TaxTMI Updates e-Newsletter
Jul 04,2026

Validity of a Demand-cum-Show Cause issued under Section 74(1) - Limitation for GST fraud demand proceedings - Bar on parallel proceedings on same subject matter - Same subject matter in dual GST enforcement - absence of a valid extension of limitation under Section 168A - excess availment of input tax credit - short payment of GST

Limitation for GST fraud demand proceedings - Extension of annual return due date - HELD THAT: - The Court held that the notification extending the due date for furnishing the annual return for 2017-18 up to 07.02.2020 was intended for the benefit of taxpayers and could not be treated as extending, for the benefit of the department, the time limit for initiating proceedings under Section 74. No separate notification extending the time for exercise of power under Section 74 was produced. The earlier communication issued in March 2021 was found to be only a scrutiny notice and not the formal commencement of adjudicatory proceedings, since it neither amounted to a show cause notice nor contained allegations of fraud, wilful misstatement or suppression that would attract Section 74(1). [Paras 16, 18, 21, 22, 23]

For 2017-18, the show cause notice and the consequential order were held to be without jurisdiction.

Bar on parallel proceedings on same subject matter - Excess availment of input tax credit - HELD THAT: - Accepting the statutory bar under Section 6(2)(b), the Court held that once adjudicatory proceedings on the same subject matter had already been initiated by the State GST authorities, parallel proceedings by the Central GST authorities were impermissible. Relying on the principle stated by the Supreme Court in M/s Armour Security (India) Ltd. [2025 (8) TMI 991 - SUPREME COURT], the Court treated the formal show cause notices issued by SGST on ITC mismatch as proceedings on the same subject matter. Since the impugned CGST notice also covered excess availment of ITC for those years, it was without jurisdiction to that extent. [Paras 24, 25, 26, 27, 28]

The impugned notice and order were invalid, insofar as they dealt with excess availment of ITC for 2018-19 and 2019-20.

Distinct subject matter in GST proceedings - Short payment of GST - HELD THAT: - The Court found that the short payment of GST aspect contained in the CGST demand-cum-show cause notice for 2018-19 and 2019-20 was not the subject matter of the SGST proceedings, which were confined to ITC mismatch. Likewise, for 2020-21, the SGST notice related to mismatch of tax liability indicated in GSTR-1B and GSTR-3B, which was distinct from the subject matter covered by the impugned CGST notice. Therefore, on those aspects, the initiation of proceedings by the respondent authority could not be faulted. Since the impugned notice and order combined both jurisdictionally barred and permissible components, the order-in-original was set aside in its entirety and the matter was remitted for a fresh order confined to the aspects legally open to the authority. [Paras 30, 31, 32, 33, 34]

The respondent authority was permitted to proceed afresh only on the aspects not hit by the jurisdictional bar.

Final Conclusion: The High Court held that the impugned CGST proceedings were barred for 2017-18 and, for 2018-19 and 2019-20, to the extent they covered excess availment of ITC already taken up by the SGST authorities. The order-in-original was set aside in its entirety and the matter was remitted for fresh adjudication confined to the aspects on which the respondent authority had jurisdiction.

Challenged to show cause notice - Maintainability of writ petition - Failure to raise objection before adjudicating authority - validity of FORM GST DRC-01 - HELD THAT: - The Court confined itself to the only contention urged, namely, that FORM GST DRC-01 was unsigned. It held that the writ petition, as framed, was not fit to be entertained because the petitioner had directly invoked writ jurisdiction without stating that any objection had earlier been placed before the competent tax authority. The Court also noted that the notice dated 02.02.2024 on record was a signed notice issued by the Deputy Commissioner. On that basis, the Court declined to examine the challenge in writ jurisdiction and left it open to the petitioner to point out any defect in the notice before the authority concerned. [Paras 7, 8]

The writ petition was dismissed as not fit for entertainment in writ jurisdiction, with liberty to the petitioner to raise the alleged defect in FORM GST DRC-01 before the Deputy Commissioner.

Final Conclusion: The High Court declined to entertain the writ petition against the show cause notice and consequential order on the sole ground urged. It held that the petitioner should first raise the alleged defect in FORM GST DRC-01 before the competent authority, especially when the record contained a signed notice.

Rejection of the refund claim - Coercive recovery during search - Voluntary payment of tax liability - Refund of tax voluntarily paid - Delayed issuance of DRC-04 - Alternative efficacious remedy

Coercive recovery during search - Disputed questions of fact in writ jurisdiction - Voluntary payment of tax liability - HELD THAT: - The Court found from the panchnamas, the written undertaking and the recorded answers during search that the petitioner admitted absence of GST registration, accepted the particulars of students and fees collected, and expressly agreed to pay the quantified liability after temporary registration was issued at his request. The statement recorded at the end of the proceedings specifically stated that it was made without pressure, coercion or threat. The Court also treated the petitioner's conduct in remaining silent for nearly two years, without any complaint to superior authorities or police, as destructive of the plea of coercion.

Following the view expressed by the Bombay High Court in the case of Innovators Facade Systems Ltd [2024 (3) TMI 1215 - BOMBAY HIGH COURT], wherein the High Court has examined the allegations of coercive recovery levelled by the tax payer. It is held that if the tax payer was genuinely coerced, as a prudent legal person, would have resorted to filing of complaints or representation on such officers, who have shown highhandedness, and since he had not done so the allegation of coercive recovery cannot be believed. It is also held that the factual dispute as to whether any coercive methods were adopted by the respondents and that such amounts were deposited under duress and coercion certainly cannot be conclusively ascertained and/or gone into in the proceedings of a writ petition under Article 226 of the Constitution.

On these facts, the plea of coercive recovery was held to be an afterthought, and in any event such disputed factual controversy was not fit for conclusive determination in writ proceedings. [Paras 5, 6, 7, 8]

The payment was treated as voluntary and the challenge founded on alleged coercion failed.

Delayed issuance of DRC-04 - Acknowledgment of voluntary payment - Absence of prejudice - HELD THAT: - The Court held that once the petitioner voluntarily paid the tax with interest and penalty, the proceedings stood concluded on that date. FORM GST DRC-04 under Rule 142 was treated only as an acknowledgment of voluntary payment of outstanding liability. Since the Rules did not prescribe any specific time limit for issuance of DRC-04, and no dispute regarding liability was raised by either side during the intervening period, the later issuance of DRC-04 caused no prejudice to the petitioner. [Paras 9, 10]

The delay in issuing DRC-04 was held inconsequential and did not render the subsequent action illegal.

Refund of tax voluntarily paid - Eligibility under refund provisions - Rejection of refund application - HELD THAT: - The Court held that the refund provision is attracted only where it is shown that the tax was not payable or that excess payment had been made. In the present case, the tax, interest and penalty were quantified on the basis of material found during search, including the number of students and fees collected in cheque and cash, and the petitioner had accepted those particulars and discharged the liability voluntarily. In that situation, the petitioner failed to establish any entitlement to refund, and the rejection of the refund application after notice and hearing was upheld. The circular relied upon by the petitioner was held inapplicable to the facts, and the decisions cited on coercive recovery, arrest powers and refund processing were distinguished as turning on materially different facts or legal contexts. [Paras 10, 11]

The order rejecting refund in FORM GST RFD-06 was upheld.

Final Conclusion: The High Court rejected the writ petition on merits, holding that the petitioner had voluntarily paid the tax liability during search and had failed to establish either coercive recovery or any legal basis for refund. The belated issuance of DRC-04 was held not to cause prejudice, and the rejection of the refund application was sustained.

Blocked input tax credit on construction of immovable property - Invocation of fraud and suppression provision for wrongly availed input tax credit - Common show cause notice for multiple tax periods

Common show cause notice for multiple tax periods - HELD THAT: - The Court held that the objection to the impugned proceedings covering multiple tax periods already stood concluded against the petitioner by the decision in M/s Chimney Hills Education Society [2024 (11) TMI 518 - KARNATAKA HIGH COURT] On that footing, the Court declined to entertain the challenge on that ground and expressed no further view. [Paras 24]

The objection that a single proceeding could not cover multiple tax periods failed.

Blocked input tax credit on construction of immovable property - Belated availment of input tax credit - HELD THAT: - The Court found that the petitioner, being engaged in renting of immovable property and having constructed the property through works contract services, fell within the prohibition contained in clauses (c) and (d) of Section 17(5). It further recorded that the credit had not been availed within the time prescribed under Section 16 and was therefore also belated. The petitioner had acted on the Orissa High Court decision in Safari Retreats Pvt. Ltd. vs. Chief Commissioner of CGST [2019 (5) TMI 1278 - ORISSA HIGH COURT], but the basis of that claim no longer survived after its reversal by the Supreme Court in Chief Commissioner of Central Goods and Services Tax & Others vs. Safari Retreats (P) Ltd & Ors. [2024 (10) TMI 286 - SUPREME COURT], review against the aforesaid order was also dismissed by the Hon’ble Supreme Court [2025 (5) TMI 1684 - SC ORDER]. The Court therefore held that the petitioner was not entitled to the disputed credit. [Paras 27, 31, 33, 35, 37]

The denial of input tax credit was upheld.

Invocation of fraud and suppression provision for wrongly availed input tax credit - Extended period of limitation - HELD THAT: - The Court held that the petitioner's letter intimating its proposed availment of credit did not amount to any approval or concurrence under the statutory regime. In the absence of such acceptance by the department, a unilateral communication could not create a bona fide basis to treat the blocked credit as validly available or to exclude suppression. The Court also noted that the petitioner had initially sought to avail a much lesser amount but proceeded to avail a substantially larger amount without concurrence. On that reasoning, and as the wrongly availed credit was beyond the normal period, the Court held that invocation of the extended period and recourse to Section 74 were justified. [Paras 38, 39, 40]

The challenge to the jurisdictional invocation of Section 74 and the extended limitation period was rejected.

Final Conclusion: The writ petition was dismissed. The Court upheld the ineligibility of the disputed input tax credit, sustained the invocation of Section 74 and the extended period, and rejected the challenge to the common proceedings covering multiple tax periods, while leaving the petitioner to pursue the statutory appellate remedy.

Failure to consider reply in assessment - Assessment on levy of GST on seigniorage fees kept in abeyance pending decision of Supreme Court - Principles of natural justice - Opportunity to file additional reply - HELD THAT: - The Court found that, in earlier orders, while permitting the assessing authorities to complete proceedings relating to levy of GST on seigniorage fees, it had directed that final orders should not be passed and that the authorities should await the Supreme Court's decision. In the present case, however, an assessment order had been passed, and the petitioner's reply had not been considered. Having regard to this procedural defect and to the fact that the very incidence of tax was still at large, the Court held that the petitioner should be afforded a fresh opportunity, and declined to impose the usual condition of deposit while granting such opportunity. [Paras 5, 6, 7]

The impugned assessment order was set aside and the matter was remanded for fresh consideration after permitting the petitioner to file an additional reply and supporting documents; any final order or enforcement of liability was directed to be kept in abeyance until the Supreme Court pronounces on the issue.

Final Conclusion: The writ petition was allowed. The assessment order was set aside for fresh consideration on the ground that the petitioner's reply had not been considered, and the authority was directed to keep any final order or enforcement in abeyance pending the Supreme Court's decision on the levy of GST on seigniorage fees.

Reasonable opportunity to produce material documents - Reconsideration of fraud-based GST demand - Principles of natural justice - validity of the order imposing interest and penalty after reversing input tax credit, without affording the petitioner an opportunity to place material documents on record on the question whether there was genuine supply of goods - HELD THAT: - The Court found that the input tax credit availed by the petitioner had already been reversed and that, to that extent, the revenue interest stood protected. In that situation, the petitioner could not be denied an opportunity to produce material documents to establish that there was genuine supply of goods and that the invocation of Section 74 was incorrect. Since that possibility could not be ruled out without such opportunity, the impugned order was interfered with only on that limited ground and the matter was remitted for reconsideration of the invocation of Section 74. [Paras 4, 5]

The impugned order was set aside to the limited extent of reconsideration of the invocation of Section 74 after granting a reasonable opportunity to the petitioner and passing a fresh order.

Final Conclusion: The writ petition was disposed of by setting aside the order only for the limited purpose of reconsidering the invocation of Section 74 after giving the petitioner a reasonable opportunity to produce supporting material. No finding was rendered on the merits of the underlying tax dispute.

Violation of principles of natural justice - Failure to afford opportunity of hearing - HELD THAT: - The Court found on perusal of the impugned order that it had been issued without affording the petitioner an opportunity of hearing. Since the matter required reconsideration on that procedural ground, the Court held that the order warranted fresh consideration. The remand was made conditional upon payment of the balance tax liability offered by the petitioner, and the assessing authority was directed to pass a fresh order after providing a reasonable opportunity. [Paras 4, 6]

The impugned order was set aside on the ground of breach of natural justice and the matter was remanded for fresh adjudication after hearing the petitioner, subject to payment of the balance tax liability.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order for want of hearing and remanding the matter for fresh decision subject to the stated condition. Consequentially, any bank account attachment pursuant to the impugned order was directed to be raised.

Entitlement to bail -Reason to believe for arrest - large-scale suppression of taxable turnover - GST evasion - Custodial interrogation - Non-cooperation with investigation - HELD THAT: - As per sec. 69 of CGST Act, what is required for according approval for arrest is some materials to believe that the arrestee has committed an offence punishable u/s. 132 of CGST Act and not the final adjudication. The word reason to believe, is not defined in CGST Act, whereas sec. 29 of BNS, defines reason to believe as the person is said to have reason to believe if he has sufficient cause to believe that thing and not otherwise. Therefore, to record a reason to believe, it is sufficient that there will be a sufficient material to believe such evasion. Therefore, at the time of arriving conclusion to arrest or not to arrest, a final adjudication is not necessary, but sufficient materials to believe that he committed offence is necessary. The reason to believe already indicated the material from which, he found the necessity for arrest.

