TMI Tax Updates e-Newsletter
Jun 13,2026

Entitlement to Anticipatory bail - fraudulent Input Tax Credit - commission of offence punishable under Sections 69 & 132 of CGST/CGGST Act, 2017 - Non-cognizable and bailable GST offence - HC [2026 (3) TMI 1621 - CHHATTISGARH HIGH COURT],held that anticipatory bail was declined and the application was rejected. - HELD THAT:- No interference with the impugned order (supra) - The Special Leave Petition was dismissed and pending applications were also disposed of.

Seeking review of the order - Seizure of cash during GST search - Scope of seizure powers under search and seizure provisions - Condonation of delay - Review petition - HELD THAT:- Delay was condoned and the review petitions were dismissed on the ground that no case for review of the earlier order [2025 (3) TMI 1700 - SC ORDER] was made out.

Clubbing of multiple financial years - Consolidated show cause notice for multiple tax periods - Coram non judice -Lack of jurisdiction in GST demand proceedings - Availability of statutory remedy - barred writ interference -HELD THAT: - Following the view already taken by the Court in Milroc [2025 (10) TMI 867 - BOMBAY HIGH COURT], the statutory scheme was held to contemplate assessment with reference to a definite tax period and not by consolidation of multiple financial years or tax periods in one show cause notice. On that basis, the impugned notice covering the period from 1st July, 2017 to 31st August, 2021 in one composite proceeding was treated as without jurisdiction. Once the initiation itself lacked jurisdiction, the adjudication order founded upon it and the recovery action taken pursuant to it were also void.

In Chief Justice of Andhra Pradesh and Another Vs. L.V.A. Dikshitulu and Others [1978 (9) TMI 174 - SUPREME COURT], the Apex Court has held that the order passed by a person lacking inherent jurisdiction would be a nullity. Any order passed by a Court without jurisdiction would be coram non judice being a nullity and principles of estoppel, waiver and acquiescence or even res judicata being procedural in nature, would have no application in a case where an order has been passed by Tribunal / Court which has no authority in that behalf.

The Court further held that admission of liability or a request for instalments could not validate an order that was a nullity, and the existence of an alternate statutory remedy was no bar to exercise of writ jurisdiction against such void proceedings. The decision cited on alternate remedy under the Customs Act was distinguished as turning on the party's failure to pursue the statutory remedy within time, and not on inherent lack of jurisdiction. [Paras 13, 14, 15, 16, 17]

The impugned show cause notice, adjudication order and consequential recovery notice were quashed, with liberty to issue fresh notices for the respective financial years in accordance with law.

Final Conclusion: The Court held that the composite GST proceedings covering multiple tax periods were without jurisdiction and therefore void. The show cause notice, adjudication order and consequential recovery were quashed, while reserving liberty to the authorities to proceed afresh for the respective financial years in accordance with section 74, if otherwise permissible in law.

Rejection of the request to file the appeal manually - Non-availability of DRC-07 on GST portal - manual filing under Proviso to Rule 108(1) of the CGST Rules - HELD THAT: - The Court found that the appellate authority itself recorded that the petitioner was unable to file the appeal electronically because Form DRC-07 was not available or uploaded on the portal. While relying on Rule 108(1), the authority failed to consider the proviso to that rule. The Court held that the proviso contemplates filing where the decision or order cannot be effectively pursued through the electronic mode and, in the situation noted by the authority itself, the request for manual filing could not be rejected solely on the ground that the appeal had to be filed electronically. [Paras 7, 8, 9, 10]

The impugned appellate order was held unsustainable, and the matter was remanded to the appellate authority to reconsider the request in the light of the proviso to Rule 108(1) and decide it expeditiously.

Final Conclusion: The writ petition was allowed. The appellate authority's refusal to consider manual filing was set aside, and the matter was remanded for fresh decision in accordance with the proviso to Rule 108(1) of the CGST Rules.

Input tax credit mismatch adjudication - Failure to consider material on record - Reasoned assessment order - mismatch between GSTR-3B and GSTR-2B - Failure to consider reply and auto-drafted ITC statement - HELD THAT: - The Court noted that the dispute arose from the mismatch between the input tax credit claimed and the amount reflected in GSTR-2B. On examining the comparison referred to in the impugned order and the extract from the auto-drafted ITC statement produced before the Court, it found prima facie that the credit reflected in GSTR-2B had not been properly shown in the comparison table forming the basis of the demand. Although the order referred to the petitioner's reply and legal submissions, the determinative material did not appear to have been considered on merits. The Court therefore treated the defect as one of non-consideration of relevant material and directed fresh adjudication after personal hearing, without deciding the underlying entitlement finally. The issue concerning attachment of the bank account was expressly left open. [Paras 9, 10, 11, 12]

The impugned order was quashed and the matter was remitted for fresh decision on merits after considering the petitioner's submissions and granting personal hearing.

Final Conclusion: The writ petition was disposed of by quashing the assessment order for non-consideration of the petitioner's material and submissions in the input tax credit mismatch dispute for the stated tax period. The matter was remitted for fresh adjudication on merits, while the question relating to bank account attachment was left open.

Absence of Document Identification Number in GST assessment orders - Service by electronic portal - Conditional interference despite delay - Entertaining delayed writ petitions against patently defective assessment orders - HELD THAT: - The Court treated the absence of a DIN as an inherent and patent defect in the assessment order and followed its earlier view that such defect is sufficient to invalidate the order. On the objection of delay, the Court noted the controversy regarding service through portal upload and also recorded that, though ignorance of law or inability to access the portal would ordinarily not justify delay, practical difficulties arising under the online GST regime had led to numerous such cases. To balance those difficulties with the State's interest in tax administration, the Court held that delayed writ petitions against orders suffering from such patent irregularity could be entertained subject to the registered person depositing 20% of the disputed tax. On that basis, the impugned assessment order was set aside and the matter was remanded for fresh assessment after due opportunity of hearing, with adjustment of any amount already paid or recovered towards the required deposit and exclusion of the pendency period for limitation purposes. [Paras 10, 11, 12, 13]

The impugned assessment order was set aside for absence of DIN and the matter was remanded to the Assessing Officer, subject to deposit of 20% of the disputed tax within the time granted.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order on the ground of absence of DIN and remanding the matter for fresh consideration after hearing. The relief was made conditional on deposit of 20% of the disputed tax, with consequential adjustment and exclusion of the pendency period for limitation.

Recovery of refunded input tax credit on ineligibility of credit - Abeyance of demand order pending filing of statutory second appeal due to portal glitch -objection based on Clause 22 - circular governing rejection of refund claims - violation of the circular dated 18.11.2019 - proceedings under sections 73 or 74

Refund rejection on ground of ineligible input tax credit - Proceedings for recovery under Sections 73 or 74 read with refund circular - HELD THAT: - The Court held that clauses 20 and 21 of the circular expressly contemplate issuance of notice and recovery proceedings under Section 73 or Section 74 where refund of unutilised or accumulated ITC is rejected on account of ineligibility of credit. Clause 22 excludes such recovery proceedings only where refund is rejected for reasons other than ineligibility of credit. Since, on the parties' own showing, the controversy was whether the credit was eligible at all, clause 22 had no application. The further question whether the matter properly fell under Section 73 or Section 74 was expressly left open. [Paras 10, 11]

The challenge founded on the circular was rejected, but the issue whether Section 73 or Section 74 was the correct provision was kept open.

Statutory second appeal not taken on file due to portal glitch - Keeping impugned order in abeyance pending appellate decision - HELD THAT: - Noting that the petitioner had already deposited the required amount and had preferred the second appeal, the Court considered it appropriate to protect the petitioner from immediate operation of the impugned order until the appellate remedy was effectively taken up. The order was therefore treated as communicated but directed to take effect only depending upon the result of the second appeal, with liberty to the petitioner to raise all available grounds, including the objection to invocation of Section 74, in appropriate proceedings if the appeal failed. [Paras 12, 13]

The second appeal was directed to be taken on file expeditiously, and the impugned order was kept in abeyance until disposal of that appeal.

Final Conclusion: The writ petition was disposed of by holding that the circular did not prohibit recovery proceedings where the refund dispute related to alleged ineligibility of input tax credit. At the same time, since the petitioner's second appeal had not been taken on file only because of a portal glitch, the impugned order was directed to remain in abeyance until the appellate decision, while the question whether Section 73 or Section 74 applied was left open.

Revocation of cancellation of GST registration - cancellation of registration for non-filing and non-payment - conditional restoration of registration upon payment and filing of returns - HELD THAT:- The writ petition challenging cancellation of GST registration was disposed of by following an earlier order in similar circumstances [2024 (10) TMI 1387 - ANDHRA PRADESH HIGH COURT], with directions to the petitioner to seek revocation, file draft returns, deposit the taxes due, and with a further direction to the registering authority to consider the revocation application and restore registration if the petitioner's plea is accepted.

Effect of unsigned assessment order - Service of unsigned GST order - Validity of an assessment order in Form GST DRC-07 issued without the signature of the assessing officer -HELD THAT: - The Court recorded the State's admission that the impugned assessment order did not bear the signature of the assessing officer. Relying on earlier Division Bench decisions of the Court in the case of A.V. Bhanoji Row v. The Assistant Commissioner (ST) [2023 (2) TMI 1224 - ANDHRA PRADESH HIGH COURT], M/s. SRK Enterprises Vs. Assistant Commissioner [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] and M/s. SRS Traders v. The Assistant Commissioner ST & ors. [2024 (4) TMI 894 - ANDHRA PRADESH HIGH COURT],it held that signature on an assessment order is indispensable and that the defect is not cured by the statutory provisions earlier considered by those decisions.

The Court further held that, in view of Rule 26(3) of the CGST Rules, 2017, service of an order without signature would not amount to service at all. The Hon’ble High Court of Madras, in T.V.L. Deepa Traders vs. The Deputy Commissioner [2025 (3) TMI 1388 - MADRAS HIGH COURT],consequently, the petitioner's delay in approaching the Court could not operate against it, since there had been no valid service of the impugned order. [Paras 4, 5, 6, 7, 8]

The impugned assessment order was set aside, with liberty to the assessing authority to undertake a fresh assessment after notice and issuance of a signed order, and the period from the date of the impugned order till receipt of the present order was directed to be excluded for limitation purposes.

Final Conclusion: The writ petition was disposed of by setting aside the unsigned assessment order for the relevant period, the Court holding that an unsigned order is invalid and cannot be treated as served. Fresh assessment was left open to the authority, with exclusion of the intervening period for limitation.

Document Identification Number - Validity of GST assessment order uploaded on portal - mandatory procedural compliance - A summary of assessment order in FORM GST DRC-07 issued without mention of a DIN number - HELD THAT: - The Court recorded the respondent's admission that the impugned summary of assessment order did not bear a DIN number. Following the law already noticed from the Supreme Court in the case of Pradeep Goyal Vs. Union of India & Ors [2022 (8) TMI 216 - SUPREME COURT] and earlier Division Bench decisions of the High Court in the case of M/s. Cluster Enterprises Vs. The Deputy Assistant Commissioner (ST)-2 [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] and Sai Manikanta Electrical Contractors Vs. The Deputy Commissioner, Special Circle, Visakhapatnam, [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] read with the CBIC circular on mandatory quoting of DIN, the Court held that non-mention of DIN affects the validity of such proceedings. On that procedural defect alone, the uploaded assessment summary could not be sustained. [Paras 7, 8]

The impugned FORM GST DRC-07 was set aside, with liberty to the authority to undertake fresh assessment after notice and after assigning a DIN number, and the intervening period was directed to be excluded for limitation.

