TMI Tax Updates e-Newsletter
Jun 18,2026

Extended period for tax demand on suppressed turnover - Suppression of value of outward supply inferred from seigniorage fee and returns - Natural justice challenge to assessment order

Invocation of the extended period of limitation under Section 74 of the respective GST enactments - HELD THAT: - The Court held that, apart from the issue relating to taxability on seigniorage fee being kept in abeyance, the impugned proceedings were founded on the difference between the quantity and value inferred from the seigniorage fee paid and the lesser value of supply disclosed in the returns. The respondent had estimated the escaped turnover on that basis and the show cause notice specifically alleged suppression of the value of output supply. These facts constituted sufficient foundational material for action under Section 74, and the use of the expression "Where it appears" in Sections 73 and 74 supported initiation once a prima facie case of under-declaration emerged. [Paras 17, 18, 19, 20, 21]

The challenge to the demand on the ground that there was no basis to invoke the extended period under Section 74 was rejected.

Natural justice challenge to assessment order - Procedural regularity in adjudication - HELD THAT: - The Court noted that the impugned orders were preceded by intimation notices in DRC-01A and show cause notices in DRC-01, to both of which replies had been furnished by the petitioner. On that record, the Court found no procedural defect in the manner in which the respondent had passed the orders and declined to interfere in writ jurisdiction. [Paras 22]

The plea of breach of natural justice or procedural infirmity was not accepted.

Final Conclusion: The writ petitions were dismissed, the Court holding that there was adequate material to invoke Section 74 on the basis of suppressed value of outward supply and that no procedural illegality was shown in the adjudication. Liberty was, however, reserved to the petitioner to pursue the statutory appeal, which was directed to be considered on merits if filed within the time granted by the Court.

Interest on belated payment of self-assessed tax - Recovery of unpaid interest under statutory recovery provisions - Maintainability of proceedings under Section 74 for delayed payment of tax - Challenged to recovery of interest on tax admittedly paid belatedly for the tax period 2017-2018, on the ground that Section 74 had been wrongly invoked - HELD THAT: - The Court held that Sections 73 and 74 form a complete code for the circumstances specified therein, together with the recovery mechanism under Section 75(12) read with Section 79. Since the petitioner had admittedly paid the tax only after it was pointed out by the Department, liability to interest under Section 50(1) followed as a statutory consequence. The Court further noted that unpaid interest on self-assessed tax is recoverable notwithstanding Sections 73 or 74, and that the explanation to Section 75(12) makes the scope of self-assessed tax wide enough to include tax payable on outward supplies furnished under Section 37 but not included in the return under Section 39. On that reasoning, the recovery proceedings were held to be sustainable, and the mere reference to Section 74 in the summary forms did not invalidate them. The Court also held that proceedings under Section 74 were maintainable in the facts of the case. [Paras 22, 23, 24, 25, 26]

The impugned recovery proceedings were held to be legally sustainable and the objection to invocation of Section 74 was rejected; however, the matter was remitted to the respondent for reconsideration of the reply and for passing a fresh order.

Final Conclusion: The Court held that interest on the belated payment of tax was recoverable and that the challenge to the proceedings could not succeed merely because the summary forms referred to Section 74. Even so, the matter was remitted to the respondent to reconsider the petitioner's reply and pass a fresh order.

Extended period of limitation under Section 74 - Scrutiny proceedings under ASMT-10 and ASMT-11 - Requirement of DRC-01 notice before adjudication under Section 74 - Procedural irregularity in conversion of scrutiny proceedings into best judgment assessment

Scrutiny of returns - Improper resort to ASMT-13 - Necessity of DRC-01 notice under Section 74 - The DRC-07 orders for the Gobichettipalayam registration, passed after issuance of ASMT-10 and filing of reply, could not be sustained without issuance of a notice in DRC-01 under Section 74. - HELD THAT: - The Court held that once an ASMT-10 is issued during scrutiny of returns and a reply is filed, the proceedings must culminate either in ASMT-12 or in an intimation in DRC-01A followed by a notice in DRC-01. ASMT-13 is confined to non-filers under Section 62 read with the Rules, and its use after issuance of ASMT-10 and reply in ASMT-11 was not in consonance with the statutory scheme. Therefore, before passing the impugned DRC-07 orders after the earlier remand, the authority ought to have issued a DRC-01 notice under Section 74. On that procedural defect, the impugned orders were set aside and directed to be treated as DRC-01 notices for fresh adjudication in compliance with natural justice. [Paras 14, 15, 17]

The impugned orders dated 05.07.2023 were set aside, treated as DRC-01 notices under Section 74, and the matters were remitted for de novo adjudication, with exclusion of the pendency period for limitation.

Extended period of limitation under Section 74 - Inspection-based invocation of Section 74 - Procedural compliance in adjudication - HELD THAT: - The Court found that the inspection and subsequent proceedings furnished adequate material to justify invocation of the extended period under Section 74, and the petitioner could not assail that invocation. In the second set of writ petitions, the petitioner had been put on notice through DRC-01A, followed by show cause notice in DRC-01 and thereafter the impugned assessment orders. Since no procedural irregularity was committed in that set of proceedings, and there were sufficient materials to inform the petitioner of the lapses alleged, no interference was warranted. [Paras 13, 16, 17]

The writ petitions relating to the Erode registration were dismissed, with liberty to pursue the appellate remedy subject to the condition imposed by the Court.

Final Conclusion: The Court upheld the invocation of the extended period under Section 74 on the basis of the inspection materials. However, the DRC-07 orders for one registration were set aside for procedural non-compliance and remitted by treating them as DRC-01 notices, while the writ petitions concerning the other registration were dismissed for want of any procedural irregularity.

Blocking of Input Tax Credit under Rule 86A - Reasons to believe of fraudulent availment of input tax credit - Non-genuine transactions - Proportionality of restriction on electronic credit ledger - HELD THAT: - A reading of the Karnataka High Court judgment in K-9 Enterprises [2024 (10) TMI 491 - KARNATAKA HIGH COURT],indicates that there must be adequate material on record to constitute the requisite “reasons to believe” and that the statutory parameters prescribed under the Rule must be strictly satisfied. The assessee is entitled to submit a representation seeking revocation of the blockage, and upon such representation, the authority is obliged to consider it and pass a reasoned and speaking order.

The Court held that the power under Rule 86A, though drastic, can be exercised where there is adequate material giving rise to the requisite reasons to believe that the credit was fraudulently availed or otherwise ineligible, and that a representation for revocation must be decided by a reasoned order. In the present case, the impugned order satisfied that requirement, as it recorded specific findings that the four suppliers lacked the physical infrastructure to have supplied the goods, that verification of the petitioner's CCTV footage did not show movement of the vehicles said to have transported the goods, and that the sequence of inward slips indicated subsequent manipulation of records. On that material, the Court found no error in the respondent treating the invoices as non-genuine and invoking Rule 86A. The contention that the blockage was unduly harsh was also rejected, since the restriction was confined to the credit relatable to the four questioned transactions and was not shown to be disproportionate. At the same time, the Court observed that the Revenue could not continue the blockage indefinitely and should proceed expeditiously with the consequential show cause and adjudicatory process. [Paras 16, 17, 18, 19, 20]

No ground for interference with the impugned order was made out, though the Revenue was directed to carry the consequential proceedings forward without delay.

Final Conclusion: The writ petition was dismissed, the Court holding that the impugned speaking order disclosed adequate material and reasons for invoking Rule 86A in respect of the disputed transactions and that the blockage was not disproportionate. The Revenue was, however, expected to complete the consequential proceedings expeditiously.

Composite notice for multiple assessment years - Separate notices for each assessment year - HELD THAT: - The Court accepted the challenge on the ground that a single composite notice issued for multiple assessment years is not legally sustainable. Relying on the binding principles already laid down by this Court in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 (2) TMI 666 - KERALA HIGH COURT] and Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner, Thrissur [2025 (4) TMI 1152 - KERALA HIGH COURT], it held that the impugned order, which covered the period from 2017-18 to 2023-24 through a composite proceeding, could not stand and that fresh action, if any, had to be initiated by issuing separate notices for the relevant assessment years. [Paras 2]

The impugned order was quashed, with liberty to the respondents to issue separate notices for the relevant assessment years, and the intervening period was directed to be excluded for limitation purposes while initiating fresh proceedings.

