TaxTMI Updates e-Newsletter
Jun 22,2026

Scope of remand directions - Fresh show cause notice after remand - Overreaching of court order - Personal hearing in GST adjudication - Assessing Officer, after the earlier remand, issue a second show cause notice for the same Financial Year instead of adjudicating the first show cause notice after granting personal hearing and considering the reply. - HELD THAT: - The Court held that its earlier common order required the Assessing Officer to proceed with adjudication on the existing show cause notice after affording personal hearing and considering the petitioner's reply. Once the remand was so structured, the authority was bound by those directions and could not restart the process by issuing a second show cause notice for the same period. The Court declined to examine the merits of invocation of Section 74 and interfered solely on the legal ground that adoption of a fresh notice route was contrary to the earlier remand and amounted to overreaching the Court's order. [Paras 9, 10]

The impugned adjudication order was set aside and the matter was remanded to the Assessing Officer to pass a fresh order on the basis of the first show cause notice, after personal hearing and due consideration of the reply, in accordance with law.

Final Conclusion: The High Court set aside the order passed under Section 74 for Financial Year 2023-24 on the ground that, after the earlier remand, the Assessing Officer was required to adjudicate the original show cause notice after granting personal hearing and could not issue a second show cause notice. The matter was remanded for fresh adjudication on that basis.

Entitlement to reimbursement of the incremental tax paid or payable on account of the levy of GST -Judicial directions contrary to statutory tax scheme - Waiver of interest, penalty and limitation under GST - Contractual reimbursement of tax burden - Directions permitting contractors to file returns or amended returns after 01.07.2017 without interest, penalty or limitation, and restraining GST authorities from taking action - HELD THAT: - The writ petitioners state that they were registered under the Karnataka Value Added Tax Act, 2003 [the KVAT Act] and had obtained GST registration after the rollout of the Goods and Services Tax [GST] regime with effect from 01.07.2017.

The Court held that the question whether the contractors were entitled to reimbursement of the additional tax burden arising from the shift to the GST regime was a matter between them and the respective employers under their contracts. That contractual controversy could not alter the statutory liability to pay GST, which had to be determined strictly in accordance with the relevant GST enactments. Consequently, no direction could be issued to the tax authorities permitting filing or amendment of returns contrary to the statute, or waiving interest, penalty, or limitation under the GST laws. The direction regarding reimbursement of differential tax was therefore to be understood as operating only against the concerned employers and not against the tax authorities. [Paras 8, 9, 10, 11, 12]

The impugned order was set aside to the extent it issued directions to the tax authorities, and the reimbursement direction was confined to the concerned employers.

Final Conclusion: The appeals were allowed in part by holding that the Single Judge could not issue directions to GST authorities inconsistent with the statutory scheme governing levy, returns, interest, penalty and recovery. The controversy regarding reimbursement of the additional GST burden was left to operate only as between the contractors and the concerned employers.

Writ petition concerning recovery of tax before expiry of the second appeal period and the consequent re-credit or refund of the recovered amount - HELD THAT:- The writ petition was disposed of by granting liberty to the petitioner to apply for refund of the amount re-credited to its E-Cash ledger after recovery from its bank account, and directing the competent authority to decide such application in accordance with law within the time stipulated by the Court.

Input tax credit- Cut-off date for filing returns - Reconsideration of ITC claim - Demand arose from proceedings initiated under Section 73(1) - HELD THAT: - The Court recorded that the petitioner had not replied to the show-cause notice, but accepted the submission, not disputed by the respondents, that returns filed prior to 30.11.2021 would require consideration in the light of the amendment referred to by the petitioner and the view already taken by this Court [2026 (4) TMI 1729 - KARNATAKA HIGH COURT], following the observations in [2026 (3) TMI 898 - KARNATAKA HIGH COURT]. Since the petitioner's case was that the relevant returns had been filed within that cut-off date and the authority had not examined the claim from that standpoint, the adjudication order was held liable to be quashed for fresh consideration of the ITC claim, while leaving other contentions open.

The adjudication order was quashed and the authority was directed to reconsider and examine the petitioner's ITC claim with reference to the returns filed before 30.11.2021.

Final Conclusion: The writ petition was allowed in part. The impugned adjudication order was quashed and the authority was directed to re-examine the petitioner's claim for input tax credit for the relevant period on the basis of returns filed before 30.11.2021, with other contentions kept open.

Supply of relied upon documents - Natural justice in adjudication under Section 74 - Principles of Natural Justice - Supply of Relied Upon Documents - Right of Cross-Examination - Confirmation of demand under Section 74 without first supplying copies of the relied upon documents to the noticee impaired the noticee's right to effectively respond to the show cause notice - HELD THAT: - The Court held that where the proposed demand is founded on relied upon documents, the noticee's reply may remain incomplete unless copies of such documents are first supplied. In the absence of any satisfactory instruction from the revenue to show that those documents had been furnished, and in view of the specific pleading to the contrary, the Court proceeded on the basis that the petitioner had not been supplied the relied upon documents before confirmation of the demand. That defect vitiated the adjudication, and the matter was remitted with directions for fresh supply of the show cause notice, copies of relied upon documents, list of non-relied upon documents, consideration of any request for further documents, and continuation of proceedings only after due opportunity. [Paras 6, 7, 8]

The impugned order was set aside and the matter was remitted to the adjudicating authority for fresh adjudication after supplying the required documents and affording due opportunity.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order on the ground that the petitioner had not been supplied the relied upon documents before confirmation of demand. Fresh adjudication was directed after compliance with procedural safeguards indicated by the Court.

IGST refund on zero-rated exports through Foreign Post Office - Failure to prescribe procedure defeating statutory refund - Statutory right - claim for want of a prescribed mechanism -HELD THAT: - Reading Section 16 of the IGST Act with Rule 96 of the CGST Rules, the Court found that the petitioners had a statutory right to seek refund in respect of zero-rated supplies and that the responsibility to process such claim lay with the respondents. The stand of the customs authorities that refund could not be processed because the mechanism for uploading export details for the period prior to the later circulars and advisories was unavailable was treated as a consequence of the Board's failure to prescribe a workable procedure. The pleadings and communications placed before the Court also showed that the authorities themselves were shifting responsibility between the Foreign Post Office, Customs and the Board, while not effectively dealing with the claim. The Court therefore observed that administrative or procedural inadequacy could not justify non-processing of a claim otherwise arising under the statute. [Paras 24, 25, 30, 33]

The Court recorded that it was for the respondents to process the refund claim and that the inability of officers arising from absence of procedure was attributable to the Board's failure to provide a mechanism; the matter was then kept pending on counsel's assurance that steps would be taken.

Final Conclusion: The Court recorded a prima facie determination that the respondents were required to process the petitioners' IGST refund claim and that the absence of a prescribed procedure could not defeat that statutory entitlement. On an assurance that the matter would be acted upon, the case was directed to be listed again without final disposal of the writ petition.

Retrospective cancellation of GST registration - Order travelling beyond show-cause notice - Show-cause notice proposed only cancellation of registration and did not disclose any proposal for retrospective cancellation - HELD THAT: - The Court found that the show-cause notice referred only to cancellation of registration and recorded suspension from a later date, but nowhere indicated that cancellation was proposed with retrospective effect. The impugned order, however, cancelled the registration from an earlier date and thus travelled beyond the show-cause notice. Having regard to that defect, and also recording the petitioner's undertaking to file all pending returns within the stipulated period and to continue filing regular returns, the Court held that the impugned order could not stand. [Paras 11, 12, 13, 17]

The impugned order was quashed, subject to the petitioner's undertaking to file the pending returns within the time granted, with liberty to the respondents to proceed afresh in case of default.

Final Conclusion: The petition was allowed because the impugned cancellation order imposed retrospective cancellation without such proposal being contained in the show-cause notice. The order was set aside on the petitioner's undertaking to file pending and regular returns, with liberty to the respondents to act in the event of default.

Writ maintainability in presence of statutory appellate remedy - Availability of appeal to GST Appellate Tribunal - Powers conferred by sub-section [1] of Section 112 of CGST by Notification No. S.O. 4220[E] - HELD THAT: - The Court recorded that the Appellate Tribunal under Section 112 of the CGST Act had started functioning at Guwahati and that, by the notified arrangement referred to in the order, an appeal in cases where the appellate order had been communicated on or before the specified date could be filed up to 30.06.2026. Since the impugned Order-in-Appeal fell within that window and the grounds raised in the writ petition were also available to be urged before the statutory appellate forum, the Court declined to entertain the writ petition on the ground of availability of an efficacious alternate remedy. [Paras 5, 6]

The petitioner was relegated to the statutory appellate remedy with liberty to file an appeal before the Appellate Tribunal on or before 30.06.2026.

Final Conclusion: The writ petition was not entertained as a statutory appeal to the Appellate Tribunal was available and still within time. Liberty was reserved to the petitioner to avail that remedy.

Penalty for estimated addition on alleged bogus purchases - Inaccurate particulars of income under Section 271(1)(c)

Penalty for estimated addition on alleged bogus purchases - Estimated disallowance of profit element in unproved purchases - Penalty under Section 271(1)(c) could not be sustained where the addition on alleged bogus purchases was restricted to the profit element and made purely on an estimated basis. - HELD THAT: - The Court held that the controversy was covered by its decision in The Principal Commissioner of Income Tax -6 Vs. Colo Colour Pvt. Ltd. . It accepted the principle that where the addition is sustained purely on estimation basis or on guesswork, penalty for furnishing inaccurate particulars cannot be imposed. Since, in the present case, the disallowance represented only an estimated gross profit on unproved purchases and the sales were not doubted, the Tribunal was justified in deleting the penalty. [Paras 7]

The deletion of penalty was upheld and the Revenue's appeal was held not to give rise to any substantial question of law.

Final Conclusion: The appeal was dismissed. The Court upheld the Tribunal's view that penalty under Section 271(1)(c) was not leviable where the addition was sustained only on an estimated basis by bringing to tax the profit element in unproved purchases.