Final Conclusion: The writ petition was disposed of by setting aside the GST assessment summary for want of a DIN number. Liberty was reserved to make a fresh assessment after notice and issuance of a DIN-compliant order, with exclusion of the intervening period for limitation.

Denial of a Personal hearing under Section 75(4) - Violation of principles of natural justice in GST assessment - Request for further hearing before adverse GST assessment - HELD THAT: - The Court found that, irrespective of the dispute as to whether the assessing officer was physically available on the date fixed, the attendance register itself showed that the authorised representative had attended the office, reiterated the earlier reply and specifically requested another hearing if any negative order was to be passed. On these undisputed facts, the determinative consideration was that such request for personal hearing had not been granted. The Court therefore held that the assessment orders suffered from violation of principles of natural justice as well as non-compliance with the requirement of personal hearing under Section 75(4). [Paras 9, 10]

The impugned assessment orders were set aside and the matters were remanded to the assessing authority for fresh decision after giving the petitioner an opportunity of personal hearing.

Final Conclusion: The writ petitions were disposed of by setting aside the assessment orders for the concerned tax periods on the ground of denial of personal hearing. The matters were remanded for fresh consideration after affording the petitioner an opportunity of personal hearing.

Validity of proceedings u/s 127 as also u/s 263 - Hasty proceedings during peak COVID period - denial ofReasonable opportunity of hearing in transfer and revision proceedings - denial of Principles of natural justice -

HELD THAT: - The Court found that, after the assessee had submitted objections in the transfer proceedings, there was no proper intimation of any further progress and the transfer order was not shown to have been preceded by an effective hearing. In the revision proceedings, the record itself disclosed two show cause notices issued on the same day carrying different dates of hearing, for which no plausible explanation was available, reinforcing the assessee's grievance that the matter had been hurried through.

Court further held that both proceedings were initiated and concluded during the peak COVID period, when business operations and movement stood severely restricted, and in such circumstances the respondents were not justified in proceeding with such haste. On that basis, both the transfer order and the consequential revision order were held to have been passed without a fair and reasonable opportunity, amounting to violation of natural justice. [Paras 14, 15, 16, 17]

The orders passed under Sections 127 and 263 were set aside, with liberty to the respondents to initiate fresh proceedings in accordance with law.

Final Conclusion: The writ petition was allowed. Both the transfer order and the consequential revision order for the assessment year in question were set aside on the ground of breach of natural justice and undue haste in proceedings conducted during the peak COVID period, with liberty to initiate fresh proceedings in accordance with law.

Amendment of e-filed writ petition without original record - Dispensation with production of original petition - Permission to amend the remanded writ petition without insisting on production of the original petition, which was stated to be untraceable - HELD THAT: - The Court noted that the writ petition had been remanded and that the petitioner had been permitted to amend the petition to challenge the vires of the concerned provisions. Having regard to the peculiar facts and circumstances, including that the petition had been e-filed and the original petition was not traceable, the Court held that the amendment could be allowed on the basis of the schedule of amendment placed on record and directed that the Registry should not insist on production of the original writ petition. Consequentially, reverification was also dispensed with since the amendment was confined to the vires challenge. [Paras 5, 7]

The petitioner was permitted to amend the writ petition to challenge the vires of Section 147A and Section 292BC, and the Registry was directed not to insist on the original petition for carrying out the amendment.

Final Conclusion: In the peculiar circumstances of the case, the Court allowed amendment of the e-filed writ petition despite the original petition being untraceable, and directed that the Registry should not insist on production of the original record. The amendment was permitted as sought, with reverification dispensed with.

Constitutional validity of certain provisions of the Black Money Act - HELD THAT:- The concerned Respondents shall file their affidavit in reply to the above Writ Petition within a period of four weeks from today and serve a copy of the same on the advocates for the Petitioner.

For interim relief we direct that since the Assessment Order is already passed, and the Petitioner has already filed an Appeal before the CIT(A), the said Appeal can proceed and orders can be passed thereon. No coercive action shall be taken against the Petitioner, including that of prosecution and penalty, till the hearing and final disposal of this Writ Petition.

Writ Petition be heard along with other WPs which raise the same or similar issues.

Reassessment notice barred by limitation - limitation u/s 149(1) -Annulment of void reassessment - HELD THAT: - The Tribunal held that for A.Y. 2015-16, the subsequent notice u/s 148 issued on 27.07.2022 was barred by limitation u/s 149(1). In reaching that conclusion, it relied on the Revenue's recorded concession before the Supreme Court in Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] as noticed in Makemytrip India Pvt Ltd [2025 (4) TMI 46 - DELHI HIGH COURT] that for assessment year 2015-16, notices issued on or after 1 April 2021 would have to be dropped. Once the very assumption of jurisdiction through the notice u/s 148 was time-barred, the reassessment could not survive and had to be quashed. [Paras 8, 9]

The notice u/s 148 dated 27.07.2022 was quashed as barred by limitation, and the assessee's appeal was allowed.

Final Conclusion: The Tribunal held that the reassessment notice issued for A.Y. 2015-16 was barred by limitation and, therefore, the reassessment was void. The assessee's appeal was allowed by quashing the notice and not merely setting aside the assessment.

Undisclosed income based solely on Form No. 10 - Application of income towards capital expenditure - Set-off of excess application of earlier years

Undisclosed income based solely on Form No. 10 - Accumulation of income for charitable purposes - addition treating the amount mentioned in Form No. 10 as unrecorded income of the trust - HELD THAT: - The Tribunal held that though the assessee had filed Form No. 10 stating that a sum was set apart for addition to the building for educational purposes, that by itself did not establish that such amount had in fact been earned or received and omitted from the books. The determinative finding was that neither the AO nor the appellate authority had any material to show actual receipt of such income. Mere filing of the form, even if done out of abundant caution, could not justify an addition as undisclosed income. [Paras 9]

The addition made on this basis was directed to be deleted.

Application of income towards capital expenditure - Capital work-in-progress - Opening capital work-in-progress added back as shortfall in application when the assessee had not claimed that opening balance itself as application of income for the year - HELD THAT: - The Tribunal found from the fixed asset schedule that the assessee had claimed as application only the capital assets added during the year. The opening capital work-in-progress appearing in the balance sheet was not itself claimed as application of income. Since the premise of the addition was that the assessee had treated the opening work-in-progress as current year's application, and that premise was found to be incorrect, the addition could not stand. [Paras 10]

The addition in respect of opening capital work-in-progress was directed to be deleted.

Set-off of excess application of earlier years - Verification of carry forward excess utilisation - HELD THAT: - The Tribunal upheld the appellate direction requiring verification of the assessee's claim for benefit of excess utilisation of funds of earlier years against current year income. It found no infirmity in that course and accepted that the benefit may be granted on verification. [Paras 11]

The appellate direction was upheld and the Assessing Officer was left to grant the benefit after proper verification.

Final Conclusion: The appeal was allowed substantially. The additions based on Form No. 10 and on opening capital work-in-progress were deleted, while the direction to verify and grant the claim of excess application of earlier years was affirmed.

Disallowance of bank loan repayments - Application of income out of borrowed funds - Loan repayment as application of income - Double deduction under charitable trust exemption - HELD THAT: - The Tribunal held that Explanation 4 to section 11 denies treatment of loan-financed expenditure as application of income at the stage when the borrowing is utilised, but permits the claim in the year of repayment to the extent the amount had not been allowed earlier.

On the material placed, including computations, returns, annual accounts and statements of application for the earlier years, the assessee had reduced the borrowed amounts from application in the years in which the loans were received and claimed application only when repayments were made. The Revenue did not dispute these statements before the Tribunal.

Disallowance had been sustained only on a presumption that the assessee might have claimed the same expenditure earlier, but the record did not support any such double claim. The repayment was therefore eligible to be treated as application of income. [Paras 7, 8]

The disallowance of loan repayment claimed as application of income was deleted.

Final Conclusion: The Tribunal held that there was no double deduction, as the assessee had not claimed the loan-funded expenditure as application in the years of borrowing and had claimed it only on repayment. The disallowance was therefore deleted and the appeal was partly allowed.

Addition u/s 14A(2) - mandation of recording satisfaction - Computation of book profit u/s 115JB - Form 26AS reconciliation and factual verification - Revenue versus capital expenditure for maintenance dredging

Recording of satisfaction u/s 14A(2) - Invocation of Rule 8D - additional disallowance for expenditure relating to exempt dividend income sustained where the assessee had furnished a specific working of the expenditure and the Assessing Officer invoked Rule 8D without recording objective dissatisfaction with that working - HELD THAT: - The Tribunal found that the assessee had not claimed that no expenditure was incurred, but had itself identified employee and administrative costs attributable to the investment activity and made a suo motu disallowance. On examining the assessment order, the Tribunal held that the Assessing Officer had neither pointed out any defect in that working nor recorded any finding from the accounts that the claim was incorrect.

Mere reproduction of the statutory provision and direct application of Rule 8D was held insufficient, since section 14A(2) requires an objective satisfaction, based on examination of the accounts, before the prescribed method can be applied. In the absence of such satisfaction, invocation of Rule 8D was held to be invalid. [Paras 27, 28, 29, 31, 32]

The further disallowance made by applying Rule 8D was deleted.

Computation of book profit u/s 115JB - corresponding adjustment to book profit under of addition u/s 14A read with Rule 8D - HELD THAT: - Having held that the additional disallowance under section 14A itself could not survive, the Tribunal further held that the corresponding MAT adjustment also failed. It additionally accepted the principle that computation under clause (f) of Explanation 1 to section 115JB has to be made independently and that the mechanism of section 14A read with Rule 8D cannot be mechanically imported into book profit computation. [Paras 33]

The Assessing Officer was directed to delete the corresponding adjustment made while computing book profit under section 115JB.

Mismatch between receipts in Form 26AS and books of accounts - assessee's reconciliation and supporting material had not been comprehensively verified - HELD THAT: - The Tribunal noted that the assessee had produced an item-wise reconciliation, explanations regarding service tax component, alleged excess reporting by a deductor, and a claim of timing mismatch in relation to carried-forward TDS credit. It held that these explanations could not be summarily rejected, but also found that their factual correctness required independent verification from the books, returns, TDS schedules and supporting records. The controversy was therefore treated as one of reconciliation and verification rather than a concluded case of undisclosed receipts. Since the relevant material needed factual examination at the assessment stage, the matter was restored without any adjudication on the merits of the addition. [Paras 41, 42, 43, 44, 45]

The orders on this issue were set aside and the matter was remanded to the AO for limited verification and fresh adjudication after giving the assessee an opportunity of hearing.