Final Conclusion: The writ petition was allowed by quashing the order passed on the basis of a composite notice for multiple years. Liberty was reserved to initiate fresh proceedings by separate notices for the relevant assessment years, with exclusion of the intervening period for limitation.

Validity of the Service of notice through GST portal after cancellation of registration - Violation of principles of natural justice- Audi Alteram Partem -HELD THAT: - The Court held that once the registration stood cancelled, the petitioner was not obliged to keep checking the GST portal. In such a situation, service of the show cause notice was required to be effected through alternative means. Since the impugned order had been passed without proper notice, there was a breach of natural justice. [Paras 4, 6]

The impugned order was quashed, with liberty to the department to issue a proper notice and proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the order passed under Section 73 on the ground that, after cancellation of registration, notice uploaded only on the GST portal did not satisfy the requirement of proper service. Liberty was reserved to the department to issue a fresh notice and proceed according to law.

Application seeking grant of bail - Adequacy of grounds of arrest - Non- Compliance with the mandatory requirement of furnishing written grounds of arrest - reasons to believe - fraudulent availment and passing of input tax credit through fake invoices - Prima facie involvement - Economic offence - Non-cooperation in investigation - Procedural safeguards

Grounds of arrest in writing - Reasons for arrest and grounds of arrest - Procedural safeguards in arrest - HELD THAT: - As far as the contention with regard to furnishing of grounds of arrest is concerned, the law on this point is no more res integra in view of the judgments rendered by the Hon’ble Apex Court in the matters of: Pankaj Bansal v. Union of India & Ors. [2023 (10) TMI 175 - SUPREME COURT]; Prabir Purkayastha v. State (NCT of Delhi) [2024 (5) TMI 1104 - SUPREME COURT]; Vihaan Kumar v. State of Haryana & Anr.[2025 (2) TMI 1104 - SUPREME COURT] and Mihir Rajesh Shah v. State Of Maharashtra And Anr. [2025 (11) TMI 367 - SUPREME COURT],that it is mandatory to supply the grounds of arrest in writing in all cases without exception.

The Court held that the legal position is settled that grounds of arrest must be furnished in writing and that such grounds are distinct from the general reasons for arrest. While reasons for arrest are broad and formal, grounds of arrest must communicate the basic facts necessitating arrest. On the record, however, the Court found that both petitioners had been furnished written grounds of arrest at the time of arrest, that copies were on record, and that the petitioners had not produced cogent material to prima facie show that those documents were antedated or subsequently prepared. The challenge founded on non-supply of written grounds of arrest was, therefore, rejected. [Paras 17, 20, 21, 22]

The objection that the arrests were illegal for non-furnishing of written grounds of arrest was negatived.

Adequacy of grounds of arrest - Economic offences based on documentary and electronic evidence - Scope of scrutiny at bail stage - HELD THAT: - The Court declined to accept the contention that the grounds of arrest were defective because they did not specify in detail the exact manner in which fake invoices were generated or every transaction and firm involved. It held that in economic offences resting on voluminous documentary and electronic material, the investigating agency is not required to reproduce the entire evidence in the grounds of arrest. The legal requirement is satisfied if the arrested person is informed of the substance of the allegations and the basis of arrest. As the petitioners had been present during search proceedings, their statements had been recorded, incriminating material had allegedly been recovered, and the written grounds disclosed the statutory provisions invoked, the allegation of issuance of fake invoices without actual supply of goods, and wrongful availment of ITC, the Court found no procedural infirmity warranting bail. [Paras 23, 24]

The plea that the grounds of arrest lacked sufficient particulars was rejected at the bail stage.

Bail in fake invoice and fraudulent ITC cases - Prima facie involvement in economic offence - Non-cooperation during investigation - HELD THAT: - On a prima facie assessment, the Court found material indicating that one petitioner was linked with beneficiary firms through which fraudulent ITC was allegedly availed and utilized, while the other was linked with operation of multiple fake firms and issuance of goods-less invoices. The Court referred to statements recorded during investigation, electronic devices seized in search proceedings, WhatsApp chats, forensic analysis and other documentary material as prima facie connecting the petitioners with the alleged activity. Having also regard to the magnitude of the alleged economic offence and the allegation of non-cooperation during investigation, the Court held that it was not a fit case for grant of bail. [Paras 16, 25]

Bail was refused to both petitioners.

Final Conclusion: The Court held that the mandatory requirement of furnishing written grounds of arrest had been complied with and that the grounds supplied were legally sufficient at the bail stage. In view of the prima facie material, the magnitude of the alleged fraudulent ITC activity and the allegation of non-cooperation, both bail applications were dismissed.

Rejection of refund claim - Prima facie contempt - failure to comply with the earlier refund directions - HELD THAT:- The petitioner submits that in the wake of the order of this Court based on [2026 (3) TMI 1042 - DELHI HIGH COURT] and the order of this Court that no further clarification is required, particularly, recorded in the order dated 13th February, 2026. The option left with the respondent was to comply with the order in terms of prayer clause (i) as directed vide order [2025 (3) TMI 1630 - DELHI HIGH COURT].

As regards the issue of shortfalls is concerned, the same issue was duly gone into by the Division Bench of this Court while passing the [2025 (3) TMI 1630 - DELHI HIGH COURT] In spite of above, when there were positive directions to refund the tax to the petitioner, the respondent, by passing the order and the subsequent orders, have chosen to reject the claim of the petitioner for refund of tax.

The Court recorded a prima facie view that rejection of the refund claim after earlier directions for grant of refund may amount to contempt, granted the respondents time to file a response, and directed the matter to be listed for further consideration.

Service of show cause notice after cancellation of GST registration - Effects of Show cause notices uploaded on the GST portal - Ex parte assessment under Section 73 - No Opportunity of personal hearing - HELD THAT: - The Court accepted the petitioner's case that, after cancellation of GST registration, it had no occasion to check the GST portal and the show cause notices were not served by any other mode. The Revenue fairly conceded that the matter was covered by the earlier order of the Court in M/s Jaipal Singh v. Commissioner, State Goods and Services Tax Commissionerate [2026 (2) TMI 995 - UTTARAKHAND HIGH COURT], where, in identical facts and circumstances, the orders passed against the assessee have been quashed, and liberty has been given to the Revenue to pass fresh order. In the said judgment, reliance has been placed on the law laid down by the Allahabad High Court in M/s AHS Steels v. Commissioner of State Taxes [2024 (10) TMI 1038 - ALLAHABAD HIGH COURT] and M/s Katyal Industries v. State of U.P. and others [2024 (2) TMI 1447 - ALLAHABAD HIGH COURT]. On that basis, the impugned ex parte orders were not sustained, and the matter was directed to proceed afresh after permitting the petitioner to file reply and avail personal hearing, if desired. [Paras 3, 4]

The impugned orders were quashed, the petitioner was granted time to reply to the show cause notices, and the Revenue was left at liberty to pass fresh orders in accordance with law after granting personal hearing as contemplated by Section 75(4).

Final Conclusion: The writ petition was disposed of by quashing the ex parte orders for the two financial years in question, as the case was accepted to be covered by the earlier decision on identical facts. Fresh adjudication was permitted after reply by the petitioner and personal hearing, if sought.

Writ maintainability in presence of efficacious alternate statutory remedy - Natural justice objection involving appreciation of facts and law - production of notarized sale agreement - Writ petition challenging three appellate orders was maintainable in view of the availability of an efficacious statutory appeal - HELD THAT: - The Court recorded that the impugned appellate orders arose from separate original orders for different periods involving High Seas Sales, and that a statutory remedy was available against those orders before the Tribunal under the Act. The only ground pressed for invoking writ jurisdiction was the alleged insistence on a notarized copy of the sale agreement, which, according to the petitioners, was later produced. The Court held that this objection, along with the other issues, required appreciation of facts and law and therefore fell within the domain of the appellate forum. In that view, the existence of an efficacious alternate remedy disentitled the petitioners from invoking writ jurisdiction. [Paras 4]

The writ petition was held not maintainable and was rejected, leaving the petitioners to avail the statutory appellate remedy before the Tribunal.

