simultaneously directed computation of tax, grant of credit for prepaid taxes, charging of interest, issuance of demand notice and initiation of penalty proceedings.

Such steps are inconsistent with a mere draft order, because under the statutory scheme the Assessing Officer must first forward only a proposed draft order and the assessment attains finality only thereafter in the manner provided by section 144C. Once tax liability was worked out, prepaid taxes were adjusted against the demand, notice under section 156 was issued and penalty proceedings were initiated, the assessment had for all practical purposes been finalized at the first stage itself. The Tribunal followed the view taken in the assessee's own earlier case and other decisions noticed in the order that non-compliance with this mandatory procedure is not a curable irregularity and section 292B does not save such action. The Assessing Officer therefore bypassed the mandatory requirement of first issuing only a draft order, with the result that the impugned assessments were without jurisdiction. [Paras 10, 11, 14]

The additional ground was allowed and the impugned assessment orders for both years were quashed as wholly without jurisdiction; the remaining grounds were left open as academic.

Final Conclusion: For Assessment Years 2013-14 and 2014-15, the Tribunal held that the so-called draft assessment orders were in substance final assessment orders because they were accompanied by demand notices, tax computation and penalty initiation. The mandatory procedure under section 144C having been bypassed, the assessments were quashed as without jurisdiction.

Final assessment order in conformity with DRP directions - Violation of section 144C(13) - validity of the final assessment order where the Assessing Officer ignored the partial relief granted by the Dispute Resolution Panel and repeated the income proposed in the draft assessment order - HELD THAT: - The Tribunal found that the final assessment order proceeded on the erroneous premise that the assessee's objections had been rejected by the Dispute Resolution Panel, whereas the order passed by the Transfer Pricing Officer giving effect to the DRP directions showed that partial relief had in fact been granted and the transfer pricing adjustment had been substantially reduced.

Since section 144C(13) mandates that the final assessment order must be passed in conformity with the DRP directions, an order not reflecting those directions is invalid.

Following the binding decisions of the jurisdictional High Court in M/S VM WARE SOFTWARE INDIA PVT. LTD. [2023 (9) TMI 1575 - KARNATAKA HIGH COURT]
and M/S FLEXTRONICS TECHNOLOGIES (INDIA) PVT. LTD. [2023 (2) TMI 712 - KARNATAKA HIGH COURT], the Tribunal held that such non-compliance vitiated the final assessment order; the contrary Tribunal decision cited by the Revenue was not followed because the Tribunal was bound by the Karnataka High Court view. [Paras 9, 10, 11, 12]

The final assessment order was held to be in clear violation of section 144C(13) and was quashed.

Final Conclusion: The Tribunal quashed the final assessment order for assessment year 2022-23 as it was not passed in conformity with the DRP directions and therefore violated section 144C(13). In view of this conclusion, the remaining grounds were treated as academic.

TP Adjustment - comparables selection - Related party transactions filter - Penalty u/s 270A

Transfer pricing comparables - Related party transactions filter - TNMM benchmarking - inclusion of ANZ Support Services India Private Limited as a comparable - HELD THAT: - The Tribunal confined its adjudication to ANZ Support Services India Private Limited, since the assessee restricted its challenge to that comparable and contended that exclusion of that company would render the remaining transfer pricing objections academic. TPO had himself adopted a search criterion rejecting companies where related party transactions exceed 25% of sales.

On examination of the annual financial statements placed on record, the Tribunal noted that the related party service income and other related party income of ANZ, as against its total revenue, worked out to more than 25%. Since the DRP had also directed that the company be retained only if it satisfied the quantitative filters applied by the TPO, the Tribunal held that ANZ would fail the related party transactions filter, subject to verification. As this specific contention was raised for the first time before the Tribunal and had not been verified by the authorities below, the matter was directed to the TPO for verification; if the assessee's computation is found correct, ANZ is to be excluded from the final set of comparables. The remaining transfer pricing grounds were left open as having been treated by the assessee as academic in that event. [Paras 3]

The issue was decided by directing the TPO to verify whether ANZ failed the 25% related party transactions filter and, if so, to exclude it as a comparable.

Penalty u/s 270A is premature at this stage and is dismissed accordingly.

Final Conclusion: The TP issue relating to inclusion of ANZ Support Services India Private Limited was remitted to the TPO for verification of the related party transactions filter with a direction to exclude the company if the filter is found breached, while the challenge to penalty initiation was dismissed as premature.

Eligibility for presumptive taxation u/s 44AD - reassessment additions could not be sustained when the assessee's contentions and additional evidence had not been examined on merits, and the assessee's claim for presumptive taxation - HELD THAT: - The Tribunal found that, although the assessee had not complied before the Assessing Officer and had later produced material before the appellate authority, the additional evidence was neither effectively examined in remand nor adjudicated on merits.

The appellate authority rejected the material, while the Assessing Officer had also not taken cognizance of the belated return and the assessee's stand regarding presumptive taxation.

In these circumstances, the determinative defect was absence of proper scrutiny of the assessee's case and supporting material. The Tribunal therefore held that, in the interest of fairness and natural justice, the matter required a fresh assessment in which the evidence filed by the assessee must be admitted and adjudicated on merits. It further directed that the assessee be allowed to claim the presumptive scheme under section 44AD if the statutory conditions are satisfied, notwithstanding the earlier claim made under section 44AE; and clarified that acceptance of returns in subsequent years did not, by itself, conclude eligibility, since such eligibility depends on fulfillment of conditions year-wise. [Paras 6]

The orders of the lower authorities were set aside and the matter was remanded to the Assessing Officer for de novo assessment after granting due opportunity and examining the assessee's evidence and claim under section 44AD in accordance with law.

Final Conclusion: The appeal was allowed for statistical purposes. The reassessment and appellate orders were set aside, and the matter was restored to the Assessing Officer for fresh adjudication on merits after considering the assessee's evidence and examining eligibility for presumptive taxation in accordance with law.