The Court held that, for approval of arrest under the CGST Act, final adjudication of tax liability is not a precondition; what is required is sufficient material to form a reason to believe that an offence punishable under section 132 has been committed. On examining the recorded reasons, the Court found that the approving authority had referred to statements of employees and recipients, transporter data, CCTV footage, melting reports, tally data and seized records, and therefore the contention that the approval was mechanical or unsupported by material was rejected. The Court further held that the decisions relied on by the petitioner concerning recovery or adjudication of GST dues did not govern consideration of bail. On the question of necessity of arrest, the Court relied on the petitioner's failure to respond to summons, non-production of promised particulars, and subsequent retraction of his earlier statement, and concluded that he was unlikely to cooperate unless subjected to custodial interrogation. Having regard to the stage of investigation, the alleged gravity of the offence and the petitioner's antecedents noted by the Court, bail was declined. [Paras 26, 27, 28, 29, 30]

The arrest was treated as supported by sufficient material and custodial interrogation was held necessary; bail was therefore refused.

Final Conclusion: The Court held that the arrest was backed by sufficient material giving rise to a reason to believe that a cognizable GST offence had been committed, and that final adjudication was not necessary at that stage. In view of the ongoing investigation, the petitioner's lack of cooperation and the need for custodial interrogation, bail was refused.

Reassessment on factually incorrect reasons - Assumption of jurisdiction under reopening provisions - Long-term capital gain exemption on sale of shares

HELD THAT: - The Court found that the recorded reasons for reopening exclusively proceeded on the allegation that the assessee had purchased and sold shares of M/s. 21st Century and had thereby claimed exempt long-term capital gain through a penny stock transaction. On examining the return of income, the Court noticed that the assessee had disclosed long-term capital gain on listed securities in respect of Bagra Partishtan Ltd., and not M/s. 21st Century.

Since this assertion was not denied by the Revenue and the company actually dealt with did not find place in the impugned notice, the very basis of the reopening was held to rest on factually incorrect information. The assumption of jurisdiction for reassessment could not therefore be sustained. [Paras 7, 8]

The notice issued for reopening and the order rejecting objections were quashed as the reassessment was founded on an incorrect factual premise.

Final Conclusion: The writ petitions were allowed. The Court held that the reassessment notices and the orders rejecting objections could not stand, as the reopening was founded on a factually incorrect allegation regarding the shares allegedly dealt with by the assessee.

Limitation for reassessment notice pursuant to search - Section 148 notice after search - Computation of ten-year block under search assessment provisions - Inclusion of search assessment year in extended limitation period

HELD THAT: - The Court held that Section 153A prescribes two distinct computational regimes. For the six-year block, the statute uses the expression "six assessment years immediately preceding", which excludes the assessment year relevant to the previous year of search. For the extended period, however, Explanation 1 uses a different formulation, namely computation of ten assessment years "from the end of the assessment year" relevant to the previous year in which search is conducted. This difference in phraseology was treated as deliberate and determinative.

The Court held that the ten-year computation cannot be made by importing the exclusionary rule applicable to the six-year block, since that would render the words "from the end of the assessment year" otiose. Proceeding on that basis, the search having taken place in Financial Year 2024-25, the corresponding Assessment Year 2025-26 was the first year in the ten-year reckoning and Assessment Year 2016-17 was the tenth year. Consequently, Assessment Year 2015-16 fell outside the permissible outer limit. The Court also followed its earlier view and the reasoning accepted by the Delhi and Madras High Courts on the same interpretation. [Paras 13, 14]

The impugned notice for Assessment Year 2015-16 was held time-barred and was quashed on the ground of limitation.

Final Conclusion: The Court held that the extended ten-year period had to be computed by including the search assessment year, with the result that Assessment Year 2015-16 lay beyond the statutory limit. The notice issued under Section 148 for that assessment year was therefore quashed as barred by limitation.

Registration of charitable trust u/s 12AB - One-time fund-raising activity as business activity - Applicability of section 13 at stage of registration - Dominant object test for charitable purpose -

Treating the assessee-trust's one-time fund raising programme through coupon sales and lucky draw as a business activity so as to attract specified violation for refusal of registration - HELD THAT: - The Court noted that the Tribunal had applied the jurisdictional High Court decision in United Way of Baroda [2020 (3) TMI 233 - GUJARAT HIGH COURT] which holds that an activity does not become business merely because it is organised, and that the dominant object and profit motive are decisive.

Accepting the Tribunal's factual finding that the programme was a one-time fund raising exercise and that the surplus was deployed towards the trust's charitable objects, the Court held that no violation of section 12AB(4) was made out. [Paras 5, 6, 7]

No substantial question of law arose on the Tribunal's conclusion that the one-time fund raising activity was not business in nature and did not constitute a specified violation.

Scope of section 13 at stage of registration - Registration of charitable trust under section 12AB - Whether provisions of section 13 could be invoked for denying registration u/s 12AB and are relevant only at the stage of assessment? - HELD THAT: - The Court accepted the Tribunal's view that disqualifications under section 13 are to be examined in assessment proceedings and not while considering grant of registration. The Tribunal's reliance on Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [2016 (9) TMI 8 - GUJARAT HIGH COURT] was found consistent with law, and no legal error was shown in refusing to treat section 13 as a ground to deny registration. [Paras 6, 7]

The challenge founded on section 13 was not accepted, and no substantial question of law arose on that aspect.

Final Conclusion: The High Court held that the Tribunal had correctly applied the dominant object test in treating the assessee-trust's one-time fund raising programme as not constituting business activity and correctly viewed section 13 as inapplicable at the registration stage. Finding no substantial question of law arising from the Tribunal's order, the appeal was dismissed.

TDS on payments to non-residents u/s 195 - Assessee in default u/s 201 - Commission paid to travel agents for hotel bookings

Whether Commission payments made to travel agents and for hotel bookings through websites and related entities did not attract deduction of tax at source u/s 195 so as to render the assessee an assessee in default under section 201? - HELD THAT: - The Court accepted the Tribunal's factual findings that the assessee had furnished Form 15CB for each transaction involving payment to non-residents, had deducted and deposited tax wherever applicable, and had filed the TDS returns. It further held that the payments examined by the Assessing Officer, namely commission paid to banks, credit card companies and travel agents in relation to hotel bookings through websites and related service providers, were not covered by the expression of sums liable for deduction under section 195 in the facts found by the Tribunal.

Once the assessee had discharged its obligation by complying with the TDS requirements supported by Form 15CB, and there was no adverse reporting by the tax auditor in Form 3CD on non-deduction of tax, it could not be treated as an assessee in default under section 201. [Paras 8, 9, 10]

The Tribunal was right in deleting the action under sections 201(1) and 201(1A), and no substantial question of law arose.

Final Conclusion: The High Court upheld the Tribunal's view that, on the facts found, the assessee had not committed any default in respect of tax deduction at source on the commission payments in question and therefore could not be treated as an assessee in default. The Revenue's appeal was accordingly disposed of for absence of any substantial question of law.

Revision u/s 263 - Erroneous and prejudicial order - Inadequate inquiry and revisional jurisdiction - Plausible view of the AO - Exercise of revisional jurisdiction against the reassessment concerning claimed exemption of long-term capital gains from sale of shares

HELD THAT: - The Court held that the twin conditions for assumption of jurisdiction u/s 263, namely that the assessment order must be both erroneous and prejudicial to the interests of the Revenue, were not satisfied.

Tribunal had recorded that the assessee had produced all material documents relating to purchase, holding and sale of the shares, including broker records, demat details and banking channel evidence, and that the AO had examined the material and made addition only in respect of one other transaction. In such circumstances, AO had adopted a course permissible in law, and the Principal Commissioner could not substitute his own opinion merely because he considered the inquiry to be inadequate. Absence of any proper reasons in the revisional order for treating the assessment order as erroneous also supported the Tribunal's view. [Paras 6, 7, 8]

The Tribunal was right in quashing the revisional order, and no substantial question of law arose from its decision.

Final Conclusion: The High Court upheld the Tribunal's order quashing the revision under section 263. It held that the Assessing Officer had taken a plausible view after considering the material on record, and therefore no substantial question of law arose.

Unexplained cash credit u/s 68 - Unsecured loans received and repaid through banking channels - Identity, genuineness and creditworthiness of creditor

HELD THAT: - The Court held that the controversy was covered by earlier coordinate Bench decisions of this Court in Ambe Trade Corporation (P) Ltd. [2022 (11) TMI 22 - GUJARAT HIGH COURT]and Rachna Finlease (P.) Ltd. [2024 (1) TMI 610 - GUJARAT HIGH COURT] which had treated similar transactions as explained where the source of funds was reflected in the books, the identity of the party was shown, and the amounts were received through banking channels.

In the present case also, the appellate authority and the Tribunal had concurrently found that the source of funds stood reflected in the books of account and that the loans were repaid through banking channels. On those factual findings, it was not open to reopen the issue as one giving rise to a substantial question of law, and the AO's doubts as to creditworthiness could not displace the concurrent appellate findings. [Paras 9, 10, 11]

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

Final Conclusion: The Court dismissed all the Revenue appeals, holding that the concurrent appellate findings accepting the source, identity and repayment of the unsecured loans through banking channels did not give rise to any substantial question of law.

Deduction u/s 80HHC without reducing therefrom the relief u/s 80IB - Interplay between deduction u/s 80HHC and deduction u/s 80IB - Scope of restriction u/s 80IA(9)

HELD THAT: - Accepting that the controversy stood covered by the decision of the Supreme Court in Shital Fibres Limited [2025 (5) TMI 1599 - SUPREME COURT (LB)] Court held that the restriction contained in Section 80IA(9), read with Section 80IB, is not on the computation of gross total income, but only on allowing deduction under another provision under the same heading to the extent already allowed. Accordingly, deduction u/s 80HHC could not be recomputed by first reducing the relief granted u/s 80IB, and the tax had to be recomputed in accordance with that principle. [Paras 6, 7]

The matter was remanded to the AO to recompute the tax by allowing deduction u/s 80HHC without reducing the deduction u/s 80IB.

Final Conclusion: The Court held that the assessee's claim for deduction u/s 80HHC could not be reduced by the deduction allowed u/s 80IB. The impugned order was set aside and the matter was remanded to the AO for fresh computation in accordance with the law declared by the Supreme Court.

Deduction u/s 80P(2)(a)(i) -interest on deposits of surplus and statutory reserve funds by a co-operative credit society - Business income attributable to providing credit facilities to members - Distinction between members' liability funds and own surplus funds

Whether Interest earned by the assessee co-operative society on deposits of its idle funds and statutory reserves kept with co-operative banks was deductible under section 80P(2)(a)(i) as business income? - HELD THAT: - The Tribunal found from the computation of income and the nature of the deposits that the assessee had claimed deduction on the footing that the interest formed part of its operative income. The funds placed with co-operative banks comprised statutory reserves and idle funds which, under the governing Societies law, were required to be kept with a co-operative bank, and those funds were not amounts due to members nor liabilities shown as members' monies.

On that factual basis, the decision in Totagars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] which turned on investment of monies retained and payable to members, was held inapplicable. Applying Tumkur Merchants Souharda Credit Co-operative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] the Tribunal held that interest earned on such own funds, not immediately required for lending to members, was attributable to the business of providing credit facilities to members and therefore qualified for deduction under section 80P(2)(a)(i). [Paras 9, 10, 11, 12]

The disallowance of deduction on the interest income was deleted and the assessee's claim under section 80P(2)(a)(i) was allowed.

Final Conclusion: The Tribunal held that the interest earned on deposits of the assessee's own idle funds and statutory reserves with co-operative banks was business income attributable to its activity of providing credit facilities to members and was deductible under section 80P(2)(a)(i). The assessee's appeal was accordingly allowed.

Unexplained cash deposits from travel business collections - Alleged unexplained commission on inter-party loan and purchase entries - Commission mismatch with Form 26AS

Unexplained cash deposits from travel business collections - Cash deposits supported by customer-wise ticket sale details - HELD THAT: - The Tribunal found that the assessee had furnished details relating to the cash deposits, including the cash component in the financial statement, customer-wise details of ticket sales and the HDFC Bank statement. These materials showed that the cash deposited in the bank represented cash received from customers in the travel business. Since the authorities had not taken these details into account, the treatment of the deposits as unexplained money could not be sustained. [Paras 7]

The addition on account of cash deposits was deleted and the ground was allowed.

Alleged unexplained commission on inter-party loan and purchase entries - Addition ignoring ledger account details - HELD THAT: - The Tribunal noted that the assessee had produced the copy of account of M/s. Arihant Trip Solution (LLP), including the purchase account and loan account, which specifically recorded the transactions between the parties. As the Assessing Officer had not taken cognizance of these details while making the addition, the assumption that the amount represented unexplained commission was held to be unfounded. [Paras 8]

The addition on account of alleged unexplained commission was deleted and the ground was allowed.

Commission mismatch with Form 26AS - Unverified difference in commission income - HELD THAT: - The Tribunal recorded that the alleged difference in commission was not verified by the Assessing Officer. It further found that the details in Form 26AS categorically tallied with the return of income filed by the assessee. On that basis, the addition could not survive. [Paras 9]

The addition based on the alleged commission difference was deleted and the ground was allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal on merits and deleted all the three additions. The ground relating to lack of opportunity was not adjudicated since the substantive issues had already been decided in the assessee's favour.

Penalty u/s 270A - under-reporting or misreporting of income - Penalty founded on set-aside quantum additions

HELD THAT: - The Tribunal found that all three additions on which the penalty had been levied were already set aside to the Assessing Officer in the quantum appeal for fresh adjudication. Once the foundational additions ceased to survive in their existing form, the penalty resting on those additions could not be maintained.

The appellate order upholding the penalty in principle and directing recomputation was therefore unsustainable. At the same time, the Tribunal clarified that the AO would remain free to take such steps for initiation of penalty as may be available in law while passing the fresh order in terms of the earlier quantum remand. [Paras 9]

The penalty levied under Section 270A was deleted, with liberty reserved to the Assessing Officer to initiate penalty proceedings afresh in accordance with law after passing the consequential order in the remanded quantum matter.

Final Conclusion: The Tribunal held that since the quantum additions forming the sole basis of the penalty had already been set aside for fresh adjudication, the penalty under Section 270A could not survive and was liable to be deleted. Liberty was, however, reserved to the Assessing Officer to proceed afresh in accordance with law after the consequential quantum order.