Final Conclusion: The High Court declined to entertain the writ petition against the three appellate orders, holding that the controversy, including the complaint regarding the notarized sale agreement, was fit for consideration in the statutory appeal before the Tribunal. The petition was accordingly rejected on the ground of efficacious alternate remedy.

No Opportunity of personal hearing in GST adjudication - Violation of the statutory requirement under section 75(4) - HELD THAT: - The Court recorded the State's concession that no written notice had been issued to the petitioner intimating any date for personal hearing. In these circumstances, the statutory requirement of affording hearing stood breached, and the impugned adjudication was therefore held to be in violation of Section 75(4) and the principles of natural justice. On that ground alone, the order was quashed and the matter remitted for fresh decision after granting hearing. [Paras 6, 7]

The impugned order was quashed for breach of the mandatory requirement of personal hearing, and the matter was remitted for fresh adjudication after affording the petitioner an opportunity of hearing.

Final Conclusion: The writ petition was allowed on the limited ground of denial of personal hearing. The adjudication order was set aside and the matter remitted to the department for fresh disposal after granting the petitioner an opportunity of hearing.

Clubbing of assessment years - Composite assessment order for more than one tax period - Separate assessment for each assessment year under GST - HELD THAT: - The Court followed the view already taken by a Division Bench of the same Court [2025 (9) TMI 1215 - ANDHRA PRADESH HIGH COURT], that a single show-cause notice or composite assessment order cannot be issued in relation to more than one tax period, and where the due date for filing the annual return has been reached, not for more than one year. Since the petitioner confined the challenge to the ground that the impugned assessment was composite in nature, the writ petition was decided on that ground alone, leaving all other grounds open. On that basis, the assessment order and the appellate order were set aside, with liberty to the authorities to initiate fresh proceedings separately for each assessment year; the intervening period was directed to be excluded for limitation. [Paras 4, 5, 6, 7]

The composite assessment and the appellate order affirming it were set aside, with liberty to proceed afresh for each assessment year separately and with exclusion of the intervening period for limitation.

Final Conclusion: The writ petition was disposed of by setting aside the composite assessment order and the appellate order. Fresh proceedings were left open to be initiated separately for each assessment year, and the intervening period was directed to be excluded for limitation.

Ad hoc disallowance of purchases - Unexplained expenditure u/s 69C - Purchases from agriculturists without PAN - disallowance of 12.5% of purchases treated as non-genuine - Disallowance of a percentage of purchases made from agriculturists through the Agricultural Produce Market Committee sustained merely because permanent account numbers of some sellers were not furnished - HELD THAT: - The Tribunal found that the assessee was carrying on trading in copra, had maintained regular books of account duly audited, and had recorded purchases, sales, opening stock and closing stock with quantitative reconciliation.

Revenue had neither rejected the books nor shown mismatch in quantities, unauthentic records, or specific purchases to be non-genuine. In these circumstances, a percentage disallowance made on an ad hoc basis lacked foundation.

Tribunal further held that section 69C could not be invoked when the expenditure stood recorded in the books and its source was disclosed as purchases from identifiable parties. Mere non-furnishing of permanent account numbers of some agriculturists did not justify treating part of the recorded purchases as non-genuine. [Paras 11, 12, 13, 14]

The sustenance of disallowance at 12.5% of the purchases was held unsustainable and the addition was directed to be deleted.

Final Conclusion: The Tribunal condoned the delay on the ground that the assessee had bona fide pursued rectification before filing the appeal. On merits, it held that the ad hoc disallowance of recorded and quantitatively reconciled purchases was unsustainable and directed deletion of the addition.

Secondment arrangements - Tax deduction at source on reimbursement of expatriate salaries - Necessity of examining underlying agreements - Failure to examine secondment agreements

HELD THAT: - The Tribunal held that the controversy could not be decided merely by relying on judicial precedents, because the taxability of payments under a secondment arrangement depends upon the terms and substance of the relevant agreements and the actual nature of services and employment conditions. It found that the assessee had not produced the relevant agreements, the AO had not called for them, and the Commissioner (Appeals) had also decided the issue without examining those documents. In that situation, the question whether any income chargeable to tax accrued to the foreign entity in India, and whether any obligation to deduct tax at source arose on reimbursement of salary costs, required fresh factual examination by the AO after calling for the complete set of agreements and related material. [Paras 16, 17]

The matter was restored to the AO for fresh adjudication after examining all relevant secondment and related agreements, the services rendered, the employment terms in India, and the judicial precedents relied upon.

Final Conclusion: The Tribunal did not decide the merits of the disallowance u/s 40(a)(i). It set aside the matter to the Assessing Officer for fresh examination of the secondment and related agreements, after giving the assessee an opportunity of hearing; the appeal was partly allowed for statistical purposes.

Reassessment beyond recorded reasons - Scope of assessment under notice for escaped income - Addition on issue not forming basis of reopening -

Whether reassessment could be sustained insofar as the addition was made only on loan processing fees when no addition was made on the interest income for which the case had been reopened? - HELD THAT: - The Tribunal found that the recorded reason for reopening was that interest income earned on inter-corporate deposits had escaped assessment. In the reassessment, however, no addition was made on that issue and the Assessing Officer instead disallowed loan processing fees, which had not formed part of the recorded reasons.

Applying the principle stated in Jet Airways [2010 (4) TMI 431 - BOMBAY HIGH COURT] the Tribunal held that once the Assessing Officer accepted that the income for which reopening was initiated had not in fact escaped assessment, he could not independently assess another item without issuing a fresh notice under Section 148. The impugned addition therefore lacked the jurisdictional foundation required for reassessment. [Paras 17]

The addition on account of loan processing fees was deleted on the legal ground that it was made on an issue not covered by the recorded reasons for reopening.

Final Conclusion: The Tribunal allowed the assessee's appeal and deleted the addition. It held that, since no addition was made on the ground recorded for reopening, the Assessing Officer could not sustain reassessment by making an addition on a different issue without fresh notice.

Validity of faceless reassessment before commencement of the e-Assessment of Income Escaping Assessment Scheme, 2022 - Retrospective deeming of Assessing Officer for reassessment initiation

Faceless reassessment jurisdiction - Reassessment notice prior to commencement of faceless scheme - Clarificatory substitution of faceless assessment provision - The reassessment order passed through the faceless mechanism on 26.03.2022 treated as non-jurisdictional merely because the e-Assessment of Income Escaping Assessment Scheme, 2022 came into force on 29.03.2022 - HELD THAT: - The Tribunal held that the retrospective insertion of Section 147A makes it clear that, for the purposes of Sections 148 and 148A, the Assessing Officer means an officer other than NFAC or an assessment unit, thereby answering the objection founded on the identity of the officer for reassessment initiation. It further held that Section 151A was only an enabling provision and did not itself make reassessment faceless. The scheme notified on 29.03.2022 operated only from that date and was concerned with issuance of notice under Section 148; since the notice in the present case had been issued on 31.03.2021, no objection based on absence of faceless jurisdiction could arise at the initiation stage. On the assessment limb, the substitution of Section 144B with effect from 01.04.2022, expressly referring to reassessment under Section 147, was treated as clarificatory and procedural, intended to streamline and refine the faceless process rather than to confer jurisdiction for the first time. The retrospective omission of erstwhile Section 144B(9) from 01.04.2021 also meant that even procedural non-compliance with faceless assessment did not carry automatic voidness. The coordinate bench decisions cited by the assessee were therefore held not to govern the present case. [Paras 26, 27, 28, 29, 30]

The challenge to the validity of the reassessment order on faceless-jurisdiction grounds was rejected and the order was held not to be non est.

Unexplained investment in property purchase - Unexplained cash deposits - HELD THAT: - Since the merits of the additions had not been examined by the lower authorities, and both sides sought restoration, the Tribunal refrained from deciding whether the property transaction and the cash deposits contained any element of unexplained income. It placed the onus on the assessee to substantiate the explanation for those transactions before the Assessing Officer, who was directed to examine the material and decide the matter in accordance with law. [Paras 31]

The additions for alleged unexplained investment in property purchase and unexplained cash deposits were restored to the Assessing Officer for fresh decision without any adjudication on merits.