Additions of bogus purchases - addition sustained solely on the basis of the statement of a third party / searched person without effective cross-examination -Admissibility of oral statement against documentary evidence

HELD THAT: - The Tribunal held that no irregularity or infirmity had been pointed out in the documentary material produced by the assessee to establish the genuineness of the purchases, including evidence relating to quantitative details and mode of transaction. Once such documentary evidence was sought to be rebutted on the basis of the oral statement of the searched person, opportunity to cross-examine that witness became of vital significance.

AO had proceeded on the footing that no cross-examination was required, while the appellate authority incorrectly observed that such opportunity had been given and declined. The addition, having been sustained by relying on such inadmissible oral material to discredit the assessee's documentary evidence, was therefore unsustainable. [Paras 10]

The additions for both years were deleted and the assessee's appeals were allowed.

Final Conclusion: The Tribunal held that the impugned additions on alleged bogus purchases were unsustainable because the assessee's documentary evidence was rejected mainly on the basis of the searched person's statement without affording cross-examination. The appeals for AY 2019-20 and AY 2020-21 were accordingly allowed and the additions were deleted.

Reassessment beyond three years - Jurisdictional conditions for escaped income represented by asset, expenditure or entries in books of account - Deemed information arising from search - Requirement of nexus between seized material and relevant assessment year - Use of material produced in response to summons during search - Evidentiary value of search statements and retractions - Cross-examination of third-party witnesses - Estimation of profit on unaccounted cash receipts

Reassessment beyond three years - Jurisdictional facts - Escaped income represented by asset or entries in books of account - HELD THAT: - The Tribunal held that, once reassessment was initiated beyond three years from the end of the relevant assessment year, the Assessing Officer had to show from the reasons recorded that the income alleged to have escaped assessment was represented in the form of an asset, expenditure in respect of a transaction or event, or entry in the books of account, as contemplated by section 149(1)(b). The seized material relied on was only a cash book containing cash receipts and payments relating to business transactions, and neither side treated those transactions as acquisition of any asset. The material was also not in the nature of books of account or parallel books of account. The reasons recorded did not identify any asset, did not describe the nature of any entry in books of account, and proceeded on the quantification supplied by the Investigation Wing without minimum verification of the nature of the transactions, their year-wise attribution, or the escaped income of each entity. The Tribunal therefore held that the recorded satisfaction was vague, mechanical and based on borrowed satisfaction, and that the jurisdictional facts necessary for issuing notice under section 148 beyond three years were absent. [Paras 23, 24, 25, 29, 34]

The notices under section 148 and the consequential reassessment orders for assessment years 2017-18 to 2019-20 were quashed as barred by the conditions of section 149(1)(b) not having been met.

Material produced under summons during search - Procedure u/s 148A - Illegal seizure and reassessment - material produced by a third person in response to summons during the search used to sustain notices under section 148 by invoking the search deeming provision - HELD THAT: - The Tribunal found that the material in question was not found from the premises covered by the search warrant, but was brought by a third person in response to summons. In such a case, the authority issuing summons could impound and retain the documents under section 131(3), but could not treat them as search seizure material recovered from the searched premises so as to proceed under section 148 read with Explanation 2(i). The Tribunal further held that summons under section 131(1A), after action under section 132 had already commenced, and the consequent seizure of information from that person, were not in accordance with law. Therefore, if the Department wanted to act on such material, it could proceed only by following the due procedure under section 148A. Since the notices were issued by directly relying on that material without following that procedure, they could not be sustained. [Paras 32, 33, 34]

On this independent ground also, the notices under section 148 for assessment years 2017-18 to 2019-20 were held invalid and the consequential reassessment orders were quashed.

Deemed information arising from search - Proviso to section 148 - Nexus with relevant assessment year - requirement to show, in the recorded reasons, escapement of income for the relevant assessment year - HELD THAT: - The Tribunal held that Explanation 2 to section 148 gives only a limited deeming fiction that a search supplies information suggesting escapement of income; it does not deem the contents of that information for every year automatically. The first proviso to section 148 still requires that the information suggesting escapement of income must relate to the relevant assessment year. For assumption of jurisdiction, the Assessing Officer had to apply his mind to the seized material, identify the relevant year, and demonstrate in the reasons recorded the income alleged to have escaped assessment. In the present case, the reasons merely relied on the information and quantification supplied by the Investigation Wing, without independent verification of the nature of escaped income, its quantum, or its connection with the assessment years in question. The Tribunal therefore held that the notices could not be issued automatically merely because there was a search, and that the absence of recorded satisfaction linking the seized material to escaped income for the relevant years vitiated the jurisdiction. [Paras 41, 42, 43, 45, 47]

The notices under section 148 and the consequential reassessment orders for assessment years 2020-21 to 2022-23 were quashed.

Unaccounted cash receipts - Truncation of two zeroes - Third-party statements and cross-examination - assessee submitted that there is no incriminating material whatsoever found during the course of search to establish that the assessee had recorded transactions after suppressing or truncating two zeroes and the entire basis adopted by the A.O. is only on the basis of statements recorded from employees during the course of search - HELD THAT: - The Tribunal noted that the assessee did not dispute the existence of the seized cash book and digital entries, but disputed the inference that all entries were recorded after truncating two zeroes. That inference was founded mainly on the initial statements of two employees and on statements of eighteen third parties. The Tribunal found that the Managing Director had categorically denied any such method, the employees had retracted their statements by detailed affidavits, and the Assessing Officer had not produced sufficient corroborative material to justify applying the theory to the entirety of the entries. The post-search statements of eighteen persons were based on selective entries out of a much larger body of transactions, and effective cross-examination was not afforded though the assessee had sought it. In the absence of broader corroboration such as actual receipts, sale deeds, bank deposits, confirmations or expert examination of the digital material, the Tribunal held that a wholesale extrapolation of the 'two zeroes' theory was impermissible. At the same time, where specific entries were supported by corroborative evidence such as cash receipts, bills, vouchers, estimate slips or WhatsApp chats, the Assessing Officer was entitled to apply the addition of two zeroes to those entries alone. [Paras 61, 62, 63, 64, 66]

The addition based on multiplying all receipt entries by hundred was set aside, and the Assessing Officer was directed to adopt receipts as recorded in the cash book except for entries specifically supported by corroborative evidence showing suppression of two zeroes.