Revenue versus capital expenditure for maintenance dredging - Maintenance of existing jetty infrastructure - Whether Expenditure incurred on maintenance dredging of the existing jetty area to remove silt and restore operational depth was revenue expenditure or capital expenditure? - HELD THAT: - The Tribunal found from the agreement, explanatory note and invoice that the dredging work was undertaken as maintenance dredging for the existing berth area and approaches, with the object of removing accumulated silt and preserving navigational depth required for normal vessel movement. No material was brought by the Revenue to show creation of any new berth, extension of infrastructure, enhancement of capacity or acquisition of a capital asset. Applying the settled distinction between capital and revenue expenditure, the Tribunal held that an expenditure is capital only when it brings into existence a new asset or advantage in the capital field; expenditure incurred for preserving and maintaining the existing profit-making apparatus remains revenue in nature. The fact that such dredging was carried out periodically, even once in about two years, was held not to alter its character. [Paras 57, 58, 59, 60, 61]

The dredging expenditure was held allowable as revenue expenditure.

Final Conclusion: The appeal was partly allowed for statistical purposes. The additional disallowance under section 14A and the related adjustment to book profit under section 115JB were deleted, the dredging expenditure was allowed as revenue expenditure, and the addition based on mismatch between Form 26AS and the books was restored to the Assessing Officer for fresh verification.

Penalty for concealment and under-reporting - penalty levied u/sec. 271(1)(c) and u/sec. 270A - Survival of penalty after annulment of quantum proceedings - Effect of quashing of reassessment and deletion of quantum addition -

HELD THAT: - The Tribunal noted that, in the connected quantum proceedings, reassessment for assessment year 2013-2014 had already been quashed and had attained finality. It further recorded that, pursuant to remand by the jurisdictional High Court, reassessment for assessment year 2014-2015 was also quashed, while the addition towards disallowance of finance charges for assessment year 2017-2018 was deleted. Since the very basis on which the penalties had been levied no longer survived, the penalties u/ss 271(1)(c) and 270A were held to have no independent footing and were liable to be deleted. [Paras 5]

The penalties for all the three assessment years were deleted.

Final Conclusion: As the connected quantum proceedings had resulted in quashing of the reassessment for two years and deletion of the surviving addition for the third year, the foundation for the impugned penalties disappeared. The assessee's three appeals were accordingly allowed and the penalties were deleted.

Indexation of cost of construction - Capital gains computation on sale of land with building - Additional evidence under Rule 46A - Sale deed annexure as part of public document

Denial of indexed cost of construction in computing capital gains from sale of property comprising land and building, on the ground that construction details constituted additional evidence - HELD THAT: - The Tribunal found that the Assessing Officer had already obtained the registered sale deed from the Sub-Registrar during the proceedings u/s 148A, and that Annexure 1-A formed an integral part of that sale deed. Since that annexure itself contained the particulars of the building, including its age and value, the details regarding construction were already part of the record contained in a public document.

In these circumstances, the Commissioner (Appeals) adopted an inconsistent approach in accepting the sale deed as a public document while treating the construction particulars contained in its annexure as additional evidence requiring compliance with Rule 46A.

Tribunal further held that the benefit of indexation u/s 48 is a statutory consequence, and where material necessary to determine cost is already available on record, such benefit cannot be denied on hyper-technical grounds. The supporting documents relied upon by the assessee were only corroborative of what already stood recorded in the sale deed and its annexure. [Paras 14, 15, 16, 17, 18]

The indexed cost of acquisition of land and the indexed cost of construction were directed to be taken into account for recomputation of capital gains, and the addition made by treating the entire sale consideration as short-term capital gain was held unsustainable.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee was entitled to indexation on the cost of construction as well as on the cost of land. The capital gains were directed to be recomputed on the basis of the registered sale deed and Annexure 1-A.

Taxability of software distribution receipts - Royalty under India-USA DTAA - Fees for technical services for ancillary support services - Binding effect of Supreme Court precedent

Chargeability of Receipts from sale of software products and ancillary support services to Indian distributors, resellers or customers in India as royalty or fees for technical services - HELD THAT: - The Tribunal noted that the Assessing Officer had treated the software receipts as royalty and the support service receipts as fees for technical services by relying on earlier Karnataka High Court decisions. It held that those decisions stood reversed by the Supreme Court in Engineering Analysis Centre for Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] and that the said position had attained finality after dismissal of the review petition. Since the Commissioner (Appeals) had followed the Tribunal's orders in the assessee's own case for other years based on that binding Supreme Court ruling, no interference with the relief granted was warranted. [Paras 8, 9, 10]

The deletion of taxability on software sales as royalty and on ancillary support services as fees for technical services was upheld, and the revenue's appeal was dismissed.

Final Conclusion: For A.Y. 2017-18, the Tribunal upheld the order of the Commissioner (Appeals) holding that receipts from sale of software products and ancillary support services were not taxable in India as royalty or fees for technical services. The revenue's appeal was dismissed by applying the binding law declared by the Supreme Court.

Profit attribution to Permanent Establishment in India - Revenue allocation between origination and execution functions - grant of MAT credit

Profit attribution to Permanent Establishment - Revenue allocation between origination and execution functions - Attribution of additional profit to the Indian PE by treating the entire execution revenue from two cross-border merger and acquisition deals as attributable to the India office - HELD THAT: - The Tribunal found that under the assessee's business model, revenue from successful deals was first divided equally between origination and execution, and thereafter shared among branches according to the role actually performed. In the two disputed deals, the material on record, including email communications, showed active involvement of the UK team in the execution process. The Tribunal also noted that for other deals the assessee had attributed the full execution revenue to the Indian branch, which supported the claim that revenue sharing with the UK branch was adopted only where another branch had played a significant execution role. The acceptance by the department of substantial origination revenue allocation to overseas branches in these very deals also reinforced the assessee's allocation methodology. On an overall consideration of the facts, the Tribunal held that rejection of the assessee's sharing of execution revenue between the India and UK branches was unsustainable. [Paras 13]

The addition on account of profit attributed to the Indian PE in respect of the two deals was directed to be deleted.

Computational error arising out of non-grant of MAT credit u/s. 115JAA - HELD THAT: - The Tribunal did not adjudicate the credit quantum on merits and directed factual verification of the assessee's claim, with consequential grant of MAT credit in accordance with law. [Paras 15]

Final Conclusion: The Tribunal deleted the addition made by attributing the disputed execution revenue entirely to the Indian PE, holding that the UK office had a significant role in those two deals. The MAT credit issue was restored for factual verification, and the appeal was partly allowed.

Transfer pricing methodology for sale of finished goods to associated enterprises - Arm's length price of sales promotion and marketing services from associated enterprises - Additional depreciation on new plant and machinery - Book profit adjustment for prior period expenses - Capitalisation of interest on capital work in progress - Weighted deduction for in-house research and development expenditure

TP Adjustment - Internal TNMM as most appropriate method - Rejection of CUP for internal comparables - Comparability adjustments for AE and non-AE sales - benchmarking sale of finished goods to associated enterprises, Internal TNMM v/s CUP as the most appropriate method - HELD THAT: - The Tribunal held that the controversy stood covered by the assessee's own cases for earlier years, where Internal TNMM had been consistently accepted and CUP rejected. It found no change in the nature of transactions, products, associated enterprises, or benchmarking approach. The determinative reasoning accepted was that, despite availability of internal uncontrolled transactions, CUP was not reliably workable because the AE and non-AE transactions were materially different in economic circumstances and contractual terms, and reliable adjustments for those differences were not shown to be possible. In the absence of any distinguishing feature or any material showing that the earlier decisions had been set aside or overruled, the principle of consistency applied and the deletion of the transfer pricing adjustment was upheld. By virtue of paragraph 29, the same conclusion governed A.Y. 2013-14 as well. [Paras 9, 10, 11, 12, 29]

The Revenue's challenge to adoption of Internal TNMM and deletion of the adjustment on sale of finished goods to associated enterprises failed for both years.

Sales promotion and marketing services from associated enterprises - TPO's jurisdiction in determining arm's length price - HELD THAT: - The Tribunal followed the assessee's own earlier years, in which the adjustment on the same transaction had already been deleted. It accepted that no distinguishing material had been brought by the Revenue. The earlier view, which the Tribunal applied, was that the assessee had produced material to substantiate the arrangement and that the TPO could not determine the arm's length price at nil by questioning the necessity of the services or by re-examining their requirement in the manner adopted. Since the impugned disallowance rested on the same grounds already rejected in the assessee's own case, the deletion was sustained. By virtue of paragraph 29, the same finding applied to A.Y. 2013-14. [Paras 13, 14, 15, 29]

The deletion of the transfer pricing adjustment relating to sales promotion and marketing services from associated enterprises was upheld for both years.

Additional depreciation on replacement of spares - New plant and machinery requirement - HELD THAT: - The Tribunal held that additional depreciation is admissible only on new machinery or plant acquired during the year and not on replacement of parts and spares of an existing plant. It found that the Assessing Officer had specifically held that the expenditure represented replacement and did not result in any new plant and machinery, and that this finding was not displaced by any contrary evidence from the assessee. The Commissioner (Appeals) was therefore in error in allowing the claim merely because the genuineness of the expenditure was not disputed. [Paras 19]

The disallowance of additional depreciation on replacement of spares and parts in A.Y. 2012-13 was restored and the Revenue succeeded on this issue.

Book profit u/s 115JB - Prior period expenses - Prior period expenses addition while computing book profit u/s 115JB - HELD THAT: - Following the co-ordinate bench decision of Gujarat Chemical Port Termianal Co. Ltd. [2022 (8) TMI 378 - ITAT AHMEDABAD] the Tribunal held that there is no provision in the computation mechanism of book profit permitting an adjustment on account of prior period expenses. The deletion directed by the Commissioner (Appeals) in relation to the book profit computation was therefore sustained. By virtue of paragraph 29, the same conclusion applied to A.Y. 2013-14 as well. [Paras 21, 22, 29]

The Revenue's objection to deletion of the addition for prior period expenses in book profit computation u/s 115JB was rejected for both years.

Capitalisation of interest on capital work in progress - Nexus between borrowed funds and capital assets - establishment of nexus between the borrowing and acquisition of fixed assets - HELD THAT: - The Tribunal accepted the finding that the Assessing Officer had proceeded merely on presumption in treating the ECB loan as utilised for acquisition of fixed assets. It noted the assessee's stand that its own funds were sufficient for the investment and further noted that no such disallowance had been made in earlier years. Since no nexus between the ECB loan and the capital work in progress was established, the basis for capitalisation of interest failed. [Paras 24, 29]

The deletion of the disallowance made by capitalising interest to capital work in progress was upheld for both years.

Disallowance u/s. 35(2AB) - Weighted deduction for in-house research and development - DSIR quantification before 01.04.2016 - HELD THAT: - The Tribunal held that the statutory requirement for DSIR quantification of eligible expenditure applied only after the amendment effective from 01.04.2016. For the years under consideration, there was no such requirement as a condition for the claim. The Assessing Officer was therefore not justified in curtailing the deduction solely by reference to the DSIR report. By virtue of paragraph 29, the same conclusion applied to A.Y. 2013-14. [Paras 26, 29]

The Revenue's challenge to allowance of the deduction for in-house research and development expenditure was rejected for both years.