Final Conclusion: The Tribunal condoned the delay, rejected the challenge to the reassessment order based on faceless-jurisdiction objections, and held the order dated 26.03.2022 to be valid. The additions relating to the property purchase and cash deposits were, however, restored to the Assessing Officer for fresh examination on merits, and the appeal was partly allowed.

Taxability of credit rating services and annual surveillance services under the India-Singapore DTAA - Income taxable in India - Fees for technical services - make available requirement - Royalty - Commercial information vis-a-vis transfer of know-how - HELD THAT: - The Tribunal held that the determinative test was whether any technical know-how, technology, skill or process had been imparted by the assessee to its clients. On the nature of the activities explained, it found that in providing ratings to clients, no technical skill, process or know-how was transferred.

The clients merely received the rating output and not the underlying expertise or technology used for arriving at it.

Following the coordinate bench decision in ICICI Bank [2007 (10) TMI 452 - ITAT MUMBAI] the Tribunal held that where the rating agency does not make available any technical skill, expertise or know-how to the client, the consideration cannot be brought to tax as fees for technical services/fees for included services. [Paras 7]

The Assessing Officer was not justified in taxing the impugned receipts as fees for technical services, and the addition was deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the receipts from credit rating and annual surveillance services could not be taxed as fees for technical services under the India-Singapore DTAA, since no technical know-how, skill or process was made available to the Indian clients.

Taxability of broken period interest on sale of non-convertible debentures - Character of receipts from transfer of debt instruments - Interest income from transfer of debt instruments

Whether amount received by the assessee from the purchaser of NCDs for the broken period prior to transfer retained the character of interest or was assessable as short-term capital gain not chargeable to tax under the India-Singapore DTAA? - HELD THAT: - The Tribunal held that the NCDs were transferred on cum-interest basis and that interest up to the immediately preceding period had already been paid by the issuer on quarterly basis and was returned as interest income. The further amount relatable to the broken period of five days, though received from the purchaser and not directly from the issuer, did not for that reason lose its character as interest. The determinative principle applied was that the source of payment at the time of transfer does not alter the intrinsic character of the receipt where it represents accrued return on a debt instrument for the intervening period.

The broken period amount received on sale of the NCDs was chargeable as interest under the head 'Income from Other Sources', and the assessment on this point was upheld.

Final Conclusion: The Tribunal upheld the treatment of the broken period amount received on transfer of the NCDs as interest income taxable under the head 'Income from Other Sources'. The assessee's appeal was dismissed.

Deduction u/s 57(iii) - Transfer of dematerialized shares - Deduction u/s 54F - Set off of F&O loss in appellate proceedings

Direct nexus u/s 57(iii) - Interest on borrowed funds - Deduction of interest expenditure against interest income allowability - HELD THAT: - The Tribunal held that the test under section 57(iii) is whether the expenditure was laid out wholly and exclusively for earning the income in question, and that this requirement is narrower than the expression used for business expenditure. On the facts, the earlier advances of Rs. 8 crore and Rs. 40 crore to M/s Birdie & Birdie were found to have been sourced from sale proceeds of shares and not from borrowed funds, and no direct nexus with interest-bearing borrowings was established. However, the advance of Rs. 31 crore during the year was directly traceable to the loan obtained from M/s Religare Securities Ltd., and the Commissioner (Appeals) was therefore justified in allowing deduction only of the proportionate interest relatable to that advance while disallowing the balance claim, including the claim against savings bank and FDR interest for want of linkage. [Paras 4]

The partial allowance of deduction under section 57(iii) as granted by the Commissioner (Appeals) was upheld, and both the assessee's challenge to the disallowance and the Revenue's challenge to the part allowance were rejected.

Transfer of dematerialised shares - Deemed consideration u/s 50D - Transfer of shares by the assessee to his mother's demat account described as a loan constituted a transfer liable to capital gains tax - HELD THAT: - The Tribunal accepted the finding that, once dematerialised shares are moved from the transferor's demat account to the transferee's demat account, the right to deal with and sell those shares passes to the transferee and the transferor retains no control over them. The transaction, though described as a loan of shares, therefore amounted to a transfer of a capital asset. On that basis, the computation of capital gains by invoking section 50D was found to be in order. [Paras 5]

The addition of capital gains on transfer of the shares was sustained.

Additional claim before appellate authority - Deduction under section 54F - allowability of assessee's alternative claim for deduction u/s 54F to be entertained in appeal even though it had not been made in the return - HELD THAT: - The Tribunal found no infirmity in the Commissioner (Appeals) admitting the alternative claim for deduction under section 54F on account of purchase of residential property. It held that the Assessing Officer should examine that claim and allow it in accordance with law. The Tribunal thus approved the course adopted by the Commissioner (Appeals) of directing examination of the claim notwithstanding its absence in the original return. [Paras 5]

The direction to the Assessing Officer to examine and allow the claim under section 54F as per law was upheld, and the Revenue's objection was rejected.

Set off of F&O loss - Claim raised for first time in appeal - whether Set off of loss from F&O trading could be considered in appellate proceedings though the claim had not been made in the return or before the Assessing Officer? - HELD THAT: - The Tribunal agreed that the assessee had not sought carry forward of loss and was claiming only set off for the year under consideration. It accepted the view that the bar relating to late filing of return applies to carry forward of loss, and does not by itself prohibit consideration of a claim for set off under sections 70 and 71. Relying on the settled legal position that an appellate authority may entertain a lawful claim on the basis of material already on record, the Tribunal upheld the direction to the Assessing Officer to examine and allow the set off in accordance with the applicable provisions. [Paras 7]

The Revenue's challenge to the allowance of the F&O loss set off was rejected, and the Assessing Officer was directed to consider the claim as per law.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s order on all contested issues. The assessee's and the Revenue's cross-appeals were both dismissed, with the Assessing Officer directed to examine the claims under section 54F and for set off of F&O loss in accordance with law.

Validity of sanction for reassessment notice - Jurisdiction of Chief Commissioner u/s 151(ii) - whether Approval for issuance of notice u/s 148 could not be validly granted by the Chief Commissioner where a Principal Chief Commissioner having jurisdiction over Madhya Pradesh and Chhattisgarh was in existence

HELD THAT: - The Tribunal held that u/s 151(ii), approval is to be accorded by the Principal Chief Commissioner, and the Chief Commissioner can act only in the absence of such authority. On the material noted, the Principal Chief Commissioner for Madhya Pradesh and Chhattisgarh was duly constituted and his jurisdiction extended to Chhattisgarh, notwithstanding the location of the office at Bhopal. The Revenue's reliance on the memorandum to the Finance Bill, 2026 was rejected as incapable of overriding the statutory mandate. Since the condition precedent for exercise of power by the Chief Commissioner did not exist, the approval granted by the Chief Commissioner was contrary to law, rendering the reassessment proceedings void ab initio. [Paras 3, 4, 5]

The sanction was held invalid and the reassessment proceedings founded on such approval were quashed.

Final Conclusion: The appeal was allowed on the additional legal ground. The reassessment was quashed as the approval for issuance of notice under section 148 had been granted by an authority not competent under section 151(ii).

Exemption u/s 10(20) on local authority income - Inadvertent wrong claim in return - Revised computation before Assessing Officer - mistake while filing the return of income instead of claiming exemption u/s 10(20) of the IT Act, deduction u/s 57 of the IT Act was claimed

HELD THAT: - The Tribunal held that the determinative fact was not the mistaken form of claim in the return but the admitted status of the assessee as a local authority covered by section 10(20). It noted that in earlier as well as subsequent regular assessments, the Revenue itself had accepted the assessee's entitlement to that exemption, and there was no change in its status or activities.

The assessee had also placed material before the AO showing that its receipts were from municipal functions and had furnished audited financial statements and budget documents. In these circumstances, a mere inadvertent error in claiming deduction under section 57 instead of exemption u/s 10(20) could not justify denial of the exemption. [Paras 7, 8]

The exemption under section 10(20) was held allowable and the addition made by denying that exemption was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee, as a local authority, was entitled to exemption under section 10(20). The denial of exemption solely because of an erroneous claim under section 57 in the return was set aside and the addition was directed to be deleted.