Profit estimation on unaccounted receipts - Net profit rate - estimation of profit at 16% on the unaccounted cash receipts - HELD THAT: - The Tribunal held that the assessee had not produced evidence justifying the lower rate of 10% offered by it. The assessee's own past financial results reflected an average profit rate of about 15%, and in the case of unaccounted receipts the margin could reasonably be higher because common administrative and overhead expenses would generally already stand absorbed in the recorded business. On that basis, the Tribunal found no infirmity in the adoption of 16% as the net profit rate on the unaccounted cash receipts. [Paras 67]

The rate of 16% profit was sustained, subject to its application on the recomputed unaccounted cash receipts.

Final Conclusion: The Tribunal quashed the reassessment notices and consequential assessment orders for assessment years 2017-18 to 2022-23, holding that the jurisdictional requirements for invoking section 148 had not been met. On the merits of the addition, it rejected the wholesale adoption of the 'two zeroes' theory for all entries, directed recomputation of unaccounted receipts only on the basis of entries supported by corroborative evidence, and sustained the profit rate of 16% on the receipts so recomputed.

Time-barred reassessment notice - Prospective operation of extended reassessment limitation - Admission of pure legal ground in cross objection - additional ground in the assessee's cross objection challenging the validity of the notice issued for reopening

HELD THAT: - The Tribunal found that the assessee had already raised the jurisdictional challenge before the appellate authority, but it remained undecided because the appeal had been allowed on merits. Being a pure legal issue going to the root of the matter, the additional ground was admitted.

On merits, the Tribunal noted that the notice for reopening was issued beyond six years from the end of the relevant assessment year.

Following the binding view of the jurisdictional High Court in CYBERABAD CITIZENS HEALTH SERVICES PRIVATE LIMITED [2025 (11) TMI 1967 - TELANGANA HIGH COURT] and its earlier coordinate bench decision in SUDHEER PARIMALA [2026 (5) TMI 400 - ITAT HYDERABAD], it held that for assessment years beginning on or before 01.04.2021, the extended period under the amended law does not revive cases in which the six-year period under the old regime had expired; the enlarged period operates prospectively, and the exclusion provisions do not override the restrictive first proviso. Consequently, the notice was invalid and the reassessment founded on it stood vitiated. [Paras 9, 12, 13]

The notice issued under section 148 was quashed as barred by limitation, the reassessment order was rendered invalid, the assessee's cross objection was allowed, and the Revenue's appeal on merits became liable to be dismissed.

Final Conclusion: The Tribunal admitted the assessee's additional legal ground, held that the reopening notice issued for assessment year 2015-2016 after expiry of six years was barred by limitation, and quashed the reassessment. As a result, the assessee's cross objection was allowed and the Revenue's appeal on merits was dismissed.

Provisional release of seized imported goods - Conditional release pending adjudication - Seizure of Multi-Functional Devices at the stage of seizure memo pending adjudication -HELD THAT: - The Court found that the matter stood on the same footing as earlier writ petitions [2025 (4) TMI 1705 - TELANGANA HIGH COURT] in which provisional release of similarly seized imported goods had been directed subject to conditions. Since, in the present case also, the proceedings had not progressed beyond the seizure memo and the petitioner sought only interim release, the Court directed the respondents to consider and grant provisional release on payment of the enhanced duty as quantified, furnishing of a bank guarantee for 10 percent of the total price of the imported goods, and maintenance of transaction details in the event of subsequent sale. The Court further clarified that the customs authorities were free to continue adjudication in accordance with law, that any request for waiver of demurrage be considered objectively, and that the adjudicating authority should decide the matter uninfluenced by the conditional release ordered by the Court. [Paras 9, 10, 11, 12]

The seized goods were directed to be provisionally released subject to the conditions specified by the Court, without affecting the adjudication on merits.

Final Conclusion: The writ petition was allowed by directing provisional release of the seized imported goods on the terms fixed by the Court. The adjudicating authority was left free to proceed independently and decide the matter on its own merits.

Entitlement to provisional release of seized gold and gold jewellery pending adjudication under Section 110A - Smuggling - Non-prohibited goods - Burden of proof for notified goods - HELD THAT: - The Tribunal held that gold is not a prohibited item for import, though it may be subject to restrictions, and therefore even in the event of confiscation the owner would be entitled to the statutory option of redemption under Section 125. On that basis, provisional release under Section 110A was to be treated as available subject to adequate safeguards. The Tribunal further held that mere allegations in the show cause notice or during investigation could not by themselves justify refusal of provisional release, and relied on the reasoning in Its My Name Pvt Ltd [2019 (11) TMI 687 - CESTAT NEW DELHI]. In the facts of the case, the seized gold and jewellery were intercepted while being carried from Gorakhpur to Lucknow for business purposes and were stated to be reflected in the firm's stock register. Though gold is a notified item under Section 123, the appellant had produced the stock register to show licit procurement. The balance of convenience was therefore found to be in favour of provisional release on execution of bond for full value and bank guarantee for 50% of the value of the gold with auto-renewal clause. [Paras 21, 22, 23, 24, 25]

Provisional release was allowed subject to bond for full value of the seized goods and bank guarantee for 50% of the value of the gold with auto-renewal clause, with direction for release within the time stipulated.

Final Conclusion: The Tribunal allowed the appeal and directed provisional release of the seized gold and gold jewellery, holding that gold was not a prohibited item and that the appellant had produced material showing licit possession. Release was made subject to execution of bond for full value and furnishing of bank guarantee to the extent directed.