Additional depreciation on storage tanks - Tanks as part of plant and machinery - depreciation allowable on newly constructed tanks used for storage of hazardous raw materials and finished products - HELD THAT: - The Tribunal held that the non-production of complete bills and vouchers could not justify disallowance of additional depreciation when the Assessing Officer had not disallowed normal depreciation on the tanks. On the facts found, the tanks were constructed for storage of hazardous raw materials and finished products and formed an integral part of the plant and machinery. Once the tanks were treated as plant and machinery for normal depreciation, there was no valid basis to deny additional depreciation on the new tanks constructed during the year. [Paras 31]

The allowance of additional depreciation on tanks in A.Y. 2013-14 was upheld and the Revenue's ground was dismissed.

Final Conclusion: Both Revenue appeals were partly allowed. The Tribunal upheld the Commissioner (Appeals) on the transfer pricing issues, book profit adjustment, interest capitalisation, and deduction for in-house research and development expenditure, but restored the disallowance of additional depreciation on replacement of spares for A.Y. 2012-13 while sustaining the allowance of additional depreciation on tanks for A.Y. 2013-14.

Transfer pricing of intra-group services - Application of CUP method - Requirement to consider additional evidence - Carry forward of unabsorbed depreciation

Transfer pricing of intra-group services - Application of CUP method - Shareholder and duplicative services - Requirement to consider additional evidence - determination of arm's length price at nil by applying CUP without reference to uncontrolled transactions - HELD THAT: - The Tribunal noted that, in the assessee's own case for the preceding year, a co-ordinate Bench had found that the TPO and the first appellate authority had used a common set of conclusions for various intra-group services without dealing with the extensive material produced to show actual receipt of services. That earlier decision also held, following CIT vs. EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] and Cushman Wakefield [2014 (5) TMI 897 - DELHI HIGH COURT] that the transfer pricing analysis could not rest on the alleged absence of necessity, lack of demonstrated benefit, or the view that the services were duplicative or in the nature of shareholder activity, and that CUP could not be applied as the most appropriate method without any uncontrolled comparable transaction.

As the present year involved the same nature of services and the material on record had likewise not been properly appreciated, the Tribunal followed the earlier order and held that the issue required fresh examination by the TPO after considering the evidence and additional evidence and after granting adequate opportunity of hearing. [Paras 14]

The impugned order on transfer pricing adjustment relating to intra-group services was set aside and the matter was remanded to the TPO for fresh adjudication; the corresponding grounds of both sides were partly allowed for statistical purposes.

Carry forward of unabsorbed depreciation - Set off beyond eight years - Amended section 32(2) - whether unabsorbed depreciation pertaining to assessment years prior to 2002-03 could be carried forward and set off beyond eight years? - HELD THAT: - The Tribunal upheld the view that unabsorbed depreciation for the earlier assessment years, not absorbed till Financial Year 2002-03, lost its identity as year-specific depreciation and merged with the depreciation allowance of the succeeding year. Applying the principle accepted in General Motors India Pvt. Ltd [2012 (8) TMI 714 - GUJARAT HIGH COURT] and approved by British Motor Car Co. Ltd. [2018 (1) TMI 547 - DELHI HIGH COURT] it held that after the amendment to section 32(2), the restriction of eight years did not survive for such unabsorbed depreciation. On that basis, the assessee's claim was accepted and the Revenue's challenge was rejected. [Paras 15, 16]

The assessee's corporate tax ground was accepted and the Revenue's ground against carry forward and set off of unabsorbed depreciation beyond eight years was rejected.

Final Conclusion: The assessee's and the Revenue's appeals were partly allowed for statistical purposes. The transfer pricing dispute on intra-group services was remanded to the TPO for fresh consideration of the evidentiary material, while the assessee succeeded on the issue of carry forward and set off of unabsorbed depreciation beyond eight years.

Concessional tax regime under section 115BAA - Delay in filing Form 10-ICby 22 days - Procedural lapse versus substantive tax benefit

Denial of the concessional tax rate u/s 115BAA solely because Form 10-IC was filed after the prescribed time, though it was available with CPC when the return was processed - HELD THAT: - The Tribunal held that the assessee had clearly manifested its intention to opt for the concessional regime by computing tax accordingly in the return, and Form 10-IC was already on record when the return was processed. The delay of 22 days in filing the form was treated as a bona fide procedural lapse, particularly when the form had neither been withdrawn, rejected nor rendered invalid and there was no dispute regarding the assessee's eligibility for the lower rate.

Following the coordinate bench decisions Kworks Technologies Pvt. Ltd.[2025 (9) TMI 103 - ITAT DELHI], Bansal Coelam Pvt. Ltd.[2024 (11) TMI 1492 - ITAT DELHI], Aprameya Engineering Ltd.[2024 (6) TMI 538 - ITAT AHMEDABAD], G.M. Knitting Industries (P.) Ltd. [2015 (11) TMI 397 - SC ORDER], Anita Sethi [2022 (4) TMI 907 - ITAT KOLKATA], Microland Ltd. [2025 (1) TMI 1569 - ITAT BANGALORE] and Satischandra Hiralal Berawala[2024 (11) TMI 1451 - ITAT AHMEDABAD] and the principle that procedural requirements should not defeat a substantive tax benefit, the Tribunal held that the assessee could not be deprived of the statutory concessional rate merely on account of delayed filing of Form 10-IC. [Paras 7, 9]

The Assessing Officer was directed to compute tax at the concessional rate under section 115BAA, and the assessee's ground was allowed.

Final Conclusion: The Tribunal allowed the appeal and held that belated filing of Form 10-IC, when the form was available with CPC at the time of processing and the assessee's intention to opt for section 115BAA was clear, was only a procedural lapse. Tax was directed to be recomputed at the concessional rate under section 115BAA.

Unexplained cash credit u/s 68 -Demonetization cash deposits from recorded cash sales [jewellery] - Recorded sales and cash balance in books - Double taxation of disclosed sales receipts - Non-rejection of books of account - Acceptance of sales in VAT records

HELD THAT: - The Tribunal held that the addition could not be sustained merely because cash sales had sharply increased before demonetization, many invoices were below the threshold requiring customer identification, or the AO invoked the test of human probabilities.

On the material produced, the assessee had sufficient cash sales and cash balance in its books to explain the deposits, and also had adequate stock to support the sales and stock movement to branches.

Tribunal treated the coordinate bench rulings relied on by the assessee as applicable like M/s. Fine Gujaranwala Jewellers [2023 (3) TMI 1196 - ITAT DELHI] since they lay down that where sales are entered in regular books, supported by stock records and accepted in indirect tax proceedings, and the books of account are not rejected, deposits out of such recorded cash cannot be assessed again u/s68.

Authorities below to have proceeded on conjectures and surmises without disproving the sales by cogent material, and distinguished the decisions cited by the Revenue on the ground that those cases lacked satisfactory evidence of the source, whereas in the present case the cash sales were already recorded in the books. [Paras 9, 10, 11, 12]

The addition sustained u/s 68 in respect of the cash deposits was deleted and the assessee's appeal was allowed.

Final Conclusion: The Tribunal held that the cash deposits during demonetization stood explained by recorded cash sales and available cash balance in the regularly maintained books, which were not rejected. The addition under section 68 was therefore deleted and the assessee's appeal was allowed.

Confiscation of excess imported goods - Redemption fine - Penalty under Section 114A for wilful misstatement or suppression - Excess quantity of imported crude degummed soya bean oil found in the shore tank - assumption of prior knowledge and concerted removal without payment of duty

Confiscation of excess imported crude degummed soya bean oil - Redemption fine - HELD THAT: - The Tribunal found from the record, including the e-mail communication, that the importer had not made any attempt to remove the excess quantity without payment of duty and had, on the contrary, directed the custodian not to release the tanker until customs duty for the excess quantity was paid. The excess goods were ultimately cleared on payment of duty. On these findings, the basis for treating the goods as liable to confiscation failed, and the consequential redemption fine also could not survive. [Paras 10]

The confiscation of the excess goods and the consequential redemption fine were set aside.

Penalty under Section 114A for excess imported goods - Mens rea - Custodian's liability - HELD THAT: - The Tribunal held that the adjudicating authority's assumption of prior knowledge and concerted removal without payment of duty was factually incorrect. The record did not establish collusion, wilful misstatement or suppression of facts by either appellant. On the contrary, the custodian had informed the importer about the excess quantity, and the importer had instructed that the tanker should not be released until duty was paid. In the absence of mens rea and of material justifying invocation of Section 114A, penalty under that provision was held inapplicable to both appellants. For the same reason, the appellate authority's remand in relation to the custodian, after setting aside penalty under Section 114A, was also found to be without merit and was set aside. [Paras 12]

Penalty under Section 114A on both appellants was set aside, and the remand ordered in relation to the custodian was also set aside.

Final Conclusion: The Tribunal set aside the impugned order in its entirety. Both appeals were allowed, with confiscation, redemption fine, penalty under Section 114A, and the remand against the custodian all being quashed.

Smuggling - Absolute confiscation of smuggled gold concealed in body cavity - Burden of proof for notified goods - Concealment - Foreign origin -Imposition of Penalty - knowingly carrying and concealing gold - appellant failed to produce any document evidencing licit purchase of the gold

Confiscation of gold concealed in body cavity - Foreign origin of notified gold - Burden under Section 123 for licit possession of gold - Gold recovered from the appellant's body cavity - smuggled gold of foreign origin - HELD THAT: - The Tribunal held that the deliberate and ingenious concealment of the gold inside the appellant's rectum was itself a strong circumstance establishing an intention to smuggle the gold into India without detection. It further found that the appellant produced no document showing licit purchase, importation or possession of the gold. Since gold is a notified good, the burden to prove bona fide procurement and lawful possession lay on the person from whose possession it was seized, and that burden was not discharged. The Tribunal also relied on the purity of the gold, the absence of supporting evidence for the appellant's explanation of local purchase, and the proved modus operandi to conclude that the goods were of foreign origin and had been smuggled in contravention of the Customs Act. [Paras 7]

The order directing absolute confiscation of the seized gold under Section 111(d), 111(i) and 111(l) was upheld.

Penalty for smuggling of gold - Conscious concealment of confiscable goods - appellant knowingly carrying and concealing gold - HELD THAT: - The Tribunal found from the facts and evidence on record that the appellant had knowingly indulged in smuggling of the gold. On that finding, the conditions for penalty were satisfied, since the appellant's acts and involvement in carrying and concealing goods rendered them liable to confiscation and squarely attracted the penal provisions invoked by the authorities below. [Paras 8]

The penalty imposed on the appellant under Section 112(a) and 112(b) was held to be legal and proper and was sustained.

Final Conclusion: The Tribunal upheld the impugned order in full. The seized gold was held liable to absolute confiscation, and the penalty imposed on the appellant was also sustained; accordingly, the appeal was dismissed.

Rejection of the declared transaction value under Rule 12 - imported lighting fixtures and allied goods ​​​​​​​- Sequential application of customs valuation rules - Admissibility of electronic evidence in customs proceedings - Extended limitation for undervaluation demand - Confiscation and penalty for alleged misdeclaration of value - Preponderance of probability - Relevancy of electronic records and statements under Section 108 - duty demand and invocation of the extended period under Section 28 - Reason to doubt - Contemporaneous imports - Corroborative evidence - Principles of natural justice - Denial of cross-examination

Rejection of declared transaction value - Reason to doubt under valuation rules - Burden to prove undervaluation - HELD THAT: - The Tribunal held that transaction value is the primary basis of customs valuation and can be displaced only on the Department establishing an objective and reasonable basis to doubt the declared value. In the present case, the allegation of undervaluation rested on unverified electronic records and uncorroborated statements, without proof of additional consideration, reliable contemporaneous comparables, or any direct linkage to the actual import transactions. Mere private figures, suspicion or inferential reasoning could not satisfy the legal threshold for rejection of declared value under the valuation scheme. [Paras 22, 23]

The declared transaction value could not be rejected and the issue was decided in favour of the appellants.