Fresh claim for capital gains exemption at appellate stage -Remand of the section 50C capital gains issue to the AO

Deduction u/s 54 - Claim not made in return or assessment proceedings - Goetze India principle - allowability of assessee's claim for deduction under section 54, raised for the first time before the first appellate authority without having been made either in the return of income or during assessment proceedings - HELD THAT: - The Tribunal held that the decision in Goetze India did not assist the assessee. That decision was understood as restricting the AO from entertaining a fresh claim otherwise than through the return, while leaving the Tribunal's powers unaffected. However, in the present case, the claim under section 54 had not been made either in the original return or during the assessment proceedings. On that admitted position, the claim raised before the appellate authority could not be accepted, and the reliance placed on Goetze principle [2006 (3) TMI 75 - SUPREME COURT] was rightly rejected by distinguishing the limited principle emerging from that decision. [Paras 9]

The rejection of the assessee's fresh claim for deduction under section 54 was upheld.

Section 50C valuation - first appellate authority remitting the determination of long-term capital gains under section 50C to the Assessing Officer for verification of stamp value and re-adjudication - HELD THAT: - The Tribunal found that the assessee had produced material before the appellate authority to dispute the basis on which the Assessing Officer had adopted the stamp value, and that the appellate authority had sought a remand report in accordance with Rule 46A but received no response. In those circumstances, the appellate authority had to choose between accepting the assessee's material outright or having it verified by the Assessing Officer. Since the Assessing Officer has the primary responsibility to examine facts relevant to assessment, the choice to remit the matter for verification and recomputation was held to be proper and free from infirmity. The Tribunal also referred to TIN box in support of that approach. [Paras 10]

The remand to the Assessing Officer for fresh verification of stamp value and recomputation of capital gains was confirmed.

Final Conclusion: The Tribunal dismissed the appeal. It upheld the denial of the fresh section 54 claim and also affirmed the remand of the section 50C capital gains issue to the Assessing Officer for verification and fresh computation.

Unexplained cash credit in unsecured loan - TP adjustment on import of coal - Interest on receivables from associated enterprises - Non-compliance with Dispute Resolution Panel directions

Unexplained cash credit in unsecured loan - Identity, genuineness and creditworthiness - Source of source - HELD THAT: - The Tribunal found that the addition had been made only on suspicion because the loan was routed through the director and was recorded in the relevant year though the funds were actually realised in the following year. It held that the assessee had produced documentary evidence not only of the lender but also of the source and further source of funds, and no enquiry was made by the AO to dislodge the genuineness or creditworthiness shown by those materials. The Tribunal also noted that assessments of the lender and source persons had been completed under section 143(3) without adverse inference regarding these transactions. On that basis, the assessee was held to have discharged the onus under section 68. [Paras 9]

The addition under section 68 was directed to be deleted.

Transfer pricing adjustment on import of coal - Comparable margin computation - Adjustment for sales commission and freight - HELD THAT: - The Tribunal held that the comparison adopted by the Transfer Pricing Officer was defective because the assessee's gross profit to sales margin had been computed after adjusting sales commission and freight or port clearance charges, whereas similar adjustments were not made while computing the margins of the comparable companies. Since a like-to-like comparison was absent, the arm's length price could not be sustained on the existing working. The matter was therefore restored for fresh computation of the comparables' margins on the same basis as that applied to the assessee and for redetermination of the arm's length range. [Paras 13]

The issue was set aside to the Assessing Officer and Transfer Pricing Officer for fresh working of the arm's length price on the directed basis.

Interest on receivables from associated enterprises - Comparable treatment of unrelated customers - Transfer pricing adjustment on account of interest on receivables from associated enterprises depended on verification whether the assessee charged interest on delayed receivables from unrelated customers. - HELD THAT: - The Tribunal accepted that the determinative test was whether the assessee had charged interest from unrelated customers in comparable circumstances. It found, however, that the factual position on record did not establish whether interest had or had not been charged from such customers. Since the legal position invoked by the assessee was contingent on that factual verification, the matter was restored for a limited examination. The Tribunal directed that if no interest was found to have been charged from unrelated customers, no interest should be imputed on receivables from foreign associated enterprises. [Paras 16, 24]

The matter was remanded for limited verification for both assessment years, with a direction that no transfer pricing adjustment on receivables be made if no such interest was charged from unrelated customers.

Transfer pricing adjustment on import of coal - Non-compliance with Dispute Resolution Panel directions - Speaking order requirement - HELD THAT: - The Tribunal found that the authorities had failed to follow the Dispute Resolution Panel's directions in a case involving peculiar facts, including the assessee's loss during the Covid period. It directed fresh adjudication after considering the resale price method, the foreign associated enterprise as the tested party, exclusion of comparables as mandated by the Dispute Resolution Panel, the plea for economic adjustment on account of Covid-19 and financial difficulty, and the objection to making adjustment on sales out of opening stock when the corresponding purchases had already been subjected to transfer pricing adjustment in the preceding year. The Tribunal further required a fair hearing, collection of relevant workings from the assessee, disclosure of the authority's own workings, and a speaking order. [Paras 23]

The arm's length price adjustment for Assessment Year 2021-22 was set aside for fresh adjudication in accordance with the Dispute Resolution Panel's directions and the Tribunal's further directions.

Final Conclusion: For Assessment Year 2020-21, the addition under section 68 in respect of the unsecured loan was deleted, while the transfer pricing adjustment on import of coal and the adjustment on receivables were remanded on the terms indicated. For Assessment Year 2021-22, the transfer pricing adjustment on import of coal was set aside for fresh adjudication for non-compliance with the Dispute Resolution Panel's directions, and the receivables issue was restored for the same limited verification as in the earlier year.

Capital gains taxability on registered sale deed - Timing of transfer of immovable property - Avoidance of double taxation of same income

Capital gains arising from transfer of immovable property - Registered sale deed as completed transfer - Short term capital gains on immovable property - Non-receipt of sale consideration - Whether Short term capital gains on transfer of the immovable property were chargeable in AY 2014-15 on execution and registration of the sale deeds, notwithstanding the assessee's plea of delayed payment and continued possession? - HELD THAT:- The Tribunal held that the undisputed execution and registration of the sale deeds transferred ownership rights in favour of the purchasers, and that completed the transfer for purposes of section 45 read with section 2(47). Mere non-realisation of part of the consideration, dishonour of cheques, delayed receipt of payment, retention of possession, or subsequent disputes between the parties could not defer taxability of capital gains so long as the registered sale deeds remained valid and were neither cancelled nor legally rescinded. The materials relied upon by the assessee only showed delay in payment and did not establish cancellation of the transaction. [Paras 8]

The addition of short term capital gains in AY 2014-15 was upheld and the assessee's challenge on timing of transfer was rejected.

Double taxation of same income - Consequential relief on capital gains - Whether the same capital gain had been offered and assessed in A.Y. 2016-17, appropriate consequential relief was required to avoid double taxation? - HELD THAT: - The Tribunal accepted the alternative contention that the Revenue could not tax the same income twice. It therefore directed verification of whether the impugned capital gain had already been offered and assessed in A.Y. 2016-17, and if so, grant consequential relief in accordance with law by considering the taxes paid in that year while computing the total tax payable on the short term capital gain for AY 2014-15. [Paras 8]

AO was directed to verify assessment of the same capital gain in A.Y. 2016-17 and grant appropriate relief to avoid double taxation.

Final Conclusion: Tribunal held that the registered sale deeds completed the transfer of the property and that the short term capital gains were taxable in AY 2014-15. At the same time, it directed the AO to verify whether the same gain had already been taxed in A.Y. 2016-17 and to grant consequential relief so that the income is not taxed twice.

Reassessment based on recorded reasons - Departure from reasons recorded for reopening - Consequential penalty u/s 271(1)(c)under concealment provisions

Reassessment based on recorded reasons - Departure from reasons recorded for reopening - validity of the reassessment where the assessment was ultimately made on items different from the basis on which reopening had been proposed - HELD THAT: - The Tribunal found that the Assessing Officer had proposed reopening on the footing of profit estimation on the assessee's turnover, but the completed assessment proceeded instead on alleged unexplained investment and share purchase. Since the reassessment ultimately travelled beyond, and did not sustain, the very basis on which reopening had been initiated, the reopening was held to be unsustainable in law. [Paras 3]

The reassessment was quashed.

