TaxTMI Updates e-Newsletter
Jul 03,2026

Clubbing multiple financial years - Single show-cause notice for multiple financial years - Limitation period - Jurisdictional error despite alternative statutory remedy - Maintainability of Writ Petition - Whether for multiple financial years a single show-cause notice is permitted to be issued ?

Single show-cause notice for multiple financial years - Limitation under Section 74 linked to each financial year - Tax period based adjudication - HELD THAT: - On a plain reading of the provisions laid down under both Section 73 and 74 of 2017 Act, this Court finds that period of limitation are imposed under sub-Section (10) to both Sections 73 and 74 of 2017 Act respectively. Under Section 73 of 2017 Act it is three years from the due date for furnishing of annual return for the relevant financial year and under Section 74 it is five years from the due date for furnishing of annual return for the relevant financial year.

On a meaningful and conjoint reading of the provisions under sub-Section (106) to Section 2 read with sub-Sections (1), (2), (3), (4) and (10) to Section 74 of the 2017 Act, this Court finds and holds that there is a specific bar under Section 74 of the Act to issue a single show-cause notice in connection with multiple financial years.

The golden rule is that if the law states that a particular action has to be taken or step to be done in a particular manner and within a particular period of time fixed under the statute, such an act has to be carried out in that manner and within the fixed time only or not at all. All other modes are expressly forbidden in law. Limitation period for five years as provided under sub-Section (10) to Section 74 of 2017 Act cannot be carried over or cannot or should not continue perpetually by clubbing the previous financial years with the current relevant financial year.

Since the Act contemplates returns monthly or annually for a particular financial year, a show-cause notice may be founded on the relevant return period, but in the absence of any provision for a return spanning multiple financial years, a single notice cannot club several financial years together. Such clubbing would indirectly extend limitation for earlier years beyond what the statute permits and is therefore contrary to Section 74. On that construction, the impugned consolidated notice and the consequential order were held illegal and without jurisdiction. [Paras 42, 43, 44, 45, 46]

The consolidated show-cause notice issued for multiple financial years was held de hors Section 74, and the consequential order-in-original was also held without jurisdiction.

Alternative statutory remedy - Writ maintainability on ex facie jurisdictional error - HELD THAT: - The law is trite that it is the self-imposed restriction of the Constitutional Court in exercising its power under Article 226 of the Constitution of India when an alternative and efficacious remedy exists under the statute. However, if the Constitutional Court finds on the face of record that an act committed by an Article 12 authority on the face of it is de hors and in violation of the statutory provisions and is without jurisdiction or in excess of jurisdiction, such self-imposed restriction is not an absolute bar before a writ Court.

The Court reiterated that the rule requiring exhaustion of statutory remedy is a self-imposed restraint and not an absolute bar. Where the impugned action is ex facie contrary to the statute, without jurisdiction or in excess of jurisdiction, and the error can be corrected without entering into disputed facts, the writ court may intervene. Since the Court had already found that the very issuance of a single notice for multiple financial years violated Section 74, the defect was jurisdictional and apparent from the record. In those circumstances, the existence of an appeal under Section 107 did not bar exercise of writ jurisdiction. [Paras 47, 48, 49, 50]

The objection as to alternative remedy was rejected and the writ petition was held maintainable.

Final Conclusion: The High Court allowed the writ petition and quashed the impugned show-cause notice and consequential order-in-original. It held that a single notice under Section 74 cannot validly club multiple financial years, and that such ex facie jurisdictional error justified interference in writ jurisdiction despite the availability of a statutory appeal.

Restoration of cancelled GST registration - Cancellation for non-filing of returns - Payment of outstanding tax dues with interest and late fee

Restoration of cancelled GST registration - Non-filing of GST returns - Absence of fraudulent activity - HELD THAT: - The Court found that the record did not disclose any allegation of fraudulent activity by the petitioner and that the default in filing returns was not intentional or deliberate. It also took note of the petitioner's readiness and willingness to pay the outstanding GST dues together with applicable interest and late fee or penalty. Following the approach adopted in Treasure Realtors Private Ltd. vs. The State of Maharashtra [2026 (6) TMI 750 - BOMBAY HIGH COURT], the Court held that, in such factual circumstances, restoration of the cancelled registration was justified since it would benefit both the taxpayer and the revenue, provided the statutory dues were first determined and paid within the time stipulated by the Court. [Paras 13, 14, 15, 16, 17]

The authorities were directed to determine and intimate the outstanding dues, and on payment thereof within the prescribed time, the petitioner's GST registration was to be restored; failing such payment, the petition would stand dismissed.

Final Conclusion: The petition was disposed of by directing restoration of the petitioner's GST registration upon determination and payment of the outstanding GST dues together with applicable interest and late fee or penalty within the time fixed by the Court.

Cancellation of GST registration for non-filing of returns - Restoration of GST registration on payment of outstanding dues - Seeking relief against cancellation of GST registration for failure to file returns for a continuous period of six months - HELD THAT: - The Court found that the order of the co-ordinate bench in Treasure Realtors Private Limited Versus The State of Maharashtra [2026 (6) TMI 750 - BOMBAY HIGH COURT] granting restoration of registration to a similarly situated petitioner squarely applied to the present case. Taking note of the petitioner's explanation for the default and the statement on behalf of the State that similar relief would not be opposed, the Court considered it appropriate to grant restoration, not unconditionally, but subject to determination of the outstanding GST dues and payment thereof together with applicable interest, late fees and penalty within the time fixed by the Court. [Paras 6, 7]

The cancellation order and the appellate order were quashed, and the petitioner's GST registration was directed to stand restored upon payment of the dues as determined within the stipulated time, failing which the writ petition would stand dismissed.

Final Conclusion: The writ petition was allowed in terms of conditional restoration of the petitioner's GST registration. The impugned cancellation and appellate orders were set aside, with restoration made subject to timely payment of the outstanding dues with applicable statutory charges.

Personal hearing under Section 75(4) - Violation of natural justice in GST adjudication - failure to grant the petitioner an opportunity of personal hearing despite a written request and despite an adverse decision being contemplated - HELD THAT: - Considering the Division Bench decision in similar circumstances [2024 (2) TMI 124 - MADHYA PRADESH HIGH COURT], held that sub-section (4) of Section 75 mandates grant of hearing in two situations, including where a written request is made and where an adverse decision is contemplated. Since it was an admitted position that no personal hearing was afforded before passing the adverse order, the decision-making process stood vitiated as being contrary both to the statutory requirement and to the principles of natural justice. The impugned order was set aside and the matter was directed to be reconsidered after granting hearing through an officer other than the one who issued the show cause notice. [Paras 9, 10]

The impugned order was set aside for breach of Section 75(4) and natural justice, with a direction for fresh decision after affording personal hearing.

Final Conclusion: The writ petition was disposed of by setting aside the impugned GST order solely on the ground of denial of personal hearing in breach of Section 75(4) and natural justice. The matter was remitted for fresh decision in accordance with law, without any expression on the merits.

Extended period of limitation under Section 74 - Suppression of facts by failure to furnish information - Ex parte GST assessment and conditional remand - Petitioner failed to respond fully to the scrutiny intimation, the DRC-01A notice and the DRC-01 notice - Principles of natural justice - Transformation of proceedings

Extended period of limitation under Section 74 - Suppression of facts by failure to furnish information - Transformation of proceedings under Section 75(2) -HELD THAT: - The Court held that Explanation 2 to Section 74 was attracted because the petitioner had not fully responded to the written requisition for documents and had also not replied to the later DRC-01A intimations and DRC-01 notices. Such failure could be construed as suppression for purposes of Section 74, thereby justifying invocation of the extended period. The Court further held that where the department proceeds on the basis of the petitioner's own records and the proper officer finds non-payment or short payment of tax, erroneous refund, or wrongful availment or utilisation of input tax credit, recourse to Section 74 can be sustained. As regards Assessment Years 2018-2019 and 2019-2020, the Court additionally held that the proceedings were within limitation even otherwise, and observed that even if Section 74 had been wrongly invoked, Section 75(2) enabled the appellate authority to treat the proceedings under Section 73, but that course would require a proper reply to the notice. [Paras 13, 14, 15, 16, 17]

The challenge to the impugned orders on the ground of improper invocation of Section 74 was not accepted.

Ex parte GST assessment and conditional remand - Opportunity to file reply -HELD THAT: - Although the Court found no reason to interfere with the impugned orders on the petitioner's substantive challenge, it noted that the orders had been passed ex parte and followed its consistent approach in similar matters of granting one further opportunity. The remand was therefore directed only on terms, namely deposit of 10% of the disputed tax and filing of replies to the notices within the stipulated period, after which the respondent was to pass fresh orders de novo upon hearing the petitioner. The Court also made it clear that failure to comply with those conditions would result in dismissal of the writ petitions. [Paras 18, 19, 20, 21]

The matters were remitted to the respondent for fresh orders de novo, subject to deposit of 10% of the disputed tax and filing of replies within 30 days, failing which the writ petitions would stand dismissed.

Final Conclusion: The Court held that invocation of the extended period under Section 74 was justified in the facts of the case and declined to interfere with the impugned orders on that ground. However, since the orders were ex parte, the matters were remitted for fresh adjudication subject to the petitioner depositing 10% of the disputed tax and filing replies within the time granted.

Consideration of subsequently filed return - Assessment for non-filing of return - HELD THAT: - The Court held that, once the petitioner had uploaded the return, the respondent could not allow the existing order passed for non-filing of return to stand unchanged. The proper course was for the respondent to take the filed return into account and deal with the matter by reassessment in accordance with law. [Paras 5]

The impugned order was set aside and the matter was remanded for consideration of the return filed by the petitioner and for passing fresh orders in accordance with law.

Final Conclusion: The Court held that, after the return had been uploaded, the order passed for non-filing of return could not be sustained. The matter was remanded to the respondent to consider the filed return and pass fresh orders in accordance with law.

Validity of assessment order passed u/s 143(3) r/w Section 144B -Reasonable opportunity of hearing - Breach of principles of natural justice - Addition beyond show cause notice - Faceless assessment procedure

Faceless assessment procedure - Breach of principles of natural justice- denial of reasonable opportunity of hearing - HELD THAT: - The Court held that the time granted to reply to the show cause notice issued under the faceless assessment procedure could not be regarded as reasonable, since the notice was issued late at night and the available period for response was less than two clear days, including Saturday and Sunday. On the respondents being unable to dispute this position, the Court found a breach of the principles of natural justice. [Paras 8]

The assessment order and consequential demand notice were liable to be quashed on the ground of denial of reasonable opportunity, and the matter was remanded for fresh assessment after adequate hearing.

Addition beyond show cause notice - Opportunity to meet proposed addition - addition made under Section 69A without any such proposal in the show cause notice and without affording hearing - HELD THAT: - The Court found that the show cause notice had not proposed any addition under Section 69A, yet the impugned assessment order made such addition. Since no opportunity of hearing had been given to the petitioner on that proposed basis, the Court treated the addition as having been made beyond the scope of the notice and in violation of natural justice. [Paras 9]

The addition under Section 69A, having been made without prior proposal or hearing, vitiated the assessment order, which was quashed with remand for fresh decision in accordance with law.

Final Conclusion: The writ petition was allowed. The assessment order and consequential demand notice were quashed for breach of natural justice, and the matter was remanded for fresh assessment, if permissible in law and within limitation, after granting an adequate opportunity of hearing.

Monetary limits for departmental appeals - exceptions to monetary limits in Board circulars - prospective effect of newly carved exceptions - application of revised monetary limits to pending appeals - exceptions introduced by the CBDT letter modifying the earlier monetary limit circular held to operate prospectively or apply to appeals instituted before the date of that letter - HELD THAT: - The Court held that the modifying letter itself showed that the change would take effect from the date of its issuance. On that basis, while the prescribed monetary limits would govern pending appeals, the newly introduced exceptions could not be given retrospective operation. See Commissioner of Income Tax Vs. V.M. Salgaonkar and Brothers (P.) Ltd. [2024 (12) TMI 717 - BOMBAY HIGH COURT]

Applying that principle, since the present appeal had been instituted before the date of the modifying letter and the tax effect was below the mandatory limit, the appeal was liable to be disposed of on that ground, without examining the merits and with the questions of law kept open. [Paras 4, 5, 6, 7]

The appeal was disposed of as not maintainable on account of low tax effect, and the substantial questions of law were left open.

Final Conclusion: The Court disposed of the Revenue's appeal solely on the ground that the tax effect was below the prescribed monetary limit. It held that the exceptions introduced by the later CBDT communication were only prospective, and therefore left the substantive questions on bogus purchases open.

Revenue appeal for enhancement - Failure to challenge first appellate order- Estimation of income on Bogus purchases addition - Revenue seeks enhancement of the addition for alleged bogus purchases in appeal against the Tribunal's order when it had not challenged the order of the Commissioner (Appeals) - HELD THAT: - The Court held that, once the Revenue had not preferred any appeal against the order of the Commissioner (Appeals), it stood precluded from questioning before the High Court the reduction of the addition by the Tribunal from the percentage fixed by the Commissioner (Appeals). Following Principal Commissioner of Income-tax Vs. Ravindra Bhaskar Deshmukh [2025 (11) TMI 2016 - BOMBAY HIGH COURT] the Court concluded that no substantial question of law arose from the Revenue's attempt to obtain enhancement. [Paras 6]

The Revenue's challenge to enhancement was not maintainable in the absence of an appeal against the order of the Commissioner (Appeals), and no substantial question of law arose.

Final Conclusion: The appeal was dismissed on the ground that the Revenue, having not challenged the order of the Commissioner (Appeals), could not seek enhancement against the Tribunal's further reduction of the addition. Consequently, no substantial question of law arose for consideration.

Monetary limits for departmental appeals - Exception for information from law enforcement agencies - Interpretation of CBDT circulars - Low tax effect exception - Rectification under section 254(2) - VAT department is not referred as a law enforcement agency and, therefore, would not be covered by paragraph 10(e) of the Circular dated 11.07.2018 read with the Circular dated 20.08.2018

HELD THAT: - The Court held that clause 10(e) refers to agencies such as CBI, ED, DRI, SFIO and DGGI only by way of illustration. Since it was not disputed that the VAT department is also an enforcement agency, it had to be regarded as an agency akin to those mentioned in the clause. The Tribunal therefore misinterpreted the circular by treating the absence of a specific reference to the VAT department as excluding it from the exception to the monetary-limit policy. [Paras 6, 7, 8]

The impugned order rejecting the miscellaneous application was set aside, and the appeal was directed to be restored to the Tribunal for decision on merits after hearing both sides.

