TaxTMI Updates e-Newsletter
Jul 02,2026

Claim for refund of transitional input tax credit - Bar against cash refund after carry forward of pre-GST credit - Distinction between utilization and refund of input tax credit - Violation of Rule 92 -Re-credit of rejected refund to electronic credit ledger - transitional input tax credit carried forward from the VAT regime and reflected in the electronic credit ledger - Statutory scheme under Sections 140, 142(3), 49(4) and 54(3) - Entitlement to seek re-credit of the rejected amount to the electronic credit ledger - Double Benefit - Natural Justice

Transitional VAT credit - Inverted duty structure refund - Statutory bar under second proviso to section 142(3) - Utilization versus cash refund - HELD THAT: - The Court held that the transitional provisions create a clear distinction between carry forward for utilization and cash refund of pre-GST credit. Section 142(3) preserves refund claims arising under the existing law, but its second proviso expressly bars refund where the same balance has already been carried forward under the GST enactments. On a combined reading of sections 49, 54, 140 and 142, the Court held that credit transitioned from the erstwhile VAT regime may be utilized for discharge of output tax after entry in the electronic credit ledger, but does not thereby become refundable under section 54(3). Refund under section 54(3) is confined to unutilized input tax credit under the GST regime in the situations specified there, and transitional credit cannot be converted into cash refund after the assessee has elected to carry it forward.

As clarified in the Circular No. 37/11/2018-GST dated 15.03.2018 clarifying the refund issues on export, where the claim of refund of CENVAT Credit (VAT) is fully or partially rejected, the amount so rejected shall lapse and, therefore, will not be transitioned into the GST and no refund of the amount of CENVAT credit (VAT) is granted in case, the said amount has been transitioned under the GST. Thus, the intention of the Department of Revenue is explicit that once the credit of erstwhile regime is transitioned under the GST, no refund of such credit is granted or allowed.

The earlier decisions relied on by the petitioner were held inapplicable as the question arising from the second proviso to section 142(3) had not been examined there. [Paras 64, 65, 66, 67, 69]

The claim for refund of the carried-forward transitional VAT credit was rejected as barred by the second proviso to section 142(3), though the credit remained available only for utilization in accordance with law.

Opportunity of hearing in refund rejection - Futility of remand on pure question of law - HELD THAT: - The Court recorded that no opportunity of hearing had been granted before rejection of the transitional credit refund claim. Even so, it declined to set aside the action on that ground because the controversy before it was a pure legal issue concerning the statutory scheme of refund and utilization of transitional credit. Since the petitioner had fully advanced its case through pleadings and submissions and the respondents had clearly disclosed the basis of refusal, remand only for observance of hearing would serve no useful purpose. [Paras 71]

No remand was ordered on the ground of breach of hearing, as reconsideration by the authority was held to be an empty formality.

Re-credit of rejected refund - Electronic credit ledger - Form GST PMT-03 - HELD THAT: - The Court held that, under rule 93, the authorities ought to have re-credited the rejected portion of the refund claim to the electronic credit ledger through an order in Form GST PMT-03. In view of the statement made by the revenue that re-credit would be processed if the petitioner applied for it, the Court treated that grievance as surviving only to the extent of directing examination of such application. As the department had also expressed doubt regarding supporting documents, the Court directed that re-credit be considered after verification of the relevant facts and records in accordance with the statutory requirements. [Paras 72, 73, 74]

The petitioner was held entitled to seek re-credit of the rejected amount to the electronic credit ledger, and the authorities were directed to process the application and pass an appropriate order, if due, in accordance with law.

Final Conclusion: The writ petition was partly allowed. The Court held that VAT credit once carried forward into GST through TRAN-1 could not be refunded in cash under section 54(3), but the petitioner was left entitled to apply for re-credit of the rejected amount in the electronic credit ledger for consideration under rule 93.

Service of notice and order through common GST portal - Maintainability of writ petition against GST demand after expiry of appellate limitation - Delay and laches - petitioner claimed lack of physical service and knowledge - HELD THAT: - The Court held that Section 169 recognises service by any one of the prescribed modes, and making the notice or order available on the common portal is sufficient statutory compliance. In view of the petitioner's own pleading that the notice had been uploaded on the GST portal, the contention that the authority was bound to adopt additional physical or postal modes was rejected as contrary to the statutory scheme and the view taken in M/s. Rahul Spares Pvt. Ltd. [2025 (4) TMI 1586 - ORISSA HIGH COURT]. The Court further found that the writ petition contained no material particulars showing the actual date of knowledge and that the petitioner had itself admitted lapse of the period for filing appeal under Section 107. Since the question of knowledge and non-receipt required factual proof before the statutory forum, and the record in the impugned summary order showed prior participation by the petitioner in the proceeding, the plea of complete ignorance of the adjudication was not accepted. In these circumstances, the petitioner failed to justify bypassing the statutory appeal or to show prompt approach to the writ court within the permissible period contemplated by the law explained in Orissa Mineral Development Company Ltd. . [Paras 5, 6, 7, 8, 9]

The challenge to the GST demand orders was rejected and the writ petition was dismissed as lacking merit, the petitioner having failed to establish invalid service or grounds to bypass the statutory appellate remedy.

Final Conclusion: The Court held that upload of the notice and order on the common GST portal constituted valid service and that no case was made out for invoking writ jurisdiction after expiry of the statutory appellate period. The writ petition was therefore dismissed.

Withholding of refund under Section 54(11) - Refund arising from appellate order - Pending appeal as condition precedent - Conscious application of mind - Recording of reasons in Form GST RFD-07 - Refusal to consider the refund application on the ground that the period for filing appeal by the State had not expired - HELD THAT: - The analysis of provision contained in Section 54(11) of the GST Act empowering the authority to exercise power to withhold refund is strictly circumscribed and the reasons assigned in the impugned order fail to satisfy the specific eventualities mandated by the said provision. Unless there has already been proceeding pending, invocation of said provision smacks arbitrariness and tainted with irrational application of mind.

Merely because there was scope for the CT & GST Organisation to file appeal before the GST Appellate Tribunal, the Deputy Commissioner of CT & GST could not have sit over the appellate order wherefrom the refund had arisen. This Court finds the reason ascribed in the impugned order is not just and proper nor can the reason be countenanced in law. An action may be contemplated, but till such appeal is filed or the proceeding is shown to have been pending, it cannot be said that the authority concerned has the power to exercise invoking sub-section (11) of Section 54 of the GST Act read with Rule 92(2) of the GST Rules. Thus, withholding of refund in present fact-situation, in the considered view of this Court, is untenable, unwarranted and uncalled for. On that finding, the matter was remitted for fresh consideration after hearing the petitioner and by passing a reasoned order in accordance with law. [Paras 6, 7, 8, 9]

The impugned order refusing to consider the refund application was set aside, and the refund claim was remitted for fresh consideration in accordance with Section 54(11), Rule 92(2), and the petitioner's reply.

Final Conclusion: The High Court held that refund could not be withheld merely because the State still had time to file an appeal, when no appeal or other proceeding was pending on the date of the impugned order and the statutory conditions for withholding refund had not been met. The order refusing to consider the refund application was set aside and the matter was remitted for fresh decision after hearing the petitioner and passing a reasoned order.

Writ maintainability against appealable GST orders - Alternate statutory remedy before functional GST Appellate Tribunal - Non -compliance with theingredient specified in Section 74 - HELD THAT: - The Court held that though a writ petition can be entertained against an appealable order when the statutory appellate forum is not functional, such recourse is justified only to prevent the aggrieved person from being left remediless. Once the appellate forum provided by the statute has become functional and the period for filing appeal has also been extended, the dispute should be adjudicated by that forum. The Court further observed that where the statute prescribes conditions for filing appeal, the writ court should ensure compliance with those conditions and should not permit a party to bypass the statutory requirement merely because writ jurisdiction is available. On that basis, the petitioner was relegated to the remedy of appeal before the GSTAT subject to compliance with the statutory pre-deposit and the notified filing timeline. [Paras 4, 5, 6]

The writ petition was disposed of by directing the petitioner to file appeal before the GSTAT within the notified timeline after complying with the statutory pre-deposit, and no opinion was expressed on the merits of the first appellate order.

Final Conclusion: The Court declined to examine the merits of the impugned GST orders in writ jurisdiction and directed the petitioner to pursue the statutory appeal before the GSTAT in accordance with Section 112 and the notified filing schedule.

Input tax credit for belated GSTR-3B returns - Benefit of curative amendment under Section 16(5) - Retrospective amendment - Entitlement to claim the benefit of the inserted Section 16(5) in relation to input tax credit denied for returns filed beyond the original due date but before 30.11.2021. - HELD THAT: - The Court held that the amendment inserting Section 16(5) was curative in nature and operated retrospectively from 01.07.2017. It found that, if the relevant returns had been filed by 30.11.2021, the input tax credit for the period July, 2018 to March 2020 stood regularised and the assessee could not be denied the benefit of the amendment. Applying the ratio of Hiranmoy Dutta vs. State of West Bengal [2025 (3) TMI 487 - CALCUTTA HIGH COURT], the Court found prima facie warrant for interference and directed re-adjudication after verification of the dates of filing of GSTR-3B returns. [Paras 13, 14, 15, 16, 17]

The impugned order was quashed, and the earlier order in original was directed to be re-adjudicated in the light of Section 16(5) after verifying the date of filing of GSTR-3B returns.

Final Conclusion: The Court held that the curative and retrospective insertion of Section 16(5) entitled the assessee to consideration of regularisation of input tax credit where the relevant returns were filed by 30.11.2021. On that basis, the impugned order was set aside and the matter was remitted for fresh adjudication after verification of the filing dates, with protection against coercive steps till re-adjudication.

Claim for payment of GST at an enhanced rate - verification and a reasoned decision - HELD THAT:- The writ petition was disposed of in terms of the earlier order referred to by the Court, directing the concerned authority to verify the petitioner's claim regarding payment of GST at 18% instead of 12% and to take a reasoned decision within one month.

Effective service of show cause notice - denial of personal hearing -Audi alteram partem - Writ maintainability despite alternate statutory remedy - reasonable opportunity - HELD THAT: - The Court held that mere display of the show cause notice on the portal did not amount to effective service when it was not uploaded in the prescribed "View Notices and Orders" window and a copy of the notice was also not served on the petitioner. In those circumstances, the petitioner was deprived of a reasonable opportunity to respond to the notice. The Court further recorded, on the respondents' own instructions, that no personal hearing had been granted before passing the adjudication order. Such denial of notice and hearing was found to be contrary to the principles of natural justice and to vitiate the consequential order.

The Coordinate Bench of this Court in T.S. Lines India Pvt. Ltd. [2024 (2) TMI 128 - BOMBAY HIGH COURT]where the Court was confronted with a similar fact situation as in the given case. This Court held that no mistake can be attributed to the Petitioner for not having noticed the Notice and/or the Order on the portal. Moreover, the Petitioner was not heard pursuant to the issuance of the show cause notice and had no opportunity to file its reply to the same. The proceedings were accordingly remanded to the Respondents for passing a fresh order after granting an opportunity of hearing to the Petitioner.

Since the defect went to procedural fairness itself, the Court declined to relegate the petitioner to the alternate appellate remedy and exercised jurisdiction under Article 226, leaving the merits open and directing fresh adjudication after opportunity to reply and to be heard. [Paras 20, 21, 22, 23, 24]

The impugned show cause notice and consequential order were quashed, and the proceedings were remanded for fresh decision after giving the petitioner an opportunity to file a reply and a personal hearing.

Final Conclusion: The Court held that the impugned proceedings stood vitiated for want of effective service of the show cause notice and absence of personal hearing. On that ground, it entertained the writ petition despite the appellate remedy, set aside the notice and order, and remanded the matter for fresh adjudication in accordance with law.

Cancellation of GST registration - Opportunity of hearing under proviso to section 29(2) - Stale show cause notice - show cause notice issued about 18 months earlier, without any intervening action - HELD THAT: - The Court found that although a show cause notice had been issued earlier for non-filing of returns, no steps were taken thereafter for a prolonged period, and the registration was suddenly cancelled much later on the basis of that notice alone. In the Court's view, such notice had become redundant by reason of inaction, particularly when intervening events requiring filing of returns had occurred during the period. Cancellation founded in that manner could not be treated as compliance with the requirement of giving an opportunity of hearing under the proviso to section 29(2), and was also unfair and unjust. [Paras 7, 8, 9, 10]

The cancellation order was set aside, with liberty to the Proper Officer to initiate fresh action under section 29, if materials so warrant, and without waiving the petitioner's obligation to comply with the Act.