Consequential penalty under concealment provisions - sustainability of penalty 271(1)(c) proceedings arising from the reassessment. - HELD THAT: - As the penalty proceedings under section 271(1)(c) were consequential to the reassessment, and the reassessment itself did not survive, the penalty appeal was required to be allowed on the same basis. [Paras 5]

The consequential penalty proceedings also failed.

Final Conclusion: The Tribunal allowed both appeals. It held that the reassessment could not stand once the assessment was completed on matters different from the reasons on which reopening had been initiated, and the consequential penalty proceedings accordingly also failed.

TP adjustment on outstanding trade receivables under TNMM - Working capital adjustment and delayed receivables - Deduction for CSR-related donations u/s 80G - Prematurity of challenge to penalty initiation

TP adjustment on outstanding trade receivables - Working capital adjustment under TNMM - Aggregation of receivables with sale transactions - Notional interest adjustment on outstanding receivables from associated enterprises where the receivables arose from the sale transaction benchmarked under TNMM and working capital adjustment had already been granted - HELD THAT: - The Tribunal followed its earlier decision in the assessee's own case and held that the outstanding receivables arose from the principal international transaction of sale of goods and were not shown to constitute an independent financing arrangement. Since the international transactions had been benchmarked under TNMM and working capital adjustment had already been granted, the effect of delayed receivables stood subsumed in the profitability analysis. In the absence of material establishing a separate financing transaction, no further arm's length adjustment by imputing notional interest could be made. [Paras 6]

The transfer pricing adjustment made towards notional interest on outstanding receivables was deleted.

Deduction for CSR-related donations u/s 80G - CSR expenditure and voluntary donation - Verification of eligibility of recipient institutions - CSR-related payments denied deduction u/s 80G merely because they were made in discharge of CSR obligations, if the contribution otherwise satisfies the statutory conditions - HELD THAT: - The Tribunal held that although CSR expenditure is not allowable as business expenditure under Explanation 2 to section 37(1), that by itself does not bar a claim u/s 80G where the payment is otherwise in the nature of an eligible donation. It noted that section 80G specifically excludes CSR contributions only in respect of Swachh Bharat Kosh and Clean Ganga Fund, indicating that other eligible CSR donations are not per se barred. As the Assessing Officer had rejected the claim solely because the payments formed part of CSR expenditure without examining approval of the recipient institutions and compliance with the other conditions of section 80G, the matter required factual verification. [Paras 7]

The issue was restored to the AO for limited verification of the eligibility of the donations u/s 80G and fresh decision in accordance with law.

Challenge to initiation of penalty proceedings u/ss 270A and 271AA -Penalty for under-reporting and transfer pricing documentation defaults - HELD THAT: - The Tribunal treated the grounds relating to initiation of penalty as consequential and premature. Since only initiation was under challenge and no final penalty order was under consideration, no adjudication was called for in the present appeal. [Paras 8]

The grounds challenging initiation of penalty proceedings were dismissed as premature.

Refund of excess dividend distribution tax - Claim for refund of excess dividend distribution tax with reference to section 115-O and the India-USA DTAA - HELD THAT: - The Tribunal did not decide the merits of the treaty-based refund claim because the issue had not been examined by the lower authorities. It therefore directed fresh adjudication after consideration of section 115-O and the applicable treaty provisions and after granting opportunity of hearing. [Paras 9]

The additional ground was restored to the Assessing Officer for fresh adjudication.

Final Conclusion: The appeal was partly allowed for statistical purposes. The transfer pricing adjustment on outstanding receivables was deleted, the section 80G claim relating to CSR-linked donations and the additional claim for refund of excess DDT were remitted for fresh adjudication, and the challenge to penalty initiation was rejected as premature.

Exemption u/s 11 and 12A - Delayed electronic filing of Form No. 10B - Application and accumulation of income - validity of Form No. 10B filed during appellate proceedings

HELD THAT: - The Tribunal held that, though Form No. 10B was not available either by the due date for filing the return or even at the stage when the return was processed u/s 143(1), the form had been electronically filed while the appeal before the Commissioner (Appeals) was pending. On that admitted position, the Tribunal applied the Gujarat High Court ruling in Commissioner of Income Tax (Exemptions) vs. Laxmanarayan Dev Shrishan Seva Khendra [2024 (10) TMI 99 - GUJARAT HIGH COURT] which accepted that filing of Form No. 10B during appellate proceedings is sufficient for grant of the benefit under section 11 and for accumulation of income.

Tribunal also noted that the earlier coordinate bench decision was distinguishable because in that case the audit report was available before issuance of the intimation under section 143(1), but held that the Gujarat High Court decision squarely governed the present case. It further observed that the Commissioner (Appeals) had correctly stated the legal position on the original processing and that the CPC could not have granted the benefit in the absence of Form No. 10B; yet, in view of the binding judicial precedent and absence of any contrary High Court decision, the assessee was entitled to relief. [Paras 9, 11, 12, 13]

The assessee was held entitled to the benefit of deduction for application of income as well as accumulation of income on the basis of Form No. 10B filed during the appellate proceedings, and the Assessing Officer was directed to grant that benefit.

Final Conclusion: The Tribunal allowed the appeal and held that the charitable trust could not be denied the benefit of application and accumulation of income merely because Form No. 10B was electronically filed during the pendency of the first appeal. The Assessing Officer was directed to grant the consequential benefit.

Customs valuation of imported embroidery threads - Undervaluation through suppressed supplementary invoices and extra-commercial payments - Penalty for customs duty evasion on importer and Director - Re-determination of the assessable value under Section 14 - demand on imported embroidery threads on the basis of suppressed supplementary invoices and admitted extra payments to the foreign supplier - Suppression of facts - Wilful misstatement - Evasion of duty - Comparable imports - Benefit of doubt

Transaction value - Re-determination of assessable value - Suppressed import value - HELD THAT: - It transpires that in respect of 27 consignments of imported goods, the appellants had paid customs duty at the time of its import before clearance from customs control on different dates for the part value of the imported goods, as declared in the B/E and in the invoice routed through the banking channel. However, in respect of the part value of such consignments, for which additional invoices/supplementary invoices were produced by the Director of the appellant company Shri Anil Mathuradas Chopra, no customs duty had been discharged. It is not the case of the appellant that the department had recovered these additional invoices and such recovery of evidences are not proper in terms of Section 138C of the Act of 1962. Further, the appellant had disputed the method of valuation of goods to state that the value of identical or similar goods have not been produced by the department.

In those circumstances, the authorities were justified in accepting the real transaction value by taking into account all payments made to the supplier under Rules 3, 4 and 9 of the valuation rules, and the absence of comparable import data did not vitiate the demand. The decision in Commissioner of Customs, Calcutta Vs. South Indian Television (P) Ltd. [2007 (7) TMI 9 - SUPREME COURT] was distinguished because, in the present case, undervaluation was supported by direct evidence furnished by the appellants themselves. [Paras 9, 10]

The duty demand under Section 28 based on the re-determined transaction value was sustained.

Penalty on importer for undervaluation - Penalty on Director - Penalties imposed on the importing company and its Director for undervaluation and short-payment of customs duty - HELD THAT: - The Tribunal found that, once suppression of the actual import value and payment of part of the price through illegal channels stood established on the evidence accepted for valuation purposes, the penalties imposed on the company and on the Director were legally sustainable. The same factual foundation that justified the duty demand also justified penal consequences against both appellants. [Paras 10]

The penalties on the importer and on the Director were sustained.

Final Conclusion: The Tribunal upheld the impugned order confirming re-determined assessable value, differential customs duty and penalties arising from established undervaluation of the imported goods. The appeals of the importer and its Director were dismissed.