Classification of casino vessel - M.V. Horseshoe Casino - classifiable under Customs Tariff Heading 8901 as a passenger vessel Or under Customs Tariff Heading 8903 as a pleasure vessel - Benefit of CVD exemption under Notification No. 1/2011-CE and BCD exemption under Notification No. 21/2002-Cus. - Inclusion of pre-import expenses, service payments, demurrage and other amounts in the assessable value under Section 14 - Confiscation for incorrect tariff classification - Penalty for misdeclaration and non-inclusion of pre-import costs - Burden of proof on Revenue - Misdeclaration

Classification of M.V. Horseshoe Casino - Pleasure vessel versus passenger vessel - Exemption linked to tariff classification - The imported vessel M.V. Horseshoe Casino was classifiable under Customs Tariff Heading 89039990 and not under Customs Tariff Heading 89011010, with the result that the claimed basic customs duty and CVD concessions applicable to Heading 8901 were unavailable. - HELD THAT: - The Tribunal held that classification under Heading 8901 required the vessel to be principally designed for transport of persons or goods. On the material on record, the impugned vessel had been designed and previously used as a casino vessel, and its dominant character was for gaming or pleasure rather than transportation of passengers from one place to another. Mere capability to move at sea or to carry persons incidentally did not satisfy the requirement of principal design for passenger transport. The provisional passenger-vessel certification under shipping law was not treated as decisive for customs classification, particularly when the available registration categories did not include a separate class for pleasure vessels. The Tribunal therefore upheld classification under Heading 8903 as a pleasure vessel, distinguished Ashok Khetrapal [2014 (4) TMI 421 - CESTAT AHMEDABAD], and consequently held that the concessions under Notification No. 21/2002-Cus. and Notification No. 1/2011-CE were not available, while CVD at the rate applicable to Heading 8903 was sustainable. [Paras 54, 59]

The reclassification to Heading 89039990 was sustained, and the exemption and concessional CVD claims linked to Heading 8901 were rejected.

Inclusion of pre-import costs in assessable value - FOB-related costs - Demurrage charges - Salvage and repair expenditure - Only the cost attributable to movement from Hammond, USA to Quebec, Canada was includible in the transaction value; the other pre-import foreign remittances, travel costs, demurrage, and salvage-related expenditure were not includible in the assessable value. - HELD THAT: - The Tribunal accepted inclusion of the cost from Hammond to Quebec because the invoice was on FOB basis and that expenditure, though incurred by the buyer, was payable in respect of the vessel while it remained under the seller's control. However, it held that the other foreign remittances listed in Annexure A.1, the travel and related expenses in Annexure A.2, the demurrage charges during wet tow, and the amount spent for removal of water and salvage at Quebec were not liable to be added to the assessable value. In relation to the salvage expenditure, the Tribunal noted that it was connected with salvage of the vessel and an insurance claim was pending, and therefore it could not be treated as includible expenditure prior to import for valuation purposes. The Chartered Engineer's valuation of the old and used vessel remained relevant, but differential duty survived only to the limited extent of costs properly includible. [Paras 55, 56, 57, 58, 60]

The valuation findings were modified by restricting inclusion to the Hammond-to-Quebec cost and excluding the remaining disputed items from assessable value.

Confiscation under section 111(m) - Incorrect tariff classification without misdescription - The vessel was not liable to confiscation under section 111(m) merely because the importer declared a wrong tariff heading when the vessel itself had not been misdescribed in the import documents. - HELD THAT: - The Tribunal found that the bill of entry described the goods as an old and used vessel for passenger transport, M.V. Horseshoe Casino, and the bill of lading and commercial invoice also disclosed it as M.V. Horseshoe Casino. Thus, there was no suppression of the fact that the imported goods were a casino vessel. The error lay in the tariff heading claimed by the importer, and the Tribunal held that proper classification at assessment was primarily the responsibility of customs. Since the department had assessed the goods without contesting classification at that stage, the incorrect claim of Heading 8901, based on the importer's understanding, could not by itself be treated as wilful misstatement attracting confiscation under section 111(m). [Paras 60]

The confiscation of the vessel under section 111(m) was set aside as not tenable.

Penalty under section 114A - Penalty on Director and Customs House Agent - Bona fide belief on valuation - Penalty on the importer for alleged misdeclaration and suppression, and penalties on the Director, Managing Director and Customs House Agent for abetment, were not sustainable. - HELD THAT: - The Tribunal held that the goods had not been misdeclared in the bill of entry or supporting documents, which themselves disclosed the vessel as a casino vessel. Since the department had physically examined the vessel and assessed it, the allegation that the persons involved in procurement had abetted misclassification was not sustainable. On valuation, the Tribunal accepted the explanation that the disputed costs and services were omitted under a bona fide belief that they were not includible in assessable value, and after examining their nature found that belief to be bona fide. As the goods were also held not liable to confiscation, the foundation for penalties under sections 114A and 112(a) failed. [Paras 61]

The penalty on the importer under section 114A and the penalties on the co-appellants under section 112(a) were set aside.

Final Conclusion: The Tribunal upheld reclassification of the imported vessel as a pleasure vessel under Heading 89039990 and sustained the consequential denial of the exemptions tied to Heading 8901, while modifying valuation by allowing inclusion only of the Hammond-to-Quebec cost and excluding the remaining disputed items. Confiscation of the vessel and all penalties on the importer and co-appellants were set aside; the importer's appeal was partly allowed and the other appeals were allowed with consequential relief.

Writ maintainability despite alternative remedy - Approved resolution plan and clean slate principle - Extinguishment of pre-resolution claims - Bar of collateral proceedings against corporate debtor in new management - Overriding effect of IBC over inconsistent proceedings

Writ maintainability despite alternative remedy - Proceedings alleged to be without jurisdiction - The writ petition was maintainable notwithstanding the availability of an alternative remedy where the impugned proceedings were alleged to be wholly without jurisdiction and contrary to a statutory bar under the IBC. - HELD THAT: - The Court accepted the threshold objection on maintainability in favour of the petitioner, holding that the rule of alternative remedy is not absolute when the challenge is founded on lack of jurisdiction and violation of a statutory embargo. Relying on Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors. [1998 (10) TMI 510 - SUPREME COURT], the Court held that the writ petition could be entertained because the grievance was directed against the very competence of the pending and fresh proceedings to continue after approval of the resolution plan. [Paras 13]

The writ petition was held maintainable at the threshold.