Penny stock transactions - Bogus long-term capital gains - Unexplained income u/s 68

HELD THAT: - The Tribunal recorded that, although the assessee had furnished documents relating to purchase and sale of the scrip, the addition had been made on the basis of investigation findings concerning Hemo Organics and the abnormal appreciation in its share price.

Referring to the Tribunal's order in Rameshkumar Karsanbhai Patel [2026 (4) TMI 734 - ITAT SURAT] and to the judicial precedents dealing with penny stock transactions, the Tribunal accepted the principle that apparent documentation does not conclude the matter where the surrounding facts show a sham arrangement and the transaction fails the test of human probabilities. On that reasoning, it held that the Revenue was justified in going behind the stated capital gains transaction to examine the real nature of the sudden price movement in the scrip, and that the assessee's alleged long-term capital gain was bogus. [Paras 5, 6, 7, 8]

The addition was sustained and the assessee's challenge to the treatment of the share profit as unexplained income failed.

Final Conclusion: The Tribunal upheld the addition by holding that the assessee's claimed long-term capital gain from the impugned penny stock transaction was bogus and assessable as unexplained income. The appeal was accordingly dismissed.

Taxability of interest from head office and overseas branches - Taxability of interest from other overseas banks - Section 14A and concessional-rate interest income - Broken period interest on securities held as stock-in-trade - Revaluation loss on outstanding foreign exchange contracts - Interest under section 234B on refund granted u/s 143(1)(a) - Club membership fee for employees - CRR/SLR shortfall payment

Taxability of interest from head office and overseas branches - Taxability of interest from other overseas banks - Specific provision prevailing over general provision - Interest received by the Indian branches from Nostro accounts and placements with the head office and overseas branches, and interest received from other overseas banks taxability in India for the years under appeal - HELD THAT: - The Tribunal held that, under the domestic law, the Indian branch and the head office or overseas branches are not distinct taxable persons, and interest arising on such internal placements is only a payment to self and cannot constitute taxable income. The treaty concept treating a permanent establishment as a distinct entity was held relevant only for attribution of profits and not for bringing such self-generated interest to tax as income. As regards interest received from other overseas banks, the Tribunal held that section 9(1)(v)(c) applies only where the non-resident payer has incurred the debt or borrowed money for a business or profession carried on by that payer in India. Since the overseas banks paying interest were not shown to have used the borrowed funds for any business carried on by them in India, the statutory condition failed. The Tribunal further held that once interest income is specifically dealt with by section 9(1)(v), the general provision in section 9(1)(i) could not be invoked to tax the same receipt. [Paras 12, 13, 14, 41, 51]

The additions on account of such interest were deleted for all the assessment years in appeal.

Section 14A and concessional-rate interest income - Interest taxable under section 115A - Expenditure disallowed against foreign currency lending interest merely because that interest was taxed at a concessional rate u/s 115A - HELD THAT: - The Tribunal found that the assessee had not claimed the interest income as exempt, but had only claimed the beneficial rate of tax available under section 115A. Since section 14A operates only where expenditure is related to income not forming part of total income, the appellate authority erred in applying that provision to income which admittedly remained taxable, though at a lower rate. [Paras 19]

The disallowance was directed to be deleted.

Section 14A and exempt interest income - Availability of own funds - Disallowance of interest expenditure against exempt interest income where interest-free funds were sufficient to cover the investments yielding exempt income - HELD THAT: - On examining the financial statements, the Tribunal found that the assessee possessed adequate interest-free funds to take care of the investments from which exempt income arose. Applying the settled principle that no interest disallowance can be made in such circumstances, the Tribunal held that the expenditure disallowance under section 14A could not be sustained. [Paras 23]

The disallowance was directed to be deleted.

Write-back of bad debt previously disallowed - Double taxation - HELD THAT: - The Tribunal accepted the principle that if the amount written off in an earlier year had not been allowed as deduction and had already suffered tax, its write-back in the impugned year could not be brought to tax once more. Since the factual position required verification from the record, the matter was sent back only for that limited purpose. [Paras 27]

The Assessing Officer was directed to verify the claim and decide the issue in accordance with law; if the amount had already been taxed earlier, it could not be taxed again.

Broken period interest on securities held as stock-in-trade - allowable revenue expenditure - HELD THAT: - The Tribunal noted that banks purchase such securities to maintain statutory liquidity requirements and, in accordance with the accounting principle followed by banks, the securities are held as stock-in-trade. Following the settled position recognised by the Supreme Court in BANK OF RAJASTHAN LTD. [2024 (10) TMI 875 - SUPREME COURT], the Tribunal held that the broken period interest paid on acquisition of such securities retains the character of revenue expenditure. [Paras 29, 53]

The disallowances made in the relevant years were deleted.

Club membership fee for employees - allowable Revenue/business expenditure - HELD THAT: - The Tribunal held that the controversy stood concluded by judicial precedent recognising such payments as revenue expenditure incurred for business purposes. There being no distinguishing feature in the present case, the deletion of the disallowance was upheld. [Paras 32]

The Revenue's challenge to deletion of the club membership fee disallowance was rejected.

Interest under section 234B on refund granted under section 143(1)(a) - Inapplicability of section 234D at the relevant time - HELD THAT: - The Tribunal agreed that section 234B deals with shortfall in payment of advance tax and cannot be used to levy interest on a refund earlier granted on processing of return. It held that the departmental attempt was effectively to recover interest of the kind contemplated by section 234D, but that provision was not on the statute for the relevant year. [Paras 36, 37, 38]

Deletion of the interest charged under section 234B was upheld.

Revaluation loss on outstanding foreign exchange contracts - Business loss - Loss arising on year-end revaluation of outstanding foreign exchange contracts - HELD THAT: - The Tribunal held that where foreign exchange contracts are entered into in the regular course of banking business and are revalued at year end in accordance with the consistently followed accounting method, the resultant loss is not a contingent or speculative loss merely because actual settlement takes place later. The claim was therefore allowable in line with the settled Special Bench view. [Paras 45]

The Assessing Officer was directed to allow the claim for revaluation loss.

CRR/SLR shortfall payment - Proviso to section 37(1) - HELD THAT: - The Tribunal followed the jurisdictional High Court view [2011 (2) TMI 1609 - BOMBAY HIGH COURT] that the payment made for non-maintenance of the prescribed CRR/SLR balance is not in the nature of penalty so as to attract the bar under the proviso to section 37(1). The payment was therefore treated as allowable expenditure. [Paras 55, 56]

The deletion of the disallowance was upheld.

Final Conclusion: The assessee succeeded on the substantive issues relating to taxability of interest, deductibility of broken period interest, foreign exchange revaluation loss, and the impugned disallowances, subject only to a limited verification on the bad debt write-back issue. The Revenue's appeals were dismissed, and the departmental cross-objections were also dismissed.

Bogus LTCG from sale of shares - Penny stock addition as unexplained cash credit - Generalised investigation report vis-a-vis documentary evidence

HELD THAT: - The Tribunal found that the assessee had produced documentary material establishing acquisition of the shares by gift, their holding in demat form, sale through a SEBI-registered broker on a recognised stock exchange, payment of STT, and receipt of sale proceeds through banking channels. It held that these materials established the acquisition, holding and sale of the shares through recognised channels.

AO had not brought any specific material showing that the assessee was involved in price manipulation or had obtained any accommodation entry, and had proceeded mainly on a general investigation report regarding the modus operandi in penny stock cases. The Tribunal held that such a generalised report could not, by itself, displace the assessee's documentary evidence in the absence of independent corroborative material or a direct nexus with the alleged operators.

Shares were sold after being held for more than twelve months and not at the peak market price, which militated against the allegation of a prearranged sham transaction. On that basis, the Tribunal held that the assessee had discharged the primary onus and, since the Revenue failed to rebut the evidence with cogent material, the addition under section 68, the consequential denial of exemption under section 10(38), and the commission addition could not be sustained. [Paras 4]

The additions were deleted and the claim of exemption was allowed; the legal grounds challenging the reassessment proceedings were left unadjudicated as academic.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition made by treating the exempt long-term capital gain from sale of shares as unexplained cash credit, together with the related commission addition. Since the appeal succeeded on merits, the challenge to the validity of the reassessment proceedings was not examined.

Inland Haulage Charges under shipping article of DTAA - Profits from operation of ships in international traffic - Composite transportation activity - Ancillary income from international shipping -

Whether Inland Haulage Charges received for movement of cargo from the customer's location to the port and vice versa, as part of the assessee's international shipping activity, are covered by Article 8(1) of the India-China DTAA? - HELD THAT: - The Tribunal held that the decisive test was whether the inland haulage formed part of the assessee's integrated transportation of goods in international traffic. On the facts, the assessee undertook transportation from origin to destination as a single composite activity, and the bill of lading also evidenced transport from origin to destination.

The absence in Article 8 of the India-China DTAA of the specific expression found in the India-Belgium treaty referring to activities directly connected with such transportation was not treated as decisive, since inland haulage in the present case was not a separate inland business but an inseparable component of the overall shipping operation.

Relying on the OECD Commentary and earlier co-ordinate bench decisions on similarly worded treaty provisions, the Tribunal accepted that profits from inland haulage, being directly connected with and ancillary to the operation of ships in international traffic, form part of shipping income covered by Article 8. [Paras 11, 12, 13, 14, 15]

The deletion of the addition on account of Inland Haulage Charges was upheld; the question of agency PE and profit attribution was left open as academic in view of the finding on Article 8.

Final Conclusion: The Tribunal held that Inland Haulage Charges formed part of the assessee's composite international shipping operations and were taxable only under Article 8 of the India-China DTAA in the state of residence. The Revenue's appeal was dismissed, and the issue of agency PE was left open as academic.

Assessee in default for non-deduction of tax at source - Binding effect of subsisting interim court directions on TDS obligation - Leave Travel Concession reimbursement - Liability of the bank to be treated as an assessee in default u/s 201/201(1A) for non-deduction of tax on Leave Travel Concession reimbursement during the period covered by the Madras High Court's interim directions -

HELD THAT: - The Tribunal found that the controversy was identical to that decided earlier by the co-ordinate Bench in the bank's own matter State Bank of India vs. ACIT [2025 (5) TMI 2306 - ITAT MUMBAI]. The Tribunal, held that the assessee cannot be treated as an assessee-in-default since the directions issued by the Hon’ble Madras High Court [2015 (2) TMI 1378 - MADRAS HIGH COURT] were binding on the assessee during the period under consideration.

Since the bank was obliged to act in conformity with that subsisting judicial direction, its failure to deduct tax could not attract treatment as an assessee in default u/s 201/201(1A). On that reasoning, the demand raised for non-deduction of tax was held to be unsustainable. [Paras 6, 7, 9]

The orders treating the assessee as in default under section 201/201(1A) were quashed, and the same view was applied mutatis mutandis to the connected appeals for the stated assessment years.

Final Conclusion: Following the earlier co-ordinate Bench decision on the same controversy, the Tribunal held that the bank could not be treated as an assessee in default for non-deduction of tax on LTC reimbursement during the period when the Madras High Court's interim directions were operative. All the appeals were accordingly allowed.

Imposition of penalty under Section 112(a) and Section 112(b) - dealing with smuggled gold - Burden of proof for notified goods - Quantum of penalty

Penalty for dealing with smuggled gold - Personal penalty on the appellant for harbouring and dealing with seized gold recovered from premises under his custody and control - HELD THAT: - The Tribunal held that, though the gold was not recovered from the physical person of the appellant, it was recovered from the godown premises where he and the co-noticee were found present and in charge. Gold being a notified commodity, once recovery from premises under the possession, custody or control of a person was established, the burden shifted to that person to prove licit possession. No document was produced to show lawful importation, procurement or possession, nor was any plausible explanation offered for storage of such quantity of gold in the premises under his control. The Tribunal further found that the appellant's involvement did not rest solely on the recorded statements, since the absence of licit documents, the nature of the seized goods, and the surrounding circumstances independently supported the conclusion that he was concerned with keeping, harbouring and dealing with goods liable to confiscation. On that basis, the ingredients of Section 112(a) and Section 112(b) stood attracted. [Paras 7, 8]

The finding imposing penalty on the appellant under Section 112(a) and Section 112(b) was affirmed.

Quantum of penalty - Evidentiary safeguards for statements - Mitigating circumstances - HELD THAT: - The Tribunal held that those circumstances were insufficient to exonerate the appellant from liability, but they were relevant to the measure of penalty. The absence on record of foreign markings or inscriptions on the seized gold introduced a degree of doubt, and the statements relied upon by the Department had not undergone the evidentiary safeguards contemplated by Section 138B of the Customs Act. Taking these factors cumulatively, the Tribunal adopted a lenient view only on the quantum and substantially reduced the penalty while maintaining the finding of liability. [Paras 8, 9]

The penalty was reduced while sustaining the appellant's liability under Section 112(a) and Section 112(b).

Final Conclusion: The Tribunal partly allowed the appeal by sustaining the appellant's penal liability in relation to the seized gold but modifying the impugned order on quantum and reducing the penalty.

Reasonable belief for seizure of gold - Statutory presumption as to smuggled goods - Admissibility of investigation statements - Penalty for dealing with alleged smuggled gold - False document penalty under customs law - Principles of natural justice - Mandatory statutory safeguards prescribed under Section 138B

Whether, the Revenue had entertained a valid and reasonable belief that the seized gold was of smuggled origin so as to justify the seizure and consequent invocation of the statutory presumption under Section 123, or not ? -HELD THAT: - Before the statutory presumption embodied under Section 123 of the Customs Act, 1962 can be pressed into service, the Revenue is first required to establish the foundational fact, namely, that the goods were seized under a reasonable belief that they were smuggled goods. Such reasonable belief cannot be founded upon conjectures, assumptions or mere suspicion, but must be supported by objective circumstances existing at the time of seizure itself. It is only upon the existence of such foundational facts that the reverse burden contemplated under Section 123 becomes operative. Conversely, where the very foundation of such belief is found wanting, the statutory presumption itself becomes unavailable and the ordinary rule of evidence would govern the matter, thereby requiring the Department to independently establish that the goods were in fact smuggled into India.