Sequential valuation methodology - Comparable imports - Arbitrary standardised valuation rates - HELD THAT: - The Tribunal held that once transaction value is rejected, valuation must proceed strictly and sequentially through the prescribed rules. The adjudicating authority had not undertaken the required exercise under the rules relating to identical goods, similar goods, deductive value or computed value, but instead adopted uniform per-kilogram rates based on unverified electronic material and assumptions. Such standardised rates were found to be unsupported by contemporaneous import data, specific comparability, lawful evidentiary foundation or transaction-specific analysis, and the inclusion of buying commission was also held unsustainable in the absence of proof that it formed part of the price actually paid or payable. [Paras 25, 27, 28, 31, 32]

The re-determined value was held contrary to the valuation rules and liable to be set aside.

Electronic records under customs law - Cross-examination of statement makers - Non-supply of relied upon material - Natural justice in customs adjudication - HELD THAT: - The Tribunal held that electronic evidence in customs proceedings must satisfy the statutory safeguards governing authenticity and certification, and that no such compliance had been shown. The Department had also failed to establish chain of custody, integrity of the devices or correlation of the data with specific consignments. Further, complete relied upon material was not supplied, selective extracts alone were used, and cross-examination of persons whose statements were relied upon was denied despite request. The statements, being disputed and uncorroborated, could not independently sustain the allegation, and defective electronic material could not serve as corroboration for defective statements. The adjudication was therefore held vitiated by breach of natural justice as well as evidentiary inadmissibility. [Paras 40, 41, 42, 43, 44]

The evidentiary foundation of the demand failed, and the proceedings stood vitiated on this ground as well.

Extended period under customs law - Suppression and intent to evade duty - Limitation in undervaluation proceedings - HELD THAT: - The Tribunal held that extended limitation is available only on strict proof of fraud, wilful misstatement, collusion or suppression with intent to evade duty, and cannot be invoked on mere allegations of undervaluation. The imports had been made through regular Bills of Entry and assessed by Customs at the time of clearance, sometimes with departmental enhancement itself, showing that the material facts were already before the Department. The very basis of undervaluation having failed on evidence, the extended period could not survive. The Tribunal also noted unexplained delay in issuance of the notice despite the Department having the primary material much earlier, and held that extended limitation could not be used to compensate for administrative inaction. [Paras 50, 51, 52, 53, 54]

The invocation of the extended period was held unsustainable and the demand was set aside as time-barred apart from failing on merits.

Confiscation for misdeclaration of value - Penalty for alleged undervaluation - Separate penalty on proprietor - HELD THAT: - It is well settled that a mere difference in valuation or subsequent re-determination of value does not automatically amount to misdeclaration. Valuation disputes often arise from differences in interpretation, commercial negotiations, or assessment practices, and cannot be equated with deliberate falsification. In the absence of proof of additional consideration, parallel invoices or flow-back of funds, undervaluation cannot be inferred as misdeclaration. The reliance placed by the Department on D. Bhoormull v. Commissioner of Customs [1974 (4) TMI 33 - SUPREME COURT] is misplaced, as the said decision relates to smuggling cases based on preponderance of probability and cannot be applied to valuation disputes governed by Section 14 and the Valuation Rules. Applying these principles, the allegation of misdeclaration fails.

The Tribunal held that confiscation for misdeclaration of value required cogent proof of deliberate misdeclaration, which was absent once the allegation of undervaluation itself failed. A mere valuation dispute or subsequent re-determination could not automatically amount to misdeclaration. Since the basis for confiscation failed, redemption fine also could not survive. Penalties under the relevant provisions were likewise unsustainable because the Department had not proved suppression, wilful misstatement, knowing use of false material, or any act rendering the goods liable to confiscation. As regards the penalty imposed on the proprietor, no independent evidence of separate culpable conduct was found beyond the case set up against the importing concern. [Paras 60, 61, 62, 63, 64]

The confiscation, redemption fine and all penalties, including those imposed on the proprietor, were set aside in entirety.

Final Conclusion: The Tribunal allowed all the appeals, holding that the demand of differential duty failed both on merits and on limitation. The declared value could not be rejected, the re-determined value was contrary to the valuation rules, and the consequential confiscation, redemption fine and penalties were set aside in full.

Entitlement to concessional countervailing duty under Notification No. 12/2012-CE - Domestically manufactured goods - Concessional CVD subject to non-availment of CENVAT credit - Exemption to importer under legal fiction of deemed manufacture - levy of additional customs duty under Section 3(1) - HELD THAT: - The Tribunal held that additional customs duty under Section 3(1) is imposed to maintain parity with like goods manufactured in India, and for that purpose the imported goods must be treated as if manufactured in India. Applying the ratio of SRF Ltd. [2015 (4) TMI 561 - SUPREME COURT], the benefit of exemption available to like domestic goods could not be denied to an importer merely because the condition relating to non-availment of CENVAT credit is linked to manufacture and cannot be literally demonstrated by a trader-importer. The plea of strict construction based on Hari Chand Shri Gopal [2010 (11) TMI 13 - SUPREME COURT] was distinguished, since that principle applied where the prescribed condition was capable of compliance but remained unfulfilled, whereas here the condition had to be read consistently with the statutory fiction governing levy of CVD. The Tribunal further held that neither a Tribunal decision nor a High Court decision rendered in a different statutory and factual setting could displace the binding declaration of law in SRF Ltd. [2016 (7) TMI 1381 - SC ORDER], and that procedural limitations of the EDI system could not defeat the substantive concession. [Paras 8, 9, 10, 11]

The concessional rate of CVD was rightly extended, the impugned order was upheld, and the Department's appeal was dismissed.

Final Conclusion: The Tribunal held that the respondent-importer was entitled to the concessional CVD benefit on imported mobile phones in view of the law declared in SRF Ltd. and the parity principle governing additional duty on imports. The Department's appeal was therefore dismissed and the appellate order granting the benefit was sustained.

Abatement of appeal on death of sole proprietor - Continuance of proceedings by legal representative - Proceedings against a dead person - appeal abated on the death of the sole appellant under Rule 22 - absence of any application for continuance by a successor-in-interest or legal representative - HELD THAT: - The Tribunal found from the material on record that the appellant had died during the pendency of the appeal. Applying Rule 22 of the CESTAT (Procedure) Rules, it held that proceedings abate on the death of a party unless an application for continuance is made by the successor-in-interest or other legal representative within the prescribed framework. Since no such application had been made, the appeal stood abated. The Tribunal also referred to Shabina Abraham & Ors. Vs. Collector of Central Excise & Customs [2015 (7) TMI 1036 - SUPREME COURT], wherein it was held that proceedings cannot be initiated or continued against a dead person, as such continuation offends principles of natural justice. [Paras 5, 6, 7]

The appeal was held to have abated on the death of the appellant and was disposed of accordingly.

Final Conclusion: The Tribunal held that the appeal had abated upon the death of the appellant-proprietor, no application for continuance having been filed by any legal representative. The appeal was therefore disposed of as abated.

Confiscation of imported petroleum products - Mineral hydrocarbon oil - Redemption fine and penalty - Import in drums vis-a-vis Petroleum Rules compliance - classifiable under heading 27101990 as declared by the importer or under heading 2710 1290 as light oils and preparations - contravention of the Petroleum Rules, 2002 and the Customs Act, 1962 - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decision in the appellants' own case on the same issue [2024 (9) TMI 187 - CESTAT KOLKATA] where it had already been held that no redemption fine and no penalty were imposable in the facts and circumstances of such imports. As the present appeals involved the same issue, the Tribunal followed that earlier order and did not sustain the confiscation-related consequences of redemption fine and penalty. [Paras 8, 9]

No redemption fine or penalty was imposable; the impugned order was set aside and the appeals were allowed.

Final Conclusion: Following its earlier order in the appellants' own case, the Tribunal held that redemption fine and penalty were not imposable in the present matters. The impugned order was set aside and the appeals were allowed with consequential relief.

Classification of CKD motherboard kits - Test of "Essential Character" under GIR 2(a) - Classification of separately presented components under Section XVI Note 2 - General Rules for the Interpretation of the Import Tariff - Scope and Applicability of GIR 1 and GIR 2(a) - Unassembled or disassembled articles - Substantial manufacturing process; Classification by end use - CKD kits comprising discrete electronic and electromechanical components for manufacture of motherboards were not classifiable as motherboards under tariff item 8473 30 20.

HELD THAT: - The Authority held that recourse to Rule 2(a) is permissible only where the goods, as presented at import, possess the essential character of the finished article, or constitute a complete article presented unassembled or disassembled merely for packing, transport or handling. Applying the principle stated in Commissioner of Customs, New Delhi v. Sony India Ltd. [2008 (9) TMI 19 - SUPREME COURT], the imported goods were found to be a collection of independently identifiable and, in many cases, independently classifiable components, requiring extensive post-importation operations such as SMT programming, PCB population, soldering, integration, inspection, testing and validation before a functional motherboard comes into existence. They were therefore neither incomplete or unfinished motherboards having the essential character of the finished article, nor complete motherboards presented unassembled or disassembled. The Authority further held that, under Section XVI Note 2, components specifically covered by separate tariff headings retain their own tariff identity notwithstanding their intended use in manufacture of a motherboard, and only such parts as are not so specifically covered could fall for consideration under the parts heading. The reliance placed on decisions concerning substantially complete CKD goods and on the classification of finished motherboards was held inapposite, since the proposed imports did not have the physical form, identity or commercial character of a motherboard at the time of importation. [Paras 7, 17]

Rule 2(a) was held inapplicable, and the CKD kits were held not classifiable as motherboards under tariff item 8473 30 20; their classification must be determined according to Rule 1 read with the relevant Section Notes, Chapter Notes and Section XVI Note 2, having regard to the nature of the individual goods imported.

Final Conclusion: The Authority rejected the applicant's claim that the proposed CKD kits were classifiable as motherboards under tariff item 8473 30 20. It held that the goods, being discrete components lacking the essential character of a motherboard at import and requiring substantial manufacturing operations thereafter, must be classified in accordance with the tariff applicable to the individual goods under Rule 1 read with the relevant Notes.

Maintainability of Company Petition -Maintainability of class action under Section 245 for past and continuing transactions - scope of reliefs under Section 245(1)(g) and (h) including claims against third parties - Compliance of Section 245(4) - illegal and systematic fraudulent acts - prejudicial to the interests - Tribunal [2026 (3) TMI 111 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI], held that Section 245(1) permits class actions for acts prejudicial to the company and its members, including past and concluded transactions where damages or restitution are sought; that reliefs under Section 245(1)(g) and (h) can extend to third parties and past acts; that the petition met the statutory threshold (2% / 4.99% shareholding) and prima facie satisfaction; and that the NCLT did not error in admitting the petition and directing issuance of public notice. The appeal against the admission and notice direction was dismissed.