Final Conclusion: The High Court quashed the order cancelling the petitioner's GST registration, holding that reliance on an old show cause notice after prolonged inaction did not satisfy the statutory requirement under the proviso to section 29(2). Fresh action in accordance with law was left open.

Proceedings against a deceased person - Validity of GST demand and recovery in the name of a dead person - Recovery action founded on void proceedings - Validity of the show-cause notice, adjudication order and consequential recovery action issued in the name of the deceased proprietor after his death - HELD THAT: - The Court held that the impugned show-cause notice and the order under the GST enactment had been issued and passed against a dead person. Once the foundational proceedings themselves were taken in the name of the deceased proprietor, they could not be sustained. On that basis, the consequential recovery measures, including freezing of the bank account, were also liable to fail. The Court at the same time clarified that the quashing of those proceedings would not preclude the respondents from initiating appropriate proceedings against the legal heir, if otherwise permissible in law. [Paras 5, 6]

The notice, order and consequential recovery action were quashed, with liberty to the respondents to proceed afresh against the petitioner if permissible under law.

Final Conclusion: The writ petition was allowed on the ground that the GST notice, adjudication order and consequential recovery steps had been taken in the name of a deceased person and were therefore unsustainable. Liberty was reserved to the respondents to initiate appropriate proceedings against the petitioner, if permissible in law.

Alternative statutory remedy - Condonation of limitation for statutory appeal in peculiar facts - HELD THAT: - The Court did not adjudicate the merits of the challenge to the show-cause notices or the adjudication orders, including the contention based on reverse charge liability for security services or the plea founded on Section 73(7). It held that those contentions required factual adjudication by the appellate authority. Having regard to the peculiar facts that the petitioner had not availed the statutory appeal and that the challenge raised issues requiring examination on facts, the Court considered it expedient to permit the petitioner to file the appeal within a specified period and directed that, if so filed, it should be entertained without objection on limitation. The order was expressly confined to the peculiar factual matrix and was not to be treated as a precedent. [Paras 7, 8, 9]

The petitioner was permitted to file the statutory appeal within three weeks, and if filed within that time the appellate authority was directed to consider it without raising limitation.

Final Conclusion: The Court declined to examine the merits of the tax demand in writ jurisdiction and relegated the petitioner to the statutory appellate remedy. In the peculiar facts of the case, it permitted the appeal to be filed within three weeks and directed that, if so filed, it be considered without objection on limitation, clarifying that the order would not operate as a precedent.

Personal hearing under Section 75(4) - Breach of natural justice - Non-compliance with the mandatory requirement under Section 75(4) - No date of personal hearing was fixed in the show-cause notice and no hearing was granted before passing the order - HELD THAT: - The Court found it undisputed that the show-cause notice did not fix any date for personal hearing and that no such opportunity was afforded to the petitioner at any stage before the order was passed. Since grant of personal hearing is a mandatory requirement under Section 75(4), non-compliance amounted to violation of principles of natural justice and rendered the order unsustainable. On that basis, the objection regarding slight delay in approaching the Court was overruled. [Paras 4, 5, 6]

The impugned order was quashed, with liberty to the authority to pass a fresh order after providing opportunity of hearing strictly in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the order passed under Section 73, as absence of any personal hearing in terms of Section 75(4) constituted violation of natural justice. Liberty was reserved to the competent authority to decide the matter afresh after granting hearing.

Ex parte adjudication - No Opportunity of hearing - Seeking Additional opportunity to respond - mismatch between GSTR-3B and GSTR-2A returns - Principles of Natural Justice - HELD THAT: - The Court accepted the explanation that the petitioner was prevented from participating in the proceedings because of personal and medical circumstances, and found the cause shown for non-response to be bona fide. It further held that the petitioner must be afforded an opportunity to explain the mismatch in the returns and produce supporting material as permissible under the relevant circular. On that basis, the ex parte order could not be sustained.

The adjudication order was quashed and the proceedings were restored to the assessing authority with liberty to the petitioner to file its response and additional documents.

Final Conclusion: The writ petition was allowed. The ex parte adjudication order was quashed and the matter was restored to the first respondent to enable the petitioner to file its response and supporting documents.

Interim release of confiscated goods and conveyance pending revisional proceedings - Exercise of writ jurisdiction where suo motu revision is yet to be commenced - mismatch in the goods intercepted and the value and penalty determined in the confiscation proceedings - HELD THAT: - The Court found that the real controversy concerned the alleged mismatch between the invoiced quantity and the quantity found on interception, and the valuation of the goods and conveyance adopted for confiscation. As that controversy was yet to be examined in the proposed revisional proceedings, and such proceedings had not commenced only because the writ petition was pending, the Court declined to determine the merits at that stage. Having regard to the nature of the goods and the circumstances of the case, it held that a just arrangement could be made by directing release on conditions that sufficiently protected the Revenue, namely deposit of part of the differential liability and security for the balance, coupled with a direction for expeditious initiation and completion of revision.

The goods and conveyance were ordered to be released on deposit of 25% of the difference amount and furnishing bank guarantee for the remaining 75%, with a further direction to the revisional authority to commence and conclude the revision expeditiously.

Final Conclusion: The writ petition was allowed to the limited extent of ordering release of the goods and conveyance on protective conditions, while leaving the dispute on confiscation, mismatch in quantity and valuation to be decided in the proposed revisional proceedings.

Contractual reimbursement of GST under works contract - Statutory primacy of GST levy and recovery - Judicial directions contrary to GST return, interest, penalty and limitation provisions - Contractual allocation of tax burden

GST reimbursement in post-GST works contracts - Employer's contractual liability - HELD THAT: - The Court held that the claim for reimbursement of the incremental tax burden on account of GST is a matter arising out of the contract between the contractor and the employer. Such contractual arrangement does not alter the statutory scheme governing levy, assessment, recovery and enforcement of GST. Since the liability to pay GST has to be determined strictly under the relevant GST enactments, any direction to reimburse tax could only be construed as one addressed to the employer under the contract, and not to the tax authorities. [Paras 18, 20, 21]

The reimbursement direction was confined to the concerned employer, and the impugned order was set aside to the extent it fastened any such obligation on the tax authorities or the State.

Revised GST returns - Waiver of statutory interest and penalty - Relaxation of limitation under GST law - HELD THAT: - The Court held that the statutory framework governing GST cannot be modified by contractual disputes between the contractor and the employer. Consequently, no direction could be issued enabling filing of revised returns in a manner contrary to the statute, nor could plenary directions be made for waiver of statutory interest and penalty or for relaxation of limitation prescribed for returns or revised returns. [Paras 18, 19, 21]

The impugned order was set aside insofar as it incorporated directions contrary to the statutory provisions relating to returns, interest, penalty and limitation under the GST enactments.

Final Conclusion: The appeal was disposed of by limiting the reimbursement direction to the employer under the works contract and by setting aside the impugned order insofar as it operated against the tax authorities or granted relief contrary to the statutory GST regime regarding returns, interest, penalty and limitation.

Enforcement of the adjudication demand -Failure to consider response to Form GST DRC-01A - Opportunity of hearing in input tax credit demand- Should this Court interfere with these Orders on the ground of lack of opportunity ? - HELD THAT: - The Court found that the assessee had responded to the intimation in Form GST DRC-01A and had produced documents in support of the purchases and the input tax credit claim. The subsequent show cause notice was issued long thereafter, but the adjudicating authority neither referred to that earlier response nor considered the material already furnished, and yet concluded that no response had been filed and presumed clandestine transactions based on fabricated documents. In these peculiar facts, the Court held that enforcement of the demand should be deferred and the assessee should be given an opportunity to place the original invoices, e-way bills and bank statements before the assessing authority, which must reconsider the matter and dissolve the order if the transactions are genuine, failing which it may proceed in terms of the impugned order. [Paras 6, 7]

The demand was not allowed to be enforced straightaway; the assessee was granted a further opportunity before the assessing authority, with liberty to the authority to proceed under the impugned order if that opportunity is not availed.

Final Conclusion: The writ petition was disposed of by deferring enforcement of the adjudication order and directing that the assessee be given an opportunity to produce the original supporting documents before the assessing authority. If the assessee fails to avail that opportunity, the respondents may act on the impugned demand, subject to the assessee's appellate remedies.

Additions u/s 68 read with Section 115BB - assessment framed on basis of investigation report without independent enquiry - onus u/s 68 of the Income tax Act - appellate review of factual findings by the ITAT as last fact finding authority - As decided by HC [2021 (1) TMI 1008 - DELHI HIGH COURT] Revenue's appeals against the ITAT order deleting additions u/s 68 read with Section 115BBE (in relation to alleged bogus LTCG from penny stocks) are dismissed; the ITAT's factual conclusions stand and no substantial question of law arises.

HELD THAT:- The present Interlocutory Application has been filed for withdrawal of SLP which stands allowed and petitioner is permitted to withdraw the SLP.

Denial of exemption u/s 12A - delay in filing Form 10B audit reports - genuine hardship -Arbitrary exercise of discretion under section 119(2)(b)

Rejection of condonation of delay in filing audit reports in Form 10B for claiming exemption under section 12A for the relevant assessment years - HELD THAT: - The Court held that exemption ought not to be denied merely because the audit report was furnished belatedly, when such report could be produced at a later stage before the competent authority on showing sufficient cause. It accepted the petitioner's explanation that the delay occurred during the Covid-19 period and treated the stated hardship as genuine, particularly when there was no effective dispute to that explanation.

Applying the principle that substantial justice must prevail over technical considerations, the Court found that the Commissioner had failed to consider the application for condonation in its proper perspective and had exercised discretion under section 119(2)(b) arbitrarily instead of pragmatically. [Paras 6]

The impugned rejection order was set aside, and the matter was remitted for consideration of the Form 10B audit reports as if filed within time, with consequential relief to be granted.

Final Conclusion: The Court held that the delay in filing Form 10B for the assessment years 2020-21 and 2021-22 arose from genuine hardship and that denial of section 12A exemption on that technical ground was unjustified. The rejection of condonation was therefore set aside and the authority was directed to treat the audit reports as filed within time and extend consequential relief.

Tax deduction at source on voluntary retirement compensation - Relief for profits in lieu of salary - Form 10E and employer's obligation u/s 192(2A)

Whether employer could be directed to refund tax deducted at source from payments made under the settlement towards voluntary retirement, loss of salary and wage revision arrears, when relief under the Act required the employees to furnish the prescribed particulars in Form 10E? - HELD THAT: - The Court held that the amounts paid under the settlement towards voluntary retirement and other termination-related payments had to be examined in the light of section 10(10C), section 89 and section 17(3), which operate together in cases of voluntary retirement, arrears, advance salary and profits in lieu of salary. Rule 21A prescribes Form 10E for claiming such relief.

Under section 192(2A), the employer is required to compute and give effect to relief only on the basis of particulars furnished by the employee. In the absence of such application and particulars, the employer was not bound to grant the relief on its own while deducting tax at source. Since the employer had acted in accordance with the statutory mandate in deducting and remitting tax, no fault could be found with it; the proper course was for the employees to file returns and obtain processing and refund in accordance with law. [Paras 32, 33, 34, 35, 36]

The prayer for a direction to compel refund by the employer was not granted; instead, the employees were directed to file returns, and the tax authorities were directed to process them and issue the admissible refund.

Final Conclusion: The writ petition was disposed of by holding that the employer had acted in accordance with law in deducting and remitting tax at source, and that any admissible relief or refund had to be worked out by the employees through returns under the Act. The employees were accordingly directed to file returns, and the tax authority was directed to process them and grant the appropriate refund.

Interest on refund of seized cash u/s 132B - No assessment after search seizure - Compensatory interest in writ jurisdiction

HELD THAT: - The Court held that Section 132B(4) mandates payment of simple interest at one-half per cent per month on refundable seized money, commencing from the date immediately following expiry of 120 days from execution of the last authorisation. The statutory provision speaks of interest running up to completion of assessment, reassessment or recomputation; however, where no assessment at all was undertaken, the Revenue could not rely on its own inaction to contend that no interest was payable.