Final Conclusion: The High Court held that the Tribunal had wrongly excluded the VAT department from the scope of clause 10(e) of the relevant circulars. On that basis, the order rejecting the Revenue's rectification application was set aside and the appeal was restored to the Tribunal for adjudication on merits, with all contentions kept open.

Recording of satisfaction u/s 153C - Immediate recording of satisfaction after completion of assessment of searched person - Jurisdictional condition for assumption of jurisdiction under section 153C - Validity of Notices u/s 153C where the satisfaction note of the Assessing Officer of the searched person was recorded almost 10 months after completion of the assessment of the searched person - HELD THAT: - The Court held that the requirement that satisfaction be recorded immediately after completion of the assessment of the searched person is a jurisdictional condition governing proceedings under section 153C.

Following its earlier decisions, rendered after considering Commissioner of Income-tax-III V/S Calcutta Knitwears [2014 (4) TMI 33 - Supreme Court] the Court held that the expression "immediately" cannot be diluted into a test of reasonable time. Since the assessment of the searched person had been completed on or about 27th September 2022 and the satisfaction note was recorded only on 03rd August 2023, the delay of almost 10 months did not satisfy that requirement. The Revenue's plea of reasonable compliance was rejected, particularly as the assets relied upon had been seized from the petitioner's premises and locker. Consequently, the jurisdictional condition for invoking section 153C was not fulfilled. [Paras 14, 15, 16]

The impugned notices under section 153C were quashed on the ground that the satisfaction note was not recorded immediately after completion of the assessment of the searched person; the other contentions were expressly kept open.

Final Conclusion: The writ petitions were allowed and the notices issued under section 153C for the stated assessment years were quashed. The Court held that the delayed recording of the satisfaction note defeated the jurisdictional requirement, while all other contentions were left open.

Reassessment beyond four years - Full and true disclosure of material facts - change in depreciation methodfrom SLM to WDV and the related accounting treatment - Proviso to reassessment for escaped income - HELD THAT: - The Court held that where reassessment is initiated after four years from the end of the relevant assessment year, it must be founded on failure by the assessee to make a full and true disclosure of material facts necessary for assessment. On the record, the assessee had furnished the audited financial statements, notes to accounts, the depreciation and amortization disclosure, and the accounting policy explaining the shift from SLM to WDV and its effect.

The original assessment under scrutiny was made after considering those materials. In the absence of any tangible material showing that any relevant fact had not been disclosed in the original proceedings, the condition prescribed in the proviso to Section 147 was not satisfied. [Paras 8, 9, 10]

The notice issued under Section 148 and the order rejecting objections were quashed as the reassessment was impermissible beyond four years for want of any failure of disclosure by the assessee.

Final Conclusion: The High Court held that the reassessment notice issued after four years was barred, since the assessee had fully and truly disclosed the material facts concerning the change in depreciation method during the original scrutiny assessment. The impugned notice and the order disposing of objections were therefore quashed.

Reassessment against non-existing entity - Mandatory compliance with faceless assessment procedure - Notice u/s 148 to correct assessee - Draft assessment order under faceless assessment -

HELD THAT: - The Court held that the reopening proceedings suffered from a jurisdictional infirmity on two counts. First, the proceedings were initiated and continued in the name and PAN of the erstwhile partnership firm, and no notice u/s 148 was issued to the petitioner company; therefore, assessment could not be made in the hands of the company without such notice.

Secondly, the mandatory procedure u/s 144B was not complied with, since no draft assessment order was made and a final assessment order was passed directly. The Court also noted that the assessing authority was aware of both PANs yet wrongly proceeded on the basis that the firm and the company continued to exist simultaneously, though the firm had already stood converted into the company. [Paras 10, 11, 12, 13]

The impugned assessment order, together with the consequential computation sheet, demand notice and penalty notices, was quashed and set aside, with liberty to the respondents to proceed afresh in accordance with law after addressing the objection regarding proceedings against a non-existing entity and following Section 144B.

Final Conclusion: The Court set aside the reassessment and consequential proceedings for want of jurisdiction and non-compliance with the mandatory faceless assessment procedure. The merits of the addition were left open for consideration in any fresh proceedings taken in accordance with law.

Reopening beyond four years - Change of opinion - Failure to disclose fully and truly material facts - Absence of tangible material - Reassessment for the claim of deduction under Section 10AA, sought to be reopened after scrutiny assessment - HELD THAT: - The Court found that, in the original scrutiny assessment u/s 143(3), the assessee's claim u/s 10AA had already been examined on the basis of documents called for u/s 142(1), and the AO had in fact made a partial disallowance while completing that assessment. The subsequent reopening was thus directed against the very same claim and material. The order rejecting objections was held to be perfunctory, and the record did not disclose any new tangible material coming to the notice of the Assessing Officer so as to justify a belief of escapement of income.

Since the reopening was beyond four years from the end of the relevant assessment year, the proviso to Section 147 required failure on the part of the assessee to file a return or to disclose fully and truly all material facts necessary for assessment; that condition was held absent. The reopening was therefore treated as resting merely on a change of opinion and could not be sustained. [Paras 6, 7, 8]

The notice issued under Section 148 and the order rejecting the objections were quashed.

Final Conclusion: The writ petition was allowed. The Court held that the reassessment for A.Y. 2012-13 was impermissible, being based on a mere change of opinion without any new tangible material and without any failure by the assessee to make full and true disclosure.

Pending rectification application u/s 154 - demand continued to reflect on the e-filing portal

HELD THAT:- We direct the respondent - Deputy Commissioner of Income Tax Circle 1(3), to decide the application dated 12.03.2015 filed by the petitioner within a period of three months. In case, the Rectification Application is to be decided by any other competent authority, the Deputy Commissioner of Income Tax may place the said application before such authority, without asking the petitioner to file a fresh application.

We further direct that the petitioner shall not be asked to produce any additional evidence compelling him to justify the non-payment of TDS amount by Cambay SEZ Pvt. Ltd, since along with this application, the petitioner has already produced the Ledger Account submitted by Cambay SEZ. Pvt Ltd. We further clarify that in case, the competent authority is not in possession of the Ledger Account submitted by Cambay SEZ Pvt. Ltd, it will be open for the petitioner to supply the same.

Further direct that till the orders are passed on Rectification Application, the respondent department shall not press for the outstanding demand amount as reflected in the e-portal.

Characterisation of overseas agent commission - Disallowance for non-deduction of tax at source on non-resident payments - Rectification of appellate order without enhancement of tax liability

Rectification of appellate order - Notice u/s 154 where there is no enhancement - Whether the rectification order passed by the appellate authority u/s 154 without fresh notice to the assessee, was valid in the absence of any enhancement of tax liability? - HELD THAT: - The Tribunal held that the appellate authority had recorded that an earlier unedited version of the order had been uploaded and that certain lines in the relevant paragraph had been omitted. The correction made u/s 154 only added to the reasoning already recorded and did not result in any new addition, enhancement of assessment, or increase in liability. On that basis, notice to the assessee was not mandatory. The Tribunal further held that filing of appeal before the Tribunal did not bar such rectification so long as the appeal had not yet been taken up for final hearing. [Paras 8]

The challenge to the rectification order failed.

Overseas agent commission - Fees for technical services - Tax deduction at source on non-resident payments - whether commission paid to an overseas agent for procuring export orders and following up payments constituted fees for technical services so as to attract tax deduction at source? - HELD THAT: - The Tribunal found that the alleged written agreement was not on record and, after the assessee specifically denied its existence, the matter had to be decided on the documentary material actually available. On examining the email correspondence, the Tribunal found that it related to commission invoices and communication of order specifications such as measurements, print, texture, dye and other buyer requirements for execution of export orders. Such exchanges did not establish rendering of technical or consultancy services. The payments therefore retained the character of commission for procuring orders and pursuing payments from the foreign buyer. Since the services were rendered outside India, the payments were held not taxable in India; consequently, the assessee had no obligation to deduct tax at source under section 195 and the disallowance u/s 40(a)(ia) could not be sustained. The same reasoning was applied to the identical issue for AY 2014-15. [Paras 10, 11, 12, 17]

The disallowance on account of non-deduction of tax at source from payment to the overseas agent was deleted for AY 2013-14 and, on identical facts, for AY 2014-15 as well.

Final Conclusion: The Tribunal upheld the validity of the rectification order under section 154, but on merits held that the payment to the Sweden-based agent was commission for procuring export orders and follow-up of payments, not fees for technical services. Accordingly, the assessee's appeal against the rectified order for AY 2013-14 was partly allowed, the parallel appeal against the original order was dismissed as infructuous, and the appeal for AY 2014-15 was allowed.

TP Adjustment - Most appropriate method for benchmarking import of finished goods - Resale Price Method for routine distributor - Effect of advertising and distribution expenditure on RPM analysis

Selection of MAM - Resale Price Method for import of finished goods - Routine distributor without value addition - Rejection of TNMM in distribution segment - TP Adjustment on import of finished goods in the distribution segment benchmarking where the assessee was merely reselling the imported products without value addition - HELD THAT: - The Tribunal found that the assessee had imported bottle-in-origin alcoholic beverages from its associated enterprise and resold them to unrelated customers in India without any processing, physical alteration, or use of intangible assets to add economic value to the products. Mere incurring of advertising, sales and distribution expenditure to establish itself in the local market did not alter its character as a routine distributor. Since RPM compares gross profit, expenditure booked below the gross profit line had no bearing on determination of arm's length price under that method. In the absence of evidence that the assessee had developed local intangibles or undertaken value addition to the traded goods, the rejection of RPM and substitution of TNMM was held to be unwarranted. [Paras 8, 9, 10, 11]

RPM was held to be the most appropriate method for benchmarking the international transaction of import of finished goods, and the grounds challenging the transfer pricing adjustment were allowed.

Interest u/ss 234B and 234D - Consequential levy of interest - HELD THAT: - The Tribunal did not undertake any independent adjudication on the merits of the levy and treated the interest as consequential to the assessment outcome. [Paras 12]

The issue of interest was left to follow the consequential effect of the order.

Initiation of penalty proceedings u/ss 271G and 271(1)(c) - HELD THAT: - The Tribunal held that a challenge directed merely against initiation of penalty proceedings was premature and therefore did not call for adjudication in the present appeal. [Paras 13]

The ground against initiation of penalty proceedings was dismissed as premature.

Final Conclusion: The Tribunal held that, for the assessee's distribution segment in AY 2011-12, import of finished goods from the associated enterprise was to be benchmarked under RPM and not TNMM, as the assessee was only a routine distributor without value addition. The challenge to interest was treated as consequential, and the challenge to initiation of penalty proceedings was dismissed as premature; the appeal was partly allowed.

Penalty u/s 271D - Cash advance for immovable property - Section 269SS specified sum - Penalty for acceptance of cash advances from customers for a residential building project - Penalty for cash acceptance of advance for immovable property - Prospective operation of amended definition of specified sum - HELD THAT: - The Tribunal held that the AO had proceeded on the footing that the cash receipts were covered by the expression specified sum in Explanation (iv) to section 269SS. Since that definition was substituted by the Finance Act, 2023 with effect from 01.04.2023, it could not be invoked for the year under consideration.

On that basis, application of section 269SS to the subject transaction for assessment year 2013-14 was held to be illegal and without authority of law, and the consequential penalty under section 271D could not survive. [Paras 6]

The penalty order and the appellate order were quashed.

Final Conclusion: The Tribunal allowed the appeal and held that the amended definition of specified sum introduced with effect from 01.04.2023 could not be applied to assessment year 2013-14. Consequently, the penalty levied under section 271D for the cash advances received by the assessee was quashed.

Business expenditure on medical reimbursement to Chairman under service terms - Rejection of books on mere suspicion of loss shifting between units - Best judgment estimation without specific defects in accounts

Medical reimbursement as business expenditure - Commercial expediency - Reimbursement of medical treatment and incidental travel expenses of the Chairman under the board-approved terms of service allowability as business expenditure - HELD THAT: - The Tribunal held that the claim was allowable in principle because a board resolution specifically permitted reimbursement of medical expenses to the Chairman. Accepting the record as placed before the authorities below, it found that, in the facts of the case, the expenditure incurred for the treatment of the Chairman was to be allowed u/s 37(1), the contractual entitlement and business nexus having been accepted. [Paras 4]

The disallowance of the medical reimbursement and incidental travel expenses was deleted.

Rejection of books of account - Estimated profit of Sahibabad unit - Absence of specific defects - books of account of the Sahibabad unit rejected merely because that unit had disclosed a loss while other units, including eligible units claiming deduction, were profitable - HELD THAT: - The Tribunal found the very starting premise of the Assessing Officer to be flawed, since the inquiry proceeded only from the disclosed loss of the Sahibabad unit and then disbelieved the assessee's explanations and documents. It noted that the books of the other units were not similarly examined to support any reasonable inference of inflation of expenses or shifting of profits for deduction purposes. It further held that the assessee's explanation that the Jaipur and Sahibabad units functioned in a combined manner, with some expenses booked in Sahibabad against receipts relating to Jaipur, had not been properly considered despite supporting documentation. In the absence of any specific defect in the accounts, or any identified under-reporting of receipts or inflation of expenditure, rejection of the book results and estimation of profit were unjustified. [Paras 4]

The rejection of the books of the Sahibabad unit and the consequential income enhancement were set aside.

Final Conclusion: The Tribunal allowed the appeal in full. It held that the medical reimbursement claim was allowable as business expenditure and that the rejection of the Sahibabad unit's books and the consequential estimated profit addition were unsustainable for want of any specific defect in the accounts.

Denial of Foreign tax credit - Belated filing of Form No. 67 - Processing u/s 143(1)

HELD THAT: - The Tribunal held that, since Form No. 67 had not been filed when the return was processed, the Central Processing Centre committed no error in not granting foreign tax credit in the intimation, as the claim then remained unsupported by the prescribed particulars. At the same time, the substantive claim to foreign tax credit did not fail merely because the form was filed belatedly.

