TaxTMI Updates e-Newsletter
Jul 06,2026

Ex parte disposal - Principles of natural justice - Condonation of delay in statutory appeal - Alternative remedy- Sufficient cause - No opportunity to place its case - HELD THAT: - The Court found that the petitioner had not been afforded an effective opportunity to defend its case, the proceedings having remained ex parte throughout, including the disposal of the writ petition. In those facts, the question whether there was a genuine reason for the petitioner's non-appearance was held to be a matter that ought to be examined by the statutory appellate forum so that the lis may be adjudicated on merits. The Court therefore set aside the ex parte order, relegated the petitioner to the appellate forum, and directed that a proper application for condonation of delay, supported by reasons and documents, be considered leniently; if sufficient cause is shown, the delay is to be condoned. The merits were expressly left open. [Paras 16, 17, 18, 19, 21]

The impugned ex parte order was set aside, and the petitioner was relegated to the statutory appellate forum with liberty to file a condonation application, to be considered leniently in accordance with law.

Final Conclusion: The appeal was disposed of by setting aside the ex parte order of the learned Single Judge and relegating the petitioner to the statutory appellate forum. The petitioner was given liberty to file an application for condonation of delay, and all merits were left open for consideration by the appellate authority.

Alternative appellate remedy under GST - Delay condonation in statutory appeal - Challenged to orders alleging irregular availment of input tax credit on account of belated filing of GSTR returns - HELD THAT: - The Court, having regard to the facts and circumstances including the petitioner's request for liberty to pursue the statutory remedy, held that the appropriate course was to require the petitioner to approach the appellate authority. It permitted the petitioner to raise all available grounds of law and fact in appeal, including grounds arising from the subsequent rectification and other contentions sought to be urged, and left the question of delay to be considered by the appellate authority on the facts noticed by the Court. The writ petitions were therefore not examined on merits of the input tax credit dispute. [Paras 4, 5, 6]

The petitioner was granted liberty to file statutory appeals within two weeks with pre-deposit and delay condonation applications, and the appellate authority was directed to consider delay and, if satisfied, decide the appeals on merits in accordance with law.

Final Conclusion: The High Court declined to entertain the writ petitions on the merits of the disputed input tax credit orders and relegated the petitioner to the statutory appellate remedy. Liberty was granted to file appeals with delay condonation applications, leaving all factual and legal grounds open for consideration by the appellate authority.

Availability of statutory appellate remedy - Writ petition in view of functional appellate tribunal - cancellation of registration and the appellate order - HELD THAT: - The Court noted that the writ petition had been entertained when the appellate tribunal under the statute was not yet constituted. Since the parties jointly submitted that the tribunal had thereafter been constituted and had become functional, the Court considered it appropriate to relegate the petitioners to the statutory appellate remedy. Taking note of the payment of 20% of the disputed tax pursuant to the earlier interim order, the Court directed that if the appeal is filed within the stipulated time, the tribunal shall hear and decide it on merits in accordance with law, while continuing protection against coercive action for a limited period to enable such filing. [Paras 3, 4]

Liberty was granted to file an appeal before the appellate tribunal within four weeks, with interim protection against coercive action continuing for that period.

Final Conclusion: The writ petition was disposed of on the ground that the statutory appellate tribunal had become functional, and the petitioners were relegated to that remedy. Interim protection was continued for a limited period to enable filing of the appeal.

Territorial jurisdiction in writ proceedings - Cause of action arising from GST assessment order - Maintainability of the writ petition before the Patna High Court against a GST assessment order passed by the proper officer at Chandigarh - HELD THAT: - The Court held that the impugned order had been passed by the ETO-cum-Proper Officer at Chandigarh and that the dispute arose from the return filed by the petitioner there. On that basis, the Court found that no part of the cause of action arose within the territorial jurisdiction of the Patna High Court. The mere fact that the petitioner had taken lease of parking space from an organisation at Patna, apart from entities at Chandigarh and New Delhi, was held insufficient to confer jurisdiction on this Court, since the challenge was directed against the assessment order made by the Chandigarh authority. [Paras 7]

The writ petition was held not maintainable before the Patna High Court, with liberty to the petitioner to pursue the appropriate remedy before the competent forum.

Final Conclusion: The Court declined to entertain the writ petition for want of territorial jurisdiction, holding that the challenge to the GST order passed at Chandigarh could be made only before the competent court exercising appellate or supervisory jurisdiction over that authority. Liberty was reserved to seek relief before the appropriate forum.