The Court further held that, though interest beyond the statutory period may not be awardable at the statutory rate under that provision, the extraordinary jurisdiction under Article 226 could be invoked to grant compensatory relief where, despite seizure, no assessment was made and refund was unduly delayed. The pendency of a vigilance reference for fixing responsibility on officials was held not to justify withholding or further delaying payment of interest to the assessee. [Paras 14, 15, 16, 17, 18]

The respondents were directed to pay interest at one-half per cent per month, or 6% per annum, from expiry of 120 days from 01.05.2019 until the date of refund, with a further direction that if payment was not made within the stipulated time, the respondents would be liable to pay interest at 12% per annum.

Final Conclusion: The petition was allowed to the extent of directing payment of interest on the refunded seized cash at the statutory rate of 6% per annum from expiry of 120 days from the last search authorisation until the date of refund. The Court further held that the Revenue could not avoid liability to pay interest merely because no assessment had been completed or because vigilance proceedings were pending.

Penalty u/s 270A - misreporting of income - Specific charge u/s 270A(9) - Ad hoc disallowance of labour charges - Disallowance for non-deduction of tax at source - HELD THAT: - The Tribunal held that levy of penalty at the higher rate for misreporting requires a clear finding as to which distinct category under section 270A(9) is attracted. Here, the AO merely treated the additions as under-reported income in consequence of misreporting, without specifying the applicable limb of section 270A(9) or explaining how the disallowances satisfied that provision.

The disallowance of loading and unloading expenditure was made on an estimated ad hoc basis for want of corroborative documents regarding the recipients, and the transport disallowance arose from alleged non-deduction of tax at source. Such disallowances, by themselves, did not establish misreporting of income.

Tribunal also noted that, in the appellate proceedings, notices had been issued only by email despite the assessee having opted otherwise, and therefore no adverse inference could be drawn from non-appearance before the first appellate authority. [Paras 10, 11, 13, 14, 15]

The penalty levied under section 270A was deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the penalty for misreporting was unsustainable, since the penalty order did not specify the applicable clause of section 270A(9) and the underlying disallowances did not by themselves establish misreporting of income. The penalty was directed to be deleted.

Adjustment under section 143(1)(a) - Delayed Employees' contribution to PF and ESI - Prospective operation of Finance Act, 2021 amendment

Disallowance of delayed deposit of employees' contribution to provident fund and ESI through processing under section 143(1) and rectification u/s 154 - HELD THAT: - The Tribunal held that though Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)] declares that employees' contribution is not allowable if not deposited within the due dates under the respective enactments, that decision was rendered after the intimation under section 143(1) and the rectification order under section 154 in the present case.

For the relevant period, the jurisdictional Karnataka High Court in Essae Teraoka (P.) Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] had taken the view in favour of the assessee where the payment was made before the due date of filing the return. Relying on decision in Chandrakant Shamppa Kontha [2025 (12) TMI 855 - ITAT BANGALORE] Tribunal further held that the Finance Act, 2021 amendments clarifying the position operate from assessment year 2021-22, and therefore such disallowance could not have been made as an adjustment under section 143(1)(a), nor retained in rectification, for the years under appeal. [Paras 9, 11]

The adjustment made by CPC in respect of belated employees' contribution to provident fund and ESI was directed to be deleted for both assessment years.

Final Conclusion: The Tribunal allowed both appeals and held that, for assessment years 2019-20 and 2020-21, the CPC could not make or retain disallowance of belated employees' PF and ESI contribution through section 143(1) processing and section 154 rectification. The impugned adjustments were directed to be deleted.

Penalty u/s 271B - failure to obtain and furnish the tax audit report u/s 44AB -Reasonable cause based on bona fide belief - Consistent treatment of interest on bank deposits as income from other sources

HELD THAT: - The Tribunal held that the determinative question was not the correctness of the head under which the interest income was assessed in the scrutiny year, but whether the assessee had shown reasonable cause for not complying with the tax audit requirement. It found that, in the preceding as well as subsequent assessment years, the assessee had consistently disclosed the interest on bank deposits under the head income from other sources and that treatment had been accepted by the Department in intimations under section 143(1).

In the year under consideration alone, the AO treated the same income as business income and, on that basis, initiated penalty proceedings for failure to furnish the tax audit report. On these facts, the Tribunal accepted that the assessee entertained a genuine and bona fide belief that section 44AB was not attracted. As the Revenue brought no material to show any deliberate or conscious default, the assessee's failure was held to be covered by reasonable cause within the meaning of section 273B. [Paras 7, 8]

Penalty under section 271B was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee's failure to furnish the tax audit report was backed by reasonable cause. The penalty levied for such failure was therefore unsustainable and was deleted.

Deduction u/s 80P(2)(a)(i) - Interest on income-tax refund under section 244A - "attributable to" v/s "derived from" -Income from other sources

Whether interest received by the co-operative society on income-tax refund u/s 244A was eligible for deduction u/s 80P(2)(a)(i) or to be taxed as income from other sources? - HELD THAT: - The Tribunal held that the controversy stood squarely covered by the Special Bench decision MAHARASHTRA STATE CO-OP. BANK LTD. VERSUS ACIT [2010 (1) TMI 851 - ITAT, MUMBAI]. Accepting that precedent, it treated the interest on income-tax refund as income attributable to the assessee's banking activity carried on for its members, and therefore falling within the scope of deduction under section 80P(2)(a)(i). On that basis, the view of the Assessing Officer and the appellate authority that such interest was taxable as income from other sources was not sustained. [Paras 7]

The addition made on account of interest on income-tax refund was deleted and the assessee's claim for deduction under section 80P(2)(a)(i) was allowed.

Final Conclusion: The Tribunal allowed the appeal and held that the interest received on income-tax refund under section 244A was eligible for deduction under section 80P(2)(a)(i). The addition treating that receipt as income from other sources was deleted.

Limitation for reassessment notice - First proviso to section 149(1) - Exclusion of time u/s 148A proceedings - Prospective operation of extended reopening period -

HELD THAT: - The Tribunal held that for Assessment Year 2015-16 the Revenue could issue a reassessment notice only if the time limit surviving under the pre-amended regime had not expired by the date of notice. Applying the first proviso to section 149(1), it held that the extended period under the amended law could not revive a case where the six-year limit had already expired on 31.03.2022. The Revenue's contention based on exclusion of time consumed in proceedings under section 148A(b) and the consequential extension was rejected on the ground that such exclusion becomes relevant only if the notice first survives the limitation test; once the notice was already barred by virtue of the first proviso, the benefit of exclusion could not be invoked. [Paras 5, 6]

The notice under section 148, the reassessment proceedings founded on it, and the consequential addition were quashed; the grounds on merits were left open.

Final Conclusion: The Tribunal held that the reassessment notice issued on 07.04.2022 for Assessment Year 2015-16 was time-barred under the first proviso to section 149(1). The reassessment and consequential addition were quashed, and the merits were left open.

Mistake apparent from record - Rectification of interest computation - Validity of rectification u/s 154 - Rectification of the assessment order to enhance interest under section 234C from the amount originally charged in scrutiny assessment

HELD THAT: - The Tribunal examined the computation placed on record and found that the correct interest under section 234C worked out to the amount originally adopted in the processing under section 143(1) as well as in the scrutiny assessment under section 143(3). The higher amount paid along with the return arose from an automatic system computation at the time of e-filing and did not establish any error in the assessment order itself. Since the assessment order had correctly levied interest, the essential condition for invoking rectification, namely the existence of a mistake apparent from record, was absent. On that basis, the initiation of proceedings under section 154 and the consequential rectification order were held to be invalid. [Paras 6]

The rectification proceedings and the order passed under section 154 read with section 143(3) were quashed.

Final Conclusion: The Tribunal allowed the appeal and held that no mistake apparent from the record existed in the original assessment insofar as interest under section 234C was concerned. The rectification proceedings initiated to enhance such interest were therefore invalid and the rectification order was quashed.

Denial of Foreign tax credit - Belated filing of Form No. 67 - Directory procedural requirement

HELD THAT: - The Tribunal held that the controversy was covered by co-ordinate Bench decisions holding that delayed filing of Form No. 67 is only a procedural defect and not a fundamental infirmity. Proceeding on that basis, and having regard also to the DTAA-based entitlement recognised in the cited precedents, it concluded that delay in filing Form No. 67 does not by itself preclude the assessee from obtaining foreign tax credit otherwise allowable in accordance with law. [Paras 5, 6]

The foreign tax credit was directed to be granted to the assessee as claimed in the return of income.

Final Conclusion: The Tribunal allowed the appeal and held that foreign tax credit could not be denied merely because Form No. 67 had been filed belatedly. The Assessing Officer was directed to grant the credit in accordance with law.

Reopening of assessment on incorrect facts - Borrowed satisfaction in reassessment - Reassessment based on uncorroborated search statement - Non-application of mind in recording reasons - reassessment initiated in respect of alleged unexplained share capital and share premium - HELD THAT: - The Tribunal held that the additional ground challenging jurisdiction was a pure legal issue and could be raised for the first time in appeal. On merits, it found that the reasons recorded for reopening were based on demonstrably incorrect facts: the assessee had issued shares only at face value and had not received the alleged share premium; the amounts referred to in the recorded reasons were conflicting and wrong; and even some of the entities named in the reasons had not been allotted shares at all.

These errors showed that the Assessing Officer had not applied his own mind to the material and had proceeded on borrowed satisfaction, which is impermissible for reopening. The Tribunal further held that reopening could not be sustained merely on the statement of the director, in the absence of corroborative evidence, particularly in view of the CBDT instructions discouraging additions founded only on confession without supporting material. On that reasoning, the notice for reopening and the consequential reassessment were unsustainable. [Paras 2, 3]

The reopening of assessment and the consequent reassessment were quashed, and the additional ground was allowed.

Final Conclusion: The Tribunal admitted the jurisdictional challenge and held that the reassessment for AY 2009-10 had been initiated on incorrect facts, without independent application of mind, and partly on an uncorroborated statement. The reopening and the consequential assessment were therefore quashed, and the remaining grounds were left open.

Penalty u/s 271D - Recording of satisfaction for penalty initiation - Penalty for acceptance of loan in cash - Contravention of section 269SS - HELD THAT: - The Tribunal found that the assessment under section 143(3) had been completed by accepting the returned income and that the assessment order contained no satisfaction for initiating penalty proceedings under section 271D.

Following CIT vs. Jai Laxmi Rice Mills, Ambala City [2015 (11) TMI 1453 - SUPREME COURT] it held that in the absence of such recorded satisfaction in the body of the assessment order, the penalty proceedings themselves were not sustainable. [Paras 7, 8, 9]

The penalty imposed under section 271D was directed to be deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal and held that, since the assessment order did not record satisfaction for initiation of penalty proceedings under section 271D, the penalty could not be sustained and was liable to be deleted.

Exclusive method of accounting - Taxability of GST refund/indirect tax refund - Processing adjustment under section 143(1)

Whether the GST refund added by the Central Processing Centre as income, is taxable when the assessee follows the exclusive method of accounting and records the refund receivable as an asset or loan and advance rather than through the profit and loss account? - HELD THAT: - The Tribunal held that under the exclusive method of accounting, the indirect tax component on purchases, expenses and inventory is maintained separately and is not claimed through the profit and loss account. Since the tax audit report itself recorded that the refund was not credited to the profit and loss account, and the assessee had accounted for the amount as a receivable from the tax department, the refund only represented recovery of an amount already shown as receivable.

Such refund does not assume the character of income unless the corresponding tax component had earlier been claimed as expenditure. On that reasoning, the adjustment made in processing and sustained in appeal was unsustainable. [Paras 7]

The addition of the GST refund to the assessee's income was deleted.

Final Conclusion: The Tribunal partly allowed the appeal and held that the GST refund was not taxable in the assessee's hands for the year in question, as the assessee had followed the exclusive method of accounting and the tax component had not been claimed through the profit and loss account.