HELD THAT:- Delay was condoned, and on consent of parties the company petition was disposed of with the disputes referred to arbitration before the Sole Arbitrator appointed by the Court; the orders of the NCLT [2026 (2) TMI 1432 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI] and NCLAT [2026 (3) TMI 111 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] on maintainability were set aside, and all contentions were kept open.

Transfer of pending winding up proceedings - Suo motu transfer by Company Court - Irreversible or irretrievable stage in liquidation - HELD THAT: - Rule 5 of the Companies (Transfer of Pending Proceeding) Rules, 2016 provides for transfer of pending proceeding of winding up in the ground of inability to pay debts. Sub Rule (1) of Rule 5 provides for a scenario where, the winding up petition although filed was not served upon the respondent under Rule 26 of the Companies (Court) Rules, 1959.

The Court held that Section 434(1)(c) contemplates transfer of pending winding up proceedings, and the last proviso enabling a party to apply for transfer does not make such an application a mandatory precondition in every case. The statutory scheme requires the Company Court to apply its judicial mind to the stage of the winding up and to determine whether the matter has reached a point where the process has become irreversible or irretrievable. Since the material before the Court showed only that possession of assets had been taken and the immovable properties remained unsold, there was no basis to hold that liquidation had crossed that stage. The Company Court had called for and considered the Official Liquidator's status report before ordering transfer; hence the transfer order was a valid exercise of jurisdiction and could not be faulted merely because no party had applied for transfer. [Paras 24, 25, 26, 27, 28]

The challenge to the transfer failed, and the order transferring the winding up proceeding to the Tribunal was upheld.

Final Conclusion: The appeal was dismissed. The Court upheld the transfer of the pending winding up proceeding to the Tribunal, holding that such transfer could be directed by the Company Court upon considering the stage of liquidation and that no mandatory transfer application was required where the proceeding had not reached an irreversible stage.

Powers of NCLT in oppression and mismanagement proceedings - Validity of acts of NCLT-appointed director - Tribunal[2026 (3) TMI 1709 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI-[PB].] found no basis to initiate criminal proceedings, holding that the impugned authorization had been issued by a director whose appointment flowed from the NCLT's order and that the subsequent DIN activation was merely procedural. - HELD THAT:- The civil appeal was dismissed, the Court finding no good ground to interfere with the impugned final order of the National Company Law Appellate Tribunal. Pending applications, if any, stood disposed of.

Continuation of ongoing insolvency assignments after expiry of authorisation for assignmenton attaining 70 years - Interference with expired extension of liquidation period granted under Regulation 44(2) of the IBBI (Liquidation Process) - Age limit for insolvency professional - Mutatis mutandis application - Committee of Stakeholders quorum - Mootness - Maximisation of value

Extension of liquidation period - Expired period of extension - HELD THAT: - The Appellate Tribunal noted that the extension granted by the Adjudicating Authority operated only for a limited period and had already come to an end by the time the appeal was heard. In that situation, interference with the order would amount to putting the clock back after the purpose of the order had already been exhausted. The Tribunal also noticed that the decision of the Stakeholders' Consultation Committee to seek extension had been treated as valid by the Adjudicating Authority. On that footing, and particularly because the extended period had already expired, no interference was warranted. [Paras 9]

The challenge to the order extending the liquidation period was rejected.

Authorisation for assignment - Bankruptcy Trustee attaining seventy years of age - HELD THAT: - The Tribunal held that Regulation 7A bars acceptance or undertaking of an assignment without a valid authorisation for assignment, but its proviso creates an express exception for assignments already being undertaken on the date of expiry of such authorisation. It accordingly held that expiry of authorisation on account of the insolvency professional attaining seventy years of age does not bring an abrupt end to pending assignments. The Bankruptcy Trustee was therefore entitled to continue and complete the ongoing assignment, and the refusal to remove him disclosed no legal or factual error. [Paras 12]

The plea for removal of the Bankruptcy Trustee on the ground of his having attained seventy years of age was rejected.

Final Conclusion: Both appeals were dismissed. The Appellate Tribunal upheld the continuation of the Bankruptcy Trustee in the ongoing assignment and declined to interfere with the order granting liquidation extension, particularly as the extended period had already expired.

Entitlement to regular bail - Satisfaction of twin conditions for bail under Section 45 - Reasonable grounds to believe - Prima facie involvement in forged bank guarantees, supporting endorsements and electronic communications, together with statements recorded under Section 50 - HELD THAT: - The legal position governing bail under the PMLA is well-established. While considering an application under Section 45 of the PMLA, the Court must satisfy itself that there are reasonable grounds for believing that the accused is not guilty of the offence alleged, and that the accused is not likely to commit any offence while on bail. These conditions are in addition to the other considerations ordinarily governing the grant of bail.

The Court held that, while considering bail under Section 45 of the PMLA, it must be satisfied that there are reasonable grounds for believing that the accused is not guilty and is not likely to commit any offence while on bail. On the material placed by the Directorate of Enforcement, including the cooperation and supplementary agreements, the communication revising the commission, statements recorded under Section 50 of the PMLA, email exchanges, WhatsApp communications and other investigation material, the Court found that the prosecution case could not be brushed aside at the bail stage. The Court noted the specific reliance placed on the statement of Amar Nath Dutta and on electronic communications indicating the Applicant's alleged role in relation to the form and particulars of the bank guarantees and supporting documents. It held that the Applicant's contentions that he lacked knowledge of the forgery, acted only in his official capacity, had himself lodged the complaint leading to the predicate FIR, and derived no proceeds of crime, were matters requiring appreciation of evidence at trial. Since a detailed evaluation of disputed facts was impermissible at the bail stage, yet the prosecution material could not be disregarded, the Court was unable to record satisfaction that there were reasonable grounds for believing that the Applicant was not guilty. [Paras 37, 38, 39, 40, 41]

The twin conditions under Section 45 of the PMLA were held not to be satisfied, and regular bail as well as interim bail were refused.

Final Conclusion: Confined to the prayer for regular bail, the Court held that the material collected by the Directorate of Enforcement disclosed a prima facie case and did not permit satisfaction of the twin conditions under Section 45 of the PMLA. The application for regular bail, including interim bail, was accordingly dismissed.

Continuation of the criminal proceedings - Receipt of foreign investment, pricing of shares and use of funds -Cheating - Criminal breach of trust - Criminal conspiracy - Money-laundering - subsistence of scheduled offence - Proceeds of Crime - Abuse of Process of Law - Mala Fide Prosecution

Cheating - Criminal breach of trust - Foreign direct investment in digital news media - Share valuation - The allegations relating to receipt of foreign investment, pricing of shares and use of funds did not disclose the offences of cheating or criminal breach of trust in the FIR. - HELD THAT: - The Court found that, on the Ministry's clarification, online publication on a website was not within print media and there was no cap or restriction on such foreign investment at the relevant time. It further held that the shares had been valued through a chartered accountant in accordance with FEMA guidelines, which required issuance at not less than fair value, and the eventual price was arrived at after negotiations as an economic decision. The allegation that the investment was siphoned away through salary, consultancy, rent and operational expenditure was also held not to disclose any criminal offence in the context of a digital media business. On the statutory ingredients, the Court held that no person was shown to have been deceived into delivering property so as to constitute cheating, and no entrustment or subsequent misappropriation was shown so as to constitute criminal breach of trust. [Paras 80, 83, 84, 85, 86]

No offence under Sections 420 or 406 IPC was made out on the allegations in the FIR or the material noticed in investigation, and the FIR was quashed as an abuse of process.

Criminal conspiracy - Scheduled offence - HELD THAT: - The Court held that a mere agreement between the petitioner and the foreign investor was not enough to constitute criminal conspiracy unless an illegal object or illegal means were shown. The enforcement authorities had not explained the basis of the alleged conspiracy beyond asserting that the parties had entered into an agreement, and despite prolonged investigation no incriminating material had been placed on record. Bald assertions of conspiracy, without material showing the commission of a scheduled offence, were held insufficient. [Paras 124, 125, 126]

The alleged offence under Section 120B IPC was not disclosed on the material relied upon.

Money-laundering - subsistence of scheduled offence - Predicate offence - HELD THAT: - Relying on the principle that action for money-laundering must rest on a legally subsisting scheduled offence, the Court held that the authorities under the PMLA cannot proceed on an assumption that the property involved is proceeds of crime in the absence of such predicate offence. Since the FIR itself did not disclose offences under Sections 406, 420 or 120B IPC and stood quashed, the necessary substratum for the ECIR ceased to exist. On that basis, the ECIR was held liable to be quashed. The separate prayer for supply of the ECIR was not examined on merits because it had become infructuous once the ECIR itself was set aside. [Paras 127, 128, 129, 130, 131]

The ECIR was quashed for want of a surviving scheduled offence, and the petition seeking supply of its copy was rendered infructuous.

Final Conclusion: The Court held that the allegations concerning foreign investment, share pricing and use of funds did not disclose offences under Sections 406, 420 or 120B IPC. As the predicate scheduled offence could not survive, the ECIR under the PMLA was also quashed, and the petition seeking supply of the ECIR was disposed of as infructuous.

Taxability of evacuation of settled ash from ash pond - Adjustment of tax already paid against confirmed service tax demand - Partial reverse charge in manpower supply service - Revenue neutrality under reverse charge mechanism - Extended period in revenue neutral cases - Penalty for suppression and wilful mis-statement - site formation and clearance, excavation and earth moving and demolition service - Revenue Neutrality - Extended Period of Limitation - Partial Reverse Charge Mechanism - Penalty for Suppression of Facts - Appropriation of Deposit

Taxability of evacuation of settled ash from ash pond - Service tax demand on evacuation of settled ash from ash pond undertaken by the appellant as a sub-contractor under the category of site formation and clearance, excavation and earth moving and demolition service. - HELD THAT: - The Tribunal found that the activity in question was evacuation of settled ash from ash pond and that the issue already stood settled by its earlier decisions. Relying on M/s. Novel Engineering & Technical Works Ltd.[2024 (5) TMI 669 - CESTAT KOLKATA], which in turn noted that transportation and dumping of ash as part of the production process was not a service activity, the Tribunal held that such activity could not be subjected to levy of service tax under the disputed taxable category. [Paras 8]

The demand under the category of site formation and clearance, excavation and earth moving and demolition service, along with interest, was set aside.

Adjustment of tax already paid against confirmed service tax demand - Works contract service - The confirmed demand under works contract service had to be reduced by the service tax already paid by the appellant and the balance adjusted out of the admitted deposit made during investigation. - HELD THAT: - On examination of the challan-wise details for the relevant financial years, the Tribunal found that substantial service tax had already been discharged under works contract service and that the Revenue had not disputed either those payments or the authenticity of the supporting challans. After comparing the confirmed demand with the tax already paid, the Tribunal held that only a differential amount remained payable; since the adjudicating authority itself had acknowledged and appropriated the amount deposited during investigation, that differential amount was liable to be adjusted from such deposit. On that basis, no further service tax demand survived, though applicable interest on delayed payment remained recoverable in accordance with law. [Paras 9]

No further service tax demand survived under works contract service after adjustment of the tax already paid and appropriation from the admitted deposit, but applicable interest, if any, remained payable.