As the assessee had claimed the credit in the return and had subsequently furnished Form No. 67, the claim required examination on merits, and the benefit could not be refused solely on account of delay in filing the form. [Paras 5, 6]

The assessee was directed to submit Form No. 67 before the jurisdictional Assessing Officer, who was directed to examine eligibility and grant foreign tax credit in accordance with law.

Final Conclusion: The Tribunal held that the denial of foreign tax credit at the stage of processing was justified because Form No. 67 was not then on record, but the claim itself could not be rejected solely for that reason after the form was subsequently filed. The matter was directed to be examined by the Assessing Officer for grant of the credit, if otherwise admissible.

Deduction for interest on bank deposits of credit co-operative society - Business income attributable to providing credit facilities to members - Section 80P(2)(a)(i) vis-a-vis section 80P(2)(d) - Choice between conflicting High Court decisions on closer factual similarity

Whether Interest earned by a members' credit co-operative society from deposits with co-operative banks and other banks, including scheduled banks, was eligible for deduction as business income attributable to providing credit facilities to its members? - HELD THAT: - The Tribunal held that, for purposes of deduction under section 80P(2)(a)(i), the material question was whether the interest formed part of the profits attributable to the assessee's business of providing credit facilities to its members. It found that the distinction between interest from co-operative banks and from other banks was relevant for section 80P(2)(d), but not for section 80P(2)(a)(i).

On the Tribunal's reading of the Karnataka High Court in Totgars Co-Operative Sale Society Ltd. [2008 (9) TMI 493 - KARNATAKA HIGH COURT] decisions relied on by the assessee, such interest retained the character of business income attributable to the assessee's principal activity. Faced with conflicting Karnataka High Court decisions, the Tribunal applied the line of authority whose facts were closer to the present case and, on that basis, rejected the treatment of the interest as income from other sources and also declined to sustain the direction to consider relief under section 57. [Paras 11, 12, 14, 15, 16]

The assessee's claim for deduction under section 80P(2)(a)(i) on interest from co-operative banks and other banks was allowed, and the Assessing Officer was directed to grant the deduction accordingly.

Final Conclusion: The Tribunal condoned the delay in filing the appeal on finding sufficient cause and absence of mala fides. On merits, it held that the interest earned by the assessee from deposits with co-operative banks and other banks formed part of its business income attributable to providing credit facilities to members and was deductible under section 80P(2)(a)(i), with the result that the appeal was allowed.

Authenticity of Certificate of Origin under Indo-Thai Free Trade Agreement - Concessional customs duty based on authenticated foreign Certificate of Origin - Substantial question of law - Finality of foreign certification - Origin rules compliance - HELD THAT: - The Court held that once the authorities in Thailand had confirmed the authenticity of the Certificates of Origin and their issuance by the Department of Foreign Trade, Thailand, Indian authorities could not go behind those certificates and undertake an independent enquiry to deny the concessional rate of duty. Permitting such scrutiny would destroy the sanctity of the Interim Rules of Origin under the Indo-Thai Free Trade Agreement. On that footing, any statement of the importer recorded under Section 108 of the Customs Act, 1962 could have no bearing on the authenticity of the Certificate of Origin. [Paras 5, 6]

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

Final Conclusion: The High Court found no infirmity in the Tribunal's order holding that Indian customs authorities could not deny the benefit of concessional duty by questioning Certificates of Origin authenticated by the designated Thai authority. The appeal was accordingly dismissed for absence of any substantial question of law.

Effect of Notification No. 12/2012-Cus -Prospective Or retrospective operation of exemption notification- Conversion of foreign-going vessel to coastal run - Customs duty on vessels imported prior to later notification - seeking levy of duty of customs of vessels imported in 2009 by retrospectively applying exemption notification - HELD THAT: - The Court held that the language of the notification, particularly the saving clause preserving things done or omitted under the earlier notification, showed no intention to give it retrospective effect. Duty on the vessel could not be fastened at the later stage of conversion to coastal run when the import had already taken place earlier and the vessels had entered India under the exemption then prevailing. Accepting the reasoning adopted in Great Eastern Shipping Company Ltd. And Ors. vs. Union of India and Ors. [2020 (1) TMI 326 - ANDHRA PRADESH HIGH COURT] and followed by The Great Eastern Shipping Company Ltd. vs. Union of India and Ors. [2021 (9) TMI 156 - ORISSA HIGH COURT], the Court held that the reliance placed by the respondents on Union of India vs. Jalyan Udyog [1993 (9) TMI 108 - SUPREME COURT] did not assist them, having regard to the wording of the notification and the nature of the present controversy. The respondents' insistence on duty for permitting conversion from foreign-going to coastal run was therefore illegal. [Paras 14, 16, 17, 18]

The writ petition was allowed in terms of the declaratory relief, and the respondents were directed to discontinue the bank guarantees furnished pursuant to the interim order.

Final Conclusion: The Court held that Notification No. 12/2012-Cus. operates only prospectively and cannot be invoked to levy duty on vessels already imported into India before its commencement merely because they were later sought to be converted from foreign-going to coastal run. The writ petition was accordingly allowed and consequential discontinuance of the bank guarantees was directed.

Penalty for abetment under customs law - Authorised courier obligations under courier clearance regulations - failure to comply with Regulation 13 - Penalty on an authorised courier agent - HELD THAT: - The Tribunal held that the sole allegation in the show cause notice was non-fulfilment of obligations as an authorised courier under Regulation 13 of the Courier Imports and Exports (Clearance) Regulations, 1998. There was no allegation invoking abetment, which is the basis on which penalty under Section 112(a) was imposed. In the absence of such allegation, the penalty was not imposable. The Tribunal further noted that the proceedings initiated against the appellant under the courier regulations had already been dropped in the appellant's favour, and therefore the alleged regulatory contravention could not sustain the penalty. [Paras 5]

The penalty imposed on the appellant was held to be unsustainable and was set aside.

Final Conclusion: The Tribunal held that, since the show cause notice contained no allegation of abetment and alleged only breach of courier obligations, penalty under Section 112(a) could not be imposed on the authorised courier agent. The impugned order was therefore set aside and the appeal was allowed.

Confiscation of areca nuts on allegation of foreign origin - Burden of proof for non-notified goods - Penalty under Section 112(b) consequent upon failed confiscation case -HELD THAT: - The Tribunal held that areca nuts are not notified goods under Section 123 of the Customs Act, 1962. Accordingly, the burden rested on the Revenue to establish that the seized goods were of foreign origin. Since the seizure and subsequent proceedings were founded on the belief that the goods were foreign origin goods, and the Revenue failed to prove that fact, the confiscation proceedings were unsustainable. Once the basis for confiscation failed, no penalty could survive against the appellant. [Paras 14, 15]

The order of absolute confiscation was set aside and the penalty imposed on the appellant was held to be not leviable.

Final Conclusion: The appeal was allowed. The Tribunal set aside the absolute confiscation of the seized areca nuts and deleted the penalty, holding that the Revenue had failed to discharge the burden of proving foreign origin of non-notified goods.

Imposition of penalty under Section 114(iii) -Binding nature of remand directions - Admissibility of investigation statements under Section 138B - Retrospective levy of export penalty - Principles of Natural Justice - Pari materia interpretation

Binding nature of remand directions - Non-compliance with remand order - HELD THAT: - The Tribunal found that, in the earlier round, specific directions had been issued for furnishing examination records, contemporaneous export values and, if required, examination or cross-examination of concerned officers. Those directions were not followed in the remand proceedings. Since the adjudicating authority proceeded to confirm penalties without carrying out the remand directions, the impugned order was held to be unsustainable in law on that ground itself. [Paras 6]

The penalty order was unsustainable for non-compliance with the earlier remand directions.

Admissibility of investigation statements under Section 138B - Cross-examination in adjudication - HELD THAT: - The Tribunal accepted the appellant's contention founded on P.C. Jain [2025 (5) TMI 1626 - CESTAT KOLKATA], held that Section 138B of the Customs Act is mandatory before statements recorded during investigation can be relied upon for proving the truth of their contents in adjudication. As the makers of the statements had not been examined in the manner required and the statutory procedure had admittedly not been followed, those statements could not be relied upon for sustaining penalties. [Paras 7, 8, 9]

The statements relied upon by the adjudicating authority were inadmissible for want of compliance with Section 138B, and the penalties could not be sustained on that basis.

Retrospective levy of export penalty - Penalty under Section 114(iii) - HELD THAT: - The Tribunal held that, since the export in question related to the period 1999-2000 and Section 114(iii) was not then on the statute book, penalty under that provision was not legally imposable. A penal provision cannot be applied to a period prior to its coming into force. [Paras 10]

Penalty under Section 114(iii) was not imposable for the relevant period.

Final Conclusion: The Tribunal held that the impugned order confirming penalties could not stand, both because the adjudicating authority had not complied with the earlier remand directions and because the statements relied upon were inadmissible for want of compliance with Section 138B. It further held that penalty under Section 114(iii) was not leviable for the period 1999-2000, and accordingly set aside the penalties and allowed the appeals.

Proceedings under Customs Broker Licensing Regulations - Free Trade Warehousing Zone activities - Form C intimation for operation at customs station - Violation of Regulation 10(d), (e) & (n) of CBLR, 2018 - Whether proceedings can be initiated under the Customs Broker Licensing Regulation, 2018 against the Respondent who had carried out activities in an independent capacity as Free Trade Warehousing Zone unit (FTWZ) under the approval of Development Commissioner, CSEZ ? - HELD THAT: - The Tribunal held that the controversy turned on the authority to invoke the Customs Broker Licensing Regulations, 2018 against activities undertaken in the FTWZ. In the absence of any Form 'C' intimation under Regulation 7(3) for extending the Customs Broker licence to the SEZ/FTWZ operations, and in the absence of evidence that the customs broker licence had been issued for transacting business in the SEZ unit, the FTWZ activities could not be treated as having been undertaken under the Customs Broker licence. The Tribunal further treated the inquiry report as the crucial document in proceedings under the Regulations and found that, once the inquiry report recorded that the alleged violations of Regulation 10(d), (e) and (n) were not proved, the Revenue's appeal seeking revocation of licence, forfeiture of security and penalty was not maintainable. [Paras 13]

The impugned order dropping the proceedings was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal held that the respondent's FTWZ operations were not shown to have been undertaken under its Customs Broker licence, particularly in the absence of the prescribed Form 'C' intimation and any evidence extending the licence to SEZ operations. Since the inquiry report had also found the alleged regulatory violations unproved, the order dropping the proceedings was sustained and the Revenue's appeal was dismissed.

Classification of goods -Aluminium formwork structures with accessories - Adjudication beyond show cause notice - Aluminium structures vis-a-vis moulds for mineral materials - classifiable under CTH 76109010 or under CTH 84806000 as moulds for mineral materials - Benefit of doubt in taxation - HSN explanatory notes -

Classification of aluminium formwork structures - HELD THAT: - Following the decision of Tribunal in the case of M/s. Alcove Constructions Pvt. Ltd. [2024 (9) TMI 712 - CESTAT KOLKATA],held that the imported goods were essentially aluminium formwork panels used as movable shuttering and support for in situ pouring of concrete during construction. They were dismantled and reused after the concrete set, and did not function as moulds producing blanks or finished articles. On the HSN explanatory notes, heading 76.10 covered aluminium structures and allied structural items, whereas heading 84.80 contemplated moulds used to shape material into identifiable articles. Since the impugned goods only supported casting of immovable structures and did not themselves answer the description of moulds for mineral materials, the proposed reclassification under CTH 84806000 was unsustainable. [Paras 10]

The classification claimed by the appellant under CTH 76109010 was accepted, and no duty was payable on the basis of classification under CTH 84806000.

Adjudication beyond show cause notice - Denial of exemption on new ground - Certificate of origin - non-compliance of the certificate of origin requirements - HELD THAT: - The Tribunal found that the allegation that the certificate of origin did not satisfy the prescribed origin requirement was never part of the show cause notice. A demand could not therefore be sustained on that fresh ground, since the appellant had no notice or opportunity to meet that case. The adjudicating authority had thus travelled beyond the scope of the show cause notice, and the enhanced demand founded on the certificate of origin objection was legally untenable. [Paras 11, 13]

The new ground relating to invalidity of the certificate of origin and the consequential enhancement of demand were held unsustainable.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the imported aluminium formwork structures were classifiable under CTH 76109010 and that the demand could not be enhanced on a certificate of origin ground not contained in the show cause notice.

Denial of exemption under Notification No. 84/97-Cus - imports for Asian Development Bank financed project -Procedural condition of countersignature on Project Implementing Authority certificate - Penalty on Project Implementing Authority in absence of sustainable confiscation

Exemption under Notification No. 84/97-Cus - HELD THAT: - The Tribunal noted that the demand had been confirmed on the ground that the appellant failed to produce the certificate in the form contemplated by the notification. It held, following CCE, Chennai Vs. Dynaspede Integrated Systems Ltd. [2001 (8) TMI 231 - CEGAT, CHENNAI], that production of the certificate before clearance is a procedural requirement and exemption cannot be denied solely for belated submission. It further followed M/s. Rashtriya Chemicals & Fertilizers Ltd., M/s. ICICI Bank Ltd. [2019 (7) TMI 1987 - CESTAT MUMBAI], where on similar facts the countersignature requirement was treated as procedural and the substantive benefit was held admissible when the project otherwise satisfied the notification. On that basis, the order denying exemption and the consequential demand, interest, confiscation and penalty against the importer was held unsustainable. [Paras 12, 13]

The benefit of the exemption notification was held admissible to Appellant No. 1, and the demand of customs duty, interest, confiscation and penalty against it were set aside.

Penalty on Project Implementing Authority - Penalty in absence of sustainable confiscation - HELD THAT: - The Tribunal held that the omission or procedural lapse attributed to Appellant No. 2 in relation to obtaining countersignatures on the certificate was not by itself sufficient to justify penalty. It further found that, in the absence of an order sustaining confiscation of the goods, the statutory basis for imposing the penalty invoked against the bank was lacking. The penalty on the bank was therefore unsustainable. [Paras 14]

The penalty imposed on Appellant No. 2 was set aside.

Final Conclusion: The Tribunal held that the exemption could not be denied on the sole basis of the procedural defect relating to countersignature on the Project Implementing Authority certificate and, following the earlier Tribunal decision on similar facts, set aside the duty demand, interest, confiscation and penalty against the importer. The penalty on ICICI Bank was also set aside as the procedural lapse alleged against it did not justify penalty and confiscation was not upheld.