Disallowance u/s 14A read with Rule 8D - mandation of Recording of satisfaction u/s 14A - Invocation of Rule 8D - Disallowance of expenditure relating to exempt income - assessee's voluntary disallowance against exempt dividend income

HELD THAT: - The Tribunal held that section 14A(2) permits recourse to Rule 8D only after the Assessing Officer examines the assessee's accounts and records reasons showing why the assessee's claim regarding expenditure relatable to exempt income is incorrect. In the present case, the Assessing Officer rejected the claim merely for want of evidence, without identifying what material was lacking, without examining the cash-flow and fund-flow reflected in the audited accounts, without recording any finding linking borrowed funds or interest expenditure to the mutual fund investments, and without examining any specific administrative expenditure to rebut the assessee's claim.

Commissioner (Appeals) also failed to address whether this statutory requirement had been satisfied and merely affirmed the conclusion. Applying the principle stated in Maxopp Investment Ltd.[2018 (3) TMI 805 - SUPREME COURT], Hindustan Aeronautics Ltd. [2020 (12) TMI 679 - KARNATAKA HIGH COURT] and M/S Hindustan Aeronautics Ltd. [2022 (7) TMI 797 - KARNATAKA HIGH COURT] the Tribunal held that, in the absence of the mandatory satisfaction contemplated by section 14A(2), the further disallowance computed under Rule 8D was unsustainable. [Paras 17, 18, 19, 20, 21]

The disallowance under section 14A read with Rule 8D was directed to be deleted to the extent it exceeded the assessee's voluntary disallowance.

Final Conclusion: The Tribunal held that the mandatory satisfaction required under section 14A(2) had not been properly recorded before invoking Rule 8D. The disallowance was therefore restricted to the amount voluntarily disallowed by the assessee, and the appeal was allowed.

Seeking relaxation with respect to utilisation of the SFIS scrips including extension, monetisation or permission to utilise the scrips for IGST/BSD payment or in the alternative to permit transferring the scrips to other eligible persons - inbound tour operations - HELD THAT:- The writ petition was disposed of by directing respondents 1 and 2 to consider the petitioner's pending representations and take a decision within two months, while maintaining status quo as to the validity of the SFIS scrips for three months.

Confiscation of imported metallic scrap for invalid pre-shipment inspection certificate - Effect of Procedural defect in the Pre-Shipment Inspection Certificate -Substantial compliance with import policy conditions - Penalty for import based on pre-shipment inspection by agency outside notified area of operation - Post-shipment inspection - Confiscation under Section 111(d) -HELD THAT: - The Tribunal found that the inspecting agency was admittedly empanelled with DGFT and the only lapse was that it was not authorised for Mauritius, where the inspection took place. It further held that the DGFT policy did not prohibit post-shipment inspection, and on such inspection in India no war material or other objectionable material was detected in the consignment. On these facts, the Tribunal treated the requirement as having been met in substance, since the purpose of the inspection condition was satisfied and the goods were not shown to contain any prohibited material. Relying on Palco Recycle Exchange Limited[2026 (3) TMI 1094 - CESTAT AHMEDABAD], and the principles noticed from Commissioner of Customs vs. Senor Metals Pvt Ltd [2008 (8) TMI 238 - GUJARAT HIGH COURT] and Moolchand Steels Pvt Ltd [2007 (7) TMI 624 - GUJARAT HIGH COURT], it held that non-compliance with the import-policy condition may justify 100% inspection, but does not by itself render the import improper so as to attract confiscation under Section 111(d). In the absence of evidence of abetment or any objectionable contents in the goods, redemption fine and penalties under Sections 112 and 114AA were also held unsustainable. [Paras 7, 8, 9, 10, 11]

The confiscation, redemption fine and penalties were set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that the defect in the pre-shipment inspection certificate, arising from inspection by a DGFT-empanelled agency outside its notified territorial area, did not by itself justify treating the imported scrap as prohibited goods when post-shipment examination revealed no objectionable material. The impugned order imposing confiscation, redemption fine and penalties was therefore set aside and the appeal was allowed.

Validity of Pre-Shipment Inspection Certificate - Prohibited goods - Substantial compliance of import conditions - Effect of Procedural defect in the Pre-Shipment Inspection Certificate - Confiscation of imported metallic scrap - Post-shipment inspection - Confiscation, redemption fine and penalty - HELD THAT: - The Tribunal found that the inspection had in fact been conducted by a DGFT-empanelled agency and the only lapse was that the agency was not authorised for Guyana. It further held that the DGFT policy did not prohibit post-shipment inspection, and such inspection, when conducted by an approved agency, confirmed that the consignment did not contain war material or any other objectionable material. Applying the principle stated in the decisions in Palco Recycle Exchange Limited [2026 (3) TMI 1094 - CESTAT AHMEDABAD], and the principles noticed from Commissioner of Customs vs. Senor Metals Pvt Ltd [2008 (8) TMI 238 - GUJARAT HIGH COURT] and Moolchand Steels Pvt Ltd [2007 (7) TMI 624 - GUJARAT HIGH COURT], the Tribunal held that non-compliance with the import-policy condition regarding PSIC, in such circumstances, could at best justify examination of the goods, but would not render the import one of prohibited goods so as to attract confiscation under Section 111(d). The subsequent clean inspection constituted substantial compliance of the policy requirement, and there was also no basis to sustain the penalties imposed. [Paras 7, 8, 9, 10, 11]

The confiscation, redemption fine and penalties were set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that the defect in the original PSIC, arising from lack of territorial authorisation of the inspecting agency, did not make the imported scrap prohibited goods where approved post-shipment inspection found the consignment free from objectionable material. On that basis, the confiscation, redemption fine and penalties were set aside.

Joint and several customs duty liability - De novo adjudication to identify actual defaulter - Determination of actual importer and role of noticees - Demand of customs duty and connected penalties, against the appellants where the impugned order fastened liability jointly and/or severally without first determining the role of each person and the actual defaulter - HELD THAT: - The Tribunal accepted the primary contention that a duty demand cannot be fastened on various persons on a joint and/or several basis. Relying on the decisionsJ.K. Pharma [2003 (11) TMI 207 - CESTAT, MUMBAI]; Danavarshini Exports (P) Ltd. & Others [2025 (12) TMI 1205 - CESTAT CHENNAI], Thar Dry Port [2017 (8) TMI 53 - CESTAT NEW DELHI],the Tribunal held that the proper course in such a situation is to require a fresh adjudication so that the adjudicating authority considers the documentary evidence, records a factual finding as to the role of each person, identifies the actual defaulter, and thereafter fixes duty and penalty, if warranted, on the person concerned. [Paras 4, 5, 6]

The impugned order, insofar as it concerned the present appellants, was set aside and the matter was remanded for de novo adjudication by a speaking order after determining the role of each noticee; all contentions were left open.

Final Conclusion: The Tribunal held that the duty demand and penalties could not stand in the form imposed jointly and/or severally on the appellants without determining the actual defaulter and the role of each person. The order against the appellants was therefore set aside and the matter remanded for fresh speaking adjudication.

Extended period of limitation in reclassification of imported goods - Burden of proving suppression in customs classification disputes - Penalty for alleged misdeclaration of imported goods - demand raised on reclassification of imported high-pressure cleaners and their spare parts, with invocation of the extended period and consequential penalty - HELD THAT: - The Tribunal found that the importer had declared the goods on the basis of the manufacturer's particulars and the consignments were cleared after assessment by the proper customs officer. It further held that there was no admissible evidence to substantiate the allegation of misdeclaration. Even assuming that the goods were capable of dual use, there was no evidence that they were used for any purpose other than that claimed by the appellant. In a classification dispute, the burden lay on the Revenue to establish suppression of facts for invoking the extended period of limitation, and on the facts of the case that burden had not been discharged. [Paras 11, 12]

The impugned orders confirming duty demand by invoking the extended period and imposing penalty were set aside, and the appeals were allowed with consequential relief.

Final Conclusion: The Tribunal set aside the duty demand and penalty arising from the alleged misclassification of the imported goods. It held that the Revenue had failed to produce admissible evidence of misdeclaration or suppression so as to justify invocation of the extended period of limitation.

Entitlement to exemption under Notification No. 46/2011 - Preferential duty exemption based on country-of-origin certificate - Mandatory statutory verification procedure for rejection of certificate of origin - Denial of the claimed preferential customs exemption on imported Mulberry Rose Silk by rejecting the country-of-origin certificate without following the prescribed verification procedure - HELD THAT: - The Tribunal held that where the law prescribes a particular manner for disbelieving or rejecting a country-of-origin certificate, that course alone must be followed. In the present case, the certificate produced by the appellant was rejected without adhering to the procedure under clauses 16 and 17 of Annexure-III to Rule 13 of Notification No. 189/2009-Cus (NT) read with Article-24 of the Operational Certification Procedures for AIFTA. The statements recorded during investigation could not override that statutory requirement. Since the foundational action of rejecting the certificate was taken contrary to the prescribed procedure, the consequential demand and penal action founded on such rejection could not be sustained. [Paras 13]

The impugned order was held unsustainable and was set aside, with the appeals allowed consequentially.

Final Conclusion: The Tribunal set aside the denial of preferential exemption, the consequential duty demand, and the penalties, holding that the country-of-origin certificate had been rejected without following the mandatory statutory verification procedure.

Classification of "Espressif ESP32-C3 DevKitM-I-N4X Development Board (Microcontroller Development Board)" and "SOC Product -Espressif ESP32-C3-WROOM-02-N4 Module" - Principal function test for composite electronic goods - Exclusion from automatic data processing machine classification - Wireless Communication Apparatus - Essential Character - General Rules for Interpretation -Whether the Microcontroller Development Board proposed to be imported will be classified under the CTI 84719000, and the SOC Product Module proposed to be imported will be classified under the CTI 84733010 ?

Classification of microcontroller development board with integrated Wi-Fi and Bluetooth - classifiable under tariff heading 8471 as an automatic data processing machine or unit thereof, or under tariff heading 8517 as other apparatus for the transmission or reception of data in a wireless network - HELD THAT: - The ESP32-C3-DevKitM-1-N4X is a development board, consisting of a microcontroller (CPU and memory), printed Circuit Board with mounted components and interfaces and communication capability. As per Chapter Note 6 (A) to Chapter 84, an ADP machine must Store processing programs, be freely programmable, perform arithmetic computations and execute processing logic automatically. The applicant contends that the development board contains CPU. memory, processes data from sensors and executes instructions. Therefore, qualifies as an ADP system/unit. The ESP32-C3-DevKitM-1-N4X is a standalone embedded system, not a peripheral unit, does not function as part of a conventional ADP system and does not require Monitor, Keyboard, storage system and operates as a controller, not as a computing system. It is designed to control machines, interface with sensors and execute embedded logic.

In the case of Insulation Electrical Private Limited [2008 (3) TMI 22 - SUPREME COURT], the Hon'ble Supreme Court held that a 'part' is an essential component of the whole without which the whole cannot function. This position has been consistently followed and reiterated in a catena of decisions including the decision of the Hon'ble Supreme Court in the case of Prasoon Enterprises [2019 (3) TMI 1361 - SUPREME COURT], wherein it was held that the test for a product to be a part of the other is to see if the other is incomplete without the product or if the other cannot function without it. The complexity or lack of complexity will not be a detriment to the question of identifiable nature of the part.

The Authority held that classification had first to be tested under the tariff headings read with the relevant Section and Chapter Notes. Though the development board contains a microcontroller, memory and programmable interfaces, it was found not to answer the description of an automatic data processing machine or unit thereof under Chapter 84, since it functions as an embedded programmable controller for control and communication applications and is not solely or principally used as part of an ADP system. The Authority further held that heading 8542 was inapplicable because the goods were not bare semiconductor devices but assembled electronic modules or boards with multiple mounted components on a printed circuit board. Examining the technical literature and functional architecture, the Authority found that the integrated Wi-Fi and Bluetooth transceiver capability gave the goods their essential character, the embedded processing function being ancillary to wireless communication. Applying the principal function and essential character test, the board was held to fall under heading 8517 as apparatus for transmission or reception of data in a wireless network. [Paras 18, 20, 21, 23]

The development board was held classifiable under CTI 8517 62 90 and not under CTI 84719000, 8473 or 8542.