Partial reverse charge in manpower supply service - Adjustment of tax already paid against confirmed service tax demand - Manpower recruitment or supply agency service - HELD THAT: - The Tribunal rejected the appellant's plea that its liability was restricted to 25% of the service value, holding that Notification No. 30/2012-ST applied only in specified circumstances and no material had been produced to establish satisfaction of those conditions. However, on scrutiny of the challan-wise statement, the Tribunal found that substantial service tax had already been deposited by the appellant under the same taxable category and the Revenue had not shown any discrepancy in that evidence. The amount so paid was therefore directed to be adjusted against the confirmed demand, and the balance was ordered to be appropriated from the amount deposited during investigation, with the result that no recoverable service tax liability survived thereafter. The Tribunal nevertheless preserved the liability to pay applicable interest on delayed payment. [Paras 10]

The plea for limiting liability to 25% of the taxable value was rejected, but no further service tax demand survived under manpower recruitment or supply agency service after adjustment of tax already paid and appropriation from the admitted deposit; applicable interest, if any, remained payable.

Revenue neutrality under reverse charge mechanism - Extended period in revenue neutral cases - Reverse charge on manpower supply service received from unregistered parties - HELD THAT: - The Tribunal noted that once service tax on the impugned services was paid by the appellant as recipient, the same would be immediately available as CENVAT credit, creating a revenue neutral situation. Applying the ratio of M/s. Indus Valley Partners (India) Pvt. Ltd. [2024 (1) TMI 886 - CESTAT ALLAHABAD], the Tribunal held that in such a revenue neutral case the demand itself was not sustainable. It further found that the demand had been raised beyond the normal period and that the Revenue had produced no evidence to establish suppression of facts or wilful mis-statement with intent to evade tax. In those circumstances, invocation of the extended period was held to be impermissible and the demand failed on limitation as well. [Paras 11]

The reverse charge demand, along with interest, was set aside both on the ground of revenue neutrality and because the extended period of limitation was not invocable.

Penalty for suppression and wilful mis-statement - Penalty for delay in registration and return filing - HELD THAT: - Having already found that the Revenue failed to establish suppression of facts or wilful mis-statement by tangible and cogent evidence, the Tribunal held that the foundation for penalty under Section 78 was absent and that such penalty could not be sustained. In contrast, the penalty under Section 77 had been imposed for delay in obtaining registration, delay in filing returns and non-declaration of specified services, and the Tribunal noted that those grounds were not disputed by the appellant. On that basis, it found no reason to interfere with the penalty under Section 77. [Paras 12]

Penalty under Section 78 was set aside, while penalty under Section 77 was upheld.

Final Conclusion: The appeal was partly allowed. The demand on evacuation of settled ash and the reverse charge demand were set aside; the demands under works contract service and manpower recruitment or supply agency service were treated as discharged by adjustment of tax already paid and appropriation from the admitted deposit, subject only to applicable interest, while penalty under Section 78 was deleted and penalty under Section 77 was sustained.

VCES declaration rejection - Limitation for notice proposing rejection under VCES - Roving inquiry under voluntary compliance scheme - Time-barred notice - Binding nature of circulars - Rejection of the appellant's declaration under the Voluntary Compliance Encouragement Scheme, 2013 - notice proposing rejection was issued beyond the prescribed period and the correspondence relied on by the department was only of a general nature. - HELD THAT: - The Tribunal held that the validity of rejection of the declaration depended first on the validity of the show cause notice proposing such rejection. Relying on the departmental circulars and the decision in JMD Ltd v CCE, New Delhi [2023 (8) TMI 1145 - CESTAT NEW DELHI], it held that the time limit of thirty days for giving notice had not been complied with. Even reckoning from the date of the departmental circular clarifying applicability of the thirty-day period to declarations already filed, the notice had been issued beyond time. The Tribunal also noted that the correspondence referred to in the notice was very general in nature, supporting the view that the alleged enquiry was only a roving inquiry. Since the department was bound by its own circulars, the impugned order upholding rejection of the declaration could not be sustained. [Paras 8, 10, 11]

The rejection of the VCES declaration was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal set aside the order rejecting the declaration filed under the Voluntary Compliance Encouragement Scheme, 2013. It held that the notice proposing rejection was time-barred and that the material relied on by the department was only of a general, roving nature.

Scope of show cause notice - Renting of residential dwelling for use as residence - Refund of service tax paid on exempt renting service - prescribed period of limitation - Entitlement to exemption from service tax as per Section 66D(m) and in terms of Notification No.33/2012 dated 20.06.2012 - building hired for running hostel and not for residential purpose.

Scope of show cause notice - Refund claim vis-a-vis unchallenged assessment - The Revenue could not sustain rejection of the refund claim on the ground that the self-assessment had not been separately challenged, when that was not the basis of the show-cause notice or the impugned orders. - HELD THAT: - The Tribunal found that the show-cause notice and the orders below had proceeded on the footing that the refund claim turned on the assessee's eligibility to exemption under Section 66D(m), and not on any independent bar arising from failure to challenge an assessment. Since the authorities had considered the refund on merits and rejected it only on the view that service tax was payable, the objection sought to be urged by the Revenue at the appellate stage was beyond the scope of the notice and the impugned orders. Applying the principle that the Department cannot travel beyond the show-cause notice, the Tribunal rejected the Revenue's objection founded on finality of assessment.

The objection that refund was not maintainable for want of challenge to assessment was rejected as being outside the case set up in the show-cause notice and the impugned orders.

Renting of residential dwelling for use as residence - Hostel accommodation for students - Activity specific exemption - Renting of the building to an educational institution for use as a hostel for its students was covered by the expression 'services by way of renting of residential dwelling for use as residence' under Section 66D(m) of the Finance Act, 1994. - HELD THAT: - The Tribunal held that there was no dispute that the premises were rented to the educational institution and were in turn used for residence by students. The sole basis of denial was that use as a hostel was not residential use. Relying on M/s. Taghar Vasudeva Ambrish [2025 (12) TMI 505 - SUPREME COURT], the Tribunal held that the exemption attaches to the activity of renting residential dwelling for ultimate use as residence, and does not depend on whether the lessee itself occupies the premises. Since the wording considered by the Supreme Court was materially similar, that ruling was found squarely applicable. The TRU clarification that residential dwelling means residential accommodation, excluding places meant for temporary stay such as hotel, motel, inn, guest house, camp-site, lodge, house boat or like places, also supported the conclusion. On that reasoning, the rental income from the premises used as student hostel was not chargeable to service tax.

The appellant was held not liable to service tax on the rental income, and the refund claim was consequently allowable with consequential relief.

Final Conclusion: The Tribunal held that the Revenue could not defend rejection of the refund on a ground not taken in the show-cause notice or the impugned orders. On merits, renting the premises to the educational institution for use as student hostel was held to fall within renting of residential dwelling for use as residence under Section 66D(m), and the appeal was allowed with consequential relief.

Reverse charge on secondment of technical personnel - Exclusion of reimbursed salary from taxable value - Extended period of limitation - Taxability of management services received from associate company - Cost sharing and service tax liability - Penalty waiver on audit-based disclosure and tax payment with interest - Suppression of Facts - Cost Sharing Arrangement - Manpower Supply Service - Secondment Agreement

Reimbursement component paid to the foreign holding company towards seconded technical personnel -Exclusion of reimbursed salary from taxable value - Extended period of limitation - Service tax liability on technical assistance received under the secondment agreement from the foreign holding company was sustainable only to the extent of the taxable service value, excluding the reimbursed salary component, and only for the normal period. - HELD THAT: - The Tribunal found that the demand arose from the secondment agreement under which qualified technical personnel were provided by the foreign holding company to the appellant. On the record, the appellant had accepted liability and paid tax with interest on the service element. However, the balance amount represented reimbursement of salary paid to the seconded employee and could not be included in the value for levy of service tax as technical services. The Tribunal further held that the entire arrangement and payments were reflected in the agreement placed on record and there was no evidence of suppression of facts; therefore, the extended period was not invocable. [Paras 5]

The demand on secondment-related services was sustained only for the normal period after excluding the reimbursed salary component from the taxable value.

Taxability of management services received from associate company - Reverse charge mechanism - HELD THAT: - The Tribunal noted that the appellant had itself stated in reply to audit that service tax on the payments to the foreign associate company had been missed and had thereafter discharged the tax with interest. The later contention that the services were received from an employee and not from an independent service provider was not accepted, since the services were received from the associate company. In these circumstances, the demand on management services was upheld. [Paras 6]

The demand of service tax on management services received from the associate company was upheld.

Cost sharing and service tax liability - HELD THAT: - The Tribunal held that the appellant's plea of mere cost sharing could not prevail once it was undisputed that the amount in question had been paid for services rendered by the associate company. The payment was therefore not outside the tax net merely because it was described as a cost-sharing arrangement. [Paras 7]

The demand on the amount paid to the associate company was sustained as consideration for taxable services.

Penalty waiver on audit-based disclosure and tax payment with interest - HELD THAT: - The Tribunal found that the audit report had recorded the reasons for non-payment and that the appellant had accepted the audit observations and discharged the service tax along with interest. In that factual setting, it saw no justification for imposition of penalties. [Paras 8]

All penalties were set aside.

Final Conclusion: The appeal was partly allowed. The demand on secondment-related services was confined to the normal period after exclusion of the reimbursed salary component, the demands on management services and on the amount paid to the associate company were sustained, and all penalties were set aside.

Service tax on ocean freight mark-up - difference between ocean freight collected from customers and the freight paid to shipping lines - statutory scheme under Sections 65B(44), 65B(51), 66B, 66D and 67 of the Finance Act, 1994, along with the exemption notification -HELD THAT: - The Tribunal held that the controversy stood covered by its earlier order in the appellant's own case [2024 (7) TMI 1784 - CESTAT CHENNAI]. for the immediately preceding period, which had relied on Baroda Electric Meters Ltd. [1997 (7) TMI 126 - SC ORDER] and the principle that profit arising from the differential in freight charges is not part of the taxable value of the service. It found that the excess amount collected over the freight actually paid had nothing to do with the activity of steamer agent service, and Revenue had not shown that the earlier order or the decisions cited in support had been stayed, modified, or set aside. Applying judicial discipline, comity, propriety, and consistency in following the coordinate Bench view, the Tribunal held the impugned demand unsustainable; consequently, interest and penalties did not survive. [Paras 5, 6]

The service tax demand on the freight mark-up was set aside, and the consequential interest and penalties also failed.

Final Conclusion: The Tribunal allowed the appeal and held that the mark-up on ocean freight collected over and above the freight paid to shipping lines could not be subjected to service tax. The impugned order was set aside with consequential relief, and the liability to interest and penalty did not survive.

Consideration of claim for tax adjustment before recovery - Adjustment of tax on declared goods under Section 15(b) of the Central Sales Tax Act - Recovery demand pending determination of actual tax dues - The assessee's objection that tax already paid under the A.P.V.A.T. Act on the same goods was liable to be adjusted against the demand raised under the Central Sales Tax Act was required to be examined by the Commercial Tax Officer before recovery. - HELD THAT: - The Court did not adjudicate the merits of the claimed adjustment. It held that the assessee's contention founded on Section 15(b) of the Central Sales Tax Act, namely that tax already paid on the same goods under the A.P.V.A.T. Act had to be adjusted while determining the outstanding dues, was a matter which could and should be considered by the Commercial Tax Officer for ascertaining the actual tax liability. On that basis, the demand notice was directed to remain stayed till such consideration was completed.