Interpretation restricting the remuneration for the entire tenure -IRP remuneration as CIRP cost - Judicial review of fee fixation by Committee of Creditors - Distinction between commercial wisdom in resolution matters and professional remuneration - deemed resolution professional - parity in remuneration - statutory duties of resolution professional

Entitlement to a monthly remuneration for the entire period of appellant's tenure as interim resolution professional​​​​​​​ - HELD THAT: - The Appellate Tribunal held that the reliance placed by the Adjudicating Authority and the CoC on K. Sashidhar Versus Indian Overseas Bank & Ors.[2019 (2) TMI 1043 - SUPREME COURT] was misplaced. That decision concerned the limited scope of judicial review over the CoC's decision to approve or reject a resolution plan, and did not render every decision of the CoC under the Code non-justiciable. Remuneration payable to an IRP forms part of CIRP costs and falls within the adjudicatory domain under the statutory framework governing such costs. The Tribunal noted that fee fixation requires scrutiny of the factual basis, the work performed and the applicable arrangement, and therefore could not be excluded from review by treating it as an unreviewable matter of commercial wisdom. [Paras 36, 54, 55]

The Tribunal disapproved the reasoning founded on K. Sashidhar, but held that the ultimate direction on payment did not call for interference.

Construction of CoC minutes on IRP remuneration - Monthly remuneration contingent on appointment as Resolution Professional - Quantum of compensation for services of erstwhile IRP - HELD THAT: - On a combined reading of the agenda, minutes and resolutions of the first CoC meeting, the Tribunal found that the appellant's remuneration as IRP was approved as a consolidated amount, whereas the proposal for monthly remuneration was tied to his appointment as Resolution Professional. Since his appointment as RP was expressly disapproved in the first CoC meeting, the claim that the approved amount of remuneration for IRP was itself monthly was held to be an erroneous reading of the record. The Tribunal further noted that the appellant had no vested right to continue against the wishes of the CoC, that the replacement process was delayed, and that the CoC was entitled in the facts of the case to assess the quantum and quality of the work done and fix the monetary compensation. The later IBBI prescription of minimum monthly fee was also held inapplicable, as it was not in force when the appellant was appointed. [Paras 52, 53, 54, 56, 57]

The total remuneration and reimbursable expenses as fixed and affirmed were upheld, and the appellant's claim for monthly remuneration for the entire tenure was rejected.

Final Conclusion: The appeal was dismissed. The Appellate Tribunal upheld the quantum of remuneration and expenses directed to be paid to the erstwhile IRP, while clarifying that such fee fixation is not immune from judicial scrutiny merely by invoking the CoC's commercial wisdom.

Legality of attachment and physical removal of assets by the Enforcement Directorate during the moratorium - Proceeds of Crime - Jurisdiction of insolvency tribunals vis-a-vis PMLA proceedings - monies withdrawn from the corporate debtor's bank account after the attachment order -Section 50 PMLA restraint notices to debtors of corporate debtor

Moratorium and proceeds of crime attachment - Liquidation estate and tainted assets - Public law proceedings under PMLA -HELD THAT: - The Appellate Tribunal held that the IBC is intended to preserve and realise the legitimate assets of the corporate debtor for insolvency resolution or liquidation, and not to shelter assets falling within the domain of crime under the PMLA. Proceedings under the PMLA operate in a distinct public-law field directed to attachment and eventual confiscation of proceeds of crime, and do not answer the description of proceedings that add to the corporate debtor's civil debt liability. On that footing, the operation of the moratorium under the IBC, and the corresponding protection during liquidation, was held to be confined to matters affecting the insolvency process in respect of legitimate assets and not to action under the PMLA, even if such action reduces the asset pool otherwise available in insolvency. [Paras 11, 12]

Attachment and related coercive action under the PMLA were held not to be interdicted by the moratorium or by the liquidation bar under the IBC.

Jurisdiction of insolvency tribunals vis-a-vis PMLA proceedings - Section 50 PMLA restraint notices - Challenge to retention of attached monies -HELD THAT: - Relying on the limited ambit of jurisdiction under Section 60(5) of the IBC, the Appellate Tribunal held that the forums constituted under the Code can act only to the extent necessary for the working of the IBC and cannot adjudicate upon measures taken by authorities functioning under another parliamentary enactment operating in a separate field. Whether the Enforcement Directorate should attach assets, continue to retain amounts earlier taken possession of, or issue restraint notices to debtors of the corporate debtor under Section 50 of the PMLA, was held to fall exclusively within the adjudicatory framework created by the PMLA. Since the earlier appellate order under the PMLA was already under challenge before the High Court, any grievance regarding continued retention of the amounts was also held to be for pursuit in that forum and not before the insolvency tribunal. [Paras 14, 16, 17]

The liquidator's applications were not maintainable before the IBC forum, and the appropriate remedy lay under the PMLA framework or before the High Court seized of the challenge.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the liquidator's applications and held that action taken by the Enforcement Directorate under the PMLA, including attachment-related measures and restraint notices, could not be questioned before the insolvency forum. The appeals were accordingly dismissed.

Continuance of unlawful and illegal possession of immovable property - Finality of eviction decree in landlord-tenant relationship - Exclusion of third-party immovable property from CIRP - Unauthorised possession as not constituting asset of the corporate debtor - Status quo order not enuring to non-party occupier -

Whether the ownership of Appellant to the subject property can be allowed to be questioned by the Corporate Debtor in proceeding initiated by the Corporate Debtor under Section 10 of the I&B Code? -HELD THAT: - The Tribunal held that the relationship between the parties was that of landlord and tenant, the lease had expired, and the eviction decree in favour of the Appellant had attained finality up to the Supreme Court. In that situation, the Corporate Debtor, which had claimed only leasehold rights and no independent title, could not be permitted in CIRP to dispute the Appellant's ownership. The Adjudicating Authority's observations that ownership was still in dispute and that title documents had not been produced were held to be wholly erroneous and to disclose non-application of mind, since the status of the Appellant vis-a-vis the Corporate Debtor already stood concluded by the eviction proceedings. [Paras 11, 12, 13, 17]

The Appellant's ownership and landlord status qua the Corporate Debtor stood concluded, and the contrary observations in the impugned order were unsustainable.

Status quo order not enuring to non-party occupier - Interim protection in land vesting proceedings - HELD THAT: - The Tribunal found that the order directing maintenance of status quo was passed in proceedings concerning the alleged vesting of the land and was between the Appellant and the State of West Bengal alone. That interim protection was intended to preserve the Appellant's position against the State and did not create or revive any right in favour of the Corporate Debtor. Since the Corporate Debtor's claim arose only from a long-expired lease, it could not derive any advantage from litigation to which it was not the beneficiary in respect of possession rights. [Paras 16, 18]

The status quo order was confined to the dispute between the Appellant and the State and did not justify the Corporate Debtor's continued possession.

Exclusion of third-party immovable property from CIRP - Unauthorised possession as not constituting asset of the corporate debtor - Subsisting enforceable right as condition for treatment as asset -HELD THAT: - The Tribunal held that, for purposes of insolvency administration, control and custody can extend only to assets over which the Corporate Debtor has ownership or a subsisting enforceable right. The Explanation to Section 18 excludes third-party assets in the possession of the Corporate Debtor under contractual arrangements. Here, the lease had ended long before commencement of CIRP, the Corporate Debtor had suffered an eviction decree affirmed up to the Supreme Court, and its possession was therefore unauthorised and illegal. Such unlawful occupation did not confer any proprietary, possessory or enforceable right capable of constituting an asset in CIRP. The Tribunal distinguished the case where title disputes were still pending before a civil forum and relied on the principle that only existing, subsisting and enforceable rights at the commencement of CIRP can be treated as assets. Inclusion of the property in the CIRP process, and any consequential treatment of it in the resolution process, was therefore held to be illegal and unauthorised. [Paras 36, 37, 39, 41, 42]

Prayer for exclusion of the property from CIRP deserved to be allowed; the impugned order was set aside, the property was excluded from the CIRP process, and all subsequent actions in respect of that asset were declared non-est.

Final Conclusion: The appeal was allowed. The Tribunal held that the Corporate Debtor had no subsisting right in the leased property after expiry of the lease and finality of the eviction decree, and consequently the property, being third-party property in unauthorised occupation, had to be excluded from the CIRP; the Appellant was left free to pursue possession and mesne profits before the competent executing and trial courts.

Statutory first charge under GST - Priority of IBC over tax charge - Status of Government tax dues in CIRP - Moratorium and post-commencement tax liability - Conferred secured creditor status on the State Tax Department despite insolvency proceedings - revised tax claim raised during the moratorium period - waterfall mechanism

Whether Section 82 of the CGST Act confers the status of a Secured Creditor upon the Appellant which is a State Government Department ? - HELD THAT: - The claim of the Appellant in the present case is on account of GST dues under CGST Act, 2017 from the Corporate Debtor. The foundation of the Appellant's argument is that Section 82 of the CGST Act is pari materia with Section 48 of the Gujarat Value Added Tax Act, 2003 which was considered by the Hon'ble Supreme Court in Rainbow Papers [2022 (9) TMI 317 - SUPREME COURT].

A plain reading of Section 82, demonstrates a material and substantive distinction between the two enactments. While Section 48 of the GVAT Act creates a first charge simpliciter, Section 82 of the CGST Act expressly incorporates the phrase "save as otherwise provided in the Insolvency and Bankruptcy Code, 2016". The aforesaid expression cannot be ignored while interpreting the scope and effect of Section 82. It is a settled principle of statutory interpretation that every word employed by the legislature must be assigned meaning and effect, which the legislature intended. Courts cannot adopt an interpretation which renders any part of the statute redundant or otiose.

The Hon'ble Supreme Court in Rainbow Papers (supra) was concerned only with Section 48 of the Gujarat Value Added Tax Act, 2003, Section 82 of the CGST Act 2017 containing an express saving clause in favour of the Insolvency and Bankruptcy Code was not before the court. The statutory framework involved in Rainbow Papers was therefore materially different from the statutory framework governing the present Appeal.

The Tribunal held that the controversy turned on the text of Section 82 of the CGST Act itself. Unlike the VAT provision considered in the decision relied on by the appellant, Section 82 expressly states that the first charge operates "save as otherwise provided in the Insolvency and Bankruptcy Code, 2016". That saving clause was treated as decisive. Since Parliament made the statutory charge subject to the Code, the claim treatment, priority and distribution mechanism during insolvency must be governed by the Code, and the tax department's dues fall to be dealt with as Government dues under the insolvency waterfall rather than as secured debt. On that reasoning, the appellant was rightly classified as an unsecured operational creditor, and the approved resolution plan could not be faulted on the ground that it did not treat the appellant as a secured creditor. The Tribunal also noticed that the appellant had been informed of the classification during CIRP, did not object before the Committee of Creditors or the Adjudicating Authority, and raised the challenge only after plan approval. [Paras 43, 44, 45, 47, 48]

The appellant was not entitled to be treated as a secured creditor, and its GST claim was correctly dealt with as unsecured operational debt under the resolution plan.

Moratorium and post-commencement tax liability - Rejection of updated tax claim - HELD THAT: - The Tribunal held that, while moratorium was in force during CIRP, scrutiny orders imposing further liability on the corporate debtor could not have been passed. On that view, no infirmity was found in the Resolution Professional's refusal to accept the updated claim founded on such additional liability. [Paras 49, 50]

The rejection of the updated claim was upheld.

Final Conclusion: The appeal was dismissed. The Tribunal held that the statutory first charge under Section 82 of the CGST Act is expressly subject to the Insolvency and Bankruptcy Code and therefore does not elevate GST dues to secured debt in CIRP, and it also upheld rejection of the additional claim raised during moratorium.

Interference with concluded liquidation auction - Additional land discovered after subdivision - Private sale of liquidation assets - Locus standi of successful auction bidder - NCLT failed to appreciate that the additional land formed part of lot 2 asset, which was auctioned and sold in the earlier auction to R 1-UPL.

Interference with concluded liquidation auction - Reserve price for additional land - Material irregularity, fraud or collusion -HELD THAT: - The Appellate Tribunal held that the Adjudicating Authority proceeded on an incorrect calculation in treating the earlier bid of UPL for Lot 2 as relatable only to the leasehold area of 1,15,632 sq. m., whereas that bid covered the entire Lot 2 area including the freehold land. On the correct basis, the reserve price fixed for the additional land was consistent with the earlier auction rate and the conclusion that UPL had already agreed to purchase the additional land at a higher figure could not be sustained. The Tribunal further found that the e-auction was publicly advertised, conducted through proper process, included participation of interested parties including UPL, and resulted in the highest bid being accepted; there was no finding of fraud, collusion, underbidding, or any fundamental procedural irregularity. Applying the settled principle that a valid liquidation auction cannot be cancelled merely on expectation of a higher price, the order directing re-auction was held to be contrary to law. [Paras 40, 41, 42, 43, 44]

The order setting aside the e-auction and directing a fresh auction was set aside, and the auction in favour of Krihaan Texchem was restored.

Additional land discovered after subdivision - Private sale of liquidation assets - Regulation 33 compliance - HELD THAT: - The Tribunal rejected UPL's stand that the additional land already formed part of the earlier Lot 2 asset. It held that the auction documents described the leasehold area as tentative and subject to survey and subdivision, and the final GIDC subdivision created a separate plot for the additional land. The claim that the additional area should automatically be read into Plot 825/2 was found untenable on the measurements themselves. The Tribunal also accepted the liquidator's explanation that the earlier communications to UPL were only part of a price-discovery exercise and expressly disclaimed any offer for sale. Since private sale of liquidation assets required prior permission of the Adjudicating Authority, the liquidator could not be faulted for proceeding by public auction instead of private sale, and the comments of the Adjudicating Authority against the liquidator's conduct were held unsustainable. [Paras 28, 31, 35, 36, 37]

UPL was not entitled to claim the additional land as part of Lot 2 or to demand its transfer at the earlier bid rate, and the liquidator's resort to public auction was upheld as proper.