Appellate jurisdiction - Forum non conveniens - Common Bench for appeals against same impugned order - The appeal arising from a common adjudication order passed at Mumbai, covering multiple noticees, ought not to be entertained on merits by this Bench merely because the Customs Broker's office is situated within its territorial jurisdiction. - HELD THAT: - The Tribunal held that where the statute and the governing tribunal notifications contemplate pursuit of the remedy in the proper forum, the mere situs of one noticee within the territorial limits of a Bench does not justify separate merits adjudication when the impugned order is a common order passed by an adjudicating authority outside that jurisdiction. Relying on its earlier order in Habasit Iakoka Pvt. Ltd. [2025 (9) TMI 1414 - CESTAT CHENNAI] and on the principle underlying forum non conveniens as explained by the Supreme Court in the case of Munshi Ram Vs Municipal Committee [1979 (3) TMI 58 - SUPREME COURT], the Tribunal found that, since the appellant was only one among several noticees covered by the same order, the appropriate course was to have the matter placed before the President under Notification No. 1/2022 for constitution of a Bench to hear appeals arising from that order. This was considered necessary to avoid conflicting decisions, secure uniformity in appreciation of facts and law, conserve judicial resources, and keep the matter under the supervisory jurisdiction of a single High Court. [Paras 5, 6, 7, 8]

The Bench declined to entertain the appeal on merits and directed the appellant to seek transfer under Notification No. 1/2022 so that the matter could be placed before the President for appropriate orders on constitution of the Bench.

Final Conclusion: The Tribunal held that this Bench should not proceed to decide the appeal on merits in isolation from the common adjudication order involving multiple noticees. The matter was directed to be placed before the President under Notification No. 1/2022 for appropriate orders on transfer and constitution of the Bench.

Abatement of appeal on death of appellant - Abatement -Continuance of proceedings against deceased person - HELD THAT: - The Tribunal held that Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 mandates abatement of the appeal on the death of the appellant 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 proceedings stood abated. The Tribunal also relied on Shabina Abraham & Ors. Vs. Collector of Central Excise & Customs [2015 (7) TMI 1036 - SUPREME COURT], wherein the Supreme Court held that proceedings cannot be initiated or continued against a dead person, as the deceased is not alive to defend himself and continuation would offend 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, in the absence of an application by the legal representative for continuance, the appeal against the deceased appellant stood abated under Rule 22 and could not be proceeded with.

Refund limitation for IGST paid by specified International Organisations - Barred by limitation - Reckoning of limitation - Commencement of limitation from clarification of proper refund authority - Exclusion of limitation during COVID-19 extension -HELD THAT: - The Tribunal held that, prior to Circular No. 23/2019-Customs dated 01.08.2019, it was not clear before which authority an assessee was required to file a refund claim for IGST. Since that circular first clarified that Customs authorities would entertain such claims, the limitation prescribed under Notification No. 20/2018-Central Tax dated 28.03.2018 had to be reckoned from 01.08.2019. The Tribunal further noted that this period overlapped with the COVID-19 pandemic, during which the Supreme Court had extended limitation, and therefore the claims filed by the appellant fell within time. [Paras 10, 11, 12]

The refund claims were held to be within limitation and could not be rejected as time-barred.

Final Conclusion: The Tribunal allowed the appeals, holding that limitation for filing the refund claims commenced only after clarification of the competent refund authority on 01.08.2019, and that the extended limitation during the COVID-19 period also applied. The rejection of the claims as time-barred was therefore set aside.

Reverse charge liability on manpower supply - Small service provider threshold exemption - Adjustment of service tax already paid - Extended period based solely on Form 26AS data - suppression of facts - corroborative evidence - Benefit of Statutory provisions, particularly Rule 2(g) of the Service Tax Rules, 1994 read with Notification No. 30/2012-ST

Reverse charge liability on manpower supply - Service recipient liable where provider is proprietary concern - HELD THAT: - The Tribunal found from the work order and invoices that the activity was purely one of manpower supply and that the appellant was a proprietary concern. On that admitted position, the liability to pay service tax fell on the service recipient and not on the appellant. The invoices also showed that the appellant had neither charged nor collected service tax from the recipient. The demand relatable to that work order was therefore set aside on merits. [Paras 15]

The demand relating to manpower supply service was set aside on merits as the tax liability was on the recipient under the reverse charge mechanism.

Small service provider threshold exemption - HELD THAT: - The Tribunal recorded that 2016-17 was the appellant's first year of operation and held that the first Rs.10,00,000 would qualify for threshold exemption. On that basis, the demand confirmed in respect of the second work order was held to be unsustainable and was set aside. [Paras 16]

The demand on the second work order was set aside by extending the threshold exemption.

Adjustment of service tax already paid - Demand leading to double taxation - HELD THAT: - The Tribunal noted that even the Order-in-Original had appropriated part of the tax as already paid, while the appellant produced payment details showing discharge of the entire liability including the balance demand in dispute. In the absence of any reason to doubt those payment particulars, no further service tax demand could survive. The balance demand was therefore held legally unsustainable and was set aside on merits. [Paras 17]

The balance demand was set aside as the service tax liability had already been discharged.

Extended period based solely on Form 26AS data - Suppression not established - absence of corroborative evidence - HELD THAT: - The Tribunal found that the show cause notice had been issued by comparing the figures in the ST-3 returns with Form 26AS and income-tax records, despite the admitted position that the appellant had filed ST-3 returns. It held that the Revenue could not issue a belated notice on that basis alone, particularly when there was no evidence of scrutiny or audit and no corroboration of suppression. Following Tabassum Enterprises [2025 (9) TMI 1275 - CESTAT KOLKATA], which in turn relied on M/s. Rishu Enterprise [2024 (2) TMI 566 - CESTAT KOLKATA], and also referring to M/s. Quest Engineers & Consultant Pvt. Ltd. [2021 (10) TMI 96 - CESTAT ALLAHABAD], the Tribunal reiterated that mere reliance on Form 26AS or income-tax data, without independent evidence regarding taxable services, does not sustain the demand and does not justify invocation of the extended period. The impugned order was therefore liable to be set aside on limitation as well. [Paras 18, 19, 20]

The demand was also held barred by limitation, as the extended period was not invocable on the basis adopted in the show cause notice.

Final Conclusion: The appeal was allowed. The Tribunal set aside the entire service tax demand, interest and penalty, holding that the principal demands failed on merits and that, in any event, the extended period could not be invoked merely on the basis of Form 26AS and income-tax data without corroborative evidence.

Reverse charge on royalty for mining rights - Withheld royalty component in works contract bills - Extended period based solely on balance sheet entries without corroborative evidence

Reverse charge on royalty for mining rights - Withheld royalty component in works contract bills - HELD THAT: - The Tribunal held that liability under reverse charge on royalty arises where mining rights are conferred by licence and royalty is paid by the licence holder for that right. In the present case, the show cause notices did not identify any mining licence obtained by the appellants, the authority granting it, or any evidence of royalty actually paid by them as licence holders. On the materials produced, read with Rule 40(10) of the Bihar Minor Mineral Concession Rules, 1972, the entry in the accounts described as royalty on mineral was explained as the royalty portion withheld by the contract-awarding authority until proof was furnished that minerals had been purchased from licensed vendors through Form M and Form N. The documentary material supported that explanation, and such withheld amount could not be treated as royalty paid by the appellants for assignment of any right to use natural resources. The demand therefore failed on merits. [Paras 18, 20, 21, 22, 23]

The demand of service tax on reverse charge basis was unsustainable on merits and the impugned orders were set aside on that ground.

Extended period based solely on balance sheet entries without corroborative evidence - Bona fide belief as to non-taxability - HELD THAT: - The Tribunal found that the notices were issued by merely relying on the accounting entries, without independent evidence to substantiate suppression or taxable receipt of any service from the Government. In the factual context that the appellants had not been granted mining rights and the amounts reflected only withheld bill components, the appellants could entertain a bona fide belief that no service tax was payable under reverse charge. Following Tabassum Enterprises [2025 (9) TMI 1275 - CESTAT KOLKATA], which in turn referred to M/s. Rishu Enterprise [2024 (2) TMI 566 - CESTAT KOLKATA] and M/s. Quest Engineers & Consultant Pvt. Ltd. [2021 (10) TMI 96 - CESTAT ALLAHABAD], the Tribunal held that mere reliance on balance sheet or Form 26AS type data, absent corroborative material, does not sustain invocation of the extended period. The demand was therefore also barred by limitation. [Paras 24, 25, 26]

The impugned orders were also set aside on the ground of limitation, the extended period having been held inapplicable.