Cancellation of GST registration for non-filing of returns - Restoration of registration on payment of tax and penalty - HELD THAT: - The Court held that the petitioner had made out a case for interference, since complete denial of the opportunity to file returns after payment would cause irreparable loss to its business and livelihood. Balancing the equities, the Court directed the authority to compute the taxes and penalties, if payable, and on such satisfaction to restore the registration from the date of registration, while permitting the petitioner to file returns regularly and keeping the portal active for payment. [Paras 8, 9, 10]

The authority was directed to determine the dues and, upon payment and satisfaction, restore the registration and enable regular filing of returns.

Final Conclusion: The writ petition was disposed of by directing computation of the payable taxes and penalties and restoration of GST registration upon compliance, with consequential permission to file returns regularly through an active portal.

Writ against show cause notice - Patent lack of jurisdiction - Territorial applicability of GST to offshore construction contractexecuted outside India -HELD THAT: - The Court held that interference at the stage of show cause notice is unwarranted unless the notice is ex facie without jurisdiction. On the materials noticed in the show cause notice, the authorities had proceeded on facts such as local procurement and shipments from the India office, and consolidation of the Mauritius site office revenue and expenditure in the financials of the Indian company. Since these factual features had a bearing on the applicability of the GST law to the contract, the question could not be treated as one of apparent lack of jurisdiction. The Court therefore held that the issue required factual examination by the statutory authority and that the notice could not be quashed in writ proceedings as premature. The decision in Sri Avantika Contractors (I) Limited [2024 (8) TMI 943 - TELANGANA HIGH COURT] was distinguished as arising from an advance ruling and not from a challenge to a show cause notice on disputed facts. [Paras 7, 8, 9]

The show cause notice was held not to be without jurisdiction on its face, and the writ challenge to it was not maintainable at that stage.

Final Conclusion: The writ appeal was dismissed. The Court affirmed that the impugned show cause notice did not suffer from patent lack of jurisdiction and left it open to the appellant to pursue the remedy and liberty already granted by the learned Judge.

Payment made through Form GST DRC-03 during search proceedings -Voluntary payment under Section 74(5) Or was obtained under coercion so as to warrant refund - Recovery during search proceedings - Interest on refund pending adjudication of tax liability - Self-ascertainment - Seeking a direction to the respondents to refund an amount along with interest, on the allegation that the said amount was involuntarily paid through Form GST DRC-03 towards reversal of Input Tax Credit during the course of search and seizure proceedings conducted at the business premises of the petitioner firm as well as at the residential premises of its partners.

Voluntary payment through Form GST DRC-03 - Refund of amount deposited during search - Self-ascertainment of wrongful availment of ITC -HELD THAT: - The Court held that a deposit made during search does not become voluntary merely because it is routed through Form GST DRC-03. For payment to fall within the statutory scheme of Section 74(5), there must be material showing independent self-ascertainment or prior ascertainment of liability. In the present case, no notice under Section 74(1) had been issued, no contemporaneous material showed prior quantification or self-ascertainment by the petitioner, and the payment was made while the search was continuing and the petitioner's records and devices were under the control of the authorities. The declaration in Column 8 of Form GST DRC-03 was found insufficient to establish voluntariness, as it itself indicated that payment was made after initiation of departmental enquiry. The non-issuance of Form GST DRC-04 was treated as a relevant circumstance, though not by itself conclusive. The petitioner's prompt objection to the voluntariness of the payment and the failure to observe the safeguards noticed in Bhumi Associate [2021 (2) TMI 925 - GUJARAT HIGH COURT], reflected in the CBIC Instruction further supported the conclusion that the deposit was not a true voluntary payment under Section 74(5). [Paras 13, 14, 15, 16, 17]

The amount deposited through Form GST DRC-03 was held to be non-voluntary, and the respondents were directed to refund the amount.

Interest on refund - Pending final determination of tax liability - HELD THAT: - The Court held that, although the deposited amount was liable to be refunded because it was not a voluntary payment under Section 74(5), the investigation had not attained finality and there had been no final adjudication of tax liability. In those circumstances, the entitlement of either side to interest would depend on the eventual determination of liability and the extent to which the deposited amount may exceed or correspond to that liability. The Court therefore considered it inappropriate to adjudicate the claim for interest at the present stage. [Paras 18]

Refund was directed without interest, leaving the question of interest to depend on the outcome of subsequent determination of liability.

Final Conclusion: The Court held that the amount deposited by the petitioner through Form GST DRC-03 during the search could not be retained as a voluntary payment under Section 74(5) of the CGST Act and directed its refund. The claim for interest on the refunded amount was declined at this stage, while leaving the respondents free to continue proceedings in accordance with law on the underlying ITC allegations.