Classification of Wi-Fi and Bluetooth module - SOC Product - Espressif ESP32-C3-WROOM-02-N4 Module is classifiable as wireless communication apparatus or as a microprocessor part of automatic data processing machines. - HELD THAT: - The Authority held that heading 8473 applies only to parts and accessories solely or principally used with machines of heading 8471 and lacking an independent function. The subject module was found to be an independent embedded module capable of processing, transmitting and receiving data, with built-in Wi-Fi and Bluetooth, and therefore not a part suitable solely or principally for use with ADP machines. The claim under heading 8542 was also rejected on the ground that the goods were not bare integrated circuits but assembled modules with multiple components mounted on a printed circuit board, a category excluded by the explanatory notes to that heading. Applying Section Note 3 to Section XVI and the functional analysis of the goods, the Authority found that the principal function of the module was wireless data transmission and reception, and that it answered the description of communication apparatus under heading 8517, falling in the residual sub-classification 8517 62 90. [Paras 19, 22, 23]

The module was held classifiable under CTI 8517 62 90 and not under CTI 84733010 or heading 8542.

Confidentiality of advance ruling - The applicant's request for protection of commercially confidential information - HELD THAT: - Relying on the applicable regulation governing publication of advance rulings, the Authority accepted the request to protect commercially confidential information and directed that the ruling be kept confidential. [Paras 24]

The request for confidentiality was approved.

Final Conclusion: The Authority rejected the classifications claimed under headings 8471, 8473 and 8542, and held that both the Espressif ESP32-C3 DevKitM-I-N4X Development Board and the Espressif ESP32-C3-WROOM-02-N4 Module are classifiable under CTI 8517 62 90 as wireless communication apparatus. The request to keep the ruling confidential for protection of commercially confidential information was also allowed.

Classification of Front Camera Module - Automatic regulating or controlling instruments and apparatus - Parts and accessories of motor vehicles - Sole or principal suitability test - HSN Explanatory Notes -classifiable under CTI 9032 89 90 as an automatic regulating or controlling instrument or apparatus, or under CTI 8708 99 00 as a motor vehicle part - HELD THAT: - Applying Section Note 2 to Section XVII, the expressions "parts" and "parts and accessories" do not apply to articles of Chapter 90 (per clause g) or electrical machinery of Chapter 85 (per clause f). As established, the Front Camera Module fails to satisfy the criteria of Heading 9032 because it lacks independent measuring sensors and actuating devices to perform a complete control loop. Since the module is legally disqualified from functioning as an automatic regulating instrument of Chapter 90, and because its primary character is that of a dedicated, vehicle-specific electronic sub-assembly rather than a generic electrical apparatus of Chapter 85, it successfully clears the exclusion barriers of Section Note 2. Applying Section Note 3, references to "parts" or "accessories" in Chapter 87 do not apply to items which are not suitable for use solely or principally with motor vehicles. The subject goods consist of a camera unit and an Electronic Control Unit (ECU) specifically designed to capture visual data and transmit signals to vehicle subsystems for ADAS functionality. Because the module is engineered exclusively to integrate with a vehicle's network and has no alternate utility, it perfectly fulfills the "sole or principal use" test mandated by Section Note 3.

The Front Camera Module is not a generic optical camera or a multi-purpose image sensor. Its internal hardware, embedded software algorithms, and data output protocols are engineered strictly to capture vehicular surroundings and transmit real-time data to automotive steering, braking, and powertrain sub-systems. Because it possesses no alternative commercial or functional application outside of automotive Advanced Driver Assistance Systems (ADAS), it squarely satisfies this first statutory boundary. Section Note 2, explicitly bars items of Chapter 85 or Chapter 90 from entering Chapter 87. As established by the technical facts, the module cannot be classified under Heading 9032 as an automatic regulating apparatus because it lacks integrated measuring devices and actuating mechanisms to close a control loop on its own. Because it is legally disqualified from Chapter 90, it successfully bypasses the Section Note 2(g) exclusion checkpoint. Consequently, having satisfied both the positive test of sole suitability and the negative test of Section exclusion, the product fully meets the statutory conditions to qualify under CTH 8708.

In Continental Automotive Brake Systems [2024 (3) TMI 1145 - CESTAT NEW DELHI], the Hon'ble CESTAT explicitly evaluated the classification of advanced electronic control units (ECUs) responsible for running vehicular safety and stability profiles (such as Anti-Lock Braking Systems and Electronic Stability Control Systems). The Hon'ble Tribunal observed that the operational profile of such an ECU relies on a decentralized network where data on wheel speed, sideway movement, and angular motion is collected by external sensors, and the resultant instructions are executed by separate vehicle parts like motors and solenoid valves. The Tribunal held that because these automotive safety units function based on distinct automotive factors rather than acting as mere electrical regulators, and because they operate through a distributed system where measurement and actuation are performed by external components, they cannot fit into Note 7(b) to Chapter 90 by any stretch of imagination. Consequently, such units are excluded from CTH 9032 and are appropriately classifiable under Tariff Item 8708 99 00 as parts of a motor vehicle.

Since the Front Camera Module satisfies the "sole or principal suitability test" under Section Note 3 to Section XVII and successfully clears the exclusion barriers of Section Note 2, it falls squarely within the scope of Heading 8708. The item is an engineered, automotive-specific composite apparatus whose essential character is derived from its role as a dedicated motor vehicle part within the Advanced Driver Assistance System (ADAS) architecture. Given that the subject goods are not specifically named or covered under any of the descriptive sub- headings of Heading 8708 such as those dedicated to road wheels, suspension systems, steering gears, brakes, or gear boxes, they cannot be classified within those specific entries. Consequently, the Front Camera Module is appropriately allocated to the residual operational category, falling squarely under Tariff Item 8708 99 00 as other parts and accessories of motor vehicles.

The advance ruling was answered by classifying the Front Camera Module under CTI 8708 99 00 and rejecting the applicant's claim under CTI 9032 89 90.

Final Conclusion: The Authority held that the Front Camera Module, in its imported form, did not satisfy the statutory requirements of Heading 9032 because the complete control loop depended on external sensors and vehicle actuators not forming part of the imported goods. Being a vehicle-specific ADAS component intended solely for use in motor vehicles, it was ruled classifiable under CTI 8708 99 00.

Bona fide dispute as to debt in winding up proceedings - Maintainability of winding up petition for recovery of disputed dues - winding up petition based on unpaid price of supplied goods - HELD THAT: - The Court held that winding up under the Companies Act is permissible only where the claimed amount is found due. Where liability is bona fide disputed and determination of the claim involves disputed questions of fact, the company court cannot use winding up jurisdiction as a means of enforcing payment. Applying that principle in the case of IBA Health (India) Pvt. Ltd. Vs. Info-Drive Systems SDN [2010 (9) TMI 229 - SUPREME COURT], the Court found a serious dispute regarding the agreed rates of the goods supplied, noticed the company's account statement asserting excess payment, and also noted that the company had called upon the firm to reconcile the bills but no such reconciliation was pursued. The factual assertions in the return were also not controverted by any rejoinder. In these circumstances, the dispute as to liability was held to be genuine and substantial, requiring adjudication before an appropriate forum rather than in winding up proceedings. [Paras 14, 16, 17, 18]

The prayer for winding up was rejected and the parties were left free to pursue their respective claims before the appropriate forum.

Final Conclusion: The petition for winding up was dismissed because the respondent company's liability was found to be bona fide disputed. The Court left both sides at liberty to seek realization of their respective claims before the appropriate forum.

Effect of remand directing hearing afresh - Additional affidavit as part of pleadings before Tribunal - Procedural rules subject to principles of natural justice - Right of rebuttal under Rule 40(4) - expressions, of “revival” and “afresh” -Merger of pre-remand interlocutory orders - Principles of natural justice - Opportunity of hearing - Refusal to take on record an additional affidavit in a revived Section 7 proceeding, remanded to be heard afresh - HELD THAT: - The expression given to the two words in the remand order, “is revived”, the word “revived” here in its clear literal expression, under the given set of circumstances is where the application under Section 7 of the I & B Code, 2016, was rejected on the basis by borrowing the findings of the proceedings under Section 241 and 242 of the Companies Act, 2013, that would not be deemed to be a merit adjudication, and that is why the use of expression in the order of remand of revival means that, the proceeding was to be decided de novo, i.e., right from the beginning on its own merits an application of pleadings would be a process, which was yet to be undergoing, and that is why, in the remand order dated 19.12.2025, this Appellate Tribunal had aptly used the expression “heard afresh”. Hearing afresh once again means that, it has to be a fresh determination, as if the proceedings under Section 7 of the I & B Code, 2016, has to be taken up, being the proceedings right at the inception stage.

But once the Appellate Tribunal has used the words, “revival” and “afresh” that, means that it has to be taken up from the stage of infancies of the proceedings. In that eventuality, the question that would be falling for consideration under the facts of the present case would be as to what the term “pleading” would denote to, under these circumstances.

The Appellate Tribunal held that the earlier dismissal of the Section 7 application had not been on its own merits, but on an impermissible borrowing of findings from the separate oppression and mismanagement proceedings. Consequently, the remand directing that the matter be revived and heard afresh meant a de novo consideration from the inception stage. In that situation, pre-remand interlocutory directions and defaults, including non-filing of rejoinder, stood merged in and lost effect with the setting aside of the final order, and could not be revived to deny the subsequent application. The Tribunal further held that an additional affidavit fell within the concept of pleadings under the NCLT Rules, including supplemental or additional statements permitted by the Tribunal. Rule 55 did not create an absolute bar, since subsequent pleadings could still be allowed with the Tribunal's leave; read with Rules 39 and 40 and the requirement of adherence to natural justice under Section 424 of the Companies Act, the provision was directory in the circumstances. The impugned order was therefore vitiated by reliance on past conduct and by failure to consider the application on its own merits. [Paras 33, 34, 35, 36, 37]

The impugned order was set aside; the application seeking to file the additional affidavit was allowed, subject to the respondent's right of rebuttal under Rule 40(4).

Final Conclusion: The appeal was allowed. The Appellate Tribunal held that, after remand reviving the Section 7 proceedings for hearing afresh, the appellant could not be denied leave to file an additional affidavit by relying on pre-remand interlocutory orders or an absolute reading of the procedural rules.

Pre-existing dispute under Section 9 IBC - Operational debt and admission of liability - genuine pre-existing dispute - defective ghee and butter consignments, return of goods, account adjustment, and subsequent mediation - Corporate Insolvency Resolution Process - Moonshine defence - Admission of operational creditor's application - HELD THAT: - Applying the test in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited [2017 (9) TMI 1270 - SUPREME COURT], the Tribunal held that the dispute relied upon by the corporate debtor was not shown to have existed before service of the demand notice. The laboratory reports did not match the invoice particulars relied upon for the alleged defective consignments, no contemporaneous written communication or supporting material was produced to show that quality objections had been raised earlier, and the plea regarding defective goods surfaced only after receipt of the demand notice. The pre-institution mediation and civil action were also initiated after the demand notice and therefore could not qualify as pre-existing disputes.

Outstanding operational debt - The operational creditor's invoices, computation sheet and ledger established the outstanding operational debt, while the corporate debtor failed to produce prior documentary material showing rejection of liability or reconciliation claims. The Tribunal further treated the part-payments made even after receipt of the demand notice, along with ledger entries reflecting stock-damage claims only in 2023, as inconsistent with the plea of an earlier genuine dispute and as indicative of admission of debt and default.

No real and bona fide pre-existing dispute was discernible; the operational debt above the statutory threshold stood established, and admission of the Section 9 application was upheld.

Final Conclusion: The Tribunal dismissed the appeal and sustained admission of the Section 9 application. It held that the corporate debtor had defaulted in payment of operational debt above the prescribed threshold and that the defence of dispute was an afterthought unsupported by credible pre-demand notice material.