Secondment of employees - Fees for included services - Make available test - Professional services exemption under DTAA - Failure to consider binding precedent

Secondment of employees - Fees for included services - Make available test - Employer-employee relationship - Amounts received by the assessee from Indian group entities towards seconded employees taxability as fees for included services under Article 12 of the India-USA DTAA or to be treated as mere cost-to-cost reimbursement. - HELD THAT: - The Court held that, on a proper reading of the deputation agreement and the scope of work, the secondees did not cease to have their lien with the overseas employer and the Indian entities had no power to sever that relationship, but could only terminate the assignment and relieve them to rejoin the assessee. The secondees continued to enjoy benefits, including social security, through the assessee, which showed that the real employment link with the overseas entity subsisted. The services rendered by the secondees were also found to involve training, implementation of group policies, and transfer of technical knowledge, skill and experience, thereby satisfying the make available requirement.

Applying Centrica India Offshore (P) Limited [2014 (5) TMI 154 - DELHI HIGH COURT] which the Tribunal had failed to consider, the Court held that the absence of markup and the description of the payment as reimbursement did not alter the true character of the arrangement as provision of services through seconded personnel. The Tribunal's contrary view was therefore held to be per incuriam and perverse. [Paras 68, 70, 73, 89, 90]

Question of law (A) in all the appeals, and question of law (B) in ITA 423/2025, were answered in favour of the Revenue; the Tribunal's orders on secondment receipts were set aside.

Professional services exemption under DTAA - Make available test - Failure to consider material findings - Reasoned adjudication - HELD THAT: - The Court found that the Assessing Officer had not treated all such receipts as taxable, but had already granted the benefit of Article 12(5)(e) to services considered to be professional services and retained only the balance as taxable fees for included services. The Tribunal, however, did not examine the actual nature of the services that remained chargeable, did not analyse the distinction between the exempted services and the retained balance, and did not adequately deal with the Assessing Officer's detailed finding that the engagement involved training and transfer of technical knowledge so as to satisfy the make available test. Its conclusion that Article 15(2) was inclusive and that all services fell within Article 12(5)(e) was thus rendered without the necessary examination of the record. In these circumstances, the Court set aside the Tribunal's orders on this aspect and directed reconsideration. [Paras 84, 85, 86, 87, 91]

Question of law remanded to the Tribunal for fresh consideration and a reasoned order.

Final Conclusion: The High Court held that receipts from secondment of employees were taxable as fees for included services under Article 12 of the India-USA DTAA and answered that issue in favour of the Revenue for all the relevant assessment years. On the separate issue of receipts from services rendered in and from the USA, the Tribunal's orders were set aside for want of proper examination and reasoning, and the matter was remanded to the Tribunal for fresh consideration.

Reopening of assessment beyond limitation - notice beyond three years - Computation of escaped income for threshold u/s 149 - Non-application of mind in section 148A(d) order - Ledger entries and opening balances -

HELD THAT: - The Court found that the entire reopening was founded on alleged accommodation entries of Rs. 70,00,000/-, but the assessee had specifically explained the relevant entries by showing that one entry was an opening balance, another debit and corresponding credit entry resulted in a nil effect, and another debit entry was also an opening balance.

The credit entry with Sampada Chemicals Ltd. had been ignored while computing the alleged escapement. Once that ignored entry was accounted for, the alleged escaped income fell below Rs. 50,00,000/-. The Court held that, in such circumstances, reopening beyond the permissible period could not be sustained, and the order under section 148A(d) suffered from non-application of mind in determining the quantum of escapement. [Paras 6, 8, 9, 10]

The impugned order under section 148A(d) was quashed, as the reopening beyond the prescribed period was barred once the alleged escaped income was below the statutory threshold.

Final Conclusion: The High Court allowed the writ petition and quashed the order under section 148A(d). It held that the alleged escaped income had been wrongly computed by ignoring the nature of the ledger entries, and once correctly reckoned, reopening beyond the applicable period was barred.

Reassessment beyond four years - Change of opinion - Failure to disclose fully and truly all material facts

Reopening of the completed assessment for exempt long-term capital gain and dividend income disallowance beyond four years - HELD THAT: - The Court held that the assessee had disclosed the exempt income and had also furnished details relating to the claim of exemption on long-term capital gain as well as the dividend income during the original assessment proceedings u/s 143(3).

Revenue could not dispute that the notice for reopening was issued after expiry of four years from the end of the relevant assessment year. In the absence of any failure by the assessee to disclose fully and truly all material facts, and with nothing to show that the reopening was founded on any new tangible material, the reassessment was held to be based only on a change of opinion, which could not sustain assumption of jurisdiction under the old regime of section 147. [Paras 3, 5, 7, 8]

The impugned reopening notice was quashed as being barred by the proviso to section 147 and founded merely on change of opinion.

Final Conclusion: The writ petition was allowed. The Court held that the reassessment for AY 2012-13, initiated after four years despite full disclosure in the original scrutiny assessment and without any new tangible material, was impermissible and the impugned notice was accordingly quashed.

Reassessment under amended Section 147 - Escapement of income based on high-value bank transactions - Absence of tangible material in Section 148A proceedings - Failure to give prior opportunity on new grounds in reassessment

Reopening on bank credits recorded in books - High-value inter-group loan transactions - Escapement of income without supporting material - Reassessment sustained merely because the petitioner's bank accounts reflected high-value transactions allegedly not coherent with its business - HELD THAT: - The Court found that the Assessing Officer himself recorded that the entities with whom the petitioner had transacted were regularly filing returns. The transactions in the bank accounts were stated to be recorded in the books and reflected in the audited accounts already considered while processing the original returns. In these circumstances, mere volume of credits and debits, or an assumption that such transactions were not in coherence with the petitioner's business, could not by itself establish escapement of income. The Court held that, without any iota of evidence, reopening on such presumption was impermissible. It further held that borrowing from group concerns did not convert the petitioner into an NBFC, so absence of an NBFC licence was irrelevant, and non-charging of interest on loan transactions also did not lead to escapement of income. [Paras 10, 11]

The notices under Section 148 and the corresponding orders under Section 148A(3) were liable to be quashed on the ground that the reopening lacked material showing escapement of income.

New grounds introduced in final Section 148A order - allegation with regard to M2M loss - Prior opportunity in reassessment proceedings - Bald allegation without material - HELD THAT: - The Court noted that the notice issued under Section 148A(1) had not called upon the petitioner to explain the alleged M2M loss. Despite that, the final order recorded an adverse finding on that aspect. The Court held that such a course was erroneous because no prior opportunity had been afforded. As regards the alleged purchase of bullion, the Court found that no material worth the name had been referred to and the allegation remained bald. [Paras 12]

The impugned order was unsustainable insofar as it rested on the M2M loss and bullion allegations.

Final Conclusion: The High Court allowed the writ petitions and quashed the notices issued under Section 148 and the orders passed under Section 148A(3) for Assessment Years 2019-20 and 2021-22. It held that the reopening was founded on assumptions arising from bank transactions already recorded in the books, and was further vitiated by reliance on grounds on which no prior opportunity had been given.

Direct Tax Vivad se Vishwas Scheme, 2024 - Search-based exclusion from settlement scheme - Reassessment based on survey material - Strict construction of exclusionary provision

Exclusion under settlement scheme - Distinction between search and survey - The declarations filed under the Direct Tax Vivad se Vishwas Scheme, 2024 rejected under Section 96(a)(i) where the pending reassessment under Section 147 was treated by the department itself as arising from survey material u/s 133A after dropping the earlier proceedings under Section 153C

HELD THAT: - The Court held that Section 96(a)(i) excludes only those assessments made under the specified provisions on the basis of search initiated under Sections 132 or 132A. In the present case, though proceedings were initially started under Section 153C after search and survey action against a third party, those proceedings were dropped. The department thereafter expressly recorded, while sustaining reopening under Section 147, that Section 153C had been wrongly invoked because the material relied upon was impounded during survey action under Section 133A and that the correct route was reassessment under Section 147.

Since Section 96(a)(i) does not include assessments based on survey under Section 133A, the Revenue could not combine the dropped search-based proceedings with the later survey-based reassessment so as to deny the benefit of the Scheme. The exclusion being statutory in nature had to be applied strictly, and no additional restriction could be read into it in the absence of express language. [Paras 6]

The rejection of the declarations under the Scheme was illegal and arbitrary, and the petitioner was held entitled to have the declarations accepted.

Final Conclusion: The writ petitions were allowed. The rejection of the petitioner's declarations under the Direct Tax Vivad se Vishwas Scheme, 2024 for A.Y. 2015-16 and A.Y. 2016-17 was quashed, and the respondent was directed to accept the declarations and issue the requisite statutory forms.

Rule of non-traverse - Presumption as to consideration under negotiable instruments - Adverse finding without challenge to evidence - Cash loan in breach of section 269SS and enforceability of debt

Adverse finding without challenge to evidence - Judicial power to put questions to witness - Perverse finding on financial capacity - Whether trial court was not justified in dismissing the suit on the ground that the plaintiff had failed to prove his financial wherewithal to advance the loan? - HELD THAT: - The Court held that, although an ex parte decree cannot be granted mechanically, an adverse finding on the plaintiff's lending capacity could not be recorded when the defendant had neither filed a written statement nor cross-examined the plaintiff on that aspect. If the trial court entertained any doubt regarding the plaintiff's capacity, it ought to have exercised its power to question the witness and have such examination recorded. In the absence of any such challenge or court-led clarification, the finding that the plaintiff lacked means was held to be based on no evidence and therefore perverse. Mere non-production of income-tax returns, or non-reflection of the transaction therein, was also held insufficient by itself to negate the loan transaction. [Paras 8, 9, 10, 11]

The finding against the plaintiff on financial capacity was set aside as unsustainable.