Writ jurisdiction to condone delay in GST appeal - Cancellation of GST registration - Statutory limitation under appellate remedy - HELD THAT: - The Court held that although the Appellate Authority is bound by the limitation scheme under Section 107 and has no power to condone delay beyond the statutorily prescribed limit, the writ court, in exercise of its constitutional jurisdiction, may grant such relief in an appropriate case. Taking note that the delay was stated to have arisen from circumstances beyond the petitioner's control and that non-adjudication on merits would cause grave prejudice, particularly when cancellation of GST registration affects livelihood and business continuity, the Court followed its consistent earlier view in M/s M R Traders [2026 (2) TMI 99 - RAJASTHAN HIGH COURT]and exercised writ jurisdiction to prevent denial of an effective remedy. The governing principle applied was that the statutory bar limiting the appellate authority's competence does not denude the High Court of its constitutional power to intervene where rigid application of limitation would work disproportionate hardship. [Paras 6, 7, 8, 9, 10]

Delay in filing the appeal was condoned, the appellate order rejecting the appeal as time-barred was set aside, and the Appellate Authority was directed to entertain and decide the appeal on merits.

Final Conclusion: The writ petition was allowed to the extent of condoning the delay in filing the appeal against cancellation of GST registration. The order dismissing the appeal as barred by limitation was set aside and the Appellate Authority was directed to decide the appeal on merits.

Anti-profiteering - Input tax credit benefit in real estate project - Interest on profiteered amount - Prospective operation of penalty provision - penalty leviable under Section 171(3A) - Commensurate reduction in price - Occupancy Certificate

Anti-profiteering - Input tax credit benefit in real estate project - HELD THAT: - The Tribunal recorded that the Respondent had voluntarily and unconditionally accepted the DGAP report, including the methodology adopted pursuant to Reckitt Benckiser India Private Limited [2024 (1) TMI 1248 - DELHI HIGH COURT], the computation of the remaining profiteered amount, and the finding of contravention under Section 171. Since the Respondent neither disputed the methodology nor challenged the quantification or findings on merits, the Tribunal found no reason to depart from the reasoned investigation and accepted the DGAP report in entirety for the period ending with receipt of the Occupancy Certificate. [Paras 13]

The contravention of Section 171 was upheld for the period from 01.07.2017 to 22.11.2019, and the remaining profiteered amount was directed to be refunded to the eligible homebuyers.

Interest on profiteered amount - HELD THAT: - The Tribunal held that Rule 133(3)(b) mandated levy of interest on the profiteered amount from the date of collection of the higher amount from the recipients until its actual return. Referring to Reckitt Benckiser India Private Limited [2024 (1) TMI 1248 - DELHI HIGH COURT], it noted that the validity of the provision stood upheld. On that basis, the Respondent was held liable to pay interest on the amount remaining to be passed on to the homebuyers. [Paras 14]

The Respondent was directed to refund the remaining profiteered amount with interest at 18% per annum from the respective dates of excess collection till actual refund.

Prospective operation of penalty provision - HELD THAT: - The Tribunal found that the period of contravention ended on 22.11.2019, whereas Section 171(3A) came into force only on 01.01.2020. Since the alleged profiteering stood fully completed before commencement of the penalty provision, that provision was held inapplicable to the case. [Paras 15]

No penalty was payable under Section 171(3A).

Final Conclusion: The Tribunal accepted the DGAP report in full in view of the Respondent's unconditional acceptance and held that the remaining anti-profiteering amount for the project period up to 22.11.2019 must be refunded to the eligible homebuyers with interest at 18% per annum. Penalty under Section 171(3A) was held inapplicable because the contravention had concluded before that provision came into force.

Petitioner guilty for the offence under Section 277 of the Income Tax Act - False claim of refund on fabricated housing loan documents - Presumption of mens rea under tax prosecution -

HELD THAT: - The Court found that the evidence of the complainant and the bank officer established that the return filed by the petitioner contained a claim for refund supported by documents which, on enquiry, were found to be false, and that no housing loan existed in his name. The petitioner's explanation in reply to the show cause notice was not accepted as a valid answer to the false verification, particularly when no defence evidence was adduced.

Applying Section 277 read with Section 278E, the Court held that once a false statement in the return stood proved, the requisite culpable mental state had to be presumed, and the petitioner had failed to rebut that presumption. In revision, no legal infirmity was found in the concurrent findings of the trial court and the appellate court. [Paras 12, 13, 15]

The conviction and sentence were upheld and the revision was dismissed.

Final Conclusion: The High Court declined to interfere with the concurrent findings convicting the petitioner for making a false statement in the income-tax return. Holding that the falsity of the refund claim stood proved and the statutory presumption of culpable mental state remained unrebutted, it dismissed the revision and directed surrender for serving the remaining sentence.