The Tribunal held that the existence of reasonable belief at the time of seizure is the foundational requirement for shifting the burden under the statutory presumption. In the present case, the gold was seized in a town area and not at a border, customs station or port, and the seized bars bore no foreign markings, inscriptions, serial numbers or other identifying features suggestive of foreign origin. The mere recital in the seizure records that the country of origin was Bangladesh, the quantity recovered, or the laboratory report showing 99.8% purity, were held insufficient to constitute objective material for such belief. The claimant had also produced registration documents, GST records, stock registers, stock summaries and melting invoices showing a prima facie documentary trail, including correspondence of the individual and aggregate weights with the seized bars. In the absence of scientific, forensic or other independent evidence disproving those records or linking the gold to illegal importation, the Revenue could not rely on suspicion alone to invoke the reverse burden. [Paras 14]

The foundational requirement of reasonable belief was not established; consequently, the statutory presumption was unavailable and the confiscation case could not be sustained on that basis.

Whether the statements recorded during investigation, forming the principal basis of the Revenue's case, are legally admissible and sufficiently corroborated so as to sustain the findings of confiscation ? - HELD THAT: - The Tribunal held that statements relied upon by the Revenue were not automatically admissible as substantive evidence and that the safeguards under the provision governing use of such statements had not been followed. The proprietors' statements, on which the Revenue chiefly relied to discredit the melting invoices and other records, had not been tested in the manner required, nor supported by handwriting examination, forensic analysis, expert opinion, seizure of original invoice books, or other objective material. The observation that the stock register appeared to have been prepared later was also unsupported by any expert or cogent evidence. As regards the statement of the carrier, once voluntariness was seriously disputed, exclusive reliance on it was held unsafe in the absence of independent corroboration. The Tribunal therefore found that the Revenue's case rested predominantly on uncorroborated and procedurally untested statements lacking sufficient probative value. [Paras 15]

The statements relied upon by the Revenue were insufficient in law to establish smuggling or fabrication of documents, and the evidentiary deficiencies had to enure to the appellants' benefit.

Penalty for dealing with alleged smuggled gold - False document penalty under customs law - HELD THAT: - The Tribunal held that penalty for dealing with goods liable to confiscation is consequential and cannot survive when the confiscation itself fails for want of proof that the gold was smuggled. It further held that the penalty for use of false or incorrect documents requires proof of conscious knowledge and deliberate falsity. Since the allegation that the melting invoices and supporting records were fabricated had not been established by independent evidence, and rested only on uncorroborated investigation statements, the essential ingredients of that penal provision were not proved. [Paras 17]

The penalties under the provisions relating to confiscable goods and false documents were set aside as the necessary jurisdictional and factual foundations were not established.

Final Conclusion: The Tribunal held that the Revenue failed to establish, by legally admissible and cogent evidence, that the seized gold was of smuggled origin or that the supporting documents were false. The confiscation of the gold and the penalties imposed on both appellants were therefore set aside, and the appeals were allowed with consequential relief.

Classification of goods - Imported nickel-chromium wire product - Reclassification in absence of factual difference or change in law - Following co-ordinate Bench decision in assessee's own case - HELD THAT: - The Tribunal found that the dispute stood squarely covered by the co-ordinate Bench decision in the appellant's own case reported [2023 (3) TMI 1019 - CESTAT AHMEDABAD], where classification of the very same goods had been considered with reference to the mill test certificate, the relevant chapter notes and sub-heading notes, and the Department's reclassification had been rejected. Since no factual distinction and no change in law were shown in the present case, the reclassification adopted by the adjudicating authority and affirmed in appeal could not be sustained. [Paras 5, 6, 7]

The reclassification was rejected, the impugned order was set aside and the appeal was allowed with consequential benefits as per law.

Final Conclusion: The Tribunal held that the Revenue could not reclassify the imported Nikrothal wire when the issue was already covered by the co-ordinate Bench decision in the appellant's own case and no factual difference or change in law was shown. The impugned order was therefore set aside and the appeal was allowed with consequential benefits.

Refund claim - barred by limitation - Determination of the Commencement Date for the Limitation Period -excess duty paid on provisional assessment of ship stores - HELD THAT: - The Tribunal found that, though the Bill of Entry had been finally assessed earlier, the finalisation was communicated to the appellant only on 03.07.2014. It held that, for the purpose of limitation under Section 27(1B)(c), the relevant starting point in the facts of the case was the date of communication of the final assessment, since only then was the appellant informed of the finalisation and adjustment of duty. As the refund claim was filed on 10.07.2014, it was within the prescribed period and could not be rejected as barred by limitation. [Paras 6, 7]

The refund claim was held to be within time, and the order sanctioning refund was restored.

Final Conclusion: The Tribunal held that limitation for the refund claim was to be reckoned from the date on which finalisation of the assessment was communicated to the appellant. On that basis, the impugned order rejecting the claim as time-barred was set aside and the refund sanction was restored.

Misdeclaration of imported marble slabs - Rejection of request for re-measurement of the imported marble slabs - Confiscation and penalty for marginal excess surface area - Mens rea for customs penal consequences - Contemporaneous protest against measurement acceptance - Tolerance limit

Contemporaneous protest against measurement acceptance - Re-measurement of imported marble slabs - HELD THAT: - The Tribunal held that the appellant had unequivocally accepted the measurement report and agreed to pay the differential duty, without any contemporaneous notation that such acceptance was under protest. A protest, in law, must be explicit and contemporaneous and cannot be introduced later by a subsequent communication seeking to retract an earlier unqualified acceptance. On that basis, the later request for re-examination and re-measurement was not sustainable. [Paras 10]

The rejection of the request for re-measurement was upheld.

Misdeclaration of imported marble slabs - Confiscation and penalty for marginal excess surface area - Mens rea for customs penal consequences - HELD THAT: - The Tribunal found that the Panchnama-based method of taking maximum length and maximum breadth of each slab would overstate the surface area of irregular or broken slabs by treating them as perfect rectangles. The existence of the departmental standing order allowing tolerance for variation in marble slab measurement showed that such variation is inherent in the trade. Since the excess was only marginally beyond that tolerance, the Tribunal accepted that the overage was reasonably attributable to measurement methodology. It further held that confiscatory and penal provisions of this nature are not attracted by a bona fide mistake alone, but require deliberate misdeclaration, wilful misstatement, suppression, or other dishonest conduct intended to evade duty. As the appellant had been willing from the outset to pay the differential duty and there was no evidence of knowingly false declaration or evasion, the statutory ingredients for confiscation and penalty were not established. [Paras 11, 12, 13, 14]

The imposition of redemption fine and penalty was held to be legally unsustainable.

Final Conclusion: The Tribunal upheld the rejection of the appellant's belated request for re-measurement, but held that the marginal excess surface area of the marble slabs did not amount to misdeclaration or suppression. The redemption fine and penalty were therefore set aside, while the accepted differential duty liability remained undisturbed.

Classification of EPS-ECU and parts thereof - classifiable under heading 8708 as parts of steering columns and steering boxes, Or under headings 8537, 8543 or 9032- Specific heading prevails over general heading - Principal use test - HELD THAT: - The Tribunal held that the controversy stood covered by its earlier decision in the appellant's own case [2026 (3) TMI 1652 - CESTAT NEW DELHI] on identical goods. It accepted the reasoning that EPS-ECU does not have an independent function as an electrical machine or regulating instrument, but operates only as an integral part of the automobile power steering system along with the torque and speed sensors. Since the goods were designed solely for use in automobiles with power steering, were not excluded from Section XVII, and were not more specifically classifiable elsewhere, the specific entry covering steering wheels, steering columns, steering boxes and parts thereof prevailed over the alternative and residual headings claimed by the appellant. Finding the present goods identical to those considered earlier, the Tribunal followed its previous order and declined to take a different view. [Paras 5, 7]

The impugned classification under CTH 8708 94 00 was upheld and all the appeals were dismissed.

Final Conclusion: Following its earlier order in the appellant's own case on identical goods, the Tribunal held that EPS-ECU and its parts are classifiable under CTH 8708 94 00 as parts of the automobile steering system. The orders under challenge were upheld and all seventeen appeals were dismissed.

Violation of Notification No. 104/94-Cus. - Burden to establish breach of exemption conditions - exemption for temporary import of durable containers - Container-wise verification of re-export evidence - HELD THAT: - The Tribunal held that exemption under Notification No.104/94-Cus. cannot be denied merely because containers appear in departmental compilations as not exported. The Department must establish, through proper verification, that each container imported under the notification was not re-exported within the prescribed or extended period. The record showed repeated reduction in the number of disputed containers, duplicate entries, and unresolved discrepancies, while the appellant had produced reconciliation statements, vessel-wise records, ICEGATE data, Shipping Bills, EGM particulars and LEO details. As neither the de novo order nor the appellate order contained a comprehensive container-wise analysis of import, permissible period, extension, default and corresponding liability, the alleged breach of the notification conditions was not conclusively established. Since the controversy essentially required reconciliation and factual verification, the orders confirming duty, confiscation and penalties were vitiated by incomplete verification, and the matter required fresh adjudication. The Tribunal left limitation and all other contentions open for consideration in remand proceedings. [Paras 13, 14, 15, 16, 17]

The impugned order was set aside and the matter was remanded to the adjudicating authority for fresh container-wise verification of all documentary evidence and for passing a fresh speaking order after giving reasonable opportunity to the appellant, with all issues including limitation kept open.

Final Conclusion: The Tribunal did not affirm the demand on merits and found that the proceedings suffered from incomplete verification of the re-export evidence. The impugned order was set aside and the matter was remanded for fresh adjudication, with limitation, confiscation, redemption fine and penalty left open.

Replenishment Scheme value addition for fully mechanised jewellery exports - Extended limitation in customs duty demand for disclosed export particulars - Penalty for alleged ineligible duty free gold procurement

Demand of customs duty on duty-free gold supplied under the replenishment scheme - Jewellery found to have been manufactured through a fully mechanised process attracting only 2.05% value addition - HELD THAT: - The Tribunal found that the exported jewellery had been manufactured by the same job worker whose process had already been held by the co-ordinate Bench in M/s. Diamond India Limited [2024 (3) TMI 1295 - CESTAT HYDERABAD] to be a fully mechanised process. Since the manufacturing process and job charges were the same, that decision was held applicable on parity of facts. On that basis, the applicable minimum value addition was 2.05% and not 3.5%. The Department's premise that the exporter was ineligible to procure duty free gold under the Replenishment Scheme therefore failed, and the consequential duty demand on the nominated agency could not survive. [Paras 11]

The exporter was entitled to be treated as having manufactured the jewellery through a fully mechanised system, the lower value addition norm stood satisfied, and the customs duty demand was unsustainable.

Extended limitation - Suppression of facts - Penalty on nominated agency - HELD THAT: - The Tribunal recorded that the shipping bills and provisional invoices disclosed the relevant particulars, including value addition, gross and net weight and rate. In the face of such disclosure, suppression of facts was not established. The Tribunal therefore held that intention to evade customs duty had not been proved, with the result that the demand raised by invoking the extended period could not be sustained. For the same reason, penalty on the nominated agency was also liable to be set aside. [Paras 11]

The extended period was not available to the Department, and the penalty imposed on the nominated agency was set aside.

Penalty on exporter and partner - Reliance on statement without cross-examination - Penalty for alleged non-fulfilment of value addition condition - HELD THAT: - The Tribunal held that once the manufacturing process undertaken by the job worker was to be treated as fully mechanised, the very basis of the allegation against the exporter and its partner disappeared. It further noted that the case for penalty had been founded mainly on the statement of the job worker, though neither the job worker nor the supplier had been made party and the request for cross-examination of the job worker had not been allowed. In those circumstances, that statement could not be relied upon to sustain penalties against the exporter and its partner. [Paras 12]

The penalties imposed on the exporter and its partner were not sustainable and were set aside.

Final Conclusion: The Tribunal held that the exported jewellery had been manufactured through a fully mechanised process, making the declared value addition sufficient for entitlement under the Replenishment Scheme. The duty demand, invocation of extended limitation, and all penalties were therefore set aside, and the appeals were allowed.

Related-party customs valuation - Rejection of declared transaction value - Deductive and computed valuation of imported spare parts - re-determination of assessable value -applicability of exemption Notification No.89/1982-Cus -Extended limitation for suppression in customs valuation - Confiscation beyond show cause notice - Applicability of penal provisions and interest to levy of CVD/SAD

Prior SVB and Tribunal acceptance - Reopening of customs valuation - HELD THAT: - The Tribunal held that the earlier decision had considered the pricing policy only in the factual context then placed before it, namely the question of loading of indent commission on stock-and-sale imports. The subsequent investigation brought out fresh agreements, merger-related changes and undisclosed adoption of different valuation methodologies for different categories of parts. In that situation, re-examination of whether the pricing policy had influenced the related-party price was justified and the earlier orders did not foreclose the present proceedings. [Paras 32]

The objection that the issue stood concluded by earlier SVB and Tribunal orders was rejected.

Statements under Section 108 - Applicability of Section 138B to departmental adjudication - HELD THAT: - The Tribunal found that the appellant had participated in the adjudication, cross-examined certain witnesses, and had not raised at that stage the objection now urged regarding examination-in-chief and admissibility. It also noted that the impugned order was founded not only on statements but on documentary material. Further, following the jurisdictional High Court decision in the case of Commissioner of Customs, Bangalore Vs. Jyothi Jain & Ors. [2025 (9) TMI 1225 - KARNATAKA HIGH COURT], it held that Section 138B was not applicable to departmental proceedings. [Paras 34]

The statements were held admissible for the purposes of the adjudication and appeal.

Rejection of declared transaction value - Deductive valuation of imported spare parts - Computed valuation where no list price exists - Admissible trade discount and general expenses - International freight and insurance in deductive value - HELD THAT: - The Tribunal upheld rejection of the declared value because different methodologies had been adopted for the same parts depending on source and use, and the declared value failed the test of an uninfluenced related-party transaction value. For spare parts covered by the MPR list price, the Department was justified in taking that list price as the starting point and applying the deductive method with permissible deductions. However, the extrapolation of a notional selling price for parts not figuring in the MPR list, by applying ratios on a monthly basis, was held impermissible under the residuary rule because the rules do not permit creation of hypothetical sale prices. For such parts, valuation had to be undertaken under the computed method. The Tribunal further held that quantity discount was an admissible discount and the assessee was entitled to the higher slab discount of 38% from the list price. GPSC expenses and other general expenses connected with sales in India, including customs duty and customs brokerage as deductible elements under the deductive method, were allowable, and the Commissioner was not justified in denying them. Since the MPR/CLCP represented a fully duty-delivered price in India, international freight and insurance already formed part of that price and could not again be added under the rule applicable to transaction value. [Paras 49, 50, 53, 54, 62]

Rejection of declared value was upheld; value was directed to be redetermined on deductive principles wherever list price was available, on computed value where list price was unavailable, with 38% trade discount and admissible general expenses allowed, and without separate addition of international freight and insurance.