Rule of non-traverse - Presumption as to consideration under negotiable instruments - Proof of execution of promissory note - Non-examination of attestor - Cash loan in breach of section 269SS and enforceability of debt - HELD THAT: - The Court held that, in the absence of a written statement, the plaintiff's averments regarding the advance and execution of the promissory note stood untraversed and were deemed admitted. The defendant's reply notice did not deny receipt of money or the signatures on the promissory note; her case was only that the plaintiff had been set up by a third party and that blank signed papers had been obtained. Such a defence required rebuttal evidence from the defendant, which was not forthcoming. Since the suit was founded on a promissory note, the statutory presumption as to consideration operated in the plaintiff's favour, and the burden to displace it lay on the defendant. The Court further held that a promissory note need not be attested, and non-examination of an attestor was not fatal when the signature itself was not in dispute. It also held that breach of the prohibition against cash loans above the statutory limit may expose the lender to consequences under the Income-tax Act, but does not render the loan transaction illegal, void, or unenforceable. The plaintiff's possession of the defendant's original title deed, referred to even in the pre-suit notice, was treated as a further circumstance supporting the plaintiff's case, especially since the defendant offered no explanation for it. [Paras 14, 15, 16, 17, 18]

The plaintiff's claim on the promissory note was upheld and the dismissal of the suit was reversed.

Final Conclusion: The High Court held that the trial court had wrongly rejected the plaintiff's unchallenged case and ignored the deemed admissions, the statutory presumption attaching to the promissory note, and the supporting documentary circumstances. The impugned judgment and decree were set aside, and the suit was decreed as prayed for.

Validity of notice u/s 148A(b) - less than seven days' time is granted - Minimum period for compliance

HELD THAT: - The Court recorded that the controversy stood covered by its earlier decision in Sri. Nagendra Credit Co-Operative Society Ltd., A Registered Co-Operative Society, Represented By Its Ceo, Sri. Siddesha. K.S. [2026 (4) TMI 1877 - KARNATAKA HIGH COURT], which in turn followed the Division Bench ruling in Venkatala Iyyappa Rajanna [2025 (8) TMI 1723 - KARNATAKA HIGH COURT] Applying that binding view, the Court accepted that where the period provided for compliance with a notice u/s 148A(b) is less than seven days, the notice is invalid; and once such notice is set aside, the consequential order u/s148A(d), the notice u/s 148, and the consequential assessment and penalty notices also cannot survive. [Paras 2, 3]

The appeal was dismissed by holding that the case was governed by the earlier Division Bench view rendering the notice under Section 148A(b) unsustainable for want of the minimum period of seven days.

Final Conclusion: Following its earlier Division Bench decision on the identical issue, the Court dismissed the Revenue's appeal and left undisturbed the view that a notice under Section 148A(b) granting less than seven days for compliance is invalid, with consequential proceedings also becoming unsustainable.

Deduction for infrastructure development u/s 80IA - Developer versus works contractor - Works contract exclusion

Deduction for sewage treatment and water treatment infrastructure projects - Financial, technical and execution risk test - HELD THAT: - The Tribunal held that the determinative test is the true nature of the contractual obligations and not the mere fact that the work was awarded by governmental bodies. On examining the tender conditions and agreements for the projects, it found that the assessee was responsible for designing, engineering, procurement, construction, commissioning, and operation and maintenance for specified periods, and had also assumed obligations relating to earnest money, security deposits, bank guarantees, mobilisation of funds, exposure to cost overruns, liquidated damages and defect rectification.

The projects were therefore not limited contractual execution of pre-determined works, but independent development of infrastructure facilities requiring the assessee's own technical expertise, commercial judgment and financial commitment.

Applying the principle stated in M/s. Patel Engg. Ltd. [2026 (3) TMI 894 - BOMBAY HIGH COURT] the Tribunal held that where the assessee bears financial, technical and execution risks and undertakes planning and implementation of the facility, the Explanation excluding works contracts does not apply. The statement relied upon by the Revenue did not displace the contractual and factual position emerging from the project documents and financial statements. [Paras 11, 12]

The assessee was held to be a developer and not a mere works contractor, and the deduction under section 80IA(4) was rightly allowed.

Final Conclusion: For Assessment Year 2009-10, the Tribunal upheld the allowance of deduction under section 80IA(4). It held that the assessee's sewage treatment and allied infrastructure projects involved development activity with financial, technical and execution risks, and were therefore not hit by the works contract exclusion.

Deduction u/s 80P - Return filed within due date under section 139(1) - Penalty u/s 270A

Deduction u/s 80P - Belated return and section 80AC condition - Return in response to section 148 - Deduction claimed by a primary agricultural credit co-operative society under section 80P for Assessment Year 2018-19 not allowable where the return had not been furnished within the due date under section 139(1) and was filed later in response to notice under section 148 - HELD THAT: - The Tribunal held that after the substitution of section 80AC with effect from Assessment Year 2018-19, filing of the return within the due date prescribed under section 139(1) became a statutory condition for claiming any deduction under Chapter VI-A under the heading relating to certain incomes, including deduction under section 80P. Since the assessee had not filed the return within that due date and made the claim only in the return filed in response to notice under section 148, the statutory condition remained unmet. The Tribunal also noted that no material had been produced seeking condonation of delay. [Paras 8, 9]

The disallowance of deduction under section 80P was upheld and the quantum appeals were dismissed.

Penalty under section 270A - Penalty consequent to quantum addition - HELD THAT: - The Tribunal sustained the penalty on the sole basis that the quantum addition out of which the penalty arose had already been upheld. No separate legal infirmity in the penalty order was accepted. [Paras 10]

The penalty appeal was dismissed and the penalty under section 270A was sustained.

Final Conclusion: The Tribunal held that for Assessment Year 2018-19, deduction under section 80P could not be allowed where the return was not filed within the due date under section 139(1) and was furnished only in response to notice under section 148. Consequently, the connected quantum appeals failed and the penalty under section 270A was also sustained.

TDS credit where tax deducted by employer was not remitted to Government - Condonation of delay on account of pursuit of rectification remedy

Condonation of delay on account of pursuit of rectification remedy - Delay in filing the first appeal where the assessee had been pursuing rectification before CPC - HELD THAT: - The Tribunal held that, on the stated facts, the assessee had been continuously pursuing rectification before CPC and, when that effort failed, was left with no option but to file the appeal. In those circumstances, dismissal of the appeal in limine as time-barred was not justified and the delay ought to have been condoned. [Paras 4]

The finding dismissing the first appeal as barred by limitation was not sustainable.

TDS credit where tax deducted by employer was not remitted to Government - Protection against recovery from employee for employer's failure to deposit TDS - HELD THAT: - The Tribunal found from the material placed in the paper-book, including salary slips, Form 16 and bank statements, that tax had been deducted by the employer from the assessee's salary and net salary alone had been paid. Applying the principle in Gayatri Snehal Rao[2024 (11) TMI 88 - GUJARAT HIGH COURT], as affirmed by the Supreme Court [2026 (2) TMI 885 - SC ORDER], the Tribunal held that once tax had been deducted at source from salary, demand could not be enforced against the employee merely because the employer failed to deposit the amount. The Assessing Officer was therefore required to verify the deduction and grant the corresponding credit. [Paras 4]

The assessee was held entitled to full TDS credit as deducted by the employer, subject to verification by the Assessing Officer.

Final Conclusion: The Tribunal held that the delay in filing the first appeal ought to have been condoned since the assessee had been pursuing rectification before CPC. On merits, it directed grant of full TDS credit, subject to verification, since tax had been deducted from salary by the employer and the employee could not be denied credit for the employer's failure to deposit it.

Penalty u/s 270A for estimated addition - Specific charge under section 270A - Under-reporting and misreporting of income -

HELD THAT: - The Tribunal held that the quantum addition had been made only on estimation after rejection of books, and such estimated determination of income did not justify levy of penalty. It further held that under-reporting and misreporting carry different connotations, and where the Assessing Officer seeks to invoke penalty in consequence of misreporting, a specific charge must be framed by identifying the applicable limb. Since the show-cause notice and the penalty order merely referred to under-reporting in consequence of misreporting without specifying the exact case within section 270A(9), the penalty proceedings were bad in law. On both legal grounds and merits, the penalty was liable to be deleted. [Paras 4]

The impugned penalty was deleted.

Final Conclusion: The Tribunal allowed the appeal and deleted the penalty under section 270A. It held that penalty was unsustainable both because the addition rested on estimated income and because no specific statutory charge of under-reporting or misreporting had been properly framed.

Disallowance of purchases as bogus - Business expenditure on management and consultancy fees

Bogus purchases - Documentary evidence of purchases - Third-party reply without further investigation - HELD THAT: - The Tribunal held that non-filing of income-tax return or low returned income of the supplier could not by itself justify treating the purchases as nongenuine when the assessee had furnished complete supporting evidence. AO relied only on the reply of the stated proprietor alleging misuse of PAN, but did not investigate that allegation further, did not identify the alleged friend, did not record the proprietor's statement under section 131, and did not afford cross-examination. The payment stood credited in the proprietary concern's bank account, the transport documents and e-way bills contained transaction particulars, no document produced by the assessee was shown to be false or fabricated, the corresponding sales were not disputed, and the books results were not rejected. In these circumstances, there was no adverse material sufficient to disallow the purchases. [Paras 7]

The disallowance of purchases was deleted and the assessee's ground was allowed.

Management and consultancy fees - Business expediency - Disallowance based on educational qualification - Disallowance of management and consultancy charges merely by doubting the recipient's educational qualification and the commensurateness of payment - HELD THAT: - The Tribunal held that the lower authorities had disallowed the expenditure only on the ground that the recipient was not highly educated and by expressing doubt about the payment. It found that no adverse material had been brought on record to show that the expenditure was not genuine, while the services rendered and the payment itself were not disputed. Since the business expediency of the expenditure was not in dispute, the educational qualification of the recipient could not by itself be a valid basis to deny the claim. [Paras 8]

The disallowance of management and consultancy charges was deleted and the assessee's ground was allowed.