Vicarious criminal liability of director - offence u/s 276CC of the Income-tax Act - Prosecution for non-filing of return of income - Resignation prior to commission of offence

Whether Process u/ss 276CC read with 278B of the Income-tax Act could be sustained against a former director who had ceased to hold office before the period in which the company's default in filing return arose? - HELD THAT: - The Court found from Form 32 and the Company Master Data placed on record that the petitioner had ceased to be a director of the company with effect from 30th December, 2013. The complaint itself showed that the alleged offence related to non-filing of return for A.Y. 2014-15, the relevant period of default being after the close of Financial Year 2013-14 and up to the due date for filing the return. Since, during that period, the petitioner was no longer a director, the foundational requirement for fastening vicarious criminal liability on him was absent.

On that basis, and applying the parameters indicated in State of Haryana and Others Vs. Bhajan Lal and Others [1990 (11) TMI 386 - SUPREME COURT] the Court held that no offence under Sections 276CC read with 278B could be said to have been committed by the petitioner. The contention based on compounding guidelines was rejected because those guidelines presuppose commission of an offence, whereas the Court found that no such offence was attributable to the petitioner. [Paras 8, 9]

The process and the revisional order were quashed only qua the petitioner, while the prosecution was directed to continue against the remaining accused.

Final Conclusion: The High Court held that, as the petitioner had ceased to be a director before the period in which the company's default in filing its return arose, prosecution against him under Sections 276CC read with 278B could not be maintained. The impugned orders were therefore quashed only in his case, leaving the criminal proceedings to continue against the other accused.

Recovery of pre-CIRP income-tax dues - subsequent notice and the order of attachment of the bank account issued under Section 226(3) of Income-Tax Act - petitioner would submit that as no claim was lodged before the Resolution Professional, no subsequent demand can be made

HELD THAT:- As contended by respondents No. 1 to 3, the order passed by NCLT and the decision taken by the Resolution Professional were not placed before the Competent Authority of the Department, therefore, this petition, at this juncture, is disposed of, reserving liberty in favour of the petitioner to submit the said documents before the Competent Authority of the Income-Tax Department within a period of 15 days from today.

Upon such submission, an appropriate decision shall be taken by the said authority within a further period of 15 days. In the event the claim of the petitioner is decided in its favour, necessary steps with regard to refund of the tax amount shall be taken forthwith.

Non-disclosure in a candidate's affidavit filed in the election process -Bar of judicial interference in election matters - Challenge to candidate affidavit disclosure - Election petition as exclusive remedy

Writ petition seeking an enquiry into the correctness of a candidate's financial disclosure in Form 26 and publication of a report before the election - HELD THAT: - The Court held that, by reason of Article 329(b), an election to Parliament or a State Legislature cannot be called in question except through an election petition in the manner provided by law. It further noted that the Representation of the People Act, 1951 treats improper acceptance of nomination, including cases founded on false or incomplete disclosure requiring detailed examination, as a matter to be raised in an election petition. Since the grievance related to alleged non-disclosure of material information in the candidate's affidavit, the relief sought could not be pursued in writ jurisdiction. [Paras 2, 3, 5, 6]

The writ petition was dismissed as not maintainable, with liberty to the petitioner to work out remedies in accordance with law.

Final Conclusion: The Court declined to entertain the writ petition on the ground that the challenge, being directed against the correctness of a candidate's disclosure in the nomination affidavit, could be pursued only in an election petition and not in writ proceedings.

Estimation of commission income in cheque and draft discounting business - Unexplained income addition in respect of discounted cheque receipts

Commission income estimation in cheque and draft discounting - Profit rate on bank credits - addition made by estimating commission income at 1% of total bank credits from cheque and draft discounting transactions - HELD THAT: - The Tribunal found that the dispute concerned income from the assessee's admitted business of cheque and draft discounting. Since, in the assessee's own case [2026 (4) TMI 560 - ITAT SURAT] for another year, the Tribunal had adopted a 0.35% net profit margin, the same rate was held to be appropriate for the present year also. The addition could not therefore be sustained at 1% of total credits, and had to be restricted by applying the lower margin with corresponding reduction of the income already shown in the return. [Paras 9, 14]

The estimated commission addition was restricted by applying a net profit margin of 0.35%, and the corresponding ground was allowed for both years.

Discounted cheque receipts - Addition as unexplained income - HELD THAT: - The Tribunal held that the Bank of India account formed part of the assessee's regular transactions and that the amount linked to Madan Overseas arose from cheque discounting carried out through that account. On the material on record, the assessee had not taken any loan from Madan Overseas and was only earning commission on the discounting transaction. The premise on which the Assessing Officer treated the receipt as unexplained income was therefore not sustainable. [Paras 12]

The separate addition relating to Madan Overseas was deleted and the ground was allowed.