Applicability of exemption Notification No.89/1982-Cus -Strict construction of exemption notification - HELD THAT: - The Tribunal held that the notification was issued in 1982 in the context of the levy then existing and could not be read as extending to special additional duty introduced later in 2005. Applying the principle that exemption notifications must be strictly construed, it rejected the contention that payment of additional duty equal to excise duty automatically exempted all later levies under Section 3. [Paras 55]

The claim for exemption from special additional duty under Notification No. 89/1982-Cus. was rejected.

Extended limitation for suppression - Misdeclaration in customs valuation - HELD THAT: - The Tribunal found that the appellant had not made true and full disclosure of the pricing pattern to the Customs authorities. The different methodologies applied for the same parts, the deduction of funding discount from CLCP, and the declaration of zero discount in the bills of entry despite list-price based derivation of values had not been disclosed. Since the facts revealed by the investigation were materially different from those considered in the earlier proceedings, the allegation of suppression and misdeclaration was held established. [Paras 56]

The extended period under the Customs Act was validly invoked.

Confiscation beyond show cause notice - Refurbished spare parts - HELD THAT: - The Tribunal held that the show cause notice had not proposed confiscation on the ground of failure to produce a Chartered Engineer certificate. Since the adjudicating authority proceeded on a ground outside the notice, the confiscation order could not stand. [Paras 57]

The confiscation ordered on that ground was set aside.

Interest and penalty on CVD and SAD - Penalty under Section 114A confined to BCD - Personal penalty on employees - HELD THAT: - Following the case of Mahindra & Mahindra Limited [2022 (10) TMI 212 - BOMBAY HIGH COURT], which has been upheld by the Hon’ble Supreme Court [2023 (8) TMI 135 - SC ORDER] and Review Petition filed later was dismissed by the Supreme Court [2024 (1) TMI 1277 - SC ORDER]. The learned advocate for the appellant fairly submitted that the same was not before the learned adjudicating authority., on the scope of the incorporating provisions of the Customs Tariff Act, the Tribunal held that there was no substantive authority to levy interest or penalty on the portion of demand relating to CVD and SAD. Accordingly, confiscation and penalty referable to that component could not survive. However, as the BCD demand had been confirmed on suppression, interest on BCD and penalty equivalent to the BCD amount under Section 114A were maintainable, while penalty under Section 114AA was set aside. Separate penalties imposed on employees were also deleted because they had merely implemented the pricing policy framed at headquarters and no personal gain or individual suppression was established. [Paras 60, 61, 62]

Interest and penalty were confined to the BCD component; penalty under Section 114AA, confiscation, and penalties on individual employees were set aside.

Final Conclusion: The Tribunal upheld rejection of the declared related-party transaction value and sustained invocation of the extended period, but modified the valuation methodology by directing deductive valuation only where list price existed and computed valuation for the remaining parts, with broader deductions and without separate addition of international freight and insurance. The demand was accordingly to be recomputed, exemption from SAD was denied, and confiscation, penalty on the CVD/SAD component, penalty under Section 114AA, and personal penalties on employees were set aside, while interest and penalty survived only to the extent of the BCD component.

AI-generated hallucinated precedents - Integrity of adjudication - Verification of cited authorities - Zero tolerance for unverified citations - Integrity of adjudicatory process - Tribunal relied on non-existent, fake and hallucinated material, generated through Artificial Intelligence[Also referred to as ‘AI’.] (AI), as if it were a precedent in support of its judgment. - HELD THAT: - The Court held that production, citation or use of AI-generated precedents without verification cannot be tolerated in adjudication. A decision founded on fake or hallucinated material, presented as legal precedent, is no decision in the eyes of law because it contaminates the decision-making process and subverts the rule of law. The defect is not cured by examining whether such material had a direct or indirect bearing on the result; once such false material enters the adjudicatory process, the sanctity and integrity of the determination stand compromised. On that basis, the orders of the tribunals were held unsustainable, while clarifying that the ruling does not prohibit rightful use of AI but only condemns reliance on fake or hallucinated material as precedent. [Paras 7, 15, 17, 18, 19]

The tribunal orders were set aside, the Section 7 application was restored for fresh consideration on its own merits, and the adjudicating authority was directed to decide it in accordance with law without any expression on the merits by the Court.

Final Conclusion: The Court held that adjudicatory orders tainted by reliance on fake or hallucinated AI-generated precedents are legally unsustainable. The orders of the NCLT and NCLAT were set aside, the Section 7 application was restored for fresh decision on merits, and a zero-tolerance approach was declared against use of unverified AI-generated precedents by the Bar and the Bench.

Seeking appointment of new Interim Resolution Professional - earlier appointee proceeding on leave -Execution of the conveyance deed and verification of pending home buyer claims - HELD THAT:- On account of the Interim Resolution Professional proceeding on leave and the resulting difficulty in complying with the Court's time-bound directions concerning execution of conveyance deeds and verification of pending home buyers' claims, a new Interim Resolution Professional was appointed to complete the remaining exercise.

Scope of Section 121(2) under Bankruptcy - Prescribed period for filing an application for bankruptcy - mandatory or directory - Sufficient cause -Condonation of delay under Section 5 of the Limitation Act read with Section 238A of the IBC - Non-speaking dismissal on limitation - three-month period for filing a bankruptcy application against a personal guarantor after an order under Section 115(2) of the Code - HELD THAT: - It is well settled position of law that each and every day has to be described for condonation of delay but it is not described by the Appellant in any petition. The Appellant has taken different grounds in every affidavit to suppress the material averments before this Hon'ble Tribunal, which reflects that the Appellant has not come to this Hon'ble Tribunal is a clean hand.

A plain and meaningful reading of Section 121(2) demonstrates that the prescription of a three-month period for filing a bankruptcy application is directory in nature and not mandatory. Significantly, while the provision employs the expression 'shall', it does not stipulate any consequence for non-compliance with the said timeline, thereby indicating that the legislative intent was not to render such applications non-maintainable solely on account of delay.

On the other hand, the Respondent claims that the Appellant's plea that Section 121(2) of the IBC is merely directory is misconceived, as the provision fixes a mandatory three-month limit binding on the applicant. Whether the delay is 90 or 160 days makes no difference since both are beyond the statutory period. The contention that no prejudice is caused is also untenable, as delayed bankruptcy proceedings themselves seriously prejudice the guarantor by prolonging uncertainty. Further, the reliance placed on judgments treating procedural timelines as directory is misplaced, because Section 121(2) is a limitation provision and not a procedural direction to the Tribunal. Likewise, Section 238A and the Limitation Act cannot be invoked to override a specific limitation prescribed under the IBC.

The Appellate Tribunal held that the use of the word shall in Section 121(2) does not make the three-month period mandatory, since the provision does not prescribe any consequence for non-compliance and does not contain any outer limit beyond which filing is prohibited. It treated the timeline as procedural and intended to advance expeditious disposal rather than defeat a bona fide bankruptcy application on technical grounds. Contrasting Section 121 with provisions under the Code where a strict outer limit is expressly prescribed, the Tribunal held that, in the absence of such exclusion, Section 238A keeps the Limitation Act applicable, and the adjudicating authority is empowered to consider condonation of delay on sufficient cause being shown. The adjudicating authority therefore erred in treating the application as non-maintainable solely on limitation and in declining relief without reasons. [Paras 48, 49, 51, 52, 53]

Delay in filing the bankruptcy application was condonable; the dismissal on the ground that Section 121(2) imposed an inflexible limitation bar was unsustainable.

Final Conclusion: The appeal was allowed. The Appellate Tribunal held that Section 121(2) prescribes only a directory timeline, that delay in filing the bankruptcy application was capable of condonation under the Limitation Act read with Section 238A of the Code, and that the order dismissing the petition on limitation was unsustainable; the bankruptcy petition was restored for consideration on merits.

Possessory rights under part performance - Binding effect of compromise decree - Limits of insolvency jurisdiction over civil court decrees - Insolvency jurisdiction vis-a-vis civil court decree - sale and purchase of the two properties between the Corporate Debtor and the Appellant - Relevancy to obtain possession of the properties under Sections 18, 23 and 25, by the Resolution Professional, despite an earlier civil court consent decree recognising the Appellant's possessory rights - HELD THAT: - The Appellate Tribunal found it undisputed that agreements to sell existed for both properties, consideration had been paid before commencement of CIRP, and the Appellant had instituted suits for specific performance which culminated in a consent decree recognizing its rights. Once a competent Civil Court had crystallized those possessory rights, the Adjudicating Authority, acting under the IBC, could not invalidate, override or sit in appeal over that decree. Mere non-execution of registered conveyance deeds did not permit disturbance of possession in summary insolvency proceedings, particularly when execution of the decree remained a ministerial act. The Tribunal further held that the Resolution Professional could not invoke Section 18 to bypass the civil court decree and take charge of the properties; any challenge to the underlying transfer or rights had to be pursued before the competent forum, while proceedings under Section 66 were left open for independent adjudication. [Paras 20, 21, 28, 30, 31]

The directions requiring the Appellant to hand over possession of the two properties to the Resolution Professional were set aside; status quo in respect of possession was directed to continue pending decision of the Section 66 application, and the Appellant was restrained from transfer, alienation or creation of encumbrances meanwhile.

Final Conclusion: The Appellate Tribunal held that the Adjudicating Authority could not, in insolvency proceedings, displace possession protected by agreements to sell and a consent decree passed by a competent Civil Court. The orders directing handover of the Baddi and Nalagarh properties to the Resolution Professional were set aside, while the pending Section 66 proceedings were left to be decided independently with status quo and restraint against alienation to continue meanwhile.

Verification of claims by resolution professional - Substantiation of claim amount - Operational creditor's claim under lease dues - Time extension charges up to insolvency commencement date - non-admission of claim towards farmer's compensation - Appellant failed to provide requisite clarification/documents, necessary for verification and admission of balance claim amount

Verification of claims by resolution professional - Substantiation of claim amount - Administrative functions of resolution professional - Entitlement to call for further evidence and clarifications for verifying the appellant's claim - HELD THAT: - The Appellate Tribunal held that, under the insolvency regulations, the resolution professional may seek such evidence or clarification as is considered necessary to substantiate the whole or part of a claim. In the present case, the resolution professional merely required supporting particulars for the disputed components of the claim and recalculated the admitted amount on the basis of the insolvency commencement date and the material available. This was held to be a part of the verification function and not an impermissible adjudicatory exercise. The challenge founded on the contention that the resolution professional had exceeded statutory authority was therefore rejected. [Paras 47, 49, 60, 64]

The finding that the resolution professional acted within the scope of claim verification was affirmed.

Farmer's compensation claim - Lease liability limited to retained land area - Unsubstantiated claim - HELD THAT: - The Appellate Tribunal accepted the resolution professional's stand that, after the sub-lease, the corporate debtor's liability could extend only to the land that continued to remain in its name. It found that the appellant had first computed farmer's compensation for the entire original land area and, even after revising the area, retained the same compensation figure without explaining its basis. The foundational amount shown as outstanding, and the interest claimed thereon, remained unsupported despite repeated requisitions for details such as total compensation paid, the relevant area, the corporate debtor's share and the date of payment. In the absence of those particulars, the claim remained unsubstantiated and could not be admitted. [Paras 46, 51, 52, 54, 55]

Non-admission of the farmer's compensation component was upheld.

Time extension charges up to insolvency commencement date - Proportionate computation of lease charges - Correction of erroneous calculation - HELD THAT: - The Appellate Tribunal held that time extension charges could not be claimed beyond the insolvency commencement date. It further accepted the proportionate recalculation made by the resolution professional after excluding the area covered by the sub-lease, and also accepted the correction of the mathematical error in the appellant's computation for the fifth year. Since the appellant had originally calculated charges up to a later date and its own later working reflected a reduced figure, the resolution professional was justified in admitting only the recalculated amount. [Paras 50, 56, 57, 58, 59]

Admission of the reduced amount towards time extension charges was sustained.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the application and found no infirmity in the resolution professional's treatment of the claim. The unresolved portions relating to farmer's compensation and time extension charges were held to have been correctly dealt with, and the appeal was dismissed.

Service of Section 7 petition on registered e-mail address in MCA records - Maintainability of Section 7 proceedings for interest default above threshold - Withdrawal of one-time settlement and revival of original loan liability - Ex-parte Order, without issuance of proper notice or affording an opportunity of hearing to the Corporate Debtor - Debt and Default - Threshold Limit - Conditional One Time Settlement - Revival of Original Dues - Going Concern

Valid service on MCA registered e-mail - Deemed service at registered office - Ex parte admission and natural justice -HELD THAT: - In Ajay Ahuja [2010 (12) TMI 1369 - DELHI HIGH COURT], the Court held that if a company shifts its office, closes operations, or avoids accepting postal articles, without informing persons dealing with it, such conduct cannot defeat valid service. The Court observed that a company having a registered office is expected to make arrangements for receiving postal communications; intimate any change of address; or provide forwarding arrangements. If it fails to do so, the sender cannot be prejudiced. Consequently, the statutory presumption of service under the General Clauses Act, 1897 applies when notices are correctly addressed and dispatched by registered post to the registered office.

The Appellate Tribunal held that service of the Section 7 petition at the Corporate Debtor's registered e-mail address as reflected in the MCA records constitutes valid and sufficient service in compliance with the NCLT Rules. Service was also attempted at the registered office, and the Corporate Debtor could not defeat service by not maintaining a functional registered office or by failing to update its particulars with the MCA. Newspaper publication was thereafter effected, and only upon continued non-appearance was the Corporate Debtor set ex parte. The plea of denial of hearing was therefore rejected, the Tribunal holding that the Corporate Debtor could not take advantage of its own failure to respond to duly effected service. [Paras 72, 73, 74, 75, 76]

The challenge to the admission order on the ground of defective service and violation of natural justice was rejected.