Final Conclusion: The Tribunal allowed the appeal and deleted both disallowances. It held that the purchases could not be treated as bogus in the absence of adverse material overcoming the assessee's documentary evidence, and that the consultancy expenditure could not be disallowed merely on suspicion regarding the recipient's qualification.

Addition u/s 69A for agricultural income - Unexplained money - Evidentiary proof of agricultural receipts

Addition treating the assessee's agricultural income as unexplained money sustainable where documentary evidence of agricultural activity, sale of produce and corresponding bank credits had been furnished - HELD THAT: - The Tribunal found that the assessee had produced relevant material supporting the agricultural income, including land records, bills relating to sale of agricultural produce, and bank statements showing the corresponding credits. It also noted that agricultural income shown in earlier years had been accepted by the Department and that the assessee continued the same agricultural activity in the relevant year.

On that basis, the Tribunal held that the mere fact that the assessee had revised his income could not, by itself, justify rejection of the claim of agricultural income. Since the material evidence had been ignored by the AO, the addition made as unexplained agricultural income u/s 69A could not be sustained. [Paras 7]

The addition u/s 69A on account of alleged unexplained agricultural income was deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee's agricultural income could not be treated as unexplained money when supporting documentary evidence had been furnished and ignored by the authorities.

Denial of deduction claimed u/s 80JJAA - return of income and Form No. 10DA were filed beyond the due date -HELD THAT: - The Tribunal held that the disallowance rested entirely on an erroneous assumption by the appellate authority that the due date under section 139(1) was 31.10.2018. On examination of the record, particularly the intimation under section 143(1), it found that the due date for filing the original return for the relevant assessment year was recorded as 30.11.2018. Since the return of income and Form No. 10DA were filed on 30.11.2018, the filing was within time and the statutory condition invoked for denying the claim was not breached. The deduction was therefore allowable. [Paras 7, 8]

The assessee was held entitled to deduction under section 80JJAA, and the Assessing Officer was directed to allow the claim.

Final Conclusion: The Tribunal held that the return of income and Form No. 10DA had been filed within the due date recorded in the statutory intimation, and the deduction under section 80JJAA was wrongly denied on a mistaken assumption as to limitation. The assessee's appeal was accordingly allowed.

Entitlement to payment based on the prevailing value - Notice before disposal of confiscated goods pending exhaustion of legal remedies - Redemption of confiscated gold - Refund in lieu of gold sold without notice - No Opportunity to participate in the auction - Violation of principles of natural justice - Non-issuance of notice

Notice before auction of confiscated gold - Principles of natural justice in disposal of seized goods - Binding effect of departmental circulars - Sale of confiscated gold without notice to the owners, when their appellate or other legal remedies had not been exhausted - HELD THAT: - It is the case of the respondent that the gold was seized within the customs area and, therefore, applying the aforesaid Board’s instructions, the rate of gold was determined at the rate on the date of transfer of the said gold to SPMCIL and after deducting all the penalties, customs duty and redemption fine, the balance amount was returned to the petitioners.

Section 150 speaks of goods, which are to be sold, but which have not been confiscated for which procedure has been prescribed and only in respect of such sale of goods, notice, according to the respondent is envisaged and the aforesaid circular deals only with such goods, which have not been confiscated.

True it is that the former portion of the circular speaks about the seized goods, which are being disposed of without notice to the owner of the goods, when such seizure has been set aside by the adjudicating authority, it casts heavy financial burden on the exchequer. However, not stopping there, paras-2 and 3 of the said circular speaks about the issuance of notice to the owner of the goods in respect of the goods which are not confiscated and also with respect to confiscated goods where the owner of the goods have not exhausted all the appeal/legal remedies.

The Court held that para 3 of the circular dated 14.02.2006 specifically extended the requirement of notice even to confiscated goods where all appeal or legal remedies had not been exhausted by the owner. Since revision and further legal remedies were available and had in fact been pursued, the respondent was bound to issue notice before auctioning the gold. The stand that notice was unnecessary for confiscated goods was rejected, and the inability to trace records only reinforced the conclusion that no notice had been issued. The auction sale was therefore held grossly improper, illegal and contrary to the circular, apart from offending principles of natural justice. [Paras 44, 45]

Non-issuance of notice before disposal of the confiscated gold was held fatal, and the respondent could not justify the sale by denying the applicability of the circular.

Redemption of confiscated gold sold earlier - Inapplicability of refund computation under Board's Instruction No. 22/2022 where prior sale was illegal - Value payable in lieu of non-returnable gold - HELD THAT: - The Court held that once redemption was granted, the petitioners became entitled to receive the seized gold, and if return of the gold was impossible because it had already been sold, the respondent had to pay the equivalent value in a manner that truly gave effect to redemption. The respondent could not selectively rely on Board's Instruction No. 22/2022 for tariff-value-based refund after having ignored the earlier circular mandating notice before sale. The Court also noted that gold did not fall within the categories of perishable, hazardous or depreciating goods contemplated for early disposal under Section 110(1A), and no notification had been shown authorising such disposal. In these circumstances, the refund computation based on the date of transfer to SPMCIL was held untenable, and balancing the conduct of both sides, the Court directed payment of the value of 24K crude gold at the rate prevailing on the date of the de novo order, less redemption fine, customs duty and penalties. [Paras 53, 55, 56, 57, 60]

The impugned refund orders were set aside, and the respondent was directed to pay the value of the gold at the rate prevailing on the date of the de novo order, after statutory deductions.

Final Conclusion: The Court held that the respondent had acted illegally in auctioning the confiscated gold without notice while legal remedies were still open and could not thereafter confine the refund to the tariff value under the later Board instruction. The impugned orders were set aside and the petitioners were held entitled to the value of the 24K crude gold as on the date of the de novo redemption order, after deduction of redemption fine, customs duty and penalties.

Imposition of penalties under Sections 112(a) and 114AA - Use of false or incorrect material - Bona fide reliance on certificate issued by authorised agency - improper importation - Mens rea - Importer submitted the emission certificate issued by an authorised agency and all supporting documents at the time of import, and the only objection later raised was that the certificate was not in the form of a type approval certificate. - HELD THAT: - The Tribunal found that the appellant had furnished the emission certificate issued by Envirotech, a duly authorised agency, along with the Bills of Entry and other supporting documents, including the manufacturer's technical specifications, and the goods were cleared after verification by Customs. The show cause notice was issued much later only on the ground that the certificate was not in the form of a type approval certificate. The Tribunal held that there was no suppression or concealment by the appellant and that the appellant had acted bona fide in relying on a certificate issued by an authorised agency. It further noted that the alleged omission had not been detected by Revenue at the time of assessment despite all documents being on record, and that the manufacturer's specifications showed noise levels within the prescribed limit. In these circumstances, the ingredients for penalty under Section 112(a), and the requirement of knowingly or intentionally using a false or incorrect document under Section 114AA, were not established. [Paras 14, 17, 18, 20]

No case was made out for imposition of penalties under Sections 112(a) and 114AA, and the penalties were set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside the penalties imposed on the appellant, holding that the appellant had acted bona fide and that the conditions for levy of penalty under Sections 112(a) and 114AA were not established.

DFIA exemption - Actual user condition through public notice - Tribunal's power to test vires - Revalidation of expired DFIA licences - Official Gazette publication - Post-export scheme - Transferability of authorisation - Benefit of duty exemption under transferable DFIA issued on post-export basis, denied by enforcing an actual user condition introduced through a DGFT public notice.

Entitlement to claim on DFIA exemption and the denial of exemption on the basis of the public notice - HELD THAT: - The Tribunal held that an actual user condition affecting import entitlements under the DFIA scheme could not be imposed merely by public notice, since such a condition touches policy and must be brought into force only in the manner required for delegated legislation. It further held that the DFIA scheme in question was a post-export and transferable scheme, distinct from advance authorisation, and therefore did not carry any inbuilt actual user requirement for the transferee. On that reasoning, denial of the claimed exemption on the ground of non-fulfilment of actual user condition lacked legal basis. [Paras 10, 11]

The appellant was held entitled to the claimed DFIA exemption and the denial of exemption on the basis of the public notice was set aside with consequential relief.

Tribunal's power to test vires - Vires of subordinate legislation - HELD THAT: - Relying on the law declared by the Supreme Court in the case of in the case of L. Chandrakumar [1997 (3) TMI 90 - SUPREME COURT] and Select Impex Ltd. [2022 (8) TMI 666 - SC ORDER] and the observations of the Delhi High Court [2005 (9) TMI 626 - DELHI HIGH COURT], the Tribunal held that it had jurisdiction to test the vires of statutory or subordinate legislative provisions falling within its field and that its quasi-judicial authority could not be excluded from considering such a challenge in a customs dispute. [Paras 14]

The objection to the Tribunal's competence was rejected and its jurisdiction to examine vires was affirmed.

Revalidation of expired DFIA licences - Certificate for revalidation - HELD THAT: - The Tribunal accepted that the licences remained unutilised during the period of dispute because the benefit claimed under them had been denied by Customs. Following the approach adopted in earlier decisions in the case of Pushpanjali Floriculture Pvt. Ltd. [2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT] and this Tribunal in their own case [2015 (11) TMI 1498 - CESTAT MUMBAI], it held that in such circumstances the request was not for Customs itself to revalidate the licences, but for issuance of a factual certificate to DGFT so that revalidation could be considered by the competent authority. [Paras 18, 19]

Customs was directed to issue the required certificate to DGFT within the time stipulated for enabling revalidation of the expired DFIAs.

Final Conclusion: The Tribunal held that actual user condition could not be enforced against imports under a transferable post-export DFIA on the strength of a mere public notice, and the appellant was entitled to the claimed exemption. It also affirmed its competence to examine vires and directed Customs to issue a certificate to DGFT for seeking revalidation of the expired DFIA licences.