Enforceability of personal guarantee from loan sanction letter and guarantee letter - Recommendatory nature of resolution professional's report in personal guarantor insolvency - Debt and Default - Admission of the Section 95 application - Non-submission of the resolution professional's report under Section 99 before admission of the Section 95 application - Appellant's liability as a personal guarantor - Admission by Conduct

Personal guarantor liability - Binding effect of loan sanction letter and guarantee letter - Belated plea of duress - HELD THAT: - The Appellate Tribunal held that the Appellant had admittedly signed the sanction letter describing himself as guarantor and had also signed the guarantee documentation. Debt, default, declaration of the account as NPA, and execution of the relevant documents were not denied. In such circumstances, the Appellant could not resile from the admitted documents and contend that he was not a valid personal guarantor. The Tribunal further held that a guarantee embodied in the sanction letter and guarantee letter remained enforceable if the documents disclosed an intention to create a binding obligation, and the absence of a separate deed of guarantee did not defeat proceedings under Section 95. The plea that the documents were signed under duress was rejected as a belated contention, since the Appellant had not challenged those documents within a reasonable time and raised the objection only after default and commencement of insolvency proceedings. Proceedings later initiated by him in other forums were also treated as afterthoughts and incapable of displacing the admitted guarantee liability. [Paras 20, 22, 23, 24, 25]

The Appellant was rightly treated as a personal guarantor, and his challenge to the maintainability of the Section 95 proceedings on that basis failed.

Section 95 application against personal guarantor - Resolution professional's report as recommendatory - New mixed question of fact and law in appeal - HELD THAT: - The Appellate Tribunal held that the objection based on absence of a prior report under Section 99 had not been pleaded or urged before the Adjudicating Authority and, being a mixed question of fact and law, ought to have been raised at the first available stage. On merits also, the Tribunal held that Section 99 is intended to aid the Adjudicating Authority in ascertaining debt, default, and guarantor liability, and the report is only recommendatory in nature. Where those foundational elements already stood established from admitted documents and undisputed default, the object of Section 99 stood sufficiently met and the absence of the report did not invalidate admission under Section 100. The earlier decision of this Appellate Tribunal cited by the Appellant was held inapplicable to the present factual matrix because, here, the existence of debt, default, and guarantee liability was explicit and undisputed. [Paras 16, 17, 19, 20, 21]

The challenge founded on non-receipt of the resolution professional's report was rejected, and the admission of the Section 95 application was upheld.

Final Conclusion: The Appellate Tribunal upheld admission of the Section 95 proceedings against the Appellant as personal guarantor. It held that the admitted loan and guarantee documents, together with undisputed debt and default, were sufficient to sustain the proceedings, and the appeal was dismissed.

Admission of Section 9 application -Pre-admission settlement in Section 9 proceedings - Closure of CIRP on settlement arrived before admission order - Appellate consideration of settlement not noticed by Adjudicating Authority - Withdrawal of insolvency proceedings - Going concern - Maximisation of value of the corporate debtor - HELD THAT: - The Appellate Tribunal recorded the common stand of both sides that a settlement had been reached before the order admitting the Section 9 application and that its terms governing payment of the admitted liability had been placed on record in the appeal. It held that an appeal is a continuation of the original proceedings, and therefore a settlement or its terms, which were skipped or not taken note of by the Adjudicating Authority, could still be considered at the appellate stage. Since the settlement had been arrived at prior to the commencement of CIRP and was accepted by the operational creditor, continuation of CIRP was held to be unwarranted. The Tribunal further observed that closure of CIRP on accepted settlement terms subserves the object of the Code by enabling the corporate debtor to remain in operation and by promoting maximisation of its value rather than pushing it into CIRP or liquidation. [Paras 8, 9, 10]

The appeal was allowed; the admission order commencing CIRP was quashed and the matter was disposed of in terms of the settlement, subject to the appellant abiding by the settlement undertaking.

Final Conclusion: The Appellate Tribunal held that the pre-admission settlement, though not considered by the Adjudicating Authority, could be acted upon in appeal. On that basis, the order initiating CIRP was quashed and the appeal was disposed of in terms of the settlement.

Maintainability of Writ petition - Alternative statutory remedy - Provisional attachment under PMLA - Scope of "reason to believe" - Proceeds of crime and equivalent value attachment - Jurisdictional Error - pre-conditions for passing the order of provisional attachment - Search Authorization under Section 67 - Property purchased before commission of the scheduled offence - principles of natural justice and fair play

Whether in the given facts and circumstances of the case, the writ petition under Article 226 is to be entertained ? - HELD THAT: - It is evidently clear that there is a remedy available to a person whose property has been attached provisionally in exercise of powers under Section 5[1].

In Gujrat Ambuja Cement Limited [2005 (7) TMI 353 - Supreme Court], it was observed to the effect that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable to dismiss the same on the ground of non-exhaustion of statutory remedy; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition.

‘Attachment’, as per Section 2[d] of the PMLA, means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III of the PMLA. The object behind Section 5 is, in essence, a preventive not a punitive measure. By attaching the tainted property, the State seeks to preserve the status quo, so that the asset remains available for eventual confiscation if the guilt of the accused is established. Provisional attachment does not transfer the title of the property to the State.

The Court held that, although the PMLA provides a complete statutory mechanism before the Adjudicating Authority, the Appellate Tribunal and thereafter the High Court, existence of such remedy does not bar writ jurisdiction where the impugned action is alleged to be without jurisdiction or in defiance of fundamental procedural requirements. Since a provisional attachment restricts the constitutional right to property and the petitioner's challenge was founded on alleged absence of the jurisdictional conditions for exercise of power under Section 5(1), the Court considered it appropriate to examine the challenge instead of rejecting the petition solely on the ground of alternative remedy. [Paras 23, 26, 27]

The Court proceeded to examine the challenge on the footing that the grounds urged alleged jurisdictional error in the exercise of attachment power.

Reason to believe - Proceeds of crime - Immediate attachment under second proviso - HELD THAT: - In Joti Parshad [1992 (10) TMI 256 - SUPREME COURT], the Hon’ble Supreme Court has observed that ‘knowledge’ is an awareness on the part of the person concerned indicating his state of mind. ‘Reason to believe’ is another facet of the state of mind.

Before passing the Provisional Attachment Order [PAO], there must be an opinion formed by the Authorized Officer that for the purpose of confiscation of Proceeds of Crime, it is necessary to attach provisionally any property of any person who is in possession of any part or whole of Proceeds of Crime.

The Court analysed Section 5(1) and held that the authorised officer must record in writing, on the basis of material in possession, satisfaction as to the two jurisdictional requirements: possession of proceeds of crime and likelihood of concealment, transfer or dealing therewith so as to frustrate confiscation. On the facts, the materials referred to in the provisional attachment order included the predicate FIR, the ECIR, seized documents, GST returns, statements recorded under Section 50, and bank records. Those materials were considered sufficient for the authorised officer to conclude that fraudulent ITC generated through the shell entity had been layered through downstream entities, that the petitioner's concern had availed and utilised part of such fraudulent ITC, and that the tainted amount had already entered the formal financial system. The Court reiterated that judicial review in such matters is confined to examining the existence of relevant material and the live link between such material and the belief formed, and not the sufficiency of that material. On that standard, the Court found the statutory preconditions and the further requirement under the second proviso to be satisfied. [Paras 52, 53, 55, 56]

The challenge to the authorised officer's satisfaction under Section 5(1) and the second proviso was rejected.

Equivalent value attachment - Property acquired prior to scheduled offence - Proceeds of crime - HELD THAT: - Following Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], the Hon’ble Supreme Court in M/s. Nav Nirman Builders & Developers Pvt. Ltd. vs. the Union of India [2026 (2) TMI 435 - SUPREME COURT], has held that the definition of ‘Proceeds of Crime’ under Section 2[1][u] of the PMLA is wide enough to include a property which is equivalent in value to the property that is directly or indirectly obtained from a criminal activity relating to the scheduled offence. Thus, such a property can also be attached if the PoC, as such, are not otherwise available. Section 2[1][u] of the PMLA, despite being a definition clause, indicates the very objective of the enactment to secure PoC in any form.

Therefore, where the actual tainted asset is no longer available, property equivalent in value may be attached. The Court held that the tainted character of proceeds of crime does not disappear merely because they are layered or circulated through multiple entities, and attachment can reach the person in possession of the whole or part of such proceeds or their equivalent value. Applying that principle, the Court held that the attached immovable property could be attached for value, even though it had been purchased before the scheduled offences, because the allegedly tainted amount availed and utilised by the petitioner's concern had already been infused into the formal financial system and was not available in specie. The contrary view in Seema Garg [2020 (3) TMI 460 - PUNJAB & HARYANA HIGH COURT] was held not to align with the Supreme Court decisions referred to in the judgment. [Paras 63, 64, 65, 66, 67]

The contention that pre-existing property lay outside the scope of Section 5(1) was held unsustainable.

Whether the impugned PAO is bad in law for the reason that the Authorized Officer has recorded his ‘reason to believe’ in the order itself ? - HELD THAT: - The case in Aslam Mohammad Merchant vs. Competent Authority and others [2008 (7) TMI 852 - SUPREME COURT], pertained to a proceeding under Chapter V-A of the NDPS Act leading to forfeiture of property. A three-Judge decision in State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog [2014 (11) TMI 1095 - SUPREME COURT] pertained to re-assessment proceeding under the U.P. Trade Tax Axt, 1948. In these statutes, the pre-condition for the concerned proceeding was a mandatory requirement to record the reason to believe in writing to the affected person / noticee.

It is not in doubt that the right to life and personal liberty, a fundamental right, is albeit at a higher pedestal than the right to property. Yet, the right to property is a constitutional right and no person is to be deprived of his property save by authority of law. Aslam Mohammad Merchant [supra] has held that the right to hold property is not only a constitutional right but also a human right. In the context of the Himachal Pradesh Goods and Services Tax Act, 2017 wherein a power has been vested on the Commissioner to order provisional attachment of the property of an assessee, the Hon’ble Supreme Court in M/s Radha Krishan Industries [2021 (4) TMI 837 - SUPREME COURT], has held that the power to levy a provisional attachment is draconian in nature. By the exercise of power, a property belonging to a taxable person may be attached.

The Court distinguished the confidentiality requirement concerning forwarding of the order and materials to the Adjudicating Authority in a sealed cover from any supposed prohibition on disclosure of the reasons to the affected person. Examining the statutory scheme, the Court found that neither Section 5(1) nor the 2013 Rules prescribe any restriction on the contents of the provisional attachment order or require that reasons to believe must remain outside the order. The 2005 Rules were understood as regulating preservation and transmission of the order and materials to the Adjudicating Authority, not as mandating secrecy vis-a-vis the affected person. The Court further observed that fairness would require furnishing the reasons to the affected person on request and that inclusion of those reasons in the order would align with natural justice and reduce the scope for arbitrary action. At the same time, the Court noticed that a co-ordinate Bench in Aftabuddin Ahmed [2024 (4) TMI 374 - GAUHATI HIGH COURT] had taken a contrary view on the confidential character of such reasons. In view of that conflict, the Court directed reference of the issue to a larger Bench. [Paras 97, 98, 100, 101, 102]

The Court rejected the petitioner's challenge on this ground in principle, but referred the conflict with the co-ordinate Bench view to a larger Bench for authoritative resolution.

Final Conclusion: The Court held that the challenge to the provisional attachment did not disclose absence of the jurisdictional conditions under Section 5(1) of the PMLA, and that attachment of property equivalent in value was permissible even though the property had been acquired before commission of the scheduled offence. However, since its view that reasons to believe may form part of the provisional attachment order conflicted with the co-ordinate Bench decision in Aftabuddin Ahmed, the matter was directed to be placed before the Chief Justice for constitution of a larger Bench on that issue.

Rebate of service tax on export of goods - Limitation under Notification No. 41/2012-ST - Date of Let Export Order as relevant date - Strict construction of exemption notification conditions - Refund of service tax paid on job work service used for export of Potash Feldspar Powder - HELD THAT: - The Tribunal held that the rebate claim was governed entirely by Notification No. 41/2012-ST, which specifically required filing within one year from the date of export. The notification itself explained the date of export as the date on which the proper officer of Customs permitted clearance and loading of the goods under section 51 of the Customs Act, namely, the date of the Let Export Order. Since the notification contained its own limitation provision, section 11B could not be invoked to substitute any other relevant date.

In the case of MMTC Ltd [2018 (5) TMI 167 - CESTAT HYDERABAD], it was held that refund claim filed after one year from the date of LEO is time barred.