Approved resolution plan and clean slate principle - Extinguishment of pre-resolution claims - Bar of collateral proceedings against corporate debtor in new management - Overriding effect of IBC over inconsistent proceedings - Lis pendens order passed without deciding maintainability - Upon approval of the resolution plan, the corporate debtor in its new management acquires statutory protection against prior claims and collateral proceedings inconsistent with the IBC, and the concerned fora must first determine maintainability in that light before proceeding further. - HELD THAT: - On a conjoint reading of the provisions governing the binding effect of an approved resolution plan, immunity for prior liabilities and the overriding operation of the IBC, the Court held that approval of the plan brings about a clean slate transition for the corporate debtor under new management. Claims, dues and proceedings relatable to the pre-resolution period, if not forming part of the approved plan, cannot be pursued through collateral civil or revenue proceedings, since such continuation would defeat the legislative object of revival and amount to an indirect challenge to the finality of the insolvency process. The Court treated this position as settled by the decisions in Ghanshyam Mishra and Sons Private Limited vs Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - Supreme Court], JSW Steel Limited vs Pratishtha Thakur Haritwal & Ors. [2025 (3) TMI 1403 - SUPREME COURT], Vaibhav Goel vs Deputy Commissioner of Income Tax and Another [2025 (3) TMI 1052 - SUPREME COURT] and National Spot Exchange Ltd v. Anil Kohli [2021 (9) TMI 1156 - Supreme Court]. It further observed that any interim order, including one invoking lis pendens, passed without first examining the maintainability of such proceedings against the corporate debtor in its new avatar would be illegal and void. The Court, however, did not itself adjudicate the merits of each pending case, and instead directed the concerned courts and authorities to consider maintainability first in the light of the IBC and the observations made. [Paras 17, 18, 21, 22, 23]

The concerned courts and authorities were directed to first decide maintainability of the impugned proceedings under the IBC before taking any further steps, and the petitioner was left at liberty to seek vacation of adverse interim orders.

Final Conclusion: The writ petition was entertained on the footing that proceedings alleged to be barred by the IBC could be questioned despite the existence of alternative remedies. The Court held that, after approval of the resolution plan, collateral proceedings in respect of prior claims against the corporate debtor in its new management cannot proceed without first deciding their maintainability under the IBC, and disposed of the petition with directions to the concerned fora accordingly.

Extended period of limitation- Concept of suppression or non-disclosure of facts - Taxability of job-work activities - Show Cause Notice - barred by limitation - Service tax demand arising from a CERA audit objection - show cause notice arose from a CERA audit objection which the department itself had disputed - HELD THAT: - The Tribunal held that limitation goes to jurisdiction and must be examined at the threshold. On the facts recorded in the order itself, the show cause notice had been issued pursuant to a CERA audit objection and the department had not accepted that objection, keeping the matter in the call book. In that situation, the dispute was plainly interpretational and the allegation of suppression of facts could not be sustained. The original authority had also failed to give any real reasoning as to how deliberate non-disclosure was made out, reducing the finding on suppression to a bare assertion. Since the notice had been issued beyond the normal period, and the conditions for invoking the extended period were not established, the notice was time-barred; consequently, the demand could not be examined on merits and the impugned order was liable to be set aside. [Paras 4, 5, 6, 7, 8]

The extended period was held to be unavailable; the show cause notice was time-barred and the impugned order was set aside with consequential relief.

Final Conclusion: The Tribunal allowed the appeal on the preliminary ground of limitation. As the department itself had disputed the CERA audit objection and no reasoned case of suppression was made out, the extended period was held inapplicable, rendering the show cause notice time-barred and the demand unsustainable.

Taxability of works contract service for construction of educational institutions - Non-commercial construction for educational use - Service tax demand on works contract services rendered for construction of Periyar Maniammai University and Periyar Teacher Training Institute could not be sustained merely by treating them as private educational institutions. - HELD THAT: - The Tribunal held that the controversy stood governed by its earlier order in the respondent's own case [2024 (7) TMI 1067 - CESTAT CHENNAI], wherein the demand on works contract services for construction of private educational institutions during the disputed period had been held unsustainable on the basis that construction for institutions used principally or solely for education was not taxable as commercial construction. In the present appeal, the Department's case was only that the two institutions ought to be treated as private educational institutions and not as Government educational institutions. Since even construction for private educational institutions had already been held non-taxable for the disputed period, that classification did not assist the Revenue. The Tribunal also noted that no case had been made out that the institutions were not used principally or solely for providing education, and found support from the coordinate bench decision in M/s. Sabari Builders [2025 (8) TMI 88 - CESTAT CHENNAI]. [Paras 9, 10, 11]

The Department's challenge to the dropping of demand in respect of the two educational institutions was rejected as devoid of merit.

Final Conclusion: The Tribunal held that, in view of its earlier decision that service tax on works contract services for construction of educational institutions during the disputed period was not sustainable, the Department could not revive the demand merely by classifying the two institutions as private educational institutions. The departmental appeal was accordingly rejected.

Refund of service tax on input services used for export of services - Reversal of CENVAT credit as equivalent to non-availment - Procedural declaration requirement - Non-filing Or delayed filing of the prescribed declaration under the exemption notification - Whether the denial of refund claims, on the aforesaid grounds of purported non filing of declaration and noncompliance with clause (e) of para 2 of the notification, is tenable ? - HELD THAT: - The Tribunal held that the condition requiring non-availment of CENVAT credit stood satisfied where the credit earlier taken had been reversed and such reversal had been reflected in the statutory return and intimated to the Department. The lower authorities had also not disputed the appellant's assertion that the tax audit report showed non-availment. On the declaration requirement, the Tribunal treated the lapse as procedural, since there was no dispute that the appellant had exported services, had paid service tax on the relevant input services, and had used those services for providing export services, with the particulars being verifiable from records. Applying the principle that substantial export-related benefit should not be denied for a technical lapse, the Tribunal held that even for the period where declaration had not been filed, the appellant should be given an opportunity to file it and the refund claims should thereafter be processed without delay. [Paras 12, 13, 14, 15, 16]

The impugned order was set aside and the refund claims were held admissible, with liberty to file the missing declaration for the period in question and consequential relief in accordance with law.