Section 7 maintainability for interest dues - Debt and default under the Code - Threshold default - HELD THAT: - The Appellate Tribunal held that the determinative test for admission under Section 7 is the existence of a financial debt and default above the prescribed threshold. It rejected the contention that the financial creditor was confined to proceedings before the DRT or that Section 7 could not be invoked where the principal had allegedly been paid and the surviving default related to interest. The Tribunal recorded that the Appellant itself admitted liability for the outstanding interest amount, which was above the threshold, and held that default in payment of interest forming part of the financial debt is sufficient to sustain admission under Section 7. [Paras 69, 77, 78, 79, 80]

The Section 7 petition was held maintainable and the admission could not be interfered with on the ground that the surviving default was towards interest.

Breach of one-time settlement - Revival of original loan dues - Adjustment of subsequent payments - HELD THAT: - In Bahadur Ram Mallah [2025 (4) TMI 379 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB] and Priyal Kantilal Patel [2023 (2) TMI 73 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], this Appellate Tribunal reiterated that the execution of a settlement agreement does not alter the nature of the underlying financial debt, and in the event of a breach, the financial creditor is entitled to claim the entire dues under the original financial arrangement.

The Appellate Tribunal held that a one-time settlement is a conditional arrangement and, upon its breach, the defaulting party cannot insist on its continuance. Once the effective settlement stood withdrawn, the financial creditor became entitled to proceed on the basis of the original loan liability, and any later payments had to be adjusted against the dues under the loan agreement rather than only against the balance stated under the settlement. On that basis, the Appellant's contention that only the shortfall under the settlement remained payable was held untenable. [Paras 81, 82, 83]

The plea that liability stood restricted to the unpaid balance under the one-time settlement was rejected.

Final Conclusion: The Appellate Tribunal upheld the admission of the Section 7 petition and dismissed the appeal. It held that service on the Corporate Debtor was duly effected, that admitted interest default above the threshold was sufficient to sustain Section 7 proceedings, and that breach of the one-time settlement revived liability under the original loan arrangement.

Belated homebuyer claims reflected in corporate debtor records - Registered agreement to sell and genuine homebuyer status - Inclusion of recorded allottee claims in resolution plan - Entitlement to be treated as genuine homebuyers under Category A of the resolution plan - Virtual Data Room - Clean slate doctrine - Commercial wisdom - Natural justice

Belated homebuyer claims reflected in corporate debtor records - Failure to notify stakeholders in CIRP - Unfair exclusion from resolution plan - HELD THAT: - The Tribunal found that the Resolution Professional had taken inconsistent stands regarding the appellants' payments and failed to produce any material showing communication of the CIRP to them. The virtual data room itself contained the appellants' registered agreement and allotment details, which formed part of the record available for preparation of the information memorandum and for consideration by prospective resolution applicants. Since the claim was already traceable from the corporate debtor's records, its non-inclusion in the resolution plan was attributable to lack of due diligence on the part of the Resolution Professional and the successful resolution applicant, and not to the appellants. In the circumstances, particularly when the CIRP period substantially overlapped with the Covid period and no notice was shown to have been given to the appellants, the delay could not by itself defeat their claim. The Tribunal also held that approval of the plan while the appellants' application was pending caused prejudice to them. [Paras 61, 63, 67, 69, 70]

The rejection of the appellants' claim solely on the ground of delay was held unsustainable, and the claim was directed to be admitted by way of addendum to the resolution plan.

Registered agreement to sell and genuine homebuyer status - Speculative investor distinction - Category A treatment under resolution plan - HELD THAT: - From the virtual data room records, Tribunal noted that Unit No. 1002 Vermont was registered in the name of Rajkumar Anandaram Jhawar & Shobha Jhawar, the Appellants herein and the said agreement to sale was registered on 23.04.2012 vide Registration No. 4264. So, it is clear from the records of the CD, which was provided to the SRA also, that Unit No. 1002 was allotted and agreement to sale was registered in favour of Appellants. RP has accepted in his affidavit that IRP was aware of the aforesaid agreement to sell executed in favour of Mr. Rajkumar Jhawar. It is shocking to say the least that this fact was not brought before the Ld. Adjudicating Authority by the RP or the SRA. It is to be noted herein that VDR data forms the basis for preparation of Information Memorandum and it is shared with Prospective Resolution Applicants so that they could incorporate the Data in their Resolution Plan.

The Tribunal held that the appellants possessed a registered agreement to sell for the unit and that the record showed payment of the contractual consideration for that flat, while their present claim was confined to allotment of the unit and not to the excess amount allegedly paid. In contrast, the rival claimant relied only on reservation letters for two units containing an assured return option and had lodged a claim for refund with interest, which, on the Tribunal's assessment of the documents and the principle stated in Mansi Brar Fernandes Vs. Shubha Sharma & Anr. [2020 (12) TMI 1254 - SC ORDER], indicated the position of a speculative investor rather than a genuine homebuyer. On that basis, the Tribunal held that the appellants stood on a higher footing and ought to have been treated within Category A of the resolution plan applicable to buyers with registered agreements. [Paras 53, 55, 60, 62, 70]

The appellants were held entitled to be treated as Category A homebuyers under the resolution plan.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the appellants were genuine homebuyers whose allotment and registered agreement were already reflected in the corporate debtor's records, and directed that their claim be admitted in Category A of the resolution plan by way of addendum.

Seeking grant of Successive bail on changed circumstances - Prolonged pre-trial incarceration and right to speedy trial - Constitutional limits on statutory bail restrictions under PMLA - Article 21 vis-a-vis statutory bail restrictions - Right to speedy trial enshrined under Article 21 of the Constitution - HELD THAT: - The Court held that a subsequent bail application must be examined with reference to the grounds on which the earlier application was rejected and the fresh circumstances arising thereafter. It found that, after the earlier rejection, several material developments had occurred, including grant of bail in the predicate offence, filing of the charge-sheet in the predicate offence, filing of a supplementary prosecution complaint against other accused who were not arrested, taking of cognizance on the prosecution complaint, and continued absence of meaningful progress in the case. The Court further noted that the matter involved voluminous documentary material and numerous witnesses, indicating that trial was not likely to conclude within a reasonable time. Relying on the line of authorities in Apex Court in ARVIND DHAM [2026 (1) TMI 266 - SC ORDER] recognising speedy trial and personal liberty under Article 21, the Court held that prolonged pre-trial detention cannot be allowed to become punitive and that the rigours of Section 45 of the PMLA cannot eclipse constitutional protection where trial has not progressed. The reliance placed by the respondent on Narcotics Control Bureau v. Mohit Aggarwal [2022 (7) TMI 871 - SUPREME COURT] was held inapplicable, as that decision arose in the context of a graver offence carrying a substantially higher sentence, whereas the present offence carried a maximum sentence of seven years. In these circumstances, the Court concluded that the changed circumstances, coupled with delay and the stage of the proceedings, justified grant of bail. [Paras 10, 11, 12, 13]

The petitioner was directed to be released on bail subject to conditions.

Final Conclusion: The Court held that the subsequent bail application was supported by genuine changed circumstances and that continued detention, in the face of no meaningful progress in trial and voluminous documentary evidence, warranted protection of personal liberty under Article 21. The petition was accordingly allowed and bail was granted subject to conditions.

Disclosure of information under PMLA - Inter-agency sharing of information - Quashing of FIR at investigation stage - Prima facie invocation of UAPA -Whether the investigation deserves to be interdicted at this incipient stage on the premise that the Enforcement Directorate lacked authority to communicate information leading to registration of the crime ?

Disclosure of information under PMLA - Inter-agency sharing of information - Harmonious construction of PMLA and FEMA - HELD THAT: - The Court held that Section 66(2) expressly authorises the Director or the specified authority, on forming an opinion that any other law has been contravened, to share the information with the concerned agency for necessary action. The provision is meant to prevent information gathered under one enactment from remaining confined where it discloses breaches of another law. The contention that such communication could relate only to offences under the PMLA was rejected as contrary to the statutory scheme. The further submission that search powers under FEMA did not permit communication to another agency was also rejected, the Court holding that PMLA and FEMA operate in cognate fields and must be read in tandem. On that construction, the communication sent by the Enforcement Directorate could not be faulted merely because it led to registration of offences under other laws. [Paras 11, 12, 13, 14]

The challenge to the registration of the crime on the ground of want of authority in the Enforcement Directorate to share the information failed.

Prima facie invocation of UAPA - Quashing of FIR at investigation stage - National security and extremist funding - HELD THAT: - The Court held that at the present stage it was not required to return findings of guilt, but only to see whether prima facie material existed to justify investigation. The communication shared by the Enforcement Directorate, detailing the alleged modus operandi, withdrawals of foreign funds, and their alleged use in Left Wing Extremism affected regions, could not be treated as barren material warranting judicial interdiction. The contention of the co-accused that they had no role was also not accepted, as the material and even the averments in the petition showed an alleged chain linking the accused to the financial and operational activities in question. The Court emphasised that where allegations concern economic subversion intertwined with national security and clandestine funding of extremism, the Court must be circumspect in stifling investigation at the incipient stage. [Paras 15, 16, 17, 18]

No case was made out for exercise of inherent jurisdiction to nip the crime in the bud, and the investigation was permitted to continue.

Final Conclusion: The petitions were dismissed. The Court held that the Enforcement Directorate was entitled to share the information leading to registration of the crime and that, in view of the prima facie material and the allegations touching national security, the FIR and investigation were not liable to be interdicted at this stage.

Attachment of proceeds of crime in hands of non-accused - Reason to believe for provisional attachment - Limited scope of adjudication during pendency of scheduled offence trial - Attachment of beneficial interest notwithstanding corporate veil - term ‘property’ under Section 2(1)(v)

Attachment of proceeds of crime in hands of non-accused - HELD THAT: - The Tribunal held that it is not necessary, for attachment of property, that the person in whose hands the property is found must also be an accused in the scheduled offence. The Act permits attachment and eventual confiscation of proceeds of crime regardless of the person holding them, and the objection founded solely on absence of the appellants' name in the predicate offence case was therefore immaterial. [Paras 26]

The challenge to attachment on the ground that the appellants were not accused in the scheduled offence was rejected.

Limited scope of adjudication during pendency of scheduled offence trial - HELD THAT: - The Tribunal held that the contention on inconsistency in the timeline was, in substance, an attack on the very allegation of kickbacks in the predicate offence. That question falls for determination by the competent criminal court trying the scheduled offence. For adjudication relating to attachment during pendency of trial, it was sufficient that a charge-sheet in the scheduled offence case and a complaint in the PMLA case had been filed and that the accused persons had not been absolved. [Paras 27]

The objection based on the alleged inconsistency in the chronology of events was declined as beyond the scope of the present attachment adjudication.

Reason to believe for provisional attachment - Evidentiary basis of audit report in attachment proceedings - HELD THAT: - The Tribunal noted that the audit report had been furnished to the Directorate by the lawyer of the principal accused and was stated to be part of his defence material, and that the impugned order recorded that Christian Michel had accepted the correctness of the amounts transferred though not necessarily every narration. The Tribunal further held that the appellant, having himself stated that he was unaware of the affairs of the foreign company during the relevant period, could not simultaneously assert as a matter of fact that the transactions had not occurred. On that footing, and applying the standard of substantial probable cause rather than proof beyond doubt, the Tribunal found that there was enough material to sustain the formation of reason to believe under Sections 5(1) and 8(1). [Paras 28, 29, 30]

The plea that the attachment lacked adequate foundational material or valid reason to believe was rejected.

Attachment of beneficial interest notwithstanding corporate veil - Equivalent attachment of property substantially owned by alleged beneficiary - HELD THAT: - The Tribunal recorded that the appellant had inherited ownership of the foreign entity alleged to have received the funds and was also the majority shareholder of the company whose fixed deposits were attached. Referring to the statutory breadth of the expression property, which includes rights and interests in assets, the Tribunal held that ownership rights and beneficial interests in an entity fall within the reach of the Act. In view of the object of the PMLA to reach proceeds of crime in whosever name or hands they are kept, the plea based on the corporate veil was held unavailable to resist attachment. [Paras 31]

The challenge to attachment of the company's fixed deposits on the basis of separate corporate personality was rejected.

Final Conclusion: The Tribunal upheld the provisional attachment and its confirmation, holding that the material on record was sufficient to sustain the requisite belief under the PMLA and that the appellants' objections on non-accused status, merits of the predicate offence allegations, and corporate separateness were untenable. The appeals were accordingly dismissed.

Continuing nature of money-laundering - Scheduled offence inclusion and relevant date for prosecution - unauthorized construction - Article 20(1) and prospective application of penal law - Attachment of property linked to proceeds of crime - allegation against the officials of MCD and builder/owner, apart from politicians, which facilitated large scale unauthorized construction in various parts of Delh - HELD THAT: - The Tribunal held that the offence under Section 3 of the Act of 2002 is a continuing activity, and the material date is not the date of commission of the predicate offence but the date on which the person indulges in or continues to indulge in any process or activity connected with the proceeds of crime. On the facts found, the appellant continued to derive benefit from the unauthorized construction and subsequent transactions connected with the property, and the ECIR was recorded when the scheduled-offence requirement stood attracted. The Tribunal further noted that the ECIR had not been quashed and that the appellant had been convicted in the predicate offence.

The Hon'ble Supreme Court in the case of Pradeep Nirankarnath Sharma [2025 (3) TMI 850 - SUPREME COURT], while dealing with the case of an Applicant who canvassed an identical submission that during the period of commissioning of the act, the said offence was not characterized as a scheduled offence so as to bring it under the ambit of PMLA. Rejecting the argument of the Applicant/Petitioner therein, the Hon'ble Supreme Court ruled that it' is well established that offences under the PMLA are of a continuing nature, and the act of money laundering does not conclude with a single instance but extends so long as the proceeds of crime are concealed, used, or projected as untainted property. The legislative intent behind the PMLA is to combat the menace of money laundering, which by its very nature involves transactions spanning over time.