Late fee for delayed presentation of supplementary Bills of Entry - Proper officer - Proviso to Section 46(3) -Waiver of late fee for sufficient cause - Non-mechanical Imposition - excess coal found after clearance of the same consignments, where the original Bills of Entry had been filed within time and the delay attributable to the appellant - Guidelines envisaged by the Board in the Circular No. 14/2017-Cus - HELD THAT: - The Tribunal found from the record that the appellant had filed the original Bills of Entry within the prescribed time and that the excess cargo subsequently found during draft survey formed part of the same consignments. In that situation, the delayed filing of supplementary Bills of Entry could not be treated as arising from any fault of the appellant. Reading Section 46(3) and its proviso, the Tribunal held that levy of late fee is not to be made mechanically and that the proper officer has authority to waive it in deserving cases. The Board guidelines and the departmental SOP were also noticed as requiring a judicious, non-routine approach to such levy. The Tribunal further held that the decision in Blueleaf Trading Company v. Commissioner of G.S.T. & C.Ex., Tiruchirapalli [2019 (5) TMI 672 - CESTAT CHENNAI] applied to the present facts, and also noted its own earlier order in Kai International Pvt Ltd Vs CC (Prev), Odisha [2026 (3) TMI 1545 - CESTAT KOLKATA] on an identical issue. Since the appellant's bona fides were not in doubt and the customs duty on the supplementary Bills of Entry was not disputed in quantification, the late fee was held unwarranted. [Paras 10, 12, 13, 14, 15]

The late fee was liable to be waived, and the impugned orders were set aside to that extent.

Final Conclusion: The Tribunal held that late fee on the supplementary Bills of Entry was not justified, since the delay did not arise from any fault of the appellant and the case warranted waiver under the statutory scheme. The impugned orders were set aside insofar as they upheld the late fee, and the appeals were allowed with consequential relief.

Entitlement to exemption from Social Welfare Surcharge under Notification No. 11/2018-Cus - Camera modules imported for use in cellular mobile phones - Strict interpretation of exemption notifications - Classification of goods -Extended period for non-payment of customs duty - Penalty for wrongful availment of exemption - Notification No. 11/2018-Cus amended vide notification number 37/2018-Cus - Basic customs duty (BCD) at the rate ‘NIL’

Social Welfare Surcharge exemption on camera modules for mobile phones - Digital still image video camera - Strict construction of exemption conditions - HELD THAT: - The Tribunal held that entry 30 of Notification No. 11/2018-Cus required satisfaction of two conditions: the goods had to fall under tariff item 85258020 and also answer the description of a digital still image video camera. Though classification under 85258020 was not in dispute, the imported goods, in their condition at the time of import, were only camera modules used as parts of mobile phones and did not possess the features of an independently functioning digital still image video camera, such as storage, output terminal, viewfinder or LCD. The Tribunal further held that similarity of function after assembly into a mobile phone could not equate the imported part with the exempted product itself, and that withdrawal of BCD exemption for camera modules under another notification did not establish that they were identical to the goods described in Notification No. 11/2018-Cus. Applying the rule of strict interpretation of exemption notifications, it held that the appellant failed to prove fulfilment of the descriptive condition. [Paras 12, 13, 14]

The claim to exemption from Social Welfare Surcharge was rejected and the demand relatable to such exemption was sustained.

Extended period for non-payment of customs duty - Penalty for wrongful availment of exemption - Confiscation for misdeclared exemption claim - HELD THAT: - The Tribunal held that the appellant, being a mobile phone manufacturer importing camera modules for use in manufacture, had availed an exemption meant only for digital still image video cameras and had also not paid BCD after the amendment withdrew that benefit until the department pointed it out. On that basis, it concluded that the conduct resulted in evasion of customs duty, making the proviso to section 28(4) invocable. The Tribunal therefore sustained the equal penalty and upheld the confiscability of the goods. [Paras 14]

The extended period was held applicable, and the penalty and confiscation were affirmed.

Final Conclusion: The Tribunal upheld the denial of exemption from Social Welfare Surcharge on camera modules for mobile phones, holding that the imported goods were not digital still image video cameras in their imported condition. The demand, invocation of the extended period, penalty, and confiscation were sustained, and the appeal was dismissed.

Maintainability of writ petition in view of the earlier writ petition having been withdrawn without liberty to file a fresh petition - Doctrine of finality of litigation - Wrong forum in writ jurisdiction - Territorial nexus of cause of action - maxim ‘interest reipublicae ut sit finis litium’ - violation of Foreign Exchange Management Act, 1999 and Allied Laws.

Fresh writ petition after withdrawal of earlier writ without liberty - A second writ petition on the same factual matrix and seeking the same reliefs, after the earlier writ petition had been dismissed as withdrawn without liberty to institute a fresh proceeding. - HELD THAT: - The Court found from the earlier writ petition and the order passed therein that the petitioners had already invoked the writ jurisdiction on the same facts and for the same reliefs, and that the earlier matter was dismissed at their request without any liberty to file a fresh petition. In such circumstances, institution of a fresh writ petition was held to offend the doctrine of finality of litigation embodied in the maxim referred to by the Supreme Court in Kangra Central Co-operative Bank Limited v. The Kangra Central Co-operative Bank Pensioners Welfare Association & Ors. [2025 (12) TMI 1854 - SUPREME COURT] The Court also noted that the affidavit in support of the present petition incorrectly stated that no earlier petition seeking the same or similar reliefs had been filed, thereby reinforcing the objection to maintainability. [Paras 7]

The writ petition was held not maintainable on account of the earlier withdrawal of an identical writ petition without liberty to file afresh.

Wrong forum in writ jurisdiction - Territorial nexus of cause of action - HELD THAT: - The Court held that the averments in the petition themselves showed that the relevant FIR had been registered at High Grounds Police Station, Bangalore, and that the interim relief sought was directed against proceedings pending before the NCLT, Bangalore. On that factual foundation, the Court accepted the objection that the Karnataka High Court was the proper forum and that the present writ petition had been filed before the wrong court. This constituted an independent ground to decline maintainability. [Paras 8]

The objection that the petition had been filed before the wrong forum was upheld.

Final Conclusion: The writ petition was dismissed as not maintainable. The Court held that a fresh petition seeking identical reliefs after withdrawal of the earlier writ without liberty could not be entertained, and that, in any event, the petition had been filed before the wrong forum.

Review jurisdiction - Alternative statutory remedy under FEMA - Error apparent on the face of the record - Delay in issuance of show cause notice - Reasonable period in penal proceedings - Violation of Foreign Exchange Management Act (FEMA) and Transfer or Issue of Security by a Person Resident Outside India Regulations, 2000 (TISPRO Regulations) - Preliminary objection regarding maintainability of the writ petitions

Delay in issuance of show cause notice - Reasonable period in penal proceedings - HELD THAT: - The Court held that the writ order had already considered the objection founded on delay and had rightly treated the reasonableness of such delay as a fact-dependent matter to be urged before the adjudicating authority. It further held that Commissioner of Income Tax and others Vs. Roca Bathroom Products Pvt. Ltd and others [2022 (6) TMI 848 - MADRAS HIGH COURT] which arose in the context of reassessment under the Income-tax Act, could not be extended as a general bar to initiation of proceedings under a penal provision. Likewise, State of Punjab and others vs. Bhatinda District Cooperative Milk Producers Union Ltd. [2007 (10) TMI 300 - SUPREME COURT] was treated as turning on the scheme of the statute there considered and not as laying down an inflexible rule of universal application. Relying on the principle noticed through Union of India and others Vs. Citi Bank [2022 (8) TMI 1107 - SUPREME COURT] and Government of India Vs. Citedal Fine Pharmaceuticals Madras and others [1989 (7) TMI 100 - SUPREME COURT], the Court reiterated that, in the absence of a prescribed limitation period, whether notice was issued within a reasonable period must depend on the facts of the individual case and is to be examined by the competent officer, subject to the appellate remedies under FEMA. [Paras 8, 10, 12]

No error apparent was shown in the writ order on the question of delay, and the plea was left open to be pursued before the adjudicating authority.

Alternative statutory remedy under FEMA - Challenge to show cause notice - Merits reserved for adjudication - HELD THAT: - The Court held that the contentions regarding the timing and applicability of the RBI notification, the status of the FDI policy as against rules or regulations under FEMA, the applicants' exit from the company, and the absence of a definition of "Group Company" all pertained to the merits and, in some instances, to disputed questions of fact. Since the writ petitions had been disposed of on the preliminary ground that an effective statutory hierarchy existed under FEMA, comprising adjudication, appeal to the Appellate Tribunal and further appeal to the High Court on a question of law, those matters were required to be raised before the adjudicating authority and not examined in review. The Court therefore found no basis to revisit its earlier conclusion that the remedy under the Act was efficacious. [Paras 15, 16, 18, 19, 20]

The merits of the alleged FEMA and TISPRO violations were left to the statutory authorities, and the review court declined to re-examine them.

Final Conclusion: The review applications were dismissed. The Court held that no error apparent was shown in the earlier writ order, that the objection of delay remained open for consideration by the adjudicating authority, and that all merits-based FEMA contentions must be pursued within the statutory appellate framework.

Challenged the legality of arrest under Section 19 - Judicial review of arrest under PMLA - Reason to believe based on material in possession - Necessity of arrest and personal liberty - Use of stale or recycled material for arrest - Statutory powers vested in the Enforcement Directorate under Section 50 - Whether the arrest itself satisfies the constitutional and statutory mandate of Section 19

Maintainability of writ against arrest under PMLA - Constitutional review of deprivation of liberty -HELD THAT: - The Court held that the petitions were confined to the legality of the arrests and did not seek adjudication on the merits of the ECIR or regular bail. A pending bail application could not bar constitutional review where the arrest itself was alleged to be contrary to the statutory safeguards governing deprivation of liberty. Relying on the law declared in Arnab Manoranjan Goswami v. State of Maharashtra [2020 (11) TMI 965 - SUPREME COURT], the Court held that constitutional courts remain the first line of defence against unlawful curtailment of personal liberty. [Paras 31, 32]

The writ petitions were held maintainable to examine the validity of the arrests.