The limitation condition was held to be substantive and not merely procedural; consequently, claims filed beyond one year from the LEO date were time-barred. The decisions relied upon by the appellant were found inapplicable because they concerned situations where the notification lacked a specific limitation mechanism or referred to section 11B, whereas the departmental decisions dealing with the same notification supported computation from the LEO date. [Paras 8, 9, 10, 11]

The rejection of the refund claim to the extent filed beyond one year from the Let Export Order date was upheld.

Final Conclusion: The Tribunal held that rebate under Notification No. 41/2012-ST had to be claimed strictly within one year from the Let Export Order date, which was the relevant date expressly prescribed by the notification. As the rejected portion of the claim was filed beyond that period, the appeal was dismissed.

Scope of services -Business support services - activities rendered to the overseas entity -Export of services Or Intermediary services - Entitlement toRefund of unutilized CENVAT credit - Principal-to-principal basis - Business support services comprising market research, inspection, regulatory information, shipping coordination and related sourcing support provided by the appellant to its overseas group entity - HELD THAT: - The Tribunal examined the service agreement and found that the appellant rendered the contracted services to the overseas entity on its own account as an independent contractor, with the agreement expressly excluding any principal-agent relationship and providing remuneration on a cost plus mark-up basis. The services consisted of support functions such as market research, supplier-related information, inspection, logistics and regulatory compliance assistance, but there was no material showing that the appellant arranged or facilitated a supply between the overseas entity and third-party vendors in the capacity of an agent or broker, nor was any tripartite arrangement shown. On that basis, the services satisfied the requirements of export under Rule 6A and did not fall within intermediary services. The Tribunal also followed its earlier decisions in the case of M/s William E. Connor [2025 (5) TMI 1898 - CESTAT CHANDIGARH] and Associates Sourcing Pvt. Ltd. and SNQs International Socks Pvt. Ltd [2023 (11) TMI 898 - CESTAT CHENNAI] affirmed by the Hon’ble Supreme Court [2024 (3) TMI 1045 - SC ORDER]​​​​​​​, on similar facts holding that comparable sourcing and support services rendered on a principal-to-principal basis are exports and not intermediary services. Since the denial of refund rested on the contrary classification, the rejection of refund was unsustainable. [Paras 7, 8, 9]

The services were held to be exports and not intermediary services, and the rejection of refund of unutilized CENVAT credit was set aside with consequential relief as per law.

Final Conclusion: The Tribunal held that the appellant's services to the overseas entity were rendered on a principal-to-principal basis as an independent contractor and therefore qualified as export of services, not intermediary services. Consequently, the denial of refund of unutilized CENVAT credit for the relevant periods was set aside and the appeal was allowed with consequential relief as per law.

Rectification of mistake apparent on record - Review under guise of rectification - Transfer of rights in immovable property - Reappreciation of evidence - HELD THAT: - The Tribunal held that the revenue's objection required reconsideration of the factual nature of the respondent's transactions and of the applicability of the precedent relied upon in the final order. Such an exercise would involve re-appreciation of facts and a fresh legal view on a debatable point, which is outside the limited scope of rectification of mistake apparent on record and would amount to an impermissible review.

Hon’ble Gujarat High Court in the case of Rama Nagappa Shetty [2020 (10) TMI 741 - GUJARAT HIGH COURT] has considered the scope of rectification of mistake. It held that re-appreciation of evidence on a debatable point cannot be said to be rectification of mistake apparent on record. Mistake apparent on record must be obvious and patent mistake and it should not be established by a long-drawn process of reasoning. Incorrect application of law can also not be corrected. It held that CESTAT is justified in rejecting the rectification application as any interference in the impugned order passed by CESTAT would have resulted in review of its own order which is not permissible.

The Tribunal further observed that the respondent had entered into agreements for sale, acquired rights in immovable property, and received the differential amount upon relinquishment of those rights to the ultimate buyer; such consideration related to transfer of title or rights in immovable property and not to a taxable service. No obvious or patent error was therefore shown in the final order. [Paras 4]

The rectification application was held not allowable and was dismissed.

Final Conclusion: The Tribunal dismissed the revenue's ROM application, holding that the plea raised sought a re-examination of facts and law and therefore amounted to review rather than rectification. No mistake apparent on the face of the record was found in the earlier final order.

Revenue-sharing arrangementfor permitting space, power supply and billing support to licensees - Taxability under Business Support Service Or Not - Penalty for short-payment of service tax - Judicial discipline and binding precedent - Principal-to-principal basis - Interpretation of law

Taxability of receipts from restaurant and retail licensees - HELD THAT: - The Tribunal found that the statement of demand itself proceeded on the same facts and circumstances as the earlier show cause notices in the appellant's own case in the case of M/s. Mayajaal Entertainment Ltd.[2023 (8) TMI 1724 - CESTAT CHENNAI] and Consequently, in [2024 (6) TMI 1595 - CESTAT CHENNAI], adhering to judicial discipline in accordance with the binding precedents in Bigen Industries Ltd. [2006 (4) TMI 124 - SUPREME COURT] and Jayswals Neco Ltd. [2006 (1) TMI 133 - SUPREME COURT]. In that earlier decision, followed here, it was held that where the occupier was allowed to use space and the consideration to the appellant was a fixed percentage of net revenue, the arrangement was one of participation in the business on a revenue-sharing basis and not a case of one party providing Business Support Service to another. Since the present demand arose from an identical arrangement and there was nothing to show that the earlier final order had not attained finality, the same view was required to be followed. [Paras 6, 7, 8, 9]

The demand under Business Support Service was held unsustainable and the impugned order was set aside on this issue.

Penalty for short-payment of service tax - Reasonable cause - Interpretational dispute - HELD THAT: - The Tribunal noted that, in the earlier majority decision in the appellant's own case (supra), penalty under Section 76 had also been set aside on the ground that the matter involved uncertainty and ambiguity in the interpretation and implementation of the law. Following that binding determination for the identical controversy, no penalty could be sustained in the present proceedings. [Paras 7, 8, 9]

The penalty imposed under Section 76 was liable to be set aside.

Final Conclusion: Following the earlier majority decision in the appellant's own case on identical facts, the Tribunal held that the revenue-sharing receipts were not taxable as Business Support Service and that the penalty also could not be sustained. The impugned order was therefore set aside and the appeal was allowed with consequential reliefs.

Extended period of limitation - Bona fide belief - Waiver of penalties - Demand based on Form 26AS data - Suppression with intent to evade - Service tax demand on cable operator services and works contract services for the period covered beyond the normal limitation

Extended period of limitation - Demand based on Form 26AS data - HELD THAT: - The Respondent failed to show any incriminating evidence proving such mala fide intention on part of the Appellant. The Appellant had not misstated or suppressed facts in any manner and all the transactions are duly recorded in the Books of Accounts thereby showing complete transparency on the part of the Appellant. The Appellant has acted throughout in a bona fide manner and was under a bona fide belief that service tax was not applicable in the present case.

The Tribunal held that the impugned order and the original order did not contain findings establishing suppression, misstatement or other mala fide conduct so as to justify invocation of the extended period under Section 73. The case itself had proceeded on the basis of third-party information and Form 26AS data, while the transactions were recorded in the books of account and reflected in income tax records. In such circumstances, mere non-payment of tax or failure to furnish particulars was insufficient to constitute suppression with intent to evade. The assessee could also entertain a bona fide belief regarding non-taxability. On that reasoning, the demand for 2013-14 to 2015-16 was held time-barred, while only the demand for 01-04-2016 to 30-06-2017 was treated as falling within the normal period. [Paras 10, 11, 12]

The extended period was held not invocable; the demand for 2013-14 to 2015-16 was set aside as barred by limitation, and the demand survived only for 01-04-2016 to 30-06-2017.

Waiver of penalties - Bona fide belief on taxability of cable operator activities - Penalties imposed for non-payment of service tax and related defaults - HELD THAT: - The Tribunal found that the activities undertaken by the assessee did not squarely fit the generally understood role of a cable operator and that the assessee functioned as an intermediary in the chain through which television signals reached customers. Having regard to the statutory definitions and the Tribunal decisions relied upon, the Tribunal accepted that there was scope for a bona fide belief regarding tax liability under the relevant taxable category. That circumstance made the case fit for grant of relief under Section 80, and the penalties could not be maintained. [Paras 8, 12]

The penalties imposed under Sections 78, 77(1)(a), 77(2) and 70 were set aside.

Final Conclusion: The appeal was partly allowed. The service tax demand was confined to the normal period from 01-04-2016 to 30-06-2017, the demand for 2013-14 to 2015-16 was set aside as time-barred, and all penalties were deleted.

Composite cargo handling contract - Consignment note requirement for Goods Transport Agency service - Reverse charge liability on transportation component - Handling and transportation services received from contractors - liability to service tax as Goods Transport Agency service under reverse charge - HELD THAT: - The facts in the present case are squarely covered by the decision of CESTAT Delhi in appellant’s own case [2019 (5) TMI 258 - CESTAT NEW DELHI], Wherein, it was held that revenue cannot split Cargo Handling Services into transport services and other services while vivisecting the contract entered by the appellant with H & T contractor. It cannot be held that providing Cargo Handling in which transportation of the goods is also ancillary activity, can be vivisecting in transportation services and other services such as loading and unloading of the goods.

As per the provisions of Section 65 (50b) of the Finance Act, 1994, “Goods Transport Agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatsoever name called”. It is on record that in this case no consignment note(s) have been issued by the contractors and only a consolidated invoice has been issued on monthly basis indicating therein the amount to be received against two different services. This fact is also established from the Inspection Memo dated 17.06.2025, jointly signed by the Representative of the appellant and concerned officials of the Commissionerate who were custodian of the file. Joint scrutiny/inspection of revenue’s file was ordered by this Tribunal on 06.03.2025. Therefore, when H&T contractors of the appellant have not issued any consignment note, service cannot be classified under GTA service. The agreement entered into between the appellant and their contractors also reveals that service agreed upon between them was Cargo Handling Service. The services so provided by H&T contractors were ultimately consumed by the clients of the appellant to whom invoices have been issued treating output service as Cargo Handling services.

Since the service was in substance a composite cargo handling service and the basic requirement for GTA classification was absent, the appellant could not be treated as liable to pay service tax under reverse charge on the transportation portion. [Paras 5]

The demand of service tax, interest and penalties founded on classification of part of the contractors' services as GTA service under reverse charge was held unsustainable.

Final Conclusion: The Tribunal held that the contractors' services formed part of a composite cargo handling arrangement and could not be split to treat the transportation element as GTA service in the absence of consignment notes. The impugned demands under reverse charge, with consequential interest and penalties, were therefore set aside and both appeals were allowed.

Taxability of corporate guarantee issued by the overseas parent company -Service tax under reverse charge - Consideration for taxable service - binding principle - HELD THAT: - The Tribunal held that the determinative test for taxability of the alleged service was the existence of consideration. Following the principle stated by the Supreme Court in Edelweiss Financial Services Ltd. [2023 (4) TMI 170 - SC ORDER], it found that a service rendered without consideration cannot be treated as a taxable service. On the record, including the show cause notices and the impugned orders, there was no evidence that the appellant had paid any consideration to its overseas parent company for issuance of the corporate guarantees. In the absence of consideration, the demand of service tax on reverse charge basis was unsustainable. [Paras 5]

The demands, interest and penalties founded on taxability of the corporate guarantees were set aside and the appeals were allowed with consequential relief.

Final Conclusion: The Tribunal held that corporate guarantees given by the overseas parent company were not liable to service tax under reverse charge in the absence of any consideration paid by the appellant. The impugned orders confirming the demands with interest and penalty were therefore set aside.

Rebate of duty on exported excisable goods - Meaning of export under Rule 18 - Moisture loss in export goods - Claim for rebate onQuantity of metallurgical coke cleared from the factory or only on the quantity actually exported as reflected in the shipping bills - HELD THAT: - It is established that the petitioner, as required by the provision of Rule-4 of the Rules, 2002, paid the duty on the goods which it manufactured, however, the goods which were exported, were less in weight than the one which were loaded in the trucks at the factory premises.

It is the case of the petitioner that the loss in quantity / weight was due to evaporation of moisture contents found in the nature of the goods, after it was dispatched from the factory, and hence the petitioner is entitled to rebate on the duty which is paid on the quantity / weight of excisable goods loaded on trucks at the factory premises.