Final Conclusion: The Tribunal allowed the appeal, holding that reversal of CENVAT credit satisfied the condition of non-availment and that refund could not be denied for a procedural lapse in filing declaration where export of services and use of taxed input services were undisputed. The impugned order was therefore set aside with consequential relief, and the appellant was permitted to file the missing declaration for processing of the claim.

Taxability of transportation of goods by road - covered by the negative list under section 66D of the Finance Act, 1994, Or taxable as a Goods Transport Agency service - Consignment note as determinative test - Benefit of Central Government vide Notification No. 49/98-ST - The appellant's activity of transportation of goods by road was not taxable as Goods Transport Agency service, since the appellant was only undertaking mere transportation of goods by road and was not issuing consignment notes or providing services in relation to such transport so as to fall within the statutory definition of Goods Transport Agency. - HELD THAT: - The Tribunal held that under the post-negative-list regime, transportation of goods by road remained outside tax except where the service was that of a Goods Transport Agency. For a person to qualify as a GTA, the statute required not only transport of goods by road but also issuance of a consignment note. On the Tribunal's reading of the statutory definition and Rule 4B, issuance of consignment note was the determinative test, and actual transport of goods by road by itself did not become taxable. Applying that test, the Tribunal found that the appellant was not registered as a carriage operator requiring issuance of consignment note, charged only agreed freight, and merely transported goods without rendering ancillary or intermediary services such as loading, unloading, or other services in relation to transportation.

In the case of Lakshmi Narayana Mining company vs. Commissioner of Central Tax, Bengaluru [2019 (7) TMI 917 - CESTAT BANGALORE]. The activity is held to be mere transport of goods by road as is covered under negative list, as already mentioned. It being the activity not subject to tax, the adjudicating authority is held to have wrongly confirmed the demand.

In the absence of any contrary evidence from the department, the activity was held to be mere transport of goods by road covered by the negative list and not taxable GTA service. [Paras 4, 5]

The demand was held unsustainable because the appellant's activity fell within transportation of goods by road covered by the negative list and not within taxable Goods Transport Agency service.

Final Conclusion: The Tribunal held that the appellant was not providing taxable Goods Transport Agency service but was only engaged in mere transportation of goods by road covered by the negative list. The demand of service tax, interest and penalties was therefore set aside and the appeal was allowed.

Substantial questions of law - Maintainability of departmental appeal- appeal below monetary limit - prescribed pecuniary limit - Commissioner (Appeals) power under Section 85 of the Finance Act, 1994 to remand the matter to the original adjudicating authority for fresh decision in a service tax appeal -

Substantial question of law exception to monetary limit - Maintainability of departmental appeal - The departmental appeal was maintainable despite the disputed amount being below the prescribed pecuniary limit, since the appeal raised a pure question of law regarding the appellate power of remand. - HELD THAT: - The Tribunal accepted the departmental submission that the challenge was directed not to the tax demand on facts but to the legal competence of the Commissioner (Appeals) to remand the matter. It therefore treated the case as falling within the exception for matters involving substantial questions of law, and held that the monetary-limit instruction did not bar the appeal. [Paras 3]

The objection to maintainability was rejected and the appeal was heard on merits.

Power of remand under Section 85(4) - Service tax appellate jurisdiction - The Commissioner (Appeals), while deciding an appeal under the Finance Act, 1994, has the power to remand the matter to the original adjudicating authority for fresh adjudication. - HELD THAT: - The Tribunal held that the question stood governed by the different language of Section 85(4) of the Finance Act, 1994, which enables the Commissioner (Appeals) to pass such orders as he thinks fit. Relying on World Vision [2009 (11) TMI 452 - CESTAT, NEW DELHI], it held that this provision is materially different from Section 35A of the Central Excise Act, 1944, under which the remand power had been curtailed. The procedural reference in Section 85(5) to the exercise of powers and procedure under the Central Excise Act could not be read as restricting the substantive appellate power available under Section 85(4). On that reasoning, the Commissioner (Appeals) was competent to send the matter back for de novo consideration. [Paras 8, 9]

The remand order passed by the Commissioner (Appeals) was upheld and the departmental appeal was dismissed.

Final Conclusion: The Tribunal held that the departmental appeal, though below the monetary limit, was maintainable because it raised a substantial question of law. On merits, it affirmed that the Commissioner (Appeals) has power under the Finance Act, 1994 to remand a service tax matter for fresh adjudication, and accordingly dismissed the departmental appeal.

Valuation of CISF security services - Includibility of reimbursed and facility-related expenses - Expenses incurred towards accommodation, medical facilities, vehicle running and maintenance, telephone, dog squad and stationery for CISF personnel -Reverse charge basis -HELD THAT: - The Tribunal held that the controversy stood covered by earlier decisions in [2024 (5) TMI 565 - CESTAT HYDERABAD], [2024 (4) TMI 391 - CESTAT AHMEDABAD] and [2019 (1) TMI 1661 - CESTAT ALLAHABAD] of different Benches, including the appellant's own case for an earlier period, all taking the view that such accommodation and ancillary facility-related expenses are not part of the consideration for the security service. Since the issue was squarely covered in favour of the assessee, the contrary view taken in the impugned order could not be sustained. [Paras 6, 7]

The demand founded on inclusion of those expenses in the assessable value was set aside and the appeal was allowed with consequential relief.

Final Conclusion: Following earlier Tribunal decisions, including the appellant's own case, the Tribunal held that the impugned accommodation and ancillary facility-related expenses could not be added to the taxable value of CISF security services. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Demand based on Rule 5 - Inclusion of reimbursable expenses in taxable value of service - Subordinate legislation vis-a-vis parent statute - HELD THAT: - The Tribunal held that the controversy stood concluded by the decision in Union of India versus International Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT], which declared that Rule 5, insofar as it sought to include reimbursable expenditure in the gross amount charged, travelled beyond Section 67. The governing principle applied was that service tax is chargeable only on the consideration for the taxable service itself, and subordinate legislation cannot expand the measure of levy beyond the parent statute. Since the dispute related to a period prior to the later statutory amendment bringing reimbursable expenditure within the valuation provision, the demand founded on Rule 5 was unsustainable. [Paras 5]

The demand on reimbursable expenses was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that, for the period in dispute, reimbursable expenses could not be added to the value of taxable service by resort to Rule 5 of the 2006 Rules. The impugned order confirming service tax on that basis was therefore set aside.