Arrest under Section 19 PMLA - Fresh tangible material for arrest - Summons under Section 50 and cooperation in investigation - Stale material and recycled allegations - HELD THAT: - The Court found that the earlier ECIR and the searches conducted thereunder were founded on allegations arising from Crime No.722 of 2024, and that the objections filed by the Directorate itself disclosed that the same allegations and material continued to form the basis of the later action. The new ECIR merely repackaged the earlier foundation; it did not disclose any fresh tangible material emerging from the later search so as to justify arrest under Section 19. If the earlier material had not been considered sufficient to warrant arrest, the same material could not, by being transplanted into a new ECIR, suddenly generate a lawful basis for incarceration. The Court further held that arrest is not the first step in investigation under the PMLA. The Directorate had statutory power under Section 50 to summon the petitioners, yet no summons had been issued prior to arrest and no opportunity for cooperation had been afforded. In these circumstances, and applying the principles stated in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)], V. Senthil Balaji v. State [2023 (8) TMI 410 - SUPREME COURT], Pankaj Bansal v. Union of India [2023 (10) TMI 175 - SUPREME COURT] and Arvind Kejriwal v. Directorate of Enforcement [2024 (7) TMI 760 - SUPREME COURT], the Court concluded that the arrests were unsupported by fresh material capable of sustaining the statutory reason to believe that the petitioners were guilty, and therefore failed the mandate of Section 19. [Paras 30, 33, 34, 35, 37]

The arrests were declared contrary to law and the petitioners were directed to be set at liberty, while leaving the Directorate free to proceed in accordance with law, including by issuing summons under Section 50.

Final Conclusion: The Court held that the writ challenge to the arrests was maintainable and that the arrests under the PMLA were unlawful. As the Directorate had relied on substantially the same earlier material, without fresh incriminating material and without first invoking the summons mechanism, the petitioners were directed to be released forthwith.

Pre-cognizance hearing - Complaint proceedings under PMLA - Corporate accused - Mandatory procedural compliance - Corporate criminal liability - Vitiation of proceedings - Opportunity of being heard - HELD THAT: - It is trite and settled as laid down by the Hon'ble Supreme Court in Parvinder Singh v. Directorate of Enforcement [2026 (5) TMI 1236 - SUPREME COURT] that the first proviso to Section 223 (1) of the BNSS, which mandates that no cognizance of an offence shall be taken without giving the accused an opportunity of being heard, applies to the complaint proceedings under the PMLA and that unless the mandates of the said provision are complied with, the proceedings initiated would stand vitiated and therefore, liable to be set aside. Admittedly there has been no compliance with the first proviso to Section 223 (1) of the BNSS in the case at hand.

The Court held that the proviso to Section 223(1) of the BNSS mandates issuance of a pre-cognizance notice, and that this safeguard is not confined to natural persons but extends to corporate bodies. Since proceedings against a company under the PMLA may also affect its directors and persons responsible for its affairs, the statutory protection of a prior hearing must be afforded to the company as well as those connected with its management. Admittedly, no such opportunity had been given before cognizance and process were issued. The Court therefore held that non-compliance with the pre-cognizance hearing requirement, coupled with the failure to furnish copies as required, vitiated the impugned summons. [Paras 6, 7, 8]

The summons issued to the petitioners were set aside, leaving it open to the trial court to reconsider the matter after affording the petitioners an opportunity of hearing in accordance with law.

Final Conclusion: The Court held that pre-cognizance hearing under the first proviso to Section 223(1) of the BNSS and furnishing of copies under Section 227(3) were mandatory even for corporate accused in PMLA complaint proceedings. As those requirements had not been complied with, the impugned summons were set aside with liberty to proceed afresh in accordance with law.

Extended period of limitation - Suppression of facts with intent to evade tax - demands arising from the bank's recorded transactions - HELD THAT: - The Tribunal found that the assessee was a PSU/scheduled bank functioning under continuous governmental and RBI supervision, and that all relevant transactions stood recorded in its statutory books. There was no case of mischief, deliberate non-disclosure, or any material showing suppression with intent to evade tax. Some of the disputes also involved interpretation, and a mere difference of view on taxability could not justify recourse to the larger period. On these admitted facts, the essential requirement for invoking the proviso to Section 73(1) was absent. [Paras 12, 13]

The extended period was held to be wrongly invoked; consequently, the demands raised on that basis were set aside and the assessee's appeals were allowed on limitation alone.

Final Conclusion: The Tribunal held that the entire demand having been raised only by invoking the extended period, and such invocation being unsustainable, the impugned order could not survive. The assessee's appeals were allowed on limitation without examination of the remaining issues, and the Department's appeals were dismissed for the same reason.

Taxability of composite construction contracts after introduction of works contract service - Construction of individual houses and police quarters as non-taxable residential construction - Extended limitation in absence of wilful suppression - Renting of immovable property demand against non-owner - Construction of police quarters for the State housing corporation and construction of individual houses in Tsunami affected areas for implementing agencies and NGOs - Whether the appellants are liable to pay service tax for the period from 01.04.2007 to 31.03.2012, pursuant to the demands confirmed invoking the extended period of limitation, on the allegation that the appellant had provided “Commercial or Industrial Construction Service” as per Section 65 (25)(b) of the Finance Act, 1994 (Act) and “Construction of Complex service” as per Section 65(91a) ?

Construction of police quarters - Construction of individual houses in Tsunami affected areas - Residential complex service - HELD THAT: - In the decision rendered in the case of M/s. K.B. & Co. v The Commissioner of GST & Central Excise, Tirunelveli [2025 (1) TMI 1551 - CESTAT CHENNAI], whereby such construction of individual houses in the Tsunami affected areas by Tsunami District Implementation Unit, Pudukkotai (TDIU) were held to be not exigible to service tax.

The Tribunal held that the residential units constructed for the police housing corporation were covered by earlier Tribunal decisions on identical facts and, there being no material to show that those decisions had not attained finality, the same view had to be followed. As regards houses constructed in Tsunami affected areas, the work orders showed construction of individual residential houses. Such activity did not answer the statutory requirement of a residential complex comprising building or buildings having more than twelve residential units with common area and facilities. The services, therefore, fell outside the ambit of taxable construction of complex service. [Paras 15, 16, 17, 18]

The service tax demand relating to construction for the police housing corporation, Tsunami District Implementation Unit and Peoples Development Association was set aside.

Composite construction contracts - Commercial or industrial construction service - Proof of commercial use - Construction services rendered for hospitals and for the municipal corporation - HELD THAT: - As noticed and applied in the coordinate bench decision in M/s. Jaypee Enterprises [2025 (5) TMI 405 - CESTAT CHENNAI], therefore, when the law of the land, as laid down in the Apex Court decision in CCE v. Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT] holds the field, with the advent of works contract services with effect from 01-06-2007, demand of service tax on the construction services rendered by the appellants under the aforesaid category of “commercial or industrial construction” is wholly unsustainable. What gets covered under Section 65(25b) read with Section 65(105)(zzq), post 01-06-2007, would only be commercial or industrial construction service that are services simpliciter. It is only by virtue of notification No.20/2012-ST dated 20- 06-2012 that provisions of Section 65 ceased to apply from 01-07- 2012. Therefore, for the period upto 31-03-2012, the services rendered by both the appellants in these appeals, were clearly outside the ambit of taxable service as provided in Section 65(105) (zzq) under which the demand has been proposed and stood confirmed, given the law laid down in CCE v. Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT].

The show cause notice itself proceeded on the footing that goods were supplied as part of the execution and extended abatement, showing that the contracts were composite in nature and not pure service contracts. After the introduction of the taxable category of works contract service, such composite contracts could not be brought to tax under commercial or industrial construction service, which post 01.06.2007 covered only services simpliciter. Independently, in relation to the municipal construction, the Department produced no material from the approved plan or otherwise to establish that the structure was primarily for commerce, though that burden lay on the Revenue. The appellant's assertion that the work remained abandoned at basement level also remained uncontroverted. [Paras 19, 20]

The demand under commercial or industrial construction service in respect of hospital and municipal construction works was held unsustainable.

Extended period of limitation - Wilful suppression - Bona fide belief - HELD THAT: - In Uniworth Textiles v CCE, Nagpur [2013 (1) TMI 616 - SUPREME COURT], while considering the ingredients required to invoke the extended period of limitation, the Supreme Court has observed that it is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. The Apex Court referred to its decision in Union of India v. Ashok Kumar & Ors. [2005 (10) TMI 536 - SUPREME COURT], wherein it was held that “it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility.”

The Tribunal found no evidence in the show cause notice of any positive or deliberate act of wilful suppression or misstatement with intent to evade tax. The statement relied on by the Department merely showed that the appellant had been informed about possible taxability and did not amount to an inculpatory admission. In the circumstances, where the appellant claimed a bona fide understanding regarding non-taxability of works executed for Government bodies, welfare agencies and hospitals, mere non-payment could not justify invocation of the extended period. [Paras 22, 23, 24]

The invocation of the extended period was held bad and the demands were also time-barred.

Renting of immovable property service - Liability of non-owner - Limitation in retrospective levy disputes - demand of service tax on alleged renting of immovable property against the Managing Director was unsustainable. - HELD THAT: - The Tribunal accepted that the appellant's contention that the property belonged to his wife and had been let out by her to the company remained uncontroverted, and therefore the demand could not be sustained against him. It further held that, in any event, the levy on renting of immovable property had been the subject of interpretational dispute and retrospective amendment, making the demand barred by limitation. [Paras 25]

The renting of immovable property demand against the Managing Director was set aside on merits as well as on limitation.