Locus standi of successful auction bidder - Appeal by aggrieved person under section 61 - HELD THAT: - The Tribunal held that section 61(1) permits an appeal by any person aggrieved by an order of the Adjudicating Authority. Since the impugned order directed a fresh auction of the additional land that had earlier been awarded to Krihaan Texchem, it was directly prejudiced by that order and was therefore entitled to challenge it. [Paras 45]

The objection to the maintainability of Krihaan Texchem's appeal was rejected.

Final Conclusion: The Appellate Tribunal held that the Adjudicating Authority had set aside the concluded auction on an erroneous factual premise and without any finding of fraud, collusion, or fundamental procedural defect. The appeal of Krihaan Texchem was allowed, UPL's appeal was dismissed, and the liquidator was directed to issue the sale certificate for the additional land to Krihaan Texchem.

Abuse of insolvency process - Malicious continuation of CIRP - Settlement by sole creditor in one-member CoC - Corporate Insolvency Resolution Process - Proceedings in rem - Admission under Section 7 - HELD THAT: - The Appellate Tribunal held that, although admission of CIRP depends on existence of debt and default, the considerations governing continuation or termination of CIRP after a genuine offer of repayment are not identical. It emphasised that the Code is directed towards revival of the corporate debtor and is not meant to be used as an instrument of compulsory divestiture or for settling personal scores. In the present case, there was only one creditor, no other claims had been received, and the entire amount claimed by that sole creditor had been deposited and was offered towards satisfaction of the debt. In such a situation, refusal by the sole-member CoC to accept settlement, without any justifiable reason, was found to be arbitrary and reflective of a misuse of the Code and of the insolvency process. The Tribunal further held that when such malicious intent or abuse becomes evident during the proceedings, it is not required to remain passive and await a separate penal consequence; it can prevent misuse of the process by terminating the CIRP itself. [Paras 9, 10, 11, 12, 13]

The CIRP was terminated and the appeal was disposed of on the ground that its continuation, in the circumstances of a sole creditor refusing repayment without justification, amounted to abuse of the Code and the Tribunal's process.

Final Conclusion: The Appellate Tribunal terminated the CIRP, holding that once the entire debt of the sole creditor had been deposited and no other creditor existed, the sole-member CoC could not, without justification, insist on continuation of the insolvency process. Such insistence was treated as a misuse of the Code and an abuse of the Tribunal's process.

Civil contempt - Wilful disobedience of unworkable order - Order passed on mistaken factual impression - Guilty of contempt - Whether the liquidator has wilfully disobeyed the Order of this tribunal, which directed him not to disburse the amounts realised through the sale of the asset of the corporate debtor ? - HELD THAT: - The Tribunal found, on the basis of the affidavit and bank statements, that the sale proceeds had already been disbursed before the order of 11.03.2026 was passed. An order alleged to have been breached must first be capable of compliance. Since the order proceeded on a mistaken factual impression that the funds were still lying with the liquidator, it could not be read either as requiring restoration of the earlier position or as a direction capable of obedience. The Tribunal further held that contempt jurisdiction cannot be used as a substitute for execution or as a means to compel reversal of a transaction not directed by the order itself. As the order did not require the liquidator or SBI to re-credit the amount to the corporate debtor's account, no case of wilful disobedience arose. [Paras 2, 3, 4, 5]

The contempt petition was dismissed, and the order of 11.03.2026 was treated as unworkable and unenforceable in view of the prior disbursement.

Final Conclusion: The Tribunal held that no contempt was made out because the sale proceeds had already been disbursed before the order relied on by the applicants was passed, rendering that order incapable of compliance. The contempt application was dismissed, and the liquidator's application was disposed of by recording that the earlier order was unworkable and unenforceable.

Pre-existing dispute in operational debt - Scope of summary adjudication under Sections 8 and 9 - Admission of the Section 9 application - contemporaneous contractual disputes, settlement correspondence and disputed reconciliation material disclosed a plausible pre-existing dispute - Seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor - HELD THAT: - The ongoing dispute between the parties is quite clearly depicted in Clause 1 of the MOU. Thus, when the draft MOU prepared by the Operational Creditor themselves in no unclear terms had acknowledged that there was an ongoing business dispute, they cannot shy away from the same by taking shield under the fact that the MOU was never signed by both parties. When the Operational Creditor had admitted to the existence of pre-existing disputes in Clause 1 of the MOU, which MOU had also adverted to the proposed settlement of disputed claims, the Adjudicating Authority could not have returned the finding that the disputes were manufactured by the Corporate Debtor. Moreover, as the above dispute pointed out in the MOU clearly existed much before issuance of demand notice, the defence of MOU taken by the Corporate Debtor to substantiate pre-existing disputes to our minds is not a feeble contention unsupported by evidence.

It is settled law that what the Adjudicating Authority is required to see is whether there is a plausible contention which requires further investigation or it is a dispute unsupported by evidence. The Adjudicating Authority is not supposed to conclusively decide at this stage as to whether the defence taken shall ultimately succeed or not.

The Appellate Tribunal applied the test in Mobilox Innovations Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT], held that, at the Section 9 stage, the adjudicating forum has only to see whether the defence raises a plausible contention requiring further investigation and whether the dispute is not spurious, hypothetical or illusory. The contemporaneous letters issued between August 2019 and March 2020, followed by the communication proposing levy of penalty, clearly raised work-performance disputes long prior to the Section 8 demand notice. The Adjudicating Authority erred in treating the absence of debit notes, arbitral proceedings or civil suits as conclusive against existence of dispute, since neither Mobilox nor the statutory scheme requires prior proceedings as a condition for establishing a pre-existing dispute. The draft MOU itself acknowledged ongoing business disputes and compromise of disputed claims; hence it could not be brushed aside as wholly irrelevant.

As regards the credit note and the Work Completion Certificate, the Tribunal held that their authenticity, effect and surrounding circumstances were themselves disputed matters requiring fuller adjudication, and could not be conclusively determined in summary insolvency proceedings. The Adjudicating Authority therefore wrongly entered into merits-based adjudication of disputed contractual material instead of confining itself to the limited enquiry under Section 9. [Paras 32, 35, 36, 37, 38]

The disputes raised by the Corporate Debtor were held to be genuine and plausible pre-existing disputes; consequently, the Section 9 application ought not to have been admitted and the impugned order was set aside.

Final Conclusion: The Appellate Tribunal held that the material on record disclosed a real and plausible pre-existing dispute regarding the operational debt, which took the matter outside the scope of Section 9 insolvency admission. The order admitting CIRP was therefore set aside and the Corporate Debtor was directed to be released from CIRP.

Locus standi to challenge liquidation sale - Finality of liquidation auction after confirmation of sale - Maintainability of appeal challenging the liquidation auction and connected interlocutory orders -non-compliance with the liquidation regulations - objections regarding inadequate publication, reduction of reserve price, alleged collusion, and non-registration of the sale certificate

Locus standi of shareholder - Status of personal guarantor after bankruptcy order - HELD THAT: - The Appellate Tribunal held that, in view of the larger Bench decision in Park Energy Private Limited [2025 (12) TMI 229 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI], a shareholder could not maintain the present challenge to the orders passed in the interlocutory applications concerning the liquidation sale. It further held that the appellant's status as personal guarantor had, in any event, lost significance because he had already been declared bankrupt in separate proceedings under Sections 121 and 123 of the Code, and on that subsequent development the challenge had for all practical purposes become irrelevant. [Paras 7, 8, 25, 26]

The appeal was not maintainable at the instance of the appellant in the capacities asserted by him and stood liable to dismissal.

Challenge to liquidation auction on alleged irregularities - Sale certificate in liquidation sale - Unsubstantiated plea of fraud - The challenge to the e-auction of the corporate debtor's assets on grounds of fraud, irregularity in publication, reduction of reserve price, exclusion from the stakeholders' process and non-registration of the sale certificate was rightly rejected. - HELD THAT: - The Appellate Tribunal accepted the Adjudicating Authority's reasoning that the allegations of fraud and collusion were factual pleas which the appellant had failed to substantiate. It also accepted the finding that the auction notices were published in newspapers having wide circulation and therefore satisfied the regulatory requirement of public notice. On the objection regarding registration, it affirmed the view based on M/s. Esjaypee V. Canara Bank [2021 (1) TMI 1308 - SUPREME COURT], that the sale certificate did not by itself require registration and that intimation to the Sub-Registrar was sufficient. The Tribunal further held that the liquidation sale process had been conducted in accordance with law through successive auction attempts, and once the fifth auction stood confirmed, the entire consideration had been paid and the sale certificate issued, the auction process stood closed and could not be reopened merely on unsupported objections. No ground for appellate interference with the issue-wise findings of the Adjudicating Authority was therefore made out. [Paras 20, 21, 22, 23, 24]

The challenge to the auction failed on merits and the confirmed sale in favour of the successful auction purchaser was left undisturbed.

Final Conclusion: The Appellate Tribunal dismissed the company appeal, holding that the appellant lacked any surviving locus to pursue the challenge and that, in any case, no merit existed in the objections to the concluded liquidation auction. All interlocutory applications were consequently rejected.

Entitlement to regular bail - Independence of money-laundering offence from stage of scheduled offence - Statutory conditions for bail under Section 45 - Twin conditions - Sick or infirm proviso to bail restriction - modus operandi - Proceeds of Crime - Reason to Believe - Admissibility of statements under Section 50 of the PMLA at bail stage - conversion of land use for Agriculture to Non-Agricultural - illegal gratification - bribe collected while processing CLU applications in The Office of District Collector

Scheduled offence and maintainability of PMLA proceedings - Power to proceed under Section 66(2) of the PMLA - Independent power of arrest under the PMLA -HELD THAT: - The Court held that, on the scheme of the PMLA as explained in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], money-laundering is an independent offence concerning the process or activity connected with proceeds of crime, though such proceeds must originate in criminal activity relating to a scheduled offence. Where the scheduled offence is not already registered, the authorised officer may still proceed under the PMLA while simultaneously sharing information with the jurisdictional police under Section 66(2). At the bail stage, the status of investigation in the predicate offence, including non-filing of charge-sheet or non-arrest therein, was held to be an irrelevant consideration so long as the scheduled offence proceedings were pending and had neither ended in discharge, acquittal nor quashing. The Court further held that arrest under Section 19 of the PMLA is founded on the authorised officer's reason to believe regarding the PMLA offence and need not await arrest in the scheduled offence. [Paras 7]

The objection to maintainability founded on the alleged absence or incompleteness of the predicate offence was rejected.

Entitlement to regular bail in the PMLA case arising from alleged bribe collection in land use conversion applications - HELD THAT: - The Court held that Section 45 of the PMLA imposes mandatory and stringent twin conditions, and the enquiry at bail stage is confined to whether reasonable grounds exist for believing that the accused is not guilty and is unlikely to commit any offence while on bail. On the material placed, the Court found prima facie involvement of the applicant as the District Collector and final authority in the approval process, with a stated share in the illegal gratification, supported by hissab sheets, digital material, photographs recovered from his account or device, witness statements and the allegation of an attempt to reset his mobile before the raid. The Court accepted that statements recorded under Section 50 are admissible for forming a prima facie view at the bail stage, and held that the later retraction relied upon by the applicant raised disputed questions not fit for adjudication in bail proceedings. It further held that recovery of the precise proceeds of crime is not a sine qua non, since attachment of equivalent value property is permissible, and that the complaint itself contemplated further investigation. The pleas based on completion of custodial interrogation, likely delay in trial, personal liberty, and parity with co-accused who had not been arrested were rejected, the Court holding that role-based differentiation was permissible and that no inordinate delay in trial was shown. In view of the gravity of the alleged socio-economic offence and the continuing apprehension of tampering with evidence, the Court concluded that the applicant failed to clear the statutory threshold. [Paras 8, 9]

The Court held that there were no reasonable grounds to believe that the applicant was not guilty, and the claim for bail under Section 45 of the PMLA was refused.

Sick or infirm proviso under the PMLA bail provision - Medical ground for bail - HELD THAT: - The Court held that the medical material showed a knee injury requiring treatment, rest, physiotherapy, medication and, if necessary, surgery, but did not disclose a terminal, serious or life-threatening condition. On that basis, the applicant was not treated as sick or infirm within the meaning of the proviso to Section 45, and the Court observed that treatment could be availed in jail or by seeking temporary bail if the situation so required. [Paras 8]

The plea for bail on medical grounds was rejected.

Final Conclusion: The Court dismissed the bail application. It held that the PMLA proceedings were maintainable notwithstanding the stage of the scheduled offence, that the applicant failed to satisfy the twin conditions for bail, and that neither medical grounds nor parity with non-arrested co-accused justified release.

Service tax on negative debtors entries - Advance payments and taxable value of services - Substantial question of law - Valuation of taxable services - Extended period of limitation - Suppression of facts - Burden of proof - Revenue neutrality - It is the case of the assessee that the Adjudicating Authority, without considering the facts and the documentary evidence placed on record by the assessee, added the total of all the negative figures appended in Annexure-D to the audit report.

Service tax on negative debtors entries - Accounting treatment of reciprocal service liabilities - HELD THAT: - The Court accepted the Tribunal's factual findings that the impugned negative debtor entries represented amounts payable by the assessee to its network firms for services received by it, maintained in a current-account style adjustment against amounts receivable from those firms. Sample debit notes had been produced before the adjudicating authority, but were ignored.

In view of the findings of fact recorded by the Tribunal and considering the provisions of section 66 of the Finance Act, 1994, which existed at the relevant point of time prior to 2011, the service tax is to be levied at the rate of 12% on the value of the taxable services referred to in the sub-clauses mentioned therein.

The provisions of section 67 of the Finance Act, 1994, provide for valuation of the taxable services for charging service tax. None of the ingredients for charging service tax are applicable to the advance payments or the amounts as per the debit notes for the services provided to the assessee by its debtors are liable for service tax under the said provision. It is also pertinent to note that whenever the assessee received an advance payment, and it was found during the course of the audit proceedings that the service tax was liable to be paid on such advance payment, the assessee had already discharged such liability along with interest as recorded in the audit report by the audit party.

The Tribunal's view that the demand was unsustainable on merits was upheld.

No substantial question of law on factual findings - Appellate interference with Tribunal's factual conclusions - HELD THAT: - The Court held that the Tribunal's conclusions rested on appreciation of the record, including the debit notes and the nature of the accounting entries, and on the finding that the Department had failed to establish that the impugned amounts were taxable advance receipts. Since the impugned order turned on findings of fact and the Court found no legal infirmity in that approach, no substantial question of law arose for consideration.