Computation of an amount under Rule 6(3) read with Rule 6(3)(A) - Proportionate reversal of CENVAT credit on common input services - Computation base for reversal in a mixed activity situation involving dutiable manufacture and exempted trading activity - amendment to Rule 6(3A) vide Notification No.13/2016-CE (N.T) - Retrospective operation - HELD THAT: - The Tribunal held that, for purposes of Rule 6(3A), the credit taken on input services must include only common input services and input services exclusively used in exempted services, and cannot include input services used exclusively in manufacture of dutiable goods. It further held that the substitution made in Rule 6(3A) by Notification No.13/2016-CE (N.T) was clarificatory and, following CCE & ST, Bangalore Vs. Fosroc Chemicals (India) Pvt. Ltd. [2014 (9) TMI 633 - KARNATAKA HIGH COURT], had retrospective effect. Since the assessee had produced a detailed computation supported by a Chartered Accountant's certificate showing proportionate reversal of common credit, and the adjudicating authority recorded no reason for rejecting that computation, confirmation of demand on the wider basis adopted in the impugned order was unsustainable. [Paras 13]

The demand, interest and penalty based on inclusion of credit attributable to input services exclusively used for dutiable goods were held unsustainable, and the impugned order was set aside.

Final Conclusion: The Tribunal held that reversal under Rule 6(3A) had to be confined to common input service credit and that the later substitution of the rule was clarificatory and retrospective. As the assessee's proportionate reversal supported by a Chartered Accountant's certificate was not rebutted by any finding, the impugned demand was set aside and the appeal was allowed with consequential relief.

Statutory pre-deposit for VAT appeal - Statutoryrequirement for admission of the appeal under proviso (2) to Section 31(1) - Adjustment of earlier deposit after remand - non-payment of the demand under the fresh assessment - Penalty dependent on outcome of assessment appeal

Statutory pre-deposit for VAT appeal - Adjustment of earlier deposit after remand -HELD THAT: - The Court held that the second proviso to Section 31(1) requires proof of payment of 12.5% of the difference between the tax assessed and the tax admitted for the relevant tax period. Since the appellant disputed the entire assessed difference and had already deposited 50% of that difference in the earlier round, that deposit satisfied the statutory condition. The earlier deposit remained available for the appeal filed against the fresh assessment order passed after remand, and no further deposit could be insisted upon merely because a fresh assessment order had been made. [Paras 12, 13, 14]

The order refusing to entertain the appeal for want of further pre-deposit was erroneous, and the appeal was liable to be restored for decision on merits.

Penalty dependent on outcome of assessment appeal - HELD THAT: - The Court held that the sustainability of the penalty depended upon the result of the assessment appeal. Once the appeal against the fresh assessment order was to be heard on merits, the penalty could not survive at that stage, though liberty remained to the authorities to impose penalty depending on the appellate outcome. [Paras 15, 16]

The penalty was quashed, subject to liberty to proceed afresh depending on the outcome of the restored appeal.

Final Conclusion: The appeals were allowed. The High Court's order was set aside, the statutory appeal against the fresh assessment order was restored for decision on merits, and the penalty was quashed subject to the result of that appeal.

Entitlement to exemption under Section 6(2) of the CST Act for a subsequent inter-State sale - Effect of exemption on first inter-State sale - Exemption on a second or subsequent inter-State sale cannot be denied solely because the first sale had itself enjoyed exemption, if the statutory conditions for exemption under Section 6(2) are otherwise satisfied. - HELD THAT: - The Court affirmed the view that the object of Section 6(2) is to avoid multiple taxation, but that object does not justify reading the provision to mean that once the first sale is exempt, the subsequent sale must necessarily be taxed. What is decisive is whether the dealer satisfies the conditions prescribed under Section 6(2). The earlier decision in A & G Projects and Technologies Limited [2008 (12) TMI 392 - SUPREME COURT] was understood only to indicate that where the first sale is taxed, the later sale is exempt to avoid cascading; it was not read as laying down the converse proposition that exemption on the first sale automatically excludes exemption on the later sale. Likewise, Jadhavjee Laljee was treated as authority only for the requirement that the conditions of Section 6(2) must be fulfilled irrespective of whether the first sale was exempt. Since the assessment and penalty orders had rejected the claim solely on the ground that the first sale was exempt, without examining compliance with Section 6(2), that approach was held unsustainable. [Paras 4]

The High Court's [2010 (7) TMI 828 - DELHI HIGH COURT] view was upheld, and the matter remained remitted to the Value Added Tax Officer for determination of whether the conditions of Section 6(2) were satisfied for claiming exemption.

Final Conclusion: The Supreme Court declined to interfere with the High Court's decision. It affirmed that exemption on a subsequent inter-State sale cannot be rejected merely because the first sale was exempt, and that the dealer's entitlement must be tested only on compliance with the conditions of Section 6(2).

Entitlement to release of the refund amount already determined by the tax authority- Statutory interest on delayed refund - HELD THAT: - The Court noted that the competent authority had already passed Form VAT 305 determining the petitioner's entitlement to refund, and that despite the lapse of almost six years the amount had not been released. As the Department, when called upon to explain the delay, only sought further time and disclosed no sufficient justification for continuing to withhold the amount, the Court held that no further indulgence was warranted. Since the refund had already been adjudicated and quantified by the authority, the respondents were required to give effect to that order and compute and pay interest in terms of the statutory provision governing delayed refund. [Paras 6, 7]

The respondents were directed to calculate and pay the refund determined under Form VAT 305 together with interest under Section 38(6) of the Telangana Value Added Tax Act, 2005 within four weeks.

Final Conclusion: The writ petition was disposed of by directing release of the refund already determined in favour of the petitioner for the stated tax period, along with statutory interest, within the time fixed by the Court.