Final Conclusion: The Tribunal allowed both appeals and held that the impugned service tax demands were unsustainable on the categories invoked, with the extended period also not available to the Department. The demand on alleged renting of immovable property against the Managing Director was likewise set aside.

CENVAT Credit -Denial of the Voluntary Compliance Encouragement Scheme - substantially false declaration - Failure to examine material records - service tax demand for flex printing, fixing and in-shop branding for the subsequent period - non-filing of periodical S.T.-3 Returns - Speaking order - Non-consideration of records - Remand for fresh adjudication - HELD THAT: - The Tribunal found that denial of the VCES benefit had proceeded on the premise of non-filing of ST-3 returns and disallowance of payments and CENVAT credit, even though the appellant had produced records relating to cenvatable invoices, actual tax liability and tax already payable. It further noted that the appellant's contention regarding the nature of printing of flex, fixing of flex and in-shop branding materials for the subsequent period had also not been examined by the adjudicating authority. Since these material issues and records had not been considered, the impugned order was held unsustainable and the matter required fresh decision by a speaking order after taking all records into account. [Paras 8, 9]

The impugned order was set aside and the matter was remanded to the adjudicating authority for decision afresh on merits after considering all records; all issues were kept open.

Final Conclusion: The Tribunal set aside the adjudication order and remanded the matter for fresh consideration on merits, holding that the adjudicating authority had not examined the appellant's records and contentions on both the VCES-related demand and the subsequent service tax demand. All issues were left open for reconsideration.

Classification of services connecting taxi drivers with customers through a controlled room and providing related training and coordination - Classifiable as "Support Services of Business or Commerce" under Section 65(104c) of the Finance Act, 1994 - HELD THAT: - The Tribunal held that the determinative test was the true nature of the activity rendered. The appellant was only connecting the driver to the customer when taxi requests were received telephonically, while the fare was paid directly by the customer to the driver. The further fact that the appellant imparted behavioural training to drivers to ensure customer satisfaction did not alter the character of the activity. The reasoning of the Commissioner (Appeals) that the appellant was providing infrastructural support or operating a call centre was rejected, since the service was not in the nature of a call centre but merely a dispatch and connectivity arrangement between customers and drivers. On that basis, the activity did not fall within support services of business or commerce as defined in Section 65(104c). [Paras 7]

The demand under support services of business or commerce was unsustainable, and the impugned order was set aside with consequential relief according to law.

Final Conclusion: The Tribunal allowed the appeal and held that the appellant's radio taxi coordination activity was not taxable under the category of support services of business or commerce. The impugned order confirming service tax, interest and penalty on that basis was therefore set aside.

Entitlement to abatement under Notification No. 1/2006-ST - Mandap Keeper Services and Outdoor Catering Services - Non-availment of Cenvat credit on input services used for the abated service - Extended period of limitation -Suppression and misdeclaration in ST-3 returns

Eligibility to abatement for Mandap Keeper Services and Outdoor Catering Services - absence of a specific allegation that credit was taken on the inputs or input services used for rendering those abated services - HELD THAT: - The Tribunal held that the show-cause notice and the impugned order proceeded only on an assumption drawn from the consolidated disclosure of credit in the ST-3 returns, without any specific allegation or finding that Cenvat credit had been taken on the inputs or input services used in providing Mandap Keeper Services and Outdoor Catering Services. It was also noticed that the tax liability on those services had been discharged in cash. Following the principle noticed in Lemon Tree Hotels Pvt. Ltd. [2018 (1) TMI 1215 - CESTAT CHENNAI] and the extract from Bharat Heavy Electrical Ltd. [2012 (4) TMI 197 - CESTAT, MUMBAI], the condition in Notification No. 1/2006-ST applies to the particular service or case where abatement is claimed, and not uniformly to all services provided by the assessee. On that reasoning, the assessee remained entitled to the abatement. [Paras 4, 5]

The demand founded on denial of abatement under Notification No. 1/2006-ST was held unsustainable and the assessee was found eligible for the abatement.

Extended period of limitation - Suppression and misdeclaration in ST-3 returns - HELD THAT: - The Tribunal recorded that the dispute related to the period from October 2006 to March 2008, whereas the show-cause notice was issued much later, and that the assessee had been regularly filing ST-3 returns showing the taxable services, the abatement claimed, and the Cenvat credit availed. It found no misdeclaration of facts in the returns and noted that the claim of abatement under Notification No. 1/2006-ST had been specifically disclosed. In those circumstances, suppression was not made out and the extended period was unavailable. [Paras 4]

The demand was also not sustainable on limitation, as invocation of the extended period was not justified.

Final Conclusion: The Tribunal allowed the appeal, holding that abatement under Notification No. 1/2006-ST could not be denied in the absence of any specific allegation that Cenvat credit had been taken on the inputs or input services used for the abated services. It also found that the extended period of limitation was not invocable since the relevant facts had been disclosed in the ST-3 returns.

Finality of unchallenged remand findings - Appropriation of service tax deposits against confirmed demand - Shortfall between the service tax collected and deposited - Extended period of limitation - Penalty for non-filing of ST-3 returns - Suppression of facts - Cum-tax value - Natural bundling of services - Exemption notification - Negative list

Finality of remand directions - Bar against reopening concluded findings - HELD THAT: - The Tribunal held that the prior order in appeal had conclusively upheld the demand relating to renting of immovable property services, upheld the liability in respect of transportation and loading and unloading services subject only to limited factual verification, left interest and penalty under Section 78 open for redetermination, and upheld the penalty for non-filing of returns. Since neither side had challenged that order, its findings and directions became binding in the remand proceedings and could not be reagitated in the subsequent appeal. The scope of the present appeal was therefore confined to the matters expressly left open by the remand order. [Paras 4]

Issues raised beyond the scope of the earlier remand directions were held to be not open for consideration.

Adjustment of tax payments through challans - Verification of service-wise tax deposits - HELD THAT: - On examining the challan details produced by the appellant, the Tribunal found that specific amounts stood deposited towards renting of immovable property service and clearing and forwarding service during 2016-17, and further amounts were deposited later through another challan. From the particulars available, the Tribunal accepted that these deposits had in fact been made towards the appellant's service tax liability under the two identified taxable services, and directed that the aggregate deposited amount be adjusted and appropriated against the demand already confirmed. [Paras 4]

The confirmed demand was maintained, but the deposited amount was ordered to be appropriated against it.

Suppression through non-payment and non-filing of returns - Extended limitation for collected but unpaid tax - Penalty under Section 78 - Late fee for non-filing of ST-3 returns - HELD THAT: - The Tribunal held that no penalty under Section 78 could survive on the amounts already deposited during 2016-17. However, for the remaining unpaid amount, penalty was justified because the appellant had not deposited the service tax by the due date and had not filed ST-3 returns for the relevant period. The Tribunal further relied on the service tax ledger produced by the appellant to find that service tax had been collected from service recipients but not fully deposited, which disclosed awareness of liability and supported the finding of suppression and intention to evade. On that factual basis, invocation of the extended period was upheld, interest under Section 75 on the delayed payment was sustained, and the penalty under Section 78 was reduced to the extent of the unpaid balance after appropriation. As the earlier appellate order had already upheld the penalty under Section 70 read with Rule 7C, that penalty also remained undisturbed. [Paras 4]

Extended limitation and interest were upheld; penalty under Section 78 was sustained only on the unpaid balance after adjustment of deposits; and the penalty for non-filing of ST-3 returns was upheld.

Final Conclusion: The appeal was partly allowed. While the confirmed service tax demand was maintained within the limits already concluded by the earlier remand order, the amounts proved to have been deposited were appropriated against that demand, the penalty under Section 78 was reduced to the unpaid balance, and interest as well as the penalty for non-filing of ST-3 returns were upheld.

Failure to consider reply to show cause notice - Non-speaking order - Principles of natural justice - Reasonable opportunities -modus operandi -clandestine removal - violation / contraventions of various provisions of Central Excise Act and Rules, apart from recovery of Central Excise duty on the Wet Grinders manufactured and cleared without payment of duty from their factory premises along with applicable interest and penalty - HELD THAT: - The Tribunal found that, despite the earlier remand directing consideration of the assessee's reply and passing of a speaking order, the adjudicating authority had not dealt with that reply in the de novo proceedings. The Commissioner (Appeals), while upholding the order, treated the reply as having been considered and rejected on merits, which the Tribunal held to be contrary to the observations in the earlier appellate order. On that basis, the impugned order was held to be a non-speaking order and one not passed in conformity with the principles of natural justice. Since the demand had been fastened on the basis of alleged clandestine removal, the matter required fresh consideration by the original authority after considering the assessee's reply and supporting statutory documents. [Paras 9, 10, 11]

The impugned order was set aside and the matter was remitted to the original authority for de novo adjudication by a speaking order after considering the assessee's reply and documentary material.

Final Conclusion: The Tribunal did not affirm the demand on merits. It held that the impugned appellate order suffered from failure to consider the assessee's reply and was a non-speaking order in breach of natural justice, and therefore remitted the matter for fresh adjudication.

Remission of duty on pre-removal handling loss of pig iron - Binding product-specific condonable loss norms - shortage of Pig Iron arising from inevitable handling and process losses before removal - Principles of natural justice - Expressions "natural causes" and "unavoidable accident" occurring in Rule 21 - HELD THAT: - The Hon'ble High Court of Rajasthan in Union of India v. Hindustan Zinc Ltd. [2004 (4) TMI 197 - CESTAT, BANGALORE], wherein, while affirming the grant of remission under Rule 21 in respect of handling and storage losses of lead and zinc concentrates (occasioned by de-bagging, shifting of concentrates, seepage of rain water, and storage and loading on trucks), the Hon'ble High Court held that the expressions "natural causes" and "unavoidable accident" occurring in Rule 21 are required to be given a reasonable and liberal meaning, lest the provision, in so far as it relates to the admissibility of remission on these two grounds, be rendered "altogether otiose". It was held that a more practical approach is called for, observing that even in the case of an "unavoidable accident" it can always be contended that the accident could have been avoided by recourse to one or more measures, and that, if such a stand were accepted, no loss or destruction would ever fall within either clause.