The appeal was dismissed for absence of any substantial question of law.

Final Conclusion: The High Court upheld the Tribunal's conclusion that the negative debtor entries did not represent untaxed advance receipts liable to service tax and that the demand had been raised without evidentiary basis. As the matter turned on factual findings properly recorded by the Tribunal, no substantial question of law arose and the Revenue's appeal was dismissed.

Services provided to overseas client's customers - intermediary services - Export of services - Entittlement to Refund of accumulated Cenvat credit - principal-to-principal subcontract - Back-office support services provided by the appellant as a sub-contractor to its overseas client, without any contractual relationship with that client's customers, and qualified as export of services - Whether the Appellant is an ‘intermediary’ under Rule 2(f) read with Rule 9(c) of the POPS Rules ? - HELD THAT: - The Tribunal found from the Master Services Agreement that the appellant had undertaken the services on a principal-to-principal basis as a sub-contractor of the overseas entity, that there was no contractual relationship between the appellant and the overseas customers, and that the appellant was remunerated only by its overseas client. On that basis, the appellant was not arranging or facilitating a supply between two other persons, but was itself providing the contracted services on its own account. The Tribunal further held that the issue stood covered by the judgments of the jurisdictional High Court in the group company's case [2023 (8) TMI 1210 - PUNJAB AND HARYANA HIGH COURT] on an identically worded agreement, and also by the Tribunal's own decision [2025 (5) TMI 1898 - CESTAT CHANDIGARH] on the same question. Applying that ratio in the case of M/s William E Connor And Associates Sourcing Pvt Ltd.[2025 (5) TMI 1898 - CESTAT CHANDIGARH], the finding that the appellant was an intermediary under the Place of Provision of Services Rules could not be sustained; consequently, the services were to be treated as export of services and the denial of refund under Rule 5 of the Cenvat Credit Rules read with the refund notification was unsustainable. [Paras 7, 9, 10, 11]

The appellant was held not to be an intermediary; the services were held to qualify as export, and the denial of refund was set aside.

Final Conclusion: The Tribunal held that the appellant's back-office support services, rendered to its overseas client under a principal-to-principal subcontracting arrangement, were not intermediary services. The impugned order denying export benefit and refund of accumulated Cenvat credit was therefore set aside, and all three appeals were allowed with consequential relief according to law.

Taxability of sovereign local body under selling of space for advertisement service- Municipal corporation - Advertisement tax as statutory levy - Extended period of limitation against public undertaking

Local body not covered by person prior to 01.07.2012 - Selling of space for advertisement service - Advertisement tax as statutory levy -HELD THAT: - The Tribunal held that, during the relevant period, the taxable entry applied where a person provided service to another person, and the Municipal Corporation, being a sovereign local body, was not covered within that expression for the purpose of the levy. It further found that the amounts recovered were in the nature of advertisement tax/statutory levy authorised under the municipal law and Article 243X of the Constitution, and not consideration for a taxable service. The finding of the Commissioner (Appeals) treating the licence fee as consideration was therefore held to be erroneous. [Paras 7, 8]

Service tax demand under selling of space for advertisement service was held unsustainable on merits.

Extended period of limitation - Suppression with intent to evade - Penalty and interest consequential to unsustainable demand - HELD THAT: - The Tribunal found that the show cause notice for the period April 2005 to March 2010 had been issued beyond the normal period prescribed under Section 73 and that the dispute turned on interpretation of law. It held that a local body/public undertaking of the Government could not, in the facts of the case, be alleged to have suppressed facts with intent to evade tax. Once the demand itself was held unsustainable, interest and penalties could not survive. [Paras 9, 10]

The extended period was held inapplicable, and the demand for that period, along with interest and penalties, was set aside.

Final Conclusion: The Tribunal held that the Municipal Corporation, being a sovereign local body, was not liable to service tax on the amounts collected as advertisement tax/licence fee under the impugned entry for the periods in dispute. It further held that the extended period was not invocable for the earlier period, and consequently set aside the demand, interest and penalties in both appeals.

Export of services - Service recipient outside India - Place of performance vis-a-vis place of provision - Extended period of limitation - CENVAT credit denial for want of supporting documents - Penalty for delayed service tax registration - Recipient located outside India - Penalty for delay in registration - Concurrent findings - Principal-to-principal basis

Export of services - Service recipient outside India - Place of performance vis-a-vis place of provision - Marketing and administrative support services - HELD THAT: - The decision of the CESTAT New Delhi in the case of M/s. Research in Motion India Pvt. Ltd. [2018 (3) TMI 509 - CESTAT NEW DELHI] also affirmed by the Hon’ble Supreme Court in M/s. Vodafone India Ltd [2025 (8) TMI 938 - Supreme Court], wherein it was held that marketing and promotion services rendered for a foreign entity, for which payment was made in convertible foreign currency, was held to be export of services.

The Tribunal found from the agreements that the services were provided to the overseas entity, which was also the person obliged to make payment. It held that the place where the activities were performed in India was not determinative of the recipient of service. For both the positive list and negative list regimes, the relevant test was the location of the service recipient, and under the place of provision rules the place of provision was the location of that recipient. Since the recipient was located outside India, payment was received in convertible foreign exchange, and the arrangement was on a principal-to-principal basis, the services satisfied the requirements of export of services. Consequently, the service tax demand, and the associated interest and penalty on that count, were unsustainable. [Paras 11]

The services were held to be export of services, and the service tax demand with consequential interest and penalty on that count was set aside.

CENVAT credit denial for want of supporting documents - Extended period of limitation - Disclosure in ST-3 returns - HELD THAT: - The Tribunal held that the credit availment had been disclosed in the periodical ST-3 returns and, therefore, invocation of the extended period was unsustainable. It further recorded that the appellant had submitted the relevant particulars, including invoice copies, during audit and with refund claims. On that basis, the denial of credit was found to be without foundation both on limitation and on facts. [Paras 12]

The denial of CENVAT credit, together with interest and penalty on that count, was set aside.

Extended period of limitation - Suppression not established - Disclosure in statutory returns - HELD THAT: - The Tribunal held that the Department had failed to establish any positive act on the part of the appellant to justify recourse to the extended period. Since the appellant had been regularly filing statutory returns, the extended period could not be invoked merely on that material. It therefore held that the demand confirmed by resort to the proviso to the limitation provision was unsustainable, and specifically observed that the demand up to 31.03.2014 was barred by limitation. [Paras 13]

The demand confirmed by invoking the extended period of limitation was held unsustainable and was set aside on that ground as well.

Penalty for delayed service tax registration - Maximum statutory penalty - Export service provider registration - HELD THAT: - The Tribunal held that even where the services were export of services and no tax was payable, the appellant was still required to obtain registration and file returns disclosing exempted services. Since there was delay in obtaining registration, liability to penalty under the relevant provision was upheld. However, the Tribunal found that the maximum penalty permissible for such delay was limited to the statutory ceiling and, therefore, the penalty imposed in excess thereof could not be sustained. [Paras 14]

The penalty under Section 77(1)(a) was sustained only to the extent of Rs.10,000/- and reduced accordingly.

Final Conclusion: The Tribunal held that the appellant's marketing and administrative support services to the overseas entity were export of services and, therefore, not liable to service tax. The denial of CENVAT credit was also set aside, the extended period was held not invocable, and only the penalty for delayed registration was sustained, restricted to Rs.10,000/-.

Exemption for road construction by sub-contractor - Works contract services -Benefit ofNotification No. 25/2012-ST - Construction of individual houses - Taxability of bank interest - Small service provider exemption - Availability of threshold exemption under Notification No. 33/2012-ST

Demand on receipts from three contractors for road construction work executed as a sub-contractor - HELD THAT: - The Tribunal found on the material available on record that the appellant's contracts with the concerned recipients were for construction of roads as a sub-contractor. Since construction of roads for public use was exempt in the hands of the main contractor, the appellant's services as a sub-contractor providing works contract service for such exempt work were also covered by the exemption under Notification No. 25/2012-ST read with the relevant entries. The discrepancies noticed in the agreements were not accepted as sufficient to deny the exemption once the nature of the work stood established. [Paras 13, 14]

The service tax demand on this count was set aside.

Construction of individual houses - Exemption under Notification No. 25/2012-ST - HELD THAT: - The Tribunal held that non-submission of land ownership documents, building blueprints, or complete property addresses in the contracts was not essential for claiming the exemption for construction of individual houses. The basis on which the appellate authority had denied the exemption was therefore insufficient in law. [Paras 17]

This part of the demand was set aside.

Bank interest not consideration for service - HELD THAT: - The Tribunal held that interest received from a bank cannot be treated as consideration for any taxable service. On that short ground, the demand relatable to bank interest was unsustainable. [Paras 18]

The demand on bank interest was set aside.

Small service provider exemption - Taxable turnover threshold - HELD THAT: - The Tribunal held that the denial of exemption under Notification No. 33/2012-ST was founded on the assumption that the appellant's other receipts were also taxable. Once those other receipts were found not exigible to service tax in the present order, the remaining taxable receipts fell within the prescribed threshold in the relevant financial years. The exemption was therefore available. [Paras 21]

The demand on these receipts was held exempt and could not be sustained.

Final Conclusion: The Tribunal held that the impugned service tax demand was unsustainable in its entirety. Exemption was allowed for the road construction sub-contract work, construction of individual houses, and small taxable receipts within the threshold, while bank interest was held non-taxable; consequently, the impugned order was set aside and the appeal was allowed with consequential relief.

Taxability of late payment surcharge on sale of electricity - Declared service of tolerating an act - Naturally bundled supply with exempt electricity supply - Negative List Regime - Service tax on the amount collected by NHPC, in guise of Late Payment Surcharge, over and above the value of electric energy sold by them to the Bulk Power Customers, i.e. Distribution Companies (DISCOMs) - HELD THAT: - The Tribunal held that the late payment surcharge was a component of the electricity tariff governed by the contractual and regulatory framework and became payable only upon delay in payment of electricity charges. It was intrinsically linked to the sale and supply of electricity and could not be artificially split from the principal supply and classified as an independent service under section 66E(e). The Tribunal accepted that, absent sale of electricity, no late payment surcharge could arise, and therefore both elements formed a naturally bundled or composite supply to be treated in the same manner as the principal supply of electricity, which was outside service tax. The Tribunal also relied on the CBIC clarification adopting the GST circular on analogous wording and on earlier Tribunal decisions, particularly the reasoning drawn from decision of the Principal Bench in the case of Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Ltd. [2022 (4) TMI 773 - CESTAT NEW DELHI] and Torrent Power [2019 (1) TMI 1092 - GUJARAT HIGH COURT], to hold that ancillary charges having direct nexus with exempt electricity supply receive the same tax treatment. [Paras 8, 9, 10, 12, 13]

The demand on late payment surcharge, along with consequential interest and penalties, was held unsustainable and the dropping of proceedings was upheld.

Final Conclusion: The Tribunal held that late payment surcharge recovered on delayed payment of electricity dues was not an independent taxable service of tolerating an act, but formed part of the bundled supply of electricity. The Revenue's appeal was therefore dismissed and the order dropping the demand was upheld.

Levy of service tax on activity of purchasing bulk advertisement space and reselling it in print media -Negative list exemption - Taxability of trade discount and volume incentives received from print media - Adjudication beyond show cause notice - Extended period of limitation in interpretational dispute - Suppression of facts - Scope of show cause notice - Intermediary service

Negative list exemption for sale of advertisement space in print media - Sale of advertisement space - HELD THAT: - The Tribunal held that the entire period in dispute fell after the introduction of the negative list regime from 01.07.2012, under which classification of services stood dispensed with. On the facts found, the appellant was engaged in purchase of bulk space for advertisement from print media or publishing houses and further sale of such space to clients as per their requirements. Such activity was held to fall within selling of space for advertisement in print media under Section 66D(g) of the Finance Act and therefore outside the levy of service tax. The fact that the appellant had taken registration under advertising agency service and had paid tax on profit margin did not alter the true legal character of the activity. [Paras 7]

The primary activity was covered by the negative list and no service tax was payable on it.

Taxability of trade discount and volume incentives received from print media - Business auxiliary service - Adjudication beyond show cause notice -HELD THAT: - In the case of Mundra Communication Pvt Ltd. [2019 (8) TMI 1103 - CESTAT BANGALORE], demand was set aside by the Tribunal by holding that service tax has been discharged on the entire amount received by the Appellant from their client advertiser for the services rendered by them; the amount which they got as discount from the Print/Electronic Media and passed on to their client-advertiser, is not chargeable to service tax as the same is not charged for their services.

In the case of Sindhu Cargo Services Ltd. [2018 (7) TMI 862 - CESTAT BANGALORE], the demand on incentives and commission received based on total space purchased was set aside by the Tribunal by holding that the direct buying and selling the space in airlines, is not liable to service tax.

The Tribunal found that the 15% trade discount allowed to the appellant by print media, as an accredited member of the Indian Newspaper Society, had been wrongly treated as commission. Nothing was shown on record to establish deduction of TDS or issuance of Form 26AS on the footing of commission. The Tribunal further held that incentives received on achieving bulk purchase or turnover targets were not consideration for any service rendered to print media or to the appellant's clients. The clients of the appellant were the advertisers, not the print media, and there was no agreement showing that the appellant had undertaken promotion of the business of the print media. Following the consistent view of the Tribunal, trade discounts and incentives received from media without contractual obligation to render service did not form part of the value of taxable service and could not be taxed under business auxiliary service. The Tribunal also held that the adjudicating authority went beyond the show cause notices by sustaining the demand on the basis that the appellant acted as an intermediary under Rule 2(f) of the POPS Rules, when no such allegation was contained in the notices. An adjudicating authority cannot travel beyond the foundation laid in the show cause notice. [Paras 8]

The demand on trade discount and incentives was unsustainable, and the intermediary-based reasoning in the impugned order was rejected as beyond the scope of the show cause notices.

Extended period of limitation in interpretational dispute - Suppression of facts - HELD THAT: - The Tribunal noted that the appellant was already registered under advertising agency service and had been paying service tax and filing ST-3 returns. It found that the department had failed to establish the ingredients necessary for invocation of the extended period. Since the dispute turned on interpretation of the statutory provisions, namely whether commission, trade discount and incentives given by print media to an advertising agency were exigible to service tax, the case was treated as an interpretational dispute in which extended limitation could not be invoked. [Paras 9]

The demand covered by the show cause notice dated 26.04.2018 was held time-barred.