The Commercial Tax Officer was directed to consider the claim for adjustment in accordance with law within the time fixed by the Court, and recovery under the demand notice was stayed until such order was passed.

Final Conclusion: The writ petition was disposed of by directing the Commercial Tax Officer to examine the assessee's claim for adjustment of tax already paid on the same goods while determining the dues. Till such determination, the recovery demand was stayed.

Service of notice on assessee society - Assessment and penalty without proper notice - Fresh assessment after opportunity of hearing

Proper service of notice on cooperative society - Validity of assessment and penalty for want of notice - Remand for fresh assessment after hearing - Assessment and penalty orders passed against the cooperative society, where notices were sent in the personal name of the President and were returned with the endorsement that the addressee had expired. - HELD THAT: - The Court found that, though the notices and orders were addressed to the petitioner society, the notice had in fact been sent to the President in his personal name. Since that notice was returned with the endorsement that the addressee had expired, there was no proper service on the petitioner society. On that finding, the assessment and penalty orders were held unsustainable for want of due notice and opportunity, and the matter was directed to be taken up afresh by the authorities after issuing proper notice to the society. The Court further directed exclusion of the intervening period for limitation purposes, while leaving the petitioner's separate objection on limitation to be raised before and considered by the assessing authority. [Paras 3, 4, 5]

The assessment and penalty orders were set aside and the matter was remanded for fresh assessment after due notice and opportunity to the petitioner society, with the limitation objection left open for consideration by the assessing authority.

Final Conclusion: The writ petition was disposed of by setting aside the assessment and penalty orders on the ground of absence of proper notice to the petitioner society. Fresh assessment was directed after due notice and opportunity, and the plea on limitation was left open to be urged before the assessing authority.

Service of assessment orders - Recovery proceedings without proof of service - Bank account attachment under the A.P.V.A.T. Act - Recovery by attachment of the petitioner's bank account, when the respondents failed to establish service of the show-cause notices and assessment orders for the relevant assessment periods. - HELD THAT: - The Court found that the respondents were unable to place any material showing service of either the show-cause notices or the assessment orders. Though it was contended that the notices had been affixed at the business premises after postal service was returned unserved, no proof of such mode of service was produced. In the absence of any material demonstrating service, the Court held that there was no service of the assessment orders on the petitioner. On that finding, the attachment of the bank account was set aside, copies of the assessment orders were directed to be served on petitioner's counsel and such service was directed to be treated as service on the petitioner, leaving it open to the petitioner to pursue statutory remedies and seek stay in accordance with law. [Paras 5, 7, 8]

The bank account attachment was set aside for want of proof of service of the assessment orders, and the petitioner was permitted to challenge those orders by treating service on counsel as service on the petitioner.

Final Conclusion: The writ petition was disposed of on the ground that the respondents had failed to prove service of the assessment orders. The attachment of the bank account was set aside, and the petitioner was left to avail statutory remedies against the assessment orders after fresh service.

Entitlement to be released on regular bail - Section 37 twin conditions for bail under the NDPS Act - Bail in offences involving commercial quantity of narcotic drugs - Prolonged incarceration as a ground for bail under special statutes - High Court's grant of regular bail in an NDPS case involving commercial quantity, without considering the mandatory conditions under Section 37 - HELD THAT: - The Court held that in cases involving commercial quantity, consideration of the twin conditions in Section 37 is mandatory, and a liberal approach ignoring that statutory requirement is impermissible. On examining the impugned order, the Court found that the High Court had not considered those conditions at all. The respondent's antecedents in offences of the same nature also negatived satisfaction that he was not likely to commit an offence while on bail. As to custody, the respondent had undergone only 1 year 7 months of incarceration, and since the offence carried a sentence extending up to twenty years, that period could not be treated as prolonged incarceration justifying release on bail on Article 21 considerations.

In Tasleem Ahmed v. State Govt. of NCT of Delhi [2026 (6) TMI 695 - SUPREME COURT] has referred the question concerning the approach of constitutional Courts in bail matters under special statutes, where “Article 21, prolonged incarceration and statutory restrictions intersect”.

The broader question regarding the approach to prolonged incarceration under special statutes was noted as pending consideration elsewhere and was not further examined. [Paras 16, 17, 18, 19, 22]

The order granting bail was set aside, and no case for bail was found to be made out under Section 37 of the NDPS Act.

Final Conclusion: The Supreme Court held that the High Court had granted bail in an NDPS case involving commercial quantity without adverting to the mandatory requirements of Section 37. Finding no satisfaction of the statutory conditions and no case of prolonged incarceration warranting release, the Court allowed the appeal and set aside the grant of bail.

Constitutional court's power to grant bail - Judicial discipline between coordinate Benches - Statutory restrictions such as Section 43D(5) of the UAPA - valuable right enshrined in Article 21 of the Constitution of India - Perceived divergence between coordinate Benches on the application of the binding three-Judge Bench decision - right to speedy trial - Interim bail on account of prolonged incarceration

Judicial discipline between coordinate Benches - Reference to larger Bench - Article 21 and restrictive bail conditions under UAPA - HELD THAT: - The Court held that K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT], remains an authoritative three-Judge Bench decision preserving the constitutional force of Article 21 while recognising the legislative policy behind Section 43D(5) of the UAPA. It further held that Gulfisha Fatima [2026 (1) TMI 1636 - SUPREME COURT] was not to be read as subordinating Article 21 to the statutory embargo, but as rejecting a purely mechanical application of delay and requiring a contextual assessment. Since a later coordinate Bench in Syed Iftikhar Andrabi [2026 (6) TMI 694 - SUPREME COURT] had expressed serious reservations about the manner in which Gulfisha Fatima applied K.A. Najeeb, the discipline of precedent required reference to a Bench of appropriate strength. The Court emphasised that a Bench of equal strength may distinguish or express doubt, but cannot effectively unsettle an earlier coordinate Bench decision on a binding larger Bench ruling without such reference. The broader question requiring authoritative settlement was how Article 21 is to operate in prosecutions under special statutes imposing restrictive bail conditions when prolonged incarceration and delay in trial are asserted. [Paras 20, 21, 22, 23, 24]

The papers were directed to be placed before the Chief Justice of India for constitution of an appropriate Bench to settle the legal position.

Interim bail on account of prolonged incarceration - Stringent bail safeguards - Pending authoritative settlement of the legal issues, the appellants were entitled to interim bail because they had undergone substantial incarceration and the trial was not likely to conclude immediately. - HELD THAT: - The Court held that the appellants could not be left in continued custody merely because an important question of law had been referred for authoritative determination. Without expressing any opinion on the merits of the prosecution case, it considered the length of incarceration already undergone, the unlikely early conclusion of trial, and the likelihood that resolution of the referred issues would consume further time. On that basis, interim bail was granted subject to stringent conditions designed to secure the fairness of the trial, prevent contact with witnesses, avoid tampering with evidence, preserve public order, ensure periodic reporting, and leave liberty to the State to seek cancellation in case of breach. [Paras 27, 28, 29, 30]

The appellants were ordered to be released on interim bail for six months subject to strict conditions, while the trial was directed to proceed expeditiously.

Final Conclusion: The Court held that the perceived conflict in the application of Union of India v. K.A. Najeeb by coordinate Benches in UAPA bail matters required authoritative resolution by a Bench to be constituted by the Chief Justice of India. Pending such consideration, interim bail was granted to the appellants for a limited period subject to stringent safeguards.

Constitutional power of courts to grant bail - Interface between Section 43-D(5) of the Unlawful Activities (Prevention) Act, 1967 and the constitutional guarantee of personal liberty under Article 21 of the Constitution of India - Right to speedy trial - Prolonged pre-trial incarceration - Presumption of innocence - Prima facie scrutiny - statutory restrictions on bail under Section 43D(5) of the Unlawful Activities (Prevention) Act, 1967 and Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Binding force of larger Bench precedent - Entitlement to bail pending trial notwithstanding the charges under the UAP Act and the NDPS Act - Balancing statutory bail restrictions with the constitutional right to speedy trial and personal liberty

Section 43D(5) and Article 21 - Constitutional courts' power to grant bail - Stare decisis - The statutory embargo on bail under Section 43D(5) of the UAP Act does not eclipse the constitutional power of courts to grant bail where prolonged incarceration and delayed trial infringe Article 21, and the three-Judge Bench decision in Union of India Vs. K.A. Najeeb remains binding[2021 (2) TMI 1212 - SUPREME COURT]. - HELD THAT: - This Court granted bail to five of the seven appellants but denied the same to two of the appellants taking the view that while the period of incarceration undergone by the two appellants is substantial, on the present record, their continued detention has not crossed the threshold of constitutional impermissibility so as to override the statutory embargo of Section 43D(5) of the UAP Act.

The Court held that K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT] authoritatively declares a constitutional limitation on the operation of Section 43D(5): while the statutory restriction governs at the threshold, its rigour melts down where trial is not likely to conclude within a reasonable time and the accused has already undergone significant incarceration. It rejected readings in Gurwinder Singh [2024 (3) TMI 175 - SUPREME COURT] and Gulfisha Fatima [2026 (1) TMI 1636 - SUPREME COURT] insofar as they diluted that principle, holding that a smaller Bench cannot dilute or circumvent the ratio of a larger Bench without reference to a larger Bench. The Court further clarified that the principle that bail is the rule and jail is the exception flows from Articles 21 and 22 and cannot be displaced by legislation, though in an appropriate case bail may still be denied on facts. [Paras 33, 35, 38, 39, 41]

Section 43D(5) was held subject to Article 21, and K.A. Najeeb was reaffirmed as binding law which could not be whittled down by smaller Benches.

Long incarceration pending trial - Bail in narco-terror prosecution - Delay in conclusion of trial - HELD THAT: - The Court declined to enter into a merits analysis beyond what was necessary for bail, but found relevant that there was no recovery of cash or contraband from the person of the appellant or from premises used by him, that the statements implicating him were made before the police and were prima facie self-incriminatory, that no prior antecedents of involvement in narcotic trade or terrorist activity were shown, and that he had not misused interim medical bail earlier granted. The decisive factor, however, was that the appellant had remained in custody for more than five years and eleven months and more than 350 prosecution witnesses still remained to be examined, making conclusion of trial in the near future well-nigh impossible. In that situation, the Court held that K.A. Najeeb applied with full force and directed release on bail, subject to conditions including deposit of passport, periodic appearance before the police station, cooperation with trial, and non-interference with witnesses. [Paras 52, 53, 54, 55]

The appellant was directed to be released on bail on terms to be fixed by the Special NIA Court, with additional safeguards imposed by this Court.

Final Conclusion: The appeal was allowed and the appellant was directed to be released on bail pending trial. The Court reaffirmed that prolonged incarceration and the absence of any realistic prospect of early completion of trial attract Article 21 notwithstanding the statutory restrictions under the UAP Act.