Final Conclusion: The Tribunal allowed both appeals. It restricted the commission addition arising from cheque and draft discounting by applying a 0.35% net profit rate and deleted the separate addition relating to Madan Overseas on the finding that it represented discounted cheque transactions and not unexplained income.

Maintainability of income-tax appeals after liquidation and sale of corporate debtor as a going concern - Binding effect of NCLT directions under the Insolvency and Bankruptcy Code on adjudication under the Income-tax Act - Academic adjudication in absence of enforceable relief

Sale of corporate debtor as a going concern - Pre-transfer tax liabilities in liquidation - Survivability of appellate proceedings - The appeals against additions relating to pre-IBC assessment years survival for adjudication after the corporate debtor had undergone liquidation, been sold as a going concern, and the liquidation proceedings had been closed by the NCLT - HELD THAT: - The Tribunal held that the determinative question was not the correctness of the individual additions, but the legal effect of the completed statutory process under the IBC. The corporate debtor had passed through CIRP, liquidation, sale as a going concern under the statutory liquidation framework, distribution of sale proceeds under the waterfall mechanism, and closure of liquidation by orders of the NCLT.

The NCLT had further directed that liabilities pertaining to the period prior to transfer were to be dealt with within the liquidation process and that investigations, inquiries, assessments, notices and proceedings relating to the pre-transfer period were not to continue against the corporate debtor or its successors after the transfer date. As those orders remained operative and had neither been stayed nor displaced, the Tribunal could not ignore their legal consequences while exercising appellate jurisdiction under the Income-tax Act. The principle applied was that once the IBC process attains finality, enforcement of pre-transfer liabilities must conform to that statutory framework; accordingly, any adjudication on the merits of the additions would be merely academic because no effective relief could be enforced against the corporate debtor in its present form. [Paras 23, 24, 25, 26, 28]

All the appeals were treated as infructuous and disposed of without examination of the additions on merits, while clarifying that the order was confined to the corporate debtor and did not express any view on any independent proceedings otherwise permissible against erstwhile management or other persons.

Final Conclusion: The Tribunal held that, in view of the completed liquidation process under the IBC, sale of the corporate debtor as a going concern, and subsisting NCLT directions governing pre-transfer liabilities, no effective adjudication survived in the income-tax appeals. The appeals were accordingly disposed of as infructuous, without any decision on the merits of the additions.

Application of income outside India - Scholarships to Indian students for foreign education - Registration of charitable institution - Approval u/s 80G consequential to charitable registration

Scholarships disbursed in India to Indian students for pursuing higher studies abroad - Whether Scholarships disbursed in India to Indian students for pursuing higher studies at foreign universities amount to application of income outside India so as to justify denial of charitable registration? - HELD THAT: - The Tribunal held that the decisive test was the situs and manner of application of the funds. Since the scholarships were paid in India, in Indian currency, directly to the students or their guardians, and no amount was remitted to any foreign university or institution, the disbursement remained a domestic application of income. The subsequent use of the money by the student abroad did not convert that domestic disbursement into application for purposes outside India within section 11(1)(c).

On that footing, the objection founded on alleged violation of section 11(1)(c) failed. The Tribunal further found that the assessee was pursuing charitable objects in the field of education and that the substantive conditions for registration stood satisfied, having regard to its longstanding charitable activity, audited accounts and filing of the prescribed report. [Paras 3]

Denial of registration on the ground that the scholarships were ultimately utilised outside India was held unsustainable, and registration was directed to be granted.

Approval u/s 80G consequential to charitable registration - Rejection of approval under section 80G solely because registration had been denied - HELD THAT: - The Tribunal noted that the application for approval under section 80G had been rejected only because the claim for registration had failed. Once that basis was removed by directing grant of registration, no independent ground remained to deny approval. [Paras 3]

Approval under section 80G was also directed to be granted.

Final Conclusion: The Tribunal allowed both appeals. It held that scholarships paid in India to Indian students for overseas study did not constitute application of income outside India, directed grant of charitable registration, and consequently directed grant of approval under section 80G.

Unexplained salary paid in cash - Seized loose papers - Statement under section 132(4) - Deletion of the addition for alleged salary payments in cash made on the basis of seized papers and the director's statement recorded during search - HELD THAT: - The Tribunal found that the Commissioner (Appeals) deleted the addition without making any further enquiry or verification and without calling for a remand report on the material produced in appeal. It further found that the Assessing Officer's addition was based not merely on seized papers but also on the statement recorded during search in which one of the directors had admitted payment of salary in cash. Since these relevant facts were ignored by the Commissioner (Appeals), the deletion of the addition could not be sustained. [Paras 7, 8]

The Revenue's challenge to the deletion was accepted and the order deleting the addition was reversed.