Negotiable Instruments Act - Dishonour of cheque - legally enforceable debt or liability - Compounding of offence under Section 138 - Statutory Presumption - Rebuttal of Presumption - Settlement at Supreme Court stage - Compounding costs under revised guidelines - HELD THAT: - The Court held that an offence under Section 138 of the Negotiable Instruments Act is quasi-criminal in nature and is expressly made compoundable, the legislative object being to secure payment and preserve the credibility of cheques. Since the parties had entered into a compromise, the complainant did not oppose compounding subject to payment, and this Court had recently revisited the governing guidelines in Sanjabij Tari v. Kishore S. Borcar & Anr. [2025 (9) TMI 1634 - SUPREME COURT], the case was fit for compounding. Applying the revised guideline applicable where payment is tendered before the Supreme Court, the Court directed payment of 10% of the cheque amount as compounding cost to the Supreme Court Legal Services Committee. [Paras 16, 17, 18, 19, 20]

The appeal was allowed; the conviction and sentence were quashed in view of the compromise, the appellant was directed to be released forthwith if not required in any other case, and compounding was made subject to deposit of 10% of the cheque amount as costs.

Final Conclusion: The Supreme Court compounded the offence under Section 138 of the Negotiable Instruments Act on the basis of the compromise between the parties and set aside the conviction and sentence. The appellant was ordered to be released, subject to deposit of the prescribed compounding cost in terms of the revised guidelines applied by the Court.

International law - Foreign judgment conclusiveness - Presumption of competent foreign jurisdiction - Rebuttable presumption of jurisdiction - Exclusive arbitration agreement and foreign court competence - Clean hands doctrine - Breach of natural justice in foreign proceedings - Interim injunction in money recovery suit - Principles of “uberrima fides” - Arbitration agreements between the parties and the plaintiff’s participation in the international arbitration proceedings pertaining to the same claim arising out of the same dispute

Conclusiveness of foreign judgment - Presumption of competent foreign jurisdiction - Exclusive arbitration agreement and foreign court competence - Breach of natural justice in foreign proceedings - At the pre-trial stage, the Russian judgment could not be accepted as conclusive evidence of the defendant's liability, nor could the statutory presumption of competent jurisdiction be applied for grant of interim relief. - HELD THAT: - The Court held that under Sections 13 and 14 CPC, a certified copy of a foreign judgment ordinarily carries conclusiveness as to matters adjudicated and a rebuttable presumption of competence of the foreign court; however, at the pre-trial stage, those consequences cannot be treated as absolute where the record itself shows a substantial objection. Here, the parties had agreed to resolve disputes through ICC arbitration with English law governing the contracts, the same dispute was already the subject matter of ongoing international arbitration, and the plaintiff had participated in that arbitration for years. In that background, the effect of Article 248.1 of the Russian Procedure Code on the Moscow court's jurisdiction remained debatable and the competence of the foreign court was prima facie doubtful. The Court further noted serious objections under Section 13, including the plea that the foreign proceedings were conducted in breach of natural justice because voluminous amendments and expert material were introduced shortly before hearing without adequate opportunity to respond. Since the plaintiff relied on the Russian judgment alone as the basis of its money claim, its conclusiveness and the foreign court's competence had to be tested at trial and could not be treated as established for interim purposes. [Paras 18, 19, 20, 34, 35]

The Russian judgment was held not capable of being treated, at this stage, as absolute and conclusive proof of the plaintiff's claim, and the presumption under Section 14 CPC was declined to be applied for interim relief.

Interim injunction in money recovery suit - Balance of convenience - Suppression of material facts -HELD THAT: - The Court held that a mere apprehension that the defendant may transfer funds out of India is insufficient in a money recovery action unless the plaintiff first shows a prima facie case on the underlying claim. Since no prima facie case was established on the strength of the foreign judgment, the foundation for injunctive relief failed. The apprehension based on the assignment agreement was also weakened because injunctive protection in relation to that agreement had already been granted by the Russian court. The Court further found that the defendant had produced material showing that orders of the English court and the ongoing arbitration proceedings concerning substantially the same claim had not been fully placed on record by the plaintiff. In these circumstances, discretionary relief was refused; the Court found absence of prima facie case, no irreparable injury in favour of the plaintiff, and held that the balance of convenience lay with the defendant, who would suffer prejudice if an injunction were granted. [Paras 30, 34, 36, 37]

The prayer for interim injunction was rejected and the interim application was dismissed.

Principles of “uberrima fides”- meaning that a litigant has a strict legal duty to plead with complete honesty and transparency by voluntarily disclosing all the true and correct facts.

Final Conclusion: The Court held that, at the interim stage, the Russian judgment could not be treated as conclusive proof of the plaintiff's money claim because serious objections existed as to the Moscow court's competence and the applicability of the exceptions under Section 13 CPC. In the absence of a prima facie case, and with the balance of convenience favouring the defendant, the interim application for injunction was dismissed.

Negotiable Instruments Act - Dishonour of cheque - forensic examination of disputed document - handwriting comparison - signature verification - Denial of execution of document - complaint under Section 138 - HELD THAT: - The Court held that once the complainant had taken a complete stand denying both his signatures and handwriting on Exhibit D01A, the disputed document acquired clear relevance for adjudication and its expert examination could not be dismissed as inconsequential. The Court observed that, had the complainant admitted execution and only disputed the document's connection with the transaction, the matter might have stood differently; but a total denial of execution made forensic comparison necessary to test the defence set up by the accused. The trial court, in rejecting the request on the assumption that such verification would not affect the result, failed to appreciate that expert opinion on the disputed receipt may have a direct bearing on the just adjudication of the complaint. [Paras 6]

The impugned order was set aside, the application was allowed, and the trial court was directed to send the disputed receipt along with admitted writings and signatures of the complainant for FSL examination; further proceedings were stayed till receipt of the report.

Final Conclusion: The petition was allowed. The Court held that forensic examination of the disputed receipt was necessary for a fair adjudication of the complaint, set aside the order refusing such examination, and directed the trial court to obtain an FSL report before proceeding further.