Final Conclusion: The Tribunal allowed both appeals, holding that the amounts reflected as royalty were merely withheld components of works contract bills and not royalty paid for any mining right so as to attract service tax under reverse charge. It further held that the notices, founded only on balance sheet entries without corroborative evidence, were also barred by limitation.

Stay of recovery pending second appeal - Interim protection against penalty recovery - Installment payment of tax and interest - Statutory scheme under Section 7(5) read with Section 16(4) - Interim arrangement governing recovery of entry tax dues during pendency of the second appeal before the Tribunal. - HELD THAT: - The Court declined to enter into the merits since the second appeal was pending before the Tribunal. On a conjoint reading of Section 7(5) and Section 16(4) of the Orissa Entry Tax Act, and having regard to the materials on record, it held that the ends of justice would be served by directing payment of the tax and interest component in installments, after giving credit to the petitioner's asserted prior payments shown in the writ petition. Subject to such deposit, recovery of penalty was directed to remain stayed till disposal of the second appeal. [Paras 6]

The petitioner was directed to pay the tax and interest dues in three installments after adjustment of asserted prior payments, and recovery of penalty was stayed pending disposal of the second appeal.

Final Conclusion: The writ petition was disposed of by moulding interim relief: the Court did not examine the merits of the disputed demand, directed phased payment of tax and interest subject to adjustment of prior payments, and stayed realization of penalty till the Tribunal decides the second appeal.

Suspension of sentence in cheque dishonour appeal - Deposit of compensation under Section 148 - Exceptional case for waiver of minimum deposit - High Court [2026 (5) TMI 1823 - ALLAHABAD HIGH COURT], held that the appellate court had correctly applied the principle governing Section 148 of the Negotiable Instruments Act, considered whether the matter fell within the exceptional category, and rightly directed deposit of 20% of the compensation amount while suspending the sentence. - HELD THAT:- The Special Leave Petition was dismissed, and pending applications, if any, were disposed of.

Dishonour of cheque - Acquittal under Section 138 of the Negotiable Instruments Act - Deemed service of demand notice - legally enforceable debt - presumption under Section 139 - Notice returned unclaimed

Deemed service of demand notice- Notice returned unclaimed - HELD THAT: - The Court held that issuance of the statutory notice and its actual acceptance are distinct matters. Where the complainant sends the demand notice to the known address of the drawer, the statutory requirement of notice stands satisfied. In the present case, the returned cover bore the endorsement 'unclaimed', which indicated refusal to accept the notice, and the same address was later effective for service of summons upon the accused. In the absence of any convincing evidence from the accused that the notice was not sent to his address, the return of the notice as unclaimed was sufficient both for issuance of notice and its deemed service. [Paras 10]

The trial court's finding that there was no valid legal notice was reversed.

Presumption as to legally enforceable debt - Proof of execution of cheque - The complainant proved the underlying transaction and execution of the cheque, thereby attracting the presumption under Section 139 of the Negotiable Instruments Act, which the accused failed to rebut. - HELD THAT: - The Court found that the complainant's evidence consistently proved the loan transaction, issuance of the cheque in discharge of liability, its dishonour, and the consequential steps taken thereafter. The discrepancy noticed by the trial court as to whether the accused was merely known to the complainant or was his friend was held to be insignificant, since both descriptions only established prior acquaintance. The defence suggestion that the cheque had been issued blank in connection with another borrowing and that such liability had already been discharged remained unsupported by any evidence. Since the accused neither adduced evidence nor proved the alleged discharge, the complainant discharged the initial burden and became entitled to the statutory presumption, which remained unrebutted. [Paras 10, 11]

The acquittal was set aside and the accused was found guilty of the offence under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal was allowed. The High Court reversed the acquittal, held that the statutory notice requirement stood satisfied and that the complainant had proved the case attracting the unrebutted presumption under Section 139, and consequently convicted and sentenced the accused for the offence under Section 138 of the Negotiable Instruments Act.

Dishonour of Cheque - Conviction under Section 138 -Statutory presumption under Sections 118 and 139 - legally enforceable debt - Rebuttal of presumption by probable defence - Presumption of dishonour from bank return memo - Limited scope of revisional interference with concurrent findings - Patent illegality or perversity

Presumption as to issuance of cheque - Legally enforceable debt - Probable defence - The cheque was duly proved to have been issued by the accused and the statutory presumption that it was issued towards a legally enforceable debt was not rebutted. - HELD THAT: - The Hon’ble Supreme Court in Kumar Exports [2008 (12) TMI 682 - SUPREME COURT] has held that the accused can rebut the presumption by showing nonexistence of consideration either by leading direct evidence or by bringing on record circumstances which may make the complainant’s case improbable. Similarly, in M.S. Narayana Menon [2006 (7) TMI 576 - SUPREME COURT], it has been held that though the burden upon the accused is not as heavy as that of the prosecution, nevertheless the accused must bring some probable material to rebut the statutory presumption. Therefore, the aforesaid judgments would not come in the rescue of the revisionist.

The Court held that once the cheque was produced and the signature or execution was not specifically disproved, the presumption under Sections 118 and 139 of the N.I. Act arose in favour of the complainant. The accused set up only a bald plea that the cheque had not been issued and referred to a case of lost cheque, but produced no expert evidence, no reliable material, and no witness to explain how the complainant came into possession of the signed instrument. The complainant's version regarding the financial transaction remained unshaken, and no material contradiction or substantive defence was brought on record. On that reasoning, the Court found that the accused failed to discharge even the lighter burden of rebuttal on the standard of preponderance of probabilities. [Paras 21, 22, 24, 27, 28]

The presumption in favour of the complainant remained intact and the finding of liability under Section 138 of the N.I. Act was sustained.

Proof of dishonour by bank return memo - Statutory presumption of correctness of bank memo - HELD THAT: - The Court held that under Section 146 of the N.I. Act, a bank slip or return memo bearing the official mark of dishonour carries a statutory presumption of correctness unless disproved. Since the bank return memo had been produced and the accused did not lead any evidence from the bank or otherwise to show fabrication or availability of funds, the challenge based on non-examination of a bank official was found meritless. The Court further held that mere denial did not amount to a probable defence sufficient to displace the statutory presumption attached to the memo. [Paras 22, 23, 25]

The objection to proof of dishonour for want of bank witness was rejected.

Revisional jurisdiction against concurrent findings - Patent illegality or perversity - HELD THAT: - The Court reiterated that revisional jurisdiction is not that of a second appellate court and can be exercised only where there is glaring procedural defect, manifest error of law, patent illegality, or perversity resulting in miscarriage of justice. On examining the judgments of the trial court and the appellate court, it found that both had considered the oral and documentary evidence, dealt with the defence, and recorded reasoned concurrent findings.

The Hon’ble Supreme Court in the case law State of Kerala Vs Puttumana Illath Jathavedan Namboodiri [1999 (2) TMI 676 - SUPREME COURT], has held that the High Court in revision cannot re-appreciate evidence to reach a different conclusion unless there is glaring defect in the procedure or manifest error on a point of law resulting in flagrant miscarriage of justice. Similarly, in the case law Amit Kapoor Vs Ramesh Chander [2014 (1) TMI 1042 - SUPREME COURT], the Hon’ble Supreme Court has reiterated that revisional jurisdiction should be exercised sparingly and only in exceptional cases where there is patent illegality or gross miscarriage of justice.

As no material evidence had been ignored and no irrelevant consideration had been relied upon, the Court declined to re-appreciate the evidence. [Paras 30, 31, 32, 33, 34]

The revision was not liable to be entertained on merits and the concurrent conviction and sentence were allowed to stand.

Final Conclusion: The Court upheld the conviction under Section 138 of the N.I. Act, holding that the accused had failed to rebut the statutory presumptions arising from the proved cheque and bank return memo. Finding no patent illegality, perversity, or miscarriage of justice in the concurrent judgments, the revision was dismissed.