Final Conclusion: The Tribunal allowed the Revenue's appeal for A.Y. 2021-22, holding that the deletion of the addition towards unexplained salary paid in cash could not stand in view of the seized material and the director's statement recorded during search. The assessee's cross-objection, being only in support of that deletion, was dismissed.

Exemption for Scheduled Tribe income from specified area - Accrual of salary income at place of rendition of services

Section 10(26) exemption for salary income earned while working from home - Territorial nexus of income with specified tribal area - Claim of exemption under section 10(26) in respect of salary income of a Scheduled Tribe assessee residing in Meghalaya depended - HELD THAT: - The Tribunal held that exemption under section 10(26) is not a blanket exemption attached merely to Scheduled Tribe status, but is available only when the statutory conditions cumulatively coexist, including that the income must accrue or arise from a source situated in the notified area.

Applying the settled principle that salary ordinarily accrues where the services are performed and the right to receive salary comes into existence, the location of the employer's office is not by itself decisive. However, on the material produced, the employer's certificate stated only that the assessee was currently working from home and did not clearly establish that he had worked from Meghalaya for the entire year under consideration; nor were the terms and conditions of employment produced to test the claim. In that view, the entitlement to exemption could not be conclusively adjudicated on the existing record. [Paras 12, 13, 14, 15, 16]

The issue was remanded to the Assessing Officer for fresh decision on the section 10(26) claim, with liberty to the assessee to produce material showing that the salary income accrued or arose from a source situated in the specified area for the year under consideration.

Final Conclusion: The Tribunal held that exemption under section 10(26) requires proof that the salary income accrued or arose from a source situated in the specified area, and that such exemption is not automatic merely because the assessee is a Scheduled Tribe resident of that area. As the evidentiary record was insufficient to establish the work-from-home claim for the relevant year, the matter was remanded to the Assessing Officer for fresh consideration.

Denial of Foreign tax credit - Delay in filing Form No. 67 - mandatory or directory obligation

HELD THAT: - The Tribunal noted that the assessee had offered the global income to tax in India and that the taxes paid in USA and the claim for corresponding foreign tax credit were not in dispute. It followed decision in Brinda Ramakrishna [2022 (2) TMI 752 - ITAT BANGALORE] holding that the requirement of filing Form No. 67 within the due date under section 139(1) is procedural and directory, and that Rule 128(9) does not itself provide for denial of foreign tax credit merely on account of delayed filing of the form. Since the substantive entitlement to the credit was undisputed, the credit could not be denied only for such delay. [Paras 4, 5]

The Assessing Officer was directed to grant the foreign tax credit and recompute the tax liability accordingly.

Final Conclusion: The Tribunal allowed the appeal and held that foreign tax credit could not be denied merely because Form No. 67 had been filed beyond the due date under section 139(1), when the substantive entitlement to the credit was not in dispute.

Taxability of employment income under the India-Australia DTAA Income deemed to accrue or arise in India -Salary for services rendered abroad - scope of Article 15 of the India-Australia DTAA - Salary for services rendered in Australia - Foreign tax credit consequentially denied -

Whether Salary received by the assessee in Australia from an Australian employer for services rendered in Australia was taxable in India? - HELD THAT: - The Tribunal found that there was no dispute that the assessee rendered services in Australia to an Australian employer and received the salary there, which was also subjected to tax in Australia. It held that the real controversy was not the grant of foreign tax credit, as addressed by the appellate authority, but the chargeability of the salary itself in India.

Applying Article 15 of the India-Australia DTAA, the Tribunal held that such salary was taxable only in the State where the services were rendered; therefore, the salary earned for services rendered in Australia could not be brought to tax in India. Since the income itself was directed to be excluded from total income in India, no foreign tax credit in respect of the Australian taxes paid on that income was allowable. [Paras 3, 4]

AO was directed to exclude the Australian salary from the assessee's total income, and the corresponding foreign tax credit was held to be not admissible.

Final Conclusion: The appeal was allowed. The Tribunal held that the salary earned in Australia for services rendered there was not taxable in India under Article 15 of the India-Australia DTAA, and consequently no foreign tax credit could be granted for taxes paid in Australia on that income.

Estimation of undisclosed commission income from property brokerage - Reasonableness of estimated brokerage rate - undisclosed commission income earned by the assessee from facilitating sale of immovable properties was estimation - HELD THAT: - The Tribunal held that the incriminating material established that the assessee had earned commission from brokering property deals. While the AO estimated such commission at 1% on the footing of the prevalent market rate and rejected the claim of sharing commission with other brokers for want of supporting details, the Tribunal found that no independent enquiry had been made from the concerned parties to ascertain the actual commission paid to the assessee. In these circumstances, the estimate at 1% was considered excessive, and a reduced estimate at 0.50% was adopted to meet the ends of justice. [Paras 5]

The addition on account of undisclosed commission income was sustained only to the extent of estimation at 0.50% instead of 1%.