The Court held that Rule 18 intrinsically connects rebate with export of goods, and the Explanation makes export mean taking goods out of India to a place outside India. Therefore, the expression duty paid on such excisable goods must be read with the goods actually exported. In the present case, the quantity shown in ARE-1 forms and factory invoices did not match the quantity exported under the shipping bills. The petitioner had not declared the moisture content in the invoices or ARE-1 at the time of clearance, and in the absence of such declaration the authorities could not be required to accept that the substantial shortage was caused by moisture loss. The notification issued under Rule 18 also required the excisable goods to be exported after payment of duty, which the Court read as making actual export the basis for rebate computation. Relying on the interpretation of export adopted by the Supreme Court in Rajindra Dyeing and Printing Mills Limited [1999 (10) TMI 82 - SUPREME COURT] the Court held that rebate had to be confined to the quantity which formed part of the export. The Bombay High Court decision in Bharat Chemicals [2015 (3) TMI 699 - BOMBAY HIGH COURT] was held inapplicable.

The Notification dated 06.09.2004, issued under Rule-18 of the Central Excise Rules, 2002 further specifies the procedure for the grant of rebate. Notification mandatorily mentions that the excisable goods shall be exported after payment of duty directly from a factory or warehouse, except as otherwise permitted by the Central Board of Excise and Customs by general or special order. The mandatory condition is that the goods must be exported and the rebate has to be processed and calculated on the quantity of the goods, which are actually exported. The petitioner was supposed to determine and declare the loss of moisture contents resulting into loss of weight.

In wake of the fact that since the petitioner has failed to declare the moisture content in the goods at the relevant point while paying the duty, and clearance from the factory for export.

The rebate was rightly restricted to the quantity actually exported as per the shipping bills, and no rebate was admissible on the shortfall attributed to moisture loss.

Final Conclusion: The Court upheld the rebate orders and held that under Rule 18 rebate is linked to the quantity actually exported out of India. Since the petitioner had not declared moisture content at the time of clearance and the export quantity in the shipping bills was lower than the factory-cleared quantity, all the writ petitions were dismissed.

CENVAT credit on reverse charge service tax - Centralised registration and Input Service Distributor - GAR-7 challan as valid document for credit - Whether the Appellant, who are situated in Mohali and have a centralised registration with the Service Tax Department to their Head Office in Chennai, have rightly taken the Cenvat Credit on various input services on which the Appellant had paid the service tax under RCM ? - HELD THAT: - The Tribunal found that the disputed input services were actually received by the Mohali unit, the invoices stood in the name of that unit, and the service tax was paid by the appellant through its centralised registration. On those facts, the Department's premise that the credit had first to be routed through the head office as an Input Service Distributor was held to be misconceived. The Tribunal held that ISD distribution is required for common input services availed for more than one unit, whereas the impugned services were availed only by the Mohali unit. It further held that the GAR-7 challans evidencing payment of service tax under reverse charge constituted valid documents for taking credit under Rule 9(1)(e) of the Cenvat Credit Rules. Following M/s Luminous Power Technologies Pvt Ltd [2025 (5) TMI 56 - CESTAT CHANDIGARH] and the decisions noticed therein, the Tribunal held that the credit could not be denied merely because the head office also held ISD registration. [Paras 9, 10, 11, 12, 13]

The demands denying the credit, and the consequential interest and penalties founded on that denial, were set aside and all three appeals were allowed.

Final Conclusion: The Tribunal held that the appellant had validly availed CENVAT credit on reverse charge service tax paid through its centralised registration, and that GAR-7 challans were proper documents for such credit. Since routing the credit through the ISD mechanism was not required on the facts found, the impugned orders were set aside and all three appeals were allowed with consequential relief.

Clandestine removal of excisable goods- Relevancy of private records and the statement of the authorised signatory without corroborative evidence - Penalty imposed on the partner under Rule 26 -Excise duty - Burden of Proof - Mere Presumption and Assumption - Unaccounted Manufacture - Preponderance of Probability - HELD THAT: - The Tribunal held that a charge of clandestine manufacture and clearance is a serious allegation which must be supported by positive and tangible evidence. In the present case, the department relied only on resumed private records and on the statement of the authorised signatory, while no statement was recorded from the persons stated to have authored or maintained the crucial records, no investigation was carried out either at the suppliers' end or at the buyers' end, and there was no evidence regarding transportation, excess raw material procurement, excess production, or other surrounding circumstances establishing unaccounted manufacture and removal. The show cause notice also did not explain the basis on which the value of the alleged clandestine clearances had been arrived at. In the absence of such corroborative material, the allegation could not be sustained, and the penalties, being founded on the same charge, also could not survive. [Paras 5]

The duty demand with interest and penalty against the manufacturing unit, and the penalty imposed on the partner under Rule 26, were set aside.

Final Conclusion: The Tribunal held that the allegation of clandestine manufacture and removal was not established by positive and corroborative evidence. The impugned order confirming duty, interest and penalty against the manufacturing unit, and the separate penalty on the partner, was therefore set aside and both appeals were allowed.

Eligibility for exemption under Notification No. 12/2012-CE - hot rolled patta patti prior to cold rolling - Binding nature of Board clarification on exemption scope - Revenue's objection that no further process had been undertaken after receipt from the job worker - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decision in the respondent's own case [2024 (11) TMI 1177 - CESTAT AHMEDABAD], which had followed the order in Multi Metal Industries [2023 (10) TMI 1457 - CESTAT AHMEDABAD] and the Board's clarification issued under Instruction F. No. 96/85/2015-CX.I. On that reasoning, the exemption entry covers pattas and pattis that have not undergone cold rolling, and all processes prior to that stage, including hot rolling, fall within the scope of the exemption. Since the goods in question were hot rolled pattas and pattis and had admittedly not undergone cold rolling, the Revenue's objection that no further process was undertaken after receipt from the job worker did not disentitle the respondent to the exemption. [Paras 5]

The exemption was held admissible, and the Revenue's appeal against the order of the Commissioner (Appeals) was dismissed.

Final Conclusion: Following its earlier decision in the respondent's own case and the Board clarification on the scope of the exemption, the Tribunal held that hot rolled patta patti cleared prior to cold rolling was entitled to exemption under Sr. No. 203 of Notification No. 12/2012-CE. The order of the Commissioner (Appeals) was upheld and the Revenue's appeal was dismissed.

Consideration of jurisdictional objection in second appeal - Effect of disposal of parallel proceedings on interlocutory deferral - Exhaustion of pending proceedings - Pending NCLAT proceedings, which had prompted the Tribunal to defer the second appeal - HELD THAT: - From the facts adumbrated in the pleadings and undisputed by the opponents, it would transpire that the petitioner was assessed to entry tax under Section 10 of the OET Act by the Deputy Commissioner of Sales Tax, Jagatsinghpur Circle, Paradeep, which was set aside by the Additional Commissioner of Sales Tax (Appeal) in the first appeal preferred under Section 16 of said Act with a direction to undertake assessment afresh. Aggrieved thereby, invoking Section 17 of the said Act the petitioner carried the matter before the learned Odisha Sales Tax Tribunal in second appeal.

The Court found that the very proceeding before the NCLAT, for whose outcome the Odisha Sales Tax Tribunal (OSTT) had deferred consideration, had already been disposed of. In that situation, the interests of justice required that the second appeal itself be taken up and decided by the Tribunal on all grounds available on record. The High Court therefore did not pronounce on the merits of the petitioner's jurisdictional objection or the exemption claim, but directed the Tribunal, being the final fact-finding authority competent to decide questions of fact and law, to hear and dispose of the appeal on merits including the jurisdictional issue. [Paras 6, 7]

The writ petition was disposed of with a direction to the Odisha Sales Tax Tribunal to expedite and decide the pending second appeal by considering all grounds, including the jurisdictional issue, without any expression of opinion by the High Court on the merits.

Final Conclusion: Since the parallel appeal before the NCLAT had already been disposed of, the challenge to the Tribunal's interlocutory deferral did not warrant adjudication on merits by the High Court. The Tribunal was directed to take up and decide the second appeal on all grounds, including the jurisdictional objection.

Suit for Recovery - Proof of outstanding liability - Entries in books of account - Preponderance of probabilities - Burden of proof - Corroborative evidence - Proof of delivery of goods - Appreciation of evidence - Plaintiff failed to establish that any amount remained outstanding from the defendant towards the electrical goods supplied - HELD THAT: - The Court held that the trial court was not justified in discarding the invoices and delivery challans merely because the challans did not bear the defendant's acknowledgment, since the defendant had not specifically disputed the supply or delivery of goods and, in a civil suit, proof is on the standard of preponderance of evidence. However, that did not prove the amount claimed as outstanding. The plaintiff's statement of account was not up to date and did not reflect payments allegedly made after the period covered by it, including subsequent payments connected with the dishonoured cheque dispute.

The Hon’ble Supreme Court in the case of Chandradhar Goswami [1966 (10) TMI 150 - SUPREME COURT], observed that a person cannot be held liable solely on the basis of entries contained in the statement of account that are maintained in the course of business. In terms of Section 34 of the Indian Evidence Act, 1872, entries made in the books of account are relevant, however, such entries must be duly supported by independent and corroborative evidence establishing the transaction therein.

The settlement of the complaint under Section 138 of the Negotiable Instruments Act, followed by encashment of three cheques, was also not shown by any contemporaneous material to be only part payment of a larger outstanding liability. Since entries in books of account, without complete and corroborative proof of the liability, were insufficient, the plaintiff failed to prove the claimed balance. [Paras 30, 31, 32, 34, 35]

The dismissal of the suit for recovery was upheld because the alleged outstanding balance was not proved.

Final Conclusion: The appeal was dismissed. While the Court found that the supply of goods could not be rejected merely for want of acknowledgment on delivery challans, it held that the plaintiff had failed to prove the subsisting outstanding liability on the basis of an incomplete statement of account and the surrounding settlement material.

Procurement preference for micro and small enterprises - Exclusive purchase of reserved items from MSEs - Camouflaged works contract to defeat statutory procurement policy - Violation of the provisions of Section 11 of the MSMED Act - Whether the impugned tender is contrary to the PPP – MSE Order, 2012, in as much as the procurement of item No. 209 of the annexure to the PPP – MSE Order, 2012 was sought to be eased out by manufacturing the said product through the works contract ? -HELD THAT: - Admittedly, the respondent corporation have been procuring the product which is described in S. No. 209 till the floating of the said contract only from the MSE enterprises. The policy and the Act makes it clear that the item No. 209 can only be procured from MSEs. This procurement policy is sought to be tweaked by the respondent by deciding to float a tender under which the successful bidder gets to supply the product by installing the machinery required for producing the aforesaid product. A item exclusively reserved for MSEs is now sought to be obtained from non-MSE.

The Court held that Section 11 of the MSMED Act and the PPP-MSE Order, 2012 create a mandatory procurement preference, and item 209 in the appendix is one of the products reserved for exclusive purchase from MSEs. Though a genuineworks contract stands on a different footing, the impugned tender, on its terms, merely altered the mode of obtaining the same reserved product by requiring the successful bidder to set up machinery within the respondent's premises while the workforce and manufacturing activity remained that of the tenderer. The Court found that this was procurement of the reserved product disguised as a works contract, and that permitting such restructuring would render Section 11 and the procurement policy otiose. The decision in Lifecare Innovations Pvt. Ltd., and another Vs. Union of India and others [2025 (3) TMI 372 - SUPREME COURT] was applied to hold that the policy has statutory force, while Sterling and Wilson Pvt. Ltd and another Vs. Union of India [2017 (7) TMI 1488 - BOMBAY HIGH COURT] was distinguished because that case involved a composite contract for design and installation and did not concern an item reserved for exclusive procurement from MSEs. Since the respondents had not shown any lawful basis to depart from the policy, the tender was held contrary to the statutory procurement mandate. [Paras 48, 49, 52, 53, 54]

The respondents were directed not to extend the tender to non-MSEs and to follow the procurement policy under the PPP-MSE Order, 2012 as amended in 2018.

Final Conclusion: The Court allowed the writ petitions, holding that the tender sought to obtain a product exclusively reserved for MSE procurement by disguising procurement as a works contract. The respondents were restrained from extending the tender to non-MSEs and were directed to adhere to the statutory procurement policy.