In Steel Authority of India Ltd. v. Commissioner of C. Ex., Mysore [2005 (10) TMI 181 - CESTAT, BANGALORE] and in Rashtriya Ispat Nigam Ltd. v. Commr. of Cus. & C. Ex., Visakhapatnam [2008 (9) TMI 663 - CESTAT, BANGALORE], the Tribunal, having regard to the guidelines on condonation of losses contained in C.B.E.C. Circular No. 52/79-CX dated 26.10.1979 and to the marginal nature of the shortage, held that demands founded on such stock-taking shortages of pig iron/steel could not be sustained.

The Tribunal found that the Board's product-specific instructions prescribed condonable loss of 2% for pig iron during annual stock-taking. On the figures recorded in the case, the shortage worked out to 0.55% of total production for the period in dispute and was therefore within the condonable limit. Relying on Tribunal decisions applying the same circular to shortages of pig iron and steel, the Tribunal held that the Commissioner erred in rejecting the remission claim in disregard of the binding Board instructions. The Tribunal also noted that the remission application had in fact been filed under Rule 21 of the Central Excise Rules, 2002, whereas the impugned order proceeded on the footing of Rule 223A of the erstwhile 1944 Rules, which were no longer in force during the relevant period. On that basis, the rejection of remission was held unsustainable. [Paras 6]

The assessee was held entitled to remission of duty on the pig iron shortage for the period 2001-02 to 2011-12, and the order rejecting remission was set aside.

Final Conclusion: The Tribunal held that the shortage of pig iron, being within the Board-prescribed condonable limit and claimed under Rule 21 of the Central Excise Rules, 2002, qualified for remission of duty. The order rejecting remission was set aside and the appeal was allowed with consequential relief.

Inclusion of freight and transportation charges - assessable value of goods sold on ex-works/FOR-works basis - Place of removal - valuation of excisable goods - Applicability of Rule 8 - Captive consumption valuation - Immovable property - Extended period of limitation - contracts showed transfer of title at the factory gate and separate consideration for transportation and erection/commissioning

Whether the cost of freight can be included in the value of assessable value for payment of excise duty, in case of Ex-works/ FOR works contracts, when separate invoices were raised for both supply of goods and transportation undertaken on behalf of the buyer​​​​​​​ ? - HELD THAT: - Hon’ble Supreme Court in the case of Commissioner of Customs and Central Excise, Nagpur v. Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT], wherein it was held that for the period prior to 14.05.2003, as per Section 4 of the Central Excise Act, there will be no extended place of removal and the factory premises or the warehouse (in the circumstances mentioned in the Section) can alone be the places of removal.

The Tribunal found from the contracts that title and risk in the manufactured equipment passed to the buyers at the factory gate and that transportation, erection and commissioning were separately contracted and separately charged. On that basis, the factory gate remained the place of removal. For the relevant period prior to and even after the amendment of section 4, the buyer's premises could not be treated as the place of removal in such ex-works supplies. Since the freight was incurred after clearance from the factory and was separately charged, Rule 5 did not permit its inclusion in the transaction value. [Paras 10, 11]

The demand based on inclusion of freight in the assessable value was held unsustainable and was set aside.

Captive consumption valuation - Turnkey projects - Boilers - Immovable property - HELD THAT: - The Tribunal held that Rule 8 applies only where goods are not sold but are used for consumption by the assessee or on his behalf in further manufacture. In the present case, the manufactured equipment had already been sold to the customers on Ex-works/FOR works basis at the factory gate, and only thereafter was made available at site for erection and commissioning under separate contractual arrangements. There was therefore no captive consumption of the same goods by the appellant.

In the case of M/s. Thermax Ltd. v. Commissioner of CGST & CE, Pune – I [2022 (12) TMI 1047 - CESTAT MUMBAI], which was affirmed by the Hon’ble Supreme Court in [2026 (5) TMI 1586 - SC ORDER], wherein it was held that boilers which are erected at the customer’s site basis the goods manufactured and cleared by the assessee including the bought out items, is an immovable property, which is not excisable. Thus, duty is correctly paid on the individual components of boiler manufactured and cleared by the Appellant.

In the case of M/s. Cheema Boilers Ltd. v. Commissioner of Central Excise & ST, Chandigarh [2018 (4) TMI 1157 - CESTAT CHANDIGARH], wherein in a case of composite contract entered for erection, commissioning and installation of boilers at site, the Department attempted to levy excise duty by including the value of bought out items in the assessable of the parts cleared by the factory. In this case, the excise duty demand was set aside by observing that the boilers emerge at project site as an immovable property, which is not excisable goods.

The Tribunal further held that the final boiler system erected at site in the course of the turnkey project, involving substantial civil work and integration, acquired the character of immovable property and was not excisable. Consequently, excise duty was payable only on the manufactured components cleared from the factory on transaction value, and not on any value relatable to bought-out items, erection or commissioning by resort to Rule 8. [Paras 11]

The valuation adopted under Rule 8 and the consequential duty demand on that basis were held unsustainable and were set aside.

Extended period of limitation - Overlapping show cause notices - Interpretational dispute - Interest and penalty - HELD THAT: - The Tribunal held that once the first show cause notice invoking the extended period had been issued, the material facts stood within the department's knowledge, making invocation of the extended period in the subsequent notice on identical issues and overlapping periods legally untenable. It further held that non-disclosure of freight in returns could not justify extended limitation when such disclosure was not required in the statutory returns, and that the dispute was interpretational without mala fide intent. Since the principal demands failed, the related interest and penalty could not survive. [Paras 12]

The demands founded on extended limitation were held unsustainable, and the associated interest and penalty were also set aside.

Final Conclusion: The Tribunal set aside the impugned order in entirety. It held that freight separately charged after ex-works clearance could not be added to assessable value, Rule 8 had no application to goods already sold and later erected into an immovable boiler system, and the demands were also barred by extended limitation; interest and penalty consequently did not survive.

Criminal negligence in bus accident - Act of moving the bus while passengers were alighting - Driver acting on conductor's signal - Rash and negligent driving - Causing death by negligence - Rash and negligent driving - Recklessness - Res ipsa loquitur - Benefit of doubt - Conviction and sentence under Sections 279 and 304A IPC - HELD THAT: - “Recklessness” is perhaps a higher degree of “carelessness”. One acts reckless when one conducts himself regardless or heedless of the possible harmful consequences of one’s act. The recklessness covers a whole range of state of mind from failing to give any thought to what is to be acted upon. Recklessness presupposes that no thought was given in the matter by the doer before he did the act.

The Court treated the conductor's evidence as determinative. That evidence showed that the conductor signalled the bus to stop, the bus was stopped, the passengers got down, and only thereafter the conductor asked the driver to move the bus. In the ordinary functioning of a passenger bus, the driver is entitled to regulate stoppage and movement on the conductor's signal and is not expected to turn back and personally verify whether every passenger has fully alighted. In such circumstances, the driver's act of moving the bus on the conductor's indication could not, by itself, be characterised as rash, reckless, or negligent. Applying the principles stated in Ravi Kapur vs. State of Rajasthan [2012 (8) TMI 1250 - SUPREME COURT] and State of Karnataka vs. Satish [1996 (3) TMI 581 - SUPREME COURT] the Court held that criminal negligence under Sections 279 and 304A IPC must be established from the attendant facts and cannot be presumed.

The deceased might have slipped while alighting from the bus because of her own movement being less than careful at the time of getting down. The appellant-driver acted as per the conductor’s indicative instructions in moving the bus. The appellant deserves to be exonerated from the charge of acting negligently.

The evidence did not establish the requisite culpable negligence with definitiveness, and the possibility that the deceased slipped while alighting could not be ruled out. [Paras 5, 6, 7, 8]

The conviction and sentence under Sections 279 and 304A IPC were held unsustainable, and the appellant was entitled to acquittal.

Final Conclusion: The Court held that the evidence did not prove rash or criminally negligent driving on the part of the appellant, who had acted on the conductor's signal in moving the bus. The conviction and sentence were set aside and the appellant was acquitted of the offences under Sections 279 and 304A IPC.

Dishonour of cheque - Prosecution under Section 138 - Joint bank account holder - Signatory to dishonoured cheque - Drawer of cheque - Vicarious liability confined to companies and firms - Quashing of summoning order - Abuse of process of court -HELD THAT: - The Court held that the offence under Section 138 is attracted only against the drawer of the cheque, namely the person who has drawn and signed the cheque on an account maintained by that person. Relying on the decisions of the Supreme Court in Jugesh Sehgal [2009 (7) TMI 1143 - SUPREME COURT], Aparna A. Shah [2013 (7) TMI 718 - SUPREME COURT], Mainuddin Abdul Sattar Shaikh [2015 (8) TMI 907 - SUPREME COURT], Alka Khandu Avhad [2021 (3) TMI 381 - SUPREME COURT] and Bijoy Kumar Moni [2024 (12) TMI 1231 - SUPREME COURT], the Court held that a joint account holder cannot be prosecuted unless that person is also a signatory to the dishonoured cheque. It further held that Section 141, which creates vicarious liability, applies only to companies and similar entities and not to private individuals. Since the cheques were admittedly signed only by the co-accused and no specific role was attributed to the applicant apart from an assertion of joint and several liability, no prima facie case under Section 138 was made out against her. [Paras 19, 20, 21]

The summoning order and complaint proceedings were quashed insofar as they related to the applicant, while the proceedings against the co-accused signatory were left to continue in accordance with law.

Final Conclusion: The application was allowed. The complaint and summoning order under Section 138 of the Negotiable Instruments Act were quashed only against the applicant, who was merely a joint account holder and not a signatory to the dishonoured cheques, while the proceedings against the co-accused signatory were permitted to continue.