Final Conclusion: The Tribunal partly allowed the appeal and held that, though commission income from property brokerage was rightly assessable on the basis of seized material, its estimation at 1% was excessive. The addition was accordingly reduced by directing adoption of a 0.50% rate.

Mandatory notice u/s 143(2) in reassessment - Draft assessment order u/s 144C - Jurisdictional defect in assessment

Mandatory notice u/s 143(2) in reassessment - Reassessment under section 147 read with section 143(3) - Failure to issue notice under section 143(2) before completing reassessment under section 147 read with section 143(3) - HELD THAT: - The Tribunal found from the assessment records and the Assessing Officer's report that copies of notices under section 143(2) were not available and the Department failed to establish that such notices had been issued before the draft assessment orders were framed. Since the Assessing Officer himself completed the reassessment as one under section 144C(1) read with section 143(3), issuance of notice under section 143(2) was a mandatory precondition.

Following the decisions of M/S. HOTEL BLUE MOON [2010 (2) TMI 1 - SUPREME COURT] and GENO PHARMACEUTICALS LTD. [2013 (10) TMI 218 - BOMBAY HIGH COURT] AND HUF OF H. LATE JM SCINDIA [2008 (2) TMI 53 - BOMBAY HIGH COURT] the Tribunal rejected the Revenue's contention that reassessment under section 147 is a self-contained code dispensing with such notice, and held that non-issuance of the notice vitiated the assumption of jurisdiction. [Paras 8, 9, 10, 11]

The draft assessment orders were held invalid and without jurisdiction for want of mandatory notice under section 143(2).

Draft assessment order under section 144C - Notice of demand issued with draft order - Penalty initiation with draft order - HELD THAT: - The Tribunal examined the operative part of the so-called draft assessment orders and found that the Assessing Officer had directed charging of interest, grant of tax credit, issue of demand notice and challan, and initiation of penalty proceedings; income computation forms and notices under section 156 and section 274 read with section 271(1)(c) were also issued simultaneously. On these facts, the Tribunal held that the Assessing Officer had, for all practical purposes, passed final assessment orders at the first stage instead of merely forwarding proposed draft orders as mandated by section 144C. Relying on Marriott International Inc [2026 (6) TMI 556 - ITAT MUMBAI] it held that such non-compliance with section 144C is a jurisdictional illegality and not a curable procedural defect, with the result that the so-called draft orders and all consequential proceedings were void. [Paras 14, 15, 16, 17]

The so-called draft assessment orders, and consequently the final assessment orders based on them, were quashed as wholly without jurisdiction.

Final Conclusion: For both assessment years, the Tribunal admitted the additional jurisdictional grounds, held that the reassessment was vitiated for non-issuance of notice under section 143(2), and further held that the so-called draft orders under section 144C were in substance final assessment orders passed in violation of the mandatory statutory procedure. The impugned assessment orders and all consequential proceedings were therefore quashed, and the remaining grounds were left open as academic.

Dividend Distribution Tax and treaty rate - Beneficial DTAA rate for dividend income - India-Switzerland DTAA dividend taxation - Beneficial ownership of dividend - DDT payable on dividend distributed to Swiss tax resident shareholders liable to be restricted to the treaty rate under Article 10 of the India-Switzerland DTAA OR at higher rate u/s 115-O - HELD THAT: - The Tribunal held that the controversy stood concluded by decision in Colorcon Asia (P.) Ltd. [2025 (12) TMI 677 - BOMBAY HIGH COURT] which had reversed the Special Bench view in Total Oil India Ltd. [2023 (4) TMI 988 - ITAT MUMBAI (SB)] and held that tax on dividend distributed cannot exceed the rate prescribed in the applicable DTAA where that rate is more beneficial than the domestic rate u/s 115-O.

Following that principle, the Tribunal accepted that the dividend rate under Article 10 of the India-Switzerland DTAA governed the levy. The Department's objection that beneficial ownership had to be established was rejected because neither AO nor the first appellate authority had expressed any doubt on that aspect. The applicable rate was therefore confined to 10%, with consequential refund of excess DDT. [Paras 9, 10]

DDT was directed to be recomputed at 10% under Article 10(2) of the India-Switzerland DTAA, and excess tax paid was to be refunded.

Final Conclusion: Following the jurisdictional High Court, Tribunal held that DDT on dividend distributed to Swiss tax resident shareholders could not exceed the 10% treaty rate under the India-Switzerland DTAA. The appeals on this issue were allowed with a direction to refund the excess DDT, while one separate appeal was dismissed as infructuous.