Penalty for alleged non-payment of service tax on print media trade discount and incentives - Interest consequential to tax demand - HELD THAT: - The Tribunal held that once the service tax demand itself was not sustainable, no liability to interest or penalties could survive. [Paras 10]

Interest and penalties were liable to be set aside along with the demand.

Final Conclusion: The Tribunal held that the appellant's activity of selling advertisement space in print media fell within the negative list and that the trade discount and volume incentives received from print media were not taxable as consideration for any service. The demand based on intermediary service was also held beyond the show cause notices, the extended period under the show cause notice dated 26.04.2018 was found inapplicable, and the entire demand, interest and penalties were set aside.

Reverse charge on imported services - Taxability of advance paid for capital goods - Cancellation of contract - Refund of consideration - Appellant’s failure to fulfill the contract conditions - revenue neutrality​​​​​​​ - HELD THAT: - Appellant submits that, in this case, service tax demand has been upheld on the amount paid to BM under reverse charge mechanism. Even if it is assumed without admitting that such service tax was payable, then the entire tax paid would be available as Cenvat credit to the Appellant. Hence, the entire demand of service tax is clearly revenue neutral.

The Tribunal found from the documents on record that the advance paid by the appellant was for receipt of capital goods and not for any taxable service. It further recorded that the contract itself stood cancelled and the amount remitted had been refunded by the foreign supplier. On these findings, the Tribunal held that no taxable service transaction survived between the appellant and the foreign supplier so as to attract levy under the reverse charge mechanism. The penalty also could not survive once the tax demand itself failed. [Paras 8, 9, 10]

The demand of service tax under reverse charge and the penalty imposed on the appellant were held unsustainable.

Final Conclusion: The Tribunal held that the impugned reverse charge demand could not be sustained since the advance was paid for capital goods and not for any service, and in any event the contract was cancelled and the amount refunded. The impugned order was set aside and the appeal was allowed with consequential relief.

Reversal of CENVAT credit on inputs removed as such - CPE used for providing output service - Limitation for reversal of credit on scrapped inputs before use - Penalty in absence of sustainable extended period demand -Application for change of cause title by changing the name of the appellant from ‘Tata Sky Ltd’ to ‘Tata Play Limited’ consequent to issue of certificate of incorporation pursuant to change of name by Registrar of Companies.

Removal as such - CPE installed at subscriber premises - Defective CPE returned after use - HELD THAT: - The Tribunal held that Rule 3(5) applies only where inputs on which credit has been taken are removed as such. The CPE lying at customers' locations had already been used for providing the appellant's output service, and the defective CPE returned to the warehouse had also earlier been used at subscriber premises. Since such goods were not removed in the condition in which they were received, the statutory requirement of removal as such was not satisfied, and reversal of credit on these two categories could not be demanded. [Paras 14]

The demand relating to CPE at customer locations and defective CPE returned after use was held unsustainable and was set aside.

Scrapped CPE before use - Extended period of limitation - Interest on normal period demand - No penalty - HELD THAT: - The Tribunal recorded that the appellant had scrapped certain CPE in its warehouse without any use. In such a case, the appellant was required to reverse the credit. However, as periodical audits had taken place and no discrepancy had earlier been pointed out, the Tribunal held that the extended period of limitation was not invocable. On that basis, only the demand for the normal period could survive, together with interest, and no penalty was held leviable in the facts of the case. [Paras 15]

Reversal of credit was sustained only for the normal period with interest in respect of CPE scrapped before use, while the extended period demand and penalty were disallowed.

Final Conclusion: The appeal was partly allowed. Reversal of CENVAT credit was held not payable on CPE already used for providing service, but was held payable for the normal period with interest on CPE scrapped in the warehouse before use; penalty was set aside.

Scope of support services of business Or commerce - Activity of providing documents, information, access to personnel and other assistance to subsidiaries for obtaining credit ratings - Inclusive definition as restrictive enumeration - Outsourced business support functions - Rule 6(3) of CENVAT Credit Rules - Extended period of limitation - Noscitur a sociis

Support services of business or commerce - Credit rating support arrangement - Outsourced services requirement - Inclusive definition as limitation - HELD THAT: - In this case, it is a fact that subsidiary is receiving a benefit or an advantage by being part of the group. However, the said benefit does not require the appellant to perform any proactive or specific assignment or any action conferring such benefit to the subsidiary. Being a group company it is natural and automatic that benefit or goodwill which the subsidiaries enjoy by being a part of the appellant. As regards the activity mentioned in the agreement concerned providing the financial statement, information, documents, access to key management personnel or other ancillary help towards assisting the credit rating activity of the subsidiary, none of these activities fall under the scope of ‘Support Services of Business or Commerce’ as discussed herein above. The word “include” may in certain context, as in the present case, be a word of limitation. By adding the said inclusive portion, the intention of the legislature is not to enlarge the meaning of the term ‘Support Services of Business or Commerce’, rather than to limit its scope to specified activities.

The service required to be outsourced by the service recipient to the appellant, the said service in question clearly indicates that only activities which are in the nature of outsourced services are sought to be covered under the aforesaid taxable service of ‘Support Service of Business or Commerce’.

The Tribunal held that the subsidiaries merely derived a natural and automatic benefit from being part of the group, and that such benefit did not arise from any proactive or specific business support function undertaken by the assessee. The acts mentioned in the agreement, namely making financial statements and other documents available to credit rating agencies, providing information, permitting access to personnel, and extending incidental co-operation, were not of the kind contemplated in the statutory definition. Reading the definition in its context, the inclusive part was treated as limiting the entry to specified or analogous support functions, and the contemporaneous TRU clarification as well as precedent showed that the taxable entry was intended to cover outsourced business support activities. Since no activity of the subsidiary had been outsourced to the assessee and the assessee was not providing operational or administrative assistance in the day-to-day functioning of the subsidiaries, the transaction remained outside the taxable category even after the post-01/05/2011 enlargement of the definition. [Paras 23, 24, 25, 29, 32]

No service tax was leviable under support services of business or commerce, and the demand and penalty confirmed on that basis were set aside.

Rule 6(3) of CENVAT Credit Rules - Exempted service - HELD THAT: - The Tribunal held that, in the facts of the case, the impugned activity could not be treated as an exempted service so as to trigger the obligation to pay an amount under Rule 6(3) for non-maintenance of separate accounts. Once the activity itself was found to be outside the taxable entry relied upon by the department, the basis for invoking the Rule 6 mechanism did not survive. The adjudicating authority was therefore right in dropping the demand raised in the separate show cause notice founded on Rule 6(3). [Paras 30, 31, 33]

The revenue's appeal against dropping of the Rule 6(3) demand failed.

Extended period of limitation - Contradictory show cause notices - HELD THAT: - The Tribunal found that one show cause notice alleged provision of taxable support services, while the other alleged provision of exempted services and non-maintenance of separate accounts for the period prior to 01/05/2011. These mutually inconsistent stands showed lack of certainty in the department's own case. In such circumstances, the longer limitation period could not be invoked. [Paras 27, 28]

The demand was also unsustainable on limitation.

Final Conclusion: The Tribunal held that the assessee's credit-rating support arrangement with its subsidiaries did not constitute support services of business or commerce, either before or after the 01/05/2011 amendment, and therefore the service tax demand and penalty were unsustainable. The Rule 6(3) demand was rightly dropped, the revenue's appeal was dismissed, and the assessee's appeal was allowed.

Refund of service tax paid by mistake - Limitation in refund claim - Applicability ofUnjust enrichment in refund proceedings - non- production of documents with regard to payment of service tax in respect of construction of college building - HELD THAT: - The Tribunal found that the adjudicating authority had noticed the appellant's assertion that an earlier refund application had been submitted, but recorded no finding on that application or on whether it had been rejected for any reason. In the absence of consideration of that submission, the conclusion that the entire claim was barred by limitation could not be sustained. The Tribunal also found that, on the statement relied upon by the appellant, the remaining payments were within limitation. On unjust enrichment, though there had been lapses in producing evidence before the adjudicating authority, the later Chartered Accountant's certificate rendered the adverse finding unsustainable. Since that material had not been produced before the adjudicating authority, the matter required fresh consideration on production of invoices, ledger accounts and the Chartered Accountant's certificate. [Paras 11]

The impugned order was set aside, and the matter was remanded to the adjudicating authority for fresh examination of unjust enrichment and supporting documents; the finding that the entire refund claim was time-barred was held unsustainable.

Final Conclusion: The Tribunal held that the finding treating the entire refund claim as time-barred could not be sustained and that the adverse finding on unjust enrichment also required reconsideration. The impugned order was set aside and the matter was remanded for fresh examination on production of the relevant documentary evidence.

Rejection of rebate claim and imposition of penalty - Exclusive reliance on precedent subsequently set aside - HELD THAT: - The Court found that the adjudicating authority had incorporated the entire judgment of the learned Single Judge in Raghav Industries Ltd. [2022 (6) TMI 175 - MADRAS HIGH COURT], had rejected the rebate claim by treating that decision as squarely applicable. Since that very decision was later set aside by the Division Bench in the same matter, the sole foundation of the impugned order no longer survived. In that situation, without entering upon the merits of the rebate entitlement or the penalty, the impugned order was liable to be quashed and the matter required reconsideration in light of the Division Bench view. [Paras 4, 6]

The impugned order rejecting the rebate claim and imposing penalty was quashed, and the matter was remanded to the competent authority for fresh decision in light of the Division Bench judgment, without any expression on merits.

Final Conclusion: The High Court held that the impugned orders could not survive because they rested exclusively on a decision that was subsequently set aside in appeal. The rebate claim and consequential penalty were therefore remitted for fresh consideration by the competent authority in light of the later Division Bench judgment, without any finding on merits.

MODVAT/CENVAT credit on fuel used for captive power generation - Captive consumption of electricity by sister units of the same manufacturer - Denial of credit for electricity used in staff housing colony - Extended period of limitation for suppression of diversion of electricity - recovery of the credit and penalty - Substantial questions of law

MODVAT/CENVAT credit on LSHS - Captive generation and captive consumption of electricity - Factory comprising more than one unit - Credit denial for non-manufacturing use of electricity - HELD THAT: - From the change in Rule 57A of the Central Excise Rules, 1944 through the 4th amendment w.e.f. 16.03.1995, we find a liberal approach for claiming input credit has been adopted. The scope of applicability to seek credit of duty paid extended to the inputs used for generation of electricity, used within the factory of production for manufacture of final products or for any other purpose.

The Court in Maruthi Suzuki [2009 (8) TMI 14 - Supreme Court] caseheld that, on the definition of factory under the Central Excise Act and the authorities relied on, electricity generated in one unit of the same company and consumed in its other manufacturing units remains a case of captive generation and captive consumption, even if transferred through wheeling. Such use continued to be in relation to manufacture of dutiable final products and did not disentitle the assessee to input credit on LSHS. However, electricity diverted for lighting the housing colony was not used for manufacture of any dutiable final product and, to that extent, the denial of input credit was sustainable. The Tribunal's remand was therefore upheld only for the limited purpose of reassessing the duty relatable to the input used for generation of electricity diverted to the housing colony, and not for electricity used in Plants II and III. [Paras 25, 26, 27, 28, 29]

The assessee was entitled to credit for electricity used in its sister manufacturing units, but not for electricity used in the staff housing colony; remand stood confined to quantification of duty on the latter alone.

Extended period of limitation - Suppression of diversion of electricity - HELD THAT: - The Court found that the dispute arose after insertion of explanation (d) to Rule 57A and that the show cause notices covered the period commencing from October 1994. It held that the transfer of electricity to sister units and the housing colony came to light only upon inspection by the departmental officers, disclosing an element of intentional suppression. On that basis, the Court upheld invocation of the extended limitation period and distinguished the decision in Reliance Industries on facts. [Paras 26]

The question of limitation was answered in favour of the Department.

Final Conclusion: The appeals were partly allowed. The Court held that credit on LSHS could not be denied for electricity wheeled to the assessee's sister manufacturing units, but remained inadmissible for electricity used in the staff housing colony; the remand was therefore restricted to quantification of duty on that limited component, while the extended period of limitation was upheld.

Manufacture of waste or by-product - Applicability of CENVAT credit reversal to barley husk - Rule 6 of the CENVAT Credit Rules in relation to non-manufactured residue - Wrongly availed the CENVAT Credit on common inputs used in manufacture of both dutiable final products (malt-based food) as well as exempted by-product (barley husk) without maintaining separate accounts in terms of Rule 6 of Cenvat Credit Rules, 2004 - Whether the demand of amount equal to 5% or 6% of clearing value of barley husk in terms of Rule 6(3) of the Cenvat Credit Rules, 2004 is sustainable in law or not? - HELD THAT: - The Tribunal held that barley husk was not a manufactured final product, but only a residue or waste inevitably emerging in the course of manufacture, with no separate manufacturing activity undertaken to produce it. Applying the ratio of Union of India vs. DSCL Sugar Ltd [2015 (10) TMI 566 - SUPREME COURT], and following the Tribunal decision in Commissioner of CE & ST, Gurgaon-I vs. M/s Barmalt Malting India Private Limited [2026 (5) TMI 974 - CESTAT CHANDIGARH] on an identical issue, it held that Rule 6 of the CENVAT Credit Rules had no application to such non-manufactured residue and the demand based on clearance value of barley husk could not be sustained. [Paras 6, 7, 8, 9]

The impugned order was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that barley husk arising during manufacture of malt-based food products was only a non-manufactured residue or waste, and therefore the demand under Rule 6(3) based on its clearance value was unsustainable. The impugned order was accordingly set aside and the appeal was allowed.