Accordingly, the plea founded on absence of scheduled-offence status at the initial point of time, or on Article 20(1), did not warrant interference with the confirmation of attachment. [Paras 14, 15, 16, 17, 18]

The challenge to the confirmation of provisional attachment failed, and the appeal was dismissed.

Final Conclusion: The Tribunal upheld the confirmation of the provisional attachment. It held that money-laundering is a continuing offence and that the relevant date is when the person is found dealing with the proceeds of crime, not merely the date of the predicate offence; the appeal was therefore dismissed.

Provisional attachment - Expression "proceeds of crime" - Equivalent value attachment - Attachment of property acquired prior to crime period

Proceeds of crime - Equivalent value attachment - Property acquired prior to crime period - HELD THAT: - The Tribunal accepted the interpretation adopted in Dilbag Singh @ Dilbag Sandhu [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT] that the definition of proceeds of crime includes not only tainted property directly or indirectly derived from the scheduled offence but also property of equivalent value. On that construction, where the actual proceeds are not available, have vanished, or have been laundered, attachment is not confined to property acquired during or after the crime period, and even property acquired earlier can be attached as property of equivalent value. [Paras 15, 16]

The challenge to attachment on the ground that some of the attached properties had been acquired prior to the crime period was rejected.

Provisional attachment under PMLA - Pending scheduled offence proceedings - Equivalent value of proceeds of crime - HELD THAT: - The Tribunal found that neither the FIR nor the ECIR had been set aside and that there was no discharge or acquittal in favour of the appellant. It further noted that the criminal case was still pending, that recovery of gold was made from the appellant's possession, and that the attachment covered either property directly representing the proceeds or, if those proceeds were unavailable, property of equivalent value. In that view, the appellant's plea that he was innocent or that he had independent sources for acquisition of the properties did not displace the attachment. [Paras 12, 17, 18, 19]

The order confirming the provisional attachment was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal held that, under the definition of proceeds of crime, property of equivalent value may be attached even if acquired prior to the crime period where the actual proceeds are unavailable. Finding no merit in the appellant's plea against his involvement or against the nexus for attachment, it upheld the confirmation of the provisional attachment and dismissed the appeal.

Extended period of limitation - Suppression of facts from books of account - Revenue neutrality - Penalty for non-payment under reverse charge on GTA service - It is the case of the revenue that during the course of verification of accounts of the appellant, it was noticed that they had not paid service tax under reverse charge mechanism (RCM) in terms of Notification Number 30/2012-ST dated 20.06.2012, for availing the services of a GTA.

Invocation of the extended period for service tax demand on freight paid for GTA services under reverse charge - HELD THAT: - The Tribunal held that where the figures forming the basis of the demand were derived from the assessee's balance sheet and other account records, such material could not by itself support a charge of suppression for invoking the extended period. The Revenue had also failed to show any positive act evidencing intent to evade payment of tax. The Tribunal further noted that the situation was revenue neutral since the appellant would be entitled to credit of the tax paid. On that reasoning, the extended period was held to be not invocable and the demand for that period was treated as time-barred; however, as the amount had already been paid, status quo ante was directed to be maintained as regards payment, with liberty to the appellant to avail credit of the amount so paid. [Paras 8]

The demand for the extended period was held time-barred, while the amount already paid was left undisturbed and made available for credit.

Penalty for non-payment under reverse charge on GTA service - Absence of concealment or suppression - HELD THAT: - The Tribunal found that there was nothing substantive on record to establish concealment of information or suppression by the appellant. Since the foundation for alleging intent to evade was absent, penal liability was held to be unjustified. [Paras 9]

The penalty was set aside and the lower authority's order was modified to that extent.

Final Conclusion: The Tribunal held that the extended period could not be invoked for the service tax demand on GTA freight under reverse charge since the demand was based on the appellant's own books and no intent to evade was shown, the case also being revenue neutral. While the amount already paid was left undisturbed with entitlement to credit, the penalty was set aside and the appeal was allowed to that extent.

Reverse charge on services received from abroad - Services performed and consumed outside India - Classification beyond show cause notice - Best judgment assessment - Extended period of limitation

Whether the appellants are liable to pay Service Tax, under Reverse Charge Mechanism, on the amounts paid by them in respect of services they availed from M/s Wainwright Industries Inc and others in respect of the goods exported by them ? - HELD THAT: - The Tribunal found that the services in question were physical activities carried out in respect of goods already exported and were performed overseas. The adjudicating authority had proceeded mainly on the basis that the recipient was located in India and the provider was located outside India, but had not returned any finding on the appellant's specific contention that the services were rendered and consumed outside India. Applying the principle adopted in the appellant's own earlier case and in Goodyear India Limited [2025 (6) TMI 1598 - CESTAT CHANDIGARH], the Tribunal held that services performed and received outside India do not attract service tax in India under reverse charge, and Rule 3(ii) of the Import of Service Rules excluded taxability where such services were performed outside India. [Paras 13, 14]

The demand failed on merits because the impugned services were rendered and consumed overseas and were not taxable in India under reverse charge.

Classification of overseas inspection and processing services - Classification beyond show cause notice - HELD THAT: - The Tribunal held that mere non-mention of the precise sub-clause of Business Auxiliary Service in the show cause notice was not, by itself, fatal so long as the service proposed to be taxed was identified. However, the impugned order was unsustainable on classification because the Commissioner treated the same services as covered both by clause (v) and clause (vii) of the definition of Business Auxiliary Service. The adjudicating authority was required to arrive at a clear and categorical classification before confirming the demand. [Paras 15]

The classification adopted in the impugned order was held unsustainable for want of a definite and consistent finding.

Best judgment assessment of service value - Demand without evidence of payment - HELD THAT: - The Tribunal accepted that any omission on the appellant's part could, at best, justify recourse to best judgment. Even then, best judgment had to be based on available figures adjusted by a reasonable method. The Commissioner had taken figures for the initial years and doubled them cumulatively for later years, despite the appellant's case that no payments were made after 2008-09. In the absence of evidence of payments in the subsequent years, service tax could not be confirmed merely on assumed or artificial figures. [Paras 16]

The demand based on best judgment was held unsustainable because it was founded on arbitrary estimation unsupported by evidence of actual payments.

Extended period of limitation - Audit-based detection - Revenue neutrality - HELD THAT: - The Tribunal held that, when the appellant had been audited on several occasions and had filed returns, the Revenue could not invoke the extended period merely by alleging that the relevant figures were not disclosed in the ST-3 returns. If the department did not raise the issue upon scrutiny, later detection through audit would not by itself justify extended limitation. The Tribunal also noted the plea of revenue neutrality and referred to its earlier view that service tax payable under reverse charge was fully cenvatable, reinforcing the absence of intent to evade. [Paras 18, 19]

The invocation of the extended period was rejected; the appeal succeeded on limitation as well.

Final Conclusion: The Tribunal allowed the appeal, holding that the overseas services relating to exported goods were performed and consumed outside India and were therefore not taxable under reverse charge. It also held that the impugned classification, the best judgment computation, and the invocation of the extended period were unsustainable.

Inclusion of reimbursable expenses in taxable value of service - Extended period of limitation for service tax demand

Whether or not the insurance premium and the workmen compensation paid by the appellants and reimbursed to them by M/s ACC is liable to service tax as the part of the gross value in terms of Section 67 of the Finance Act read with Rule 5(1) of Service Tax (Determination of Valuation) Rules, 2006 ? - HELD THAT: - The Tribunal held that the demand had been raised by including reimbursable insurance expenses in the assessable value under Rule 5(1) of the Service Tax (Determination of Valuation) Rules, 2006 read with section 67 of the Finance Act, 1994. It found that Rule 5(1), insofar as it mandated inclusion of expenditure incurred by the service provider in the course of providing taxable service, stood declared ultra vires sections 66 and 67 in Intercontinental Consultants and Technocrats Private Limited [2012 (12) TMI 150 - DELHI HIGH COURT], which view was upheld by the Supreme Court in the same case [2018 (3) TMI 357 - SUPREME COURT]. Applying that ratio, the Tribunal held that reimbursable insurance premium and workmen compensation could not be added to the value of taxable service. [Paras 6, 7]

The service tax demand founded on inclusion of reimbursable expenses in the taxable value was unsustainable.

Extended period of limitation - Absence of suppression - HELD THAT: - The Tribunal found that the Revenue had failed to establish the ingredients necessary for invoking the extended period of limitation. In the absence of the required elements to support suppression or like conduct, the demand for the period prior to 30.09.2010 was held to be time-barred. [Paras 7]

The demand for the period prior to 30.09.2010 could not be sustained on limitation.

Final Conclusion: The Tribunal allowed both appeals and set aside the impugned orders. It held that reimbursable insurance premium and workmen compensation could not be included in the value of taxable services and, in any event, the demand for the period prior to 30.09.2010 was time-barred.

Applicability of the service tax in respect of construction of multi level parking -Exemption for construction services to local authority - benefit of Notification No. 25/2012 - Predominant use other than commerce - Construction of multi level parking for Chandigarh Administration for use by the public at large - HELD THAT: - The Tribunal held that the only controversy was the taxability of construction of multi level parking undertaken for the Chandigarh Administration. Referring to paragraph 12A of Notification No. 25/2012, it held that services provided to a local authority by way of construction of original works predominantly meant for use other than for commerce, industry, or business are not taxable. On the facts found, the parking facility was created as a public amenity to decongest traffic and improve parking management for citizens, and not with a profit-making objective. Mere collection of a fee from users did not alter the essential character of the activity as a public facility. The Tribunal further followed M/s Shalimar Corp Ltd. [2019 (5) TMI 663 - CESTAT ALLAHABAD], which had treated construction of multi level parking for a public authority as non-commercial in nature. [Paras 6, 7, 8, 9]

The exemption under Notification No. 25/2012 was held applicable, and the Revenue's appeals were dismissed.

Final Conclusion: The Tribunal upheld the order of the Commissioner (Appeals) and held that construction of the multi level parking for the Chandigarh Administration was a non-commercial public utility activity covered by the exemption under Notification No. 25/2012. Both Revenue appeals were dismissed.

Taxability of revenue-sharing film exhibition - Business Support Service - Principal-to-principal arrangement - Exhibition of films by the appellant under revenue-sharing agreements with distributors/sub-distributors - HELD THAT: - The Tribunal held that the controversy stood concluded by earlier decisions of the Tribunal in the case of M/s Inox Leisure Ltd [2021 (10) TMI 893 - CESTAT HYDERABAD], including the decision concerning film exhibition on revenue-sharing basis, as affirmed by the Supreme Court [2022 (3) TMI 1206 - SC ORDER]. It also noted that in the appellant's own case [2020 (12) TMI 1318 - Supreme Court] for the earlier period, the same activity had already been held to be not classifiable under Business Support Service. Following those binding precedents, the Tribunal treated the arrangement for screening films as not giving rise to a taxable service by the exhibitor to the distributor and rejected the basis on which service tax had been demanded. [Paras 6, 7, 8]

The service tax demands, interest, and penalties founded on classification of the activity as Business Support Service were set aside, and the appeals were allowed with consequential relief.

Final Conclusion: Following the earlier decisions of the Tribunal, including the decision affirmed by the Supreme Court, and the appellant's own earlier case, the Tribunal held that revenue-sharing film exhibition by the appellant was not taxable as Business Support Service. The impugned orders were therefore set aside and the appeals allowed with consequential relief.

Refund claims filed by an SEZ unit for service tax paid on input services used for authorized operations - SEZ exemption overriding service tax notifications - Inconsistency between SEZ Act and Finance Act notifications - One-year limitation prescribed in Notification No. 40/2012-ST and Notification No. 12/2013-ST - HELD THAT: - The Tribunal held that the appellant was an SEZ unit and it was undisputed that the input services were received for authorised operations. It accepted the legal position settled in M/s GMR Aerospace Engineering Limited and Another [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT], affirmed by GMR Aerospace Engineering Limited [2019 (7) TMI 1975 - SC ORDER], and followed in later Tribunal decisions, that section 26 of the SEZ Act grants the exemption and the conditions governing such exemption must arise from the SEZ Act and the SEZ Rules. Since the SEZ Act has overriding effect, notifications issued under section 93 of the Finance Act, 1994 cannot impose additional restrictions inconsistent with that special statutory scheme. On that principle, the one-year limitation in the service tax notifications was held inapplicable to an SEZ refund claim. The departmental authorities had rejected the claim only on limitation, and the precedents cited by the Department were found inapplicable because they dealt with general limitation and not the special position of SEZ units. [Paras 7, 8, 9, 10]

The refund claim could not be denied as time-barred under the service tax notifications, and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that the SEZ Act and the SEZ Rules override the limitation condition contained in the service tax notifications, and that the appellant's refund claim for services used in authorised operations could not be rejected as time-barred. The impugned order was therefore set aside and the appeal allowed with consequential relief.

Pre-deposit compliance through earlier challans - Reverse charge liability on manpower services provided by proprietary concern - Service tax demand based solely on Form 26AS - Extended limitation without corroborative material

Pre-deposit compliance - Adjustment of challans towards statutory deposit - HELD THAT: - The Tribunal found that the three GAR-7 challans enclosed by the appellant, if taken into account, clearly covered the required pre-deposit against the litigated amount. The refusal of the Commissioner (Appeals) to consider those challans was not justified, especially when the amounts related to the same period covered by the show cause notice and could have been appropriated had they been produced earlier before the adjudicating authority. On that factual basis, the defect regarding pre-deposit stood cured. [Paras 2, 3]

The appeal was treated as properly instituted and the registry defect regarding pre-deposit was held to be cured.

Reverse charge on manpower services - Service tax liability of service recipient - HELD THAT: - On examination of Form 26AS and the invoices produced, the Tribunal found that the receipts in question were from services rendered to the named companies and that the services were only manpower services. Since, for such manpower services, service tax was payable under the reverse charge mechanism by the recipient company where the provider was a proprietary firm, the appellant was not liable to pay service tax on those transactions. The confirmed demand therefore failed on merits. [Paras 5, 7]

The demand was set aside on merits as the tax liability, if any, was on the service recipients under reverse charge.