Manufacture of iron ore concentrate - Crushing and screening of iron ore - Exemption of ores - Special treatment for removal of foreign matter - exempt as “ores” under Notification No.4/2006CE / Notification No.12/2012-CE or not - Whether the process of crushing and screening of iron ore undertaken by/on behalf of the Appellant amounts to “manufacture” of “iron ore concentrate” within the meaning of Chapter Note 4 to Chapter 26 of the Central Excise Tariff Act, 1985 (inserted w.e.f. 01.03.2011), so as to attract central excise duty, when the said process effects only size reduction and segregation of the iron ore and does not involve any beneficiation or special treatment removing foreign matter or enriching the ferrous content ? - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decisions, including M/s Odisha Mining Corporation Ltd. [2025 (11) TMI 1956 - CESTAT KOLKATA], affirmed in Commissioner v. M/s Odisha Mining Corporation Ltd. [2026 (3) TMI 862 - SC ORDER], as well as M/s Khatau Narbheram & Company and M/s Jindal Steel and Power Ltd. [2025 (11) TMI 1956 - CESTAT KOLKATA]. It accepted the principle that Chapter Note 4 is attracted only when ores are converted into concentrates by special treatment removing foreign matter. Since crushing and screening are only processes of size reduction and separation, and the Department failed to establish any beneficiation or other special treatment resulting in concentrate, no manufacture of iron ore concentrate arose. The demand, with interest and penalty, therefore could not be sustained. [Paras 10, 11, 12]

The excise demand with interest and penalty was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that mere crushing and screening of iron ore do not result in manufacture of iron ore concentrate under Chapter Note 4, as no special treatment or beneficiation was shown. The demand of duty, along with interest and penalty, was therefore set aside and the appeal was allowed.

Classification of GI welded wire mesh - Parts of poultry keeping machinery - Common parlance and statutory context in tariff classification - Extended period in classification dispute - Penalty on partner under Rule 26 - Demand of service tax on erection, installation and commissioning activity - GI welded wire mesh manufactured and cleared for supply to poultry farms - classifiable under heading 7314 or as poultry keeping machinery or parts thereof under heading 8436

Classification of GI welded wire mesh - Parts of poultry keeping machinery - Articles of iron and steel wire -HELD THAT: - The Tribunal held that classification had to be determined on the basis of the goods in the form in which they were manufactured and cleared, and not merely by their ultimate intended use in poultry farms. Though the goods were made to customer specifications and described as poultry weld mesh, they were not cleared as cages or batteries, nor was it shown that the cleared product itself constituted a part of poultry keeping machinery. Relying on Azra Poultry Equipments [2012 (3) TMI 326 - DELHI HIGH COURT], and applying the classification principles discussed in Welkin Foods [2026 (1) TMI 348 - SUPREME COURT], the Tribunal held that a wire mesh structure, even if later used in making poultry cages, does not by that fact alone become machinery or part of poultry keeping machinery. The specific tariff entry covering welded wire mesh under heading 7314 therefore governed the classification. [Paras 16, 17, 18, 19, 20]

The duty demand on the excisable goods was upheld within the normal period on the basis of classification under heading 7314.

Erection, commissioning and installation service - Service tax on poultry farm installation activity - HELD THAT: - The Tribunal found that the appellants were not merely clearing goods but were also undertaking installation-related activities at the site. On that factual position, the adjudicating authority's view that the activity squarely fell within erection, commissioning and installation service was accepted. [Paras 21, 23]

The service tax demand and the related penalty under section 78 were upheld.

Extended period in classification dispute - Penalty under section 11AC - Confiscation under Rule 25 - HELD THAT: - The Tribunal held that the dispute was essentially one of classification involving competing tariff headings, earlier decisions taking different views, and a complex interpretative exercise. In such circumstances, the material on record did not establish any deliberate attempt to evade duty or any intentional misclassification. The appellants could legitimately entertain a bona fide belief that goods supplied exclusively to poultry farms were covered under heading 8436, even though that view failed on merits. Once the extended period was held inapplicable, penalty under section 11AC could not survive. For the same reason, penalty under Rule 25 read with section 11AC and confiscation of plant, building and machinery under Rule 25 were also not sustainable. [Paras 22, 23]

The excise demand was confined to the normal period, and the penalties under section 11AC and Rule 25 as well as confiscation under Rule 25 were set aside.

Penalty on partner under Rule 26 - Knowledge of offending nature of goods - Personal penalty on the partner under Rule 26 was not sustainable in the absence of evidence that he knew or had reason to believe that the goods were liable to confiscation. - HELD THAT: - Though the partner was in overall charge and had taken the decision not to obtain registration or pay duty, the Tribunal found that this could be attributed to the same bona fide belief regarding nil rate classification. There was no evidence of deliberate wrongdoing or of knowledge that the goods were of an offending nature attracting confiscation. The statutory requirement for sustaining penalty under Rule 26 was therefore not met. [Paras 22, 23]

The personal penalties imposed on the partner in both appeals were set aside.

Final Conclusion: The Tribunal held that the GI welded wire mesh cleared by the assessee was classifiable under heading 7314 and sustained the excise demand only for the normal period, while also upholding the service tax demand on the installation activity. The extended period, penalties under section 11AC and Rule 25, confiscation under Rule 25, and the partner's personal penalties under Rule 26 were set aside.

SSI exemption - Clubbing of clearances - Principal manufacturer and job worker - Extended period of limitation - Penalty under section 11AC - Principal-to-principal basis - Eligibility under Notification No. 8/2003-CE - Value of bottled water manufactured by franchisee job workers - Non-disclosure of the franchise and job-work arrangement and the turnover position - Time-barred demand and penalty under Section 11AC

Whether the value of such bottled water, as shown in the account of the appellant as trading in goods, needs to be clubbed with their own turnover for the purpose of benefit of exemption Notification No. 8/2003-CE ? -HELD THAT: - The Tribunal held that the controversy was not about fastening excise duty on the job workers as independent manufacturers, but about computation of the appellant's aggregate clearances for SSI exemption. On the admitted terms of the franchise agreements, the appellant supplied the packaging material, the goods bore the appellant's brand, the job workers were obliged to return the filled bottles to the appellant, and they were not free to market the product on their own. In that factual setting, the manufacture was on behalf of the appellant in a principal manufacturer-job worker relationship, and not on a principal-to-principal basis. The decisions cited by the appellant were distinguished because those cases turned on materially different facts, including absence of control or independent clearance by the manufacturer. The Tribunal therefore held that where goods are manufactured by job workers on behalf of the principal manufacturer, their value must be included in the principal manufacturer's turnover for applying the conditions of Notification No. 8/2003-CE. [Paras 10, 11, 12, 13]

The turnover of goods manufactured by the job workers was rightly clubbed with the appellant's turnover, and the appellant was not entitled to the claimed SSI exemption once the threshold condition stood breached.

Extended period of limitation - Suppression of facts - Penalty under section 11AC -HELD THAT: - The Tribunal accepted the finding that the true nature of the transactions and the effect of the job work agreements emerged only on detailed scrutiny of accounts and agreements, and that the material facts had not been voluntarily disclosed. In that factual background, suppression justifying invocation of the extended period stood established. Once the demand was held to be within the extended period, the Tribunal sustained the consequential liability to interest and the penalty under section 11AC. [Paras 15]

The demand for the extended period, along with interest and penalty, was upheld.

Final Conclusion: The Tribunal dismissed both appeals, holding that the value of goods manufactured by the job workers on behalf of the appellant was liable to be clubbed with the appellant's turnover for SSI exemption purposes. The invocation of the extended period, and the consequential interest and penalty, were also sustained.

Effect of exemption Notification No. 12/2012-C.E. - Retrospective exemption - Assessable value of goods manufactured from free-supplied inputs - demand confirmed by including the value of rails supplied free of cost by Indian Railways in the assessable value of glued joints - HELD THAT: - The Tribunal found that the impugned demand had been confirmed solely on the premise that no exemption was available for exclusion of the value of free-supplied rails during the relevant period. After the impugned order, Entry No. 205A was inserted in Notification No. 12/2012-C.E. through the Finance Act, 2015, granting exemption retrospectively for the very period in dispute.

The records reveal that subsequent to the passing of the impugned order, Parliament enacted the Finance Act, 2015, whereby, Entry No. 205A was inserted in Notification No. 12/2012-C.E. granting exemption in respect of rails supplied free of cost by Indian Railways for manufacture of glued joints. More importantly, the exemption was made applicable retrospectively for the period from 17.03.2012 to 03.02.2014. The period covered by the retrospective exemption is precisely the same period involved in the present proceedings.

The legal effect of retrospective exemption is well settled. The Tribunal held that once an exemption is granted with retrospective effect, the amended provision must be treated as having operated from the specified date and pending proceedings must be decided under the amended law. Since the Adjudicating Authority had no occasion to examine the assessee's entitlement under that retrospective exemption, fresh adjudication was necessary. [Paras 13, 14, 15, 16, 18]

The impugned order was set aside and the matter was remanded for fresh adjudication in accordance with the retrospective exemption, with all other questions kept open.

Final Conclusion: The appeal was allowed by way of remand. The Tribunal held that the impugned demand, having been founded on the absence of exemption, required fresh adjudication after considering the retrospective exemption applicable to the same period.

Limitation for reassessment of escaped turnover - Belated adjudication of show cause notice -barred by limitation - Revival of stale proceedings - Pendency of connected proceedings and extension of limitation - obligation to maintain records - HELD THAT: - The Court held that once the assessment order for 2009-2010 had been passed after the audit, the respondent could invoke Section 27 only within the six-year period prescribed by that provision. The petitioner's earlier request to keep the proceedings in abeyance till disposal of the writ petitions relating to earlier years did not suspend or extend that statutory limitation. After disposal of those writ petitions and the subsequent denovo orders for the earlier assessment years, there was nothing preventing the respondent from proceeding with the show cause notice already issued for 2009-2010. Waiting further for the appellate outcome in the earlier years was held to be unjustified, and a stale proceeding could not be revived after limitation had run out. The Court also held that the decision in M/s.Oliva Care [2024 (9) TMI 1708 - MADRAS HIGH COURT], which concerned Section 22 and deemed assessment, had no application to a proceeding governed by Section 27. [Paras 34, 35, 36, 37, 39]

The impugned show cause notice was liable to be interfered with as the reassessment proceeding had become barred by limitation.

Final Conclusion: The writ petition was allowed. The Court held that the reassessment proceeding for the Assessment Year 2009-2010 had become time-barred under Section 27 of the Tamil Nadu Value Added Tax Act, 2006, and that the respondent could not revive it by issuing a belated show cause notice after keeping the matter pending during connected litigation.

Dishonour of cheque - legally enforceable debt or liability- Rebuttal of presumption under Section 139 - acquittal under Section 138​​​​​​​ - Appellate interference with acquittal - Blank signed cheque - Preponderance of probabilities - Presumption of innocence​​​​​​​ - HELD THAT: - The Court held that, although absence of a money-lending licence does not by itself defeat a prosecution under Section 138 of the Negotiable Instruments Act, the complainant must still establish the foundational transaction once the existence of consideration is effectively put in issue. On the evidence, the appellant could not state the exact particulars of the alleged loan, the date of disbursement, or the agreed interest, and produced no independent contemporaneous record to show movement of funds. Against this evidentiary vacuum, the respondent's explanation that signed blank cheques had been handed over in the course of an existing professional and business relationship was treated as a probable defence sufficient to rebut the statutory presumption under Section 139 on a preponderance of probabilities. Since the Trial Court's view that the legally enforceable debt was not proved was a plausible view on the evidence, the High Court held that no perversity or manifest illegality was shown so as to justify appellate reversal of the acquittal. [Paras 18, 19, 20, 21, 22]

The appeal was dismissed and the acquittal was affirmed.

Final Conclusion: The High Court declined to interfere with the acquittal in the complaint under Section 138 of the Negotiable Instruments Act. It held that, notwithstanding the legal irrelevance of the money-lending licence objection by itself, the respondent had successfully rebutted the statutory presumption and the appellant had failed to prove a legally enforceable debt.

Interpretation of the term ‘reason to believe’ - Attachment of property as proceeds of crime - Notice to persons claiming right over attached property - Principles of natural justice - assumption or suspicion - Whether Court was justified in setting aside the order of trial Court passed in connection with the attachment order in the light of modern expositions of the expression ‘reasons to believe’ in the context of section 107 of the BNSS ? - HELD THAT: - While the statutory language appears straightforward, the judicial interpretation has progressively shaped the definition ‘reasons to believe’ into a naunced doctrinal tool that mediates between mere suspicion and actual knowledge. The judgment in Arbind Kejriwal [2024 (5) TMI 675 - SUPREME COURT]constitutes one of the most detailed modern exposition of the expression ‘reason to believe’ in the context of arrest under section 19 of the PMLA. In the judgment a sharp distinction has been drawn between ‘reason to believe’ and ‘suspicion’. The court reiterates that 'suspicion' represents a lower grade of satisfaction and cannot justify arrest. ‘Reason to believe’ on the other hand holds a higher threshold conveying a conviction founded on an evidence regarding the existence of a fact.

The procedural dimension of the doctrine was emphasised in Aslam Md. Merchant [2008 (7) TMI 852 - SUPREME COURT], where the supreme Court held that the formation of ‘reason to believe’ must, in appropriate statutory context, be accompanied by the recording of reasons. This requirement ensures transparency, accountability and facilitates judicial review, thereby preventing arbitrary exercise of power.

In Laxmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT], the Supreme Court introduced the well established requirement of a ‘live link’ or rational nexus between the material available and the belief formed. The court held that the connection between the information and the belief must not be remote.

The Court held that the expression reason to believe in section 107 of the BNSS requires sufficient cause founded on objective material and a rational nexus between the material and the conclusion that the property constitutes proceeds of crime; it cannot be equated with apprehension, assumption or mere non-filing of a reply to the show-cause notice. Applying that standard, the trial court's order was found defective because it proceeded on suspicion, treated the absence of reply as sufficient basis for belief, directed the investigating officer to attach and hold the properties despite the statutory scheme, and omitted notice to the lessor though section 107 contemplates notice to persons claiming rights over the property. The revisional court was therefore right in setting aside the attachment order, but, since the defect lay in non-compliance with the statutory procedure, the matter ought to have been left open for a fresh attachment request in accordance with section 107. [Paras 27, 28, 30]

The revisional court's interference with the attachment order was upheld, with liberty to the investigating authority to make a fresh prayer strictly in compliance with section 107 of the BNSS.

Final Conclusion: The challenge to the revisional order failed. The attachment order was rightly found unsustainable for want of a legally tenable basis of reason to believe and for non-compliance with the statutory procedure, but the investigating authority was left free to seek fresh attachment in accordance with section 107 of the BNSS.