Form 26AS based demand - Corroborative evidence - Extended period of limitation - HELD THAT: - The Tribunal accepted the line of authority holding that service tax demand cannot be legally sustained merely on the basis of Form 26AS or income-tax data without independent or corroborative material showing rendition of taxable service. Relying on Tabassum Enterprises [2025 (9) TMI 1275 - CESTAT KOLKATA] which in turn referred to M/s. Rishu Enterprise [2024 (2) TMI 566 - CESTAT KOLKATA], and also noticing the co-ordinate Bench view in Homeopathic Medical Publishers [2025 (12) TMI 1248 - CESTAT MUMBAI], the Tribunal held that mechanical reliance on third-party income-tax data was insufficient. Proceeding on that basis, it further held that the confirmed demand did not survive even on the ground of time bar. [Paras 8, 9, 10]

The demand was held unsustainable independently on the ground that it rested only on Form 26AS data and was also barred by limitation.

Final Conclusion: The Tribunal held that the appeal was maintainable since the pre-deposit stood satisfied through the challans produced. On merits, the service tax demand was set aside because the services were covered by reverse charge at the recipient's end, and in any event the demand, having been raised solely on Form 26AS data without corroborative material, was also unsustainable on limitation.

Taxability of buying and selling cargo space - Principal-to-principal freight forwarding transactions - liable to service tax as Business Support Service or declared service - treated as intermediary service or a taxable composite service - Income earned by the freight forwarder from purchase of cargo space from shipping lines and resale of such space to exporters on a marked-up basis - HELD THAT: - The Tribunal held that the impugned order proceeded on an untenable assumption that the difference between the buying price and selling price of ocean freight necessarily represented consideration for other support services. Mere markup in a trading transaction could not by itself establish rendition of a taxable service, and the finding that the appellant had also rendered local transportation, cargo handling, labour and facilitation services was unsupported by evidence. The record showed that the appellant purchased space in bulk on its own behalf, bore the risk of unsold space, and resold the space to exporters; this was inconsistent with the appellant acting as an intermediary or agent. The Tribunal further held that even if the activity were viewed as a bundled transaction, the principal element would remain transportation by ocean, which was not taxable in the manner assumed in the impugned order, and the departmental clarification itself recognised that a freight forwarder acting as a principal and providing the service on its own account would not be treated as an intermediary. Following the decisions in Seagull Maritime Agencies Pvt Ltd [2024 (12) TMI 677 - CESTAT NEW DELHI] and Blue Moon Logistics (P) Ltd. [2024 (3) TMI 285 - CESTAT ALLAHABAD] upheld the order by Hon’ble supreme Court [2025 (1) TMI 1041 - SC ORDER], the Tribunal held that purchase and sale of cargo space is a principal-to-principal commercial transaction and that the surplus arising therefrom is business income from trading in space, not consideration for a taxable service. [Paras 10, 11, 12, 13]

The demand of service tax, interest and penalties on the amount shown as freight inwards was unsustainable and the impugned order was set aside.

Final Conclusion: The Tribunal held that the appellant's activity of purchasing cargo space from shipping lines and reselling it to exporters on its own account was a principal-to-principal trading transaction and not a taxable service. The service tax demand with interest and penalties was therefore set aside and the appeal was allowed.

Taxability of construction for educational institutions and Government welfare projects - Commercial or Industrial Construction Service or Works Contract Service -Finality of accepted VCES declaration - Extended limitation and penalty in absence of suppression - Reverse charge liability of service provider in manpower supply - Suppression of Facts - Bonafide Belief - Amnesty Scheme

Whether the service tax demand on services rendered to SRM Medical College and Hospital, SRM Engineering Construction Corporation Limited; Tamil Nadu Housing Board – Slum Tenements at Vellakuttai Eri, Salem; Tamil Nadu Police Housing Corporation Ltd., Mahalakshmi Plaza and GVN Nursing College, Short paid tax due to difference in P & L and ST-3 in 2012-2013 are liable to service tax? - HELD THAT: - The materials on record show that SRM Medical College functions as an educational institution administered by a recognized charitable trust engaged principally in education and healthcare services. Merely because fees are collected or incidental revenue is generated cannot convert such institution into a commercial establishment.

The appellant has contended that the description of work containing the shopping complex as a small part of the construction to facilitate the incumbents and trainees to get the refreshment and canteen services within the campus. Since the academy is located in the outskirts of the city there is no shopping facility nearby to enable the police personnel to get the basic essential requirements. The facility of refreshment and canteen is not meant for common public and is not for any commercial purpose. The facility is available only for the police personnel within the campus undergoing the training and commodities are provided there at the subsidized rate by the government of Tamil Nadu. They also provided a Certificate dated 29.04.2016 in this regard which indicates non-commercial in nature. These contentions remain unrebutted.

The Tribunal held that construction executed predominantly for an educational institution administered by a charitable trust does not assume commercial character merely because fees are collected or incidental revenue is generated. The same principle was applied to projects of Tamil Nadu Housing Board and Tamil Nadu Police Housing Corporation, as the records showed that they were public welfare works such as housing, academy infrastructure and ancillary facilities for police personnel, and a minor shopping or canteen component could not alter the dominant non-commercial character of the project. The Tribunal further noted that subcontracting does not change the character of the underlying project and the Department could not ignore the statutory reverse charge framework. However, as regards SRM Engineering Construction Corporation Limited, the appellant had conceded that in respect of manpower supply agency service it had discharged only part of the tax under Notification No. 30/2012-ST, and the balance liability to that limited extent was therefore sustainable with applicable interest, subject to limitation. [Paras 16, 17, 18, 19, 20]

The demand on construction services relating to the educational and Government welfare projects was unsustainable; only the admitted balance service tax on manpower supply service to SRM Engineering Construction Corporation Limited survived with interest, subject to limitation.

Services rendered by the appellant are liable to service tax under Commercial or Industrial Construction Service / Works Contract Service - Whether the declaration filed under the Voluntary Compliance Encouragement Scheme, 2013 could validly be reopened ? - HELD THAT: - The principal foundation of the impugned order is the conclusion that the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme, 2013 (VCES) was “substantially false” within the meaning of Section 111 of the Finance Act, 2013 and consequently liable to be reopened, leading to confirmation of service tax demand for the VCES period. The main question which therefore arises is whether the Department could legally reopen a declaration already accepted under the Scheme and whether the services rendered by the appellant were taxable in the manner alleged in the impugned proceedings.

The Tribunal held that the Scheme was enacted as a one-time amnesty measure intended to secure certainty and closure, and therefore the expression substantially false in Section 111 could not be read expansively to permit unrestricted reopening of accepted declarations. A declaration does not become substantially false only because the Department subsequently adopts a different interpretational view or works out a higher liability. The Tribunal further held that the statutory framework of VCES required action against an inadmissible or false declaration to be initiated within the prescribed period, and once the revised declaration was accepted and no such proceedings were initiated within that time, finality attached to the declaration. On that basis, the Department lacked jurisdiction to reopen the accepted declaration thereafter. [Paras 26, 27, 28, 29, 30]

The reopening of the VCES declaration was without jurisdiction, and the demand founded on treating the accepted declaration as substantially false was unsustainable.

Extended period of limitation - Penalty in absence of suppression - Reconciliation difference between P&L and ST-3 - HELD THAT: - The Tribunal found that the service tax liability had been computed on the basis of consideration received and reconciled with the audited balance sheet, and the alleged difference was only a minor rounding-off difference. It also found that the tax due for 2012-2013 had been discharged before issuance of the show cause notice. In these circumstances, there was no deliberate or positive act of suppression to justify the extended period, and the Department ought to have examined the applicability of Section 73(3). The Tribunal further held that, there being reasonable cause and absence of intent to evade, the benefit of Section 80 was available and consequential penalties could not be sustained. [Paras 31, 32, 33]

The demand founded on the P and L and ST-3 difference failed, and the invocation of extended limitation and imposition of penalties were unsustainable.

Final Conclusion: The appeal was partly allowed. The demands relating to construction for educational institutions, Government welfare projects, reopening of the accepted VCES declaration, and the alleged difference between the P and L account and ST-3 returns were set aside, while the admitted balance service tax liability on manpower supply service rendered to SRM Engineering Construction Corporation Limited was upheld with applicable interest, subject to limitation.

Alternative Remedy - Writ against show cause notice - Prematurity of challenge - Allegation of predetermined mindset in show cause notice - Procedural fairness in adjudication - challenged to the proposed levy of NCCD under the competing notifications​​​​​​​ - applicability of Notification No. 26/2001-CE​​​​​​​ - HELD THAT: - The Court held that, although the show cause notice contained a narration capable of creating a narrative against the petitioner and could have been drafted better so as to avoid any impression of bias or premeditation, its contents were only tentative projections supporting the proposed demand and did not record any concluded finding on the disputed issues. Mere prima facie prejudicial language in the notice was therefore insufficient to invalidate the proceeding. Since the adjudicating authority was to consider the petitioner's reply and hear the petitioner before passing the order, the proper course was to require the petitioner to submit its response before the adjudicating authority. The Court consequently refrained from examining the merits of the competing exemption notifications and left that controversy open for adjudication, while directing observance of procedural fairness and reasoned decision-making. [Paras 7, 8, 9, 10]

The writ petition was disposed of without interfering with the show cause notice, leaving the merits of the NCCD demand and the applicability of the notifications open for decision by the adjudicating authority after hearing the petitioner.

Final Conclusion: The Court declined to quash the show cause notice at the threshold, holding that the impugned recitals were only tentative and did not establish a concluded bias rendering the proceedings illegal. The petitioner was left to file its reply and pursue all contentions on merits before the adjudicating authority, which was directed to ensure a fair hearing and pass a reasoned order.

Seeking cash refund under Section 11B - initially utilized Cenvat credit -Double recovery of excise duty - Refund under Section 11B vis-a-vis account re-credit - Denial of re-credit of Cenvat amount, after the assessee had earlier debited Cenvat credit and thereafter paid the same duty again through PLA pursuant to the High Court judgment - HELD THAT: - The Court held that the petitioners were not claiming a suo motu re-credit in the abstract, but sought restoration of the equivalent credit after the duty amount, earlier adjusted through Cenvat credit and later held to have been impermissibly so utilized, had again been paid in cash through PLA. In these peculiar facts, retention of both the earlier debit and the later cash payment would amount to double recovery. The only plausible adjustment was re-credit of the amount earlier debited from the Cenvat account. The Department erred in treating the request as one for impermissible suo motu re-credit and in directing the petitioners to pursue refund under Section 11B, since sanction of refund in cash would recreate the very situation that had earlier been disapproved by the High Court when it held that such liability could not be met by utilizing Cenvat credit. [Paras 12, 13, 14]

The impugned communications rejecting re-credit were quashed, and the Department was directed to sanction and re-credit the equivalent amount in the electronic credit ledger maintained under the GST regime.

Final Conclusion: The writ petition was allowed. The High Court held that, after the petitioners had paid the disputed duty in cash through PLA pursuant to the earlier judgment, the Department could not retain the earlier Cenvat debit as well and insist on a refund application; it was bound to restore the equivalent credit to avoid double recovery.

Rectification of mistake - Mistake apparent from record - Recording of submissions vis-a-vis adjudicatory finding - HELD THAT: - The Tribunal held that the portion of the earlier final order relied upon by the Revenue only reproduced the assessee's contention regarding departmental knowledge and the alleged reply to the letter dated 15.11.2000. That paragraph did not contain any finding by the Bench on the existence or effect of such reply. The limitation issue had, in fact, been decided in the succeeding paragraph on independent grounds, namely that the dispute involved interpretation of law, there were decisions in favour of the assessee giving rise to a bona fide belief, and there was no reliable evidence of suppression, wilful misstatement, fraud or collusion so as to justify invocation of the extended period. Since the alleged error proceeded on treating a recorded submission as an adjudicatory finding, no mistake apparent from the record was made out. [Paras 5, 6]

The miscellaneous application for rectification of mistake was dismissed.

Final Conclusion: The Tribunal found no rectifiable error in the earlier final order, as the impugned paragraph merely recorded the assessee's submission and the limitation issue had been decided on separate reasons. The Revenue's rectification application was therefore dismissed.

Job work under duty-free clearance scheme - clearance of the goods under Notification No. 214/86-CE - Exempted service under CENVAT Credit Rules - Rule 6 reversal and technical non-compliance - Waste and scrap arising during manufacture - Manufacture of exempted goods for Rule 6 purposes - demand of 7% of the job work charges -

Job work under duty-free clearance scheme - Job work undertaken in manufacture of goods cleared without payment of duty under Notification No. 214/86-CE - exempted service for demanding 7% of the job charges under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 - HELD THAT: - The Tribunal held that the very activity which the department had treated as manufacture and permitted to be cleared under the job work exemption notification could not simultaneously be recharacterised as an exempted service for the purpose of Rule 6(3)(i). It further recorded that the appellant had reversed the amount under Rule 6(3A), and the Revenue did not dispute the fact of such reversal. Once the reversal had been made, non-intimation to the Superintendent was only a technical lapse and could not justify a further demand under Rule 6(3). [Paras 12, 13, 14]

The demand of 7% of the job work charges under Rule 6(3)(i) was unsustainable.

Waste and scrap arising during manufacture - Manufacture of exempted goods for Rule 6 purposes - Waste and scrap such as wooden pallets, PVC pipes, iron strips and HDPE sheets, arising in the course of manufacture and cleared without duty - HELD THAT: - The Tribunal held that, although waste and scrap cleared for consideration may be treated as exempted or non-excisable goods, Rule 6(1) is attracted only where inputs or input services are used in or in relation to the manufacture of such goods. Waste and scrap are not manufactured products but merely arise during manufacture of the final product; they are not intended manufactured outputs. Since no waste or scrap was manufactured by the appellant, Rule 6(1) did not apply, and consequently the demand under Rule 6(3)(i) also failed. [Paras 16, 17, 18]

The demand of 6% of the value of waste and scrap under Rule 6(3)(i) could not be sustained.

Final Conclusion: All three appeals were allowed. The Tribunal set aside the impugned orders, holding that job work treated by the department as manufacture could not also be treated as exempted service, and that waste and scrap merely arising during manufacture did not attract Rule 6(3)(i).