MAT exclusion for SEZ income - Disallowance under section 14A limited to exempt income - Deduction u/s 10AA for SEZ activity - Cessation of trading liability - Unexplained sundry creditors

MAT exclusion for SEZ income - Prospective withdrawal of statutory exemption - Profits of the SEZ manufacturing unit eligible u/s 10AA treatment in book profit u/s 115JB for Assessment Year 2011-12 - HELD THAT: - The Tribunal held that for Assessment Year 2011-12, section 115JB(6), as it then stood, specifically kept income accruing or arising from business carried on in a Special Economic Zone outside the operation of section 115JB. The withdrawal of that benefit by the Finance Act, 2011 was made effective from 01.04.2012, i.e. from Assessment Year 2012-13 onwards, and therefore operated prospectively. The Tribunal followed the jurisdictional Mumbai Bench decision in Genesys International Corporation Ltd [2012 (12) TMI 491 - ITAT MUMBAI]and held that the amendments to Explanation 1 did not displace the then operative exclusion under section 115JB(6) for the year under appeal. [Paras 13, 14, 15, 17, 18]

The direction to exclude eligible SEZ manufacturing profits from book profit for Assessment Year 2011-12 was upheld and the Department's appeal on this issue was dismissed.

Disallowance u/s 14A limited to exempt income - Rule 8D disallowance - HELD THAT: - The Tribunal treated it as a settled legal position that disallowance under section 14A cannot exceed the exempt income of the relevant year. Since the exempt dividend income earned by the assessee was lower than the amount computed by the Assessing Officer under Rule 8D, the disallowance sustained by the appellate authority was held to be unsustainable to that extent. The Tribunal followed Caraf Builders & Constructions (P.) Ltd. [2020 (1) TMI 135 - SC ORDER], NDL Ventures Ltd. [2026 (4) TMI 1609 - ITAT MUMBAI] and Chettinad Logistics (P.) Ltd. [2017 (4) TMI 298 - MADRAS HIGH COURT] [Paras 21, 22, 23, 24]

The Assessing Officer was directed to restrict the disallowance to the amount of exempt income and the assessee's ground was allowed.

Deduction u/s 10AA for SEZ trading activity - Burden to prove actual eligible activity - HELD THAT: - The Tribunal held that even if trading may qualify in law subject to fulfillment of statutory conditions, deduction cannot be granted unless the assessee establishes by credible evidence that such eligible activity was in fact carried on during the relevant previous year. Both the Assessing Officer and the Commissioner (Appeals) had concurrently found that the assessee failed to substantiate actual eligible trading operations, and no material was produced before the Tribunal to rebut those findings. Relying on Commissioner of Customs v. Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT (LB)] the Tribunal reiterated that the burden to establish entitlement to an exemption or deduction lies on the claimant and the conditions must be strictly complied with. [Paras 29, 30, 31, 32]

The disallowance of deduction under section 10AA in respect of the claimed trading activity was upheld.

Deduction u/s 10AA for SEZ activity - Proof of actual manufacturing or trading operations - HELD THAT: - The Tribunal noted that in the earlier round the matter had been restored for proper enquiry into the actual conduct of eligible activities in the SEZ unit. After such enquiry, the Assessing Officer recorded that apart from approvals, Form No. 56F, utility bills and sample invoices, no material was produced to establish real manufacturing or eligible trading operations; the findings included negligible consumption and absence of evidence of employees, labour or operational records. The Commissioner (Appeals) independently concurred with those factual findings, and the assessee placed no rebuttal before the Tribunal. Applying the principle in Dilip Kumar & Co. [2018 (7) TMI 1826 - SUPREME COURT (LB)], Novopan India Ltd. [1994 (9) TMI 67 - SUPREME COURT] and State of Jharkhand v. Ambay Cements[2004 (11) TMI 319 - SUPREME COURT] the Tribunal held that the burden to strictly establish fulfillment of the conditions for exemption or deduction rested on the assessee and had not been discharged. [Paras 41, 42, 43]

The disallowance of deduction under section 10AA for Assessment Year 2012-13 was affirmed.

Cessation of trading liability - Failure to prove subsisting creditors - addition under section 41(1) where the assessee failed to establish that long outstanding trade liabilities were genuine and subsisting - HELD THAT: - The Tribunal found that, pursuant to the earlier remand, the Assessing Officer had conducted detailed enquiries, issued notices and specifically called for confirmations, payment evidence and material showing continuity of the liabilities. The assessee failed to produce even the basic supporting evidence, and the enquiries u/s 133(6) did not support the assessee's claim; the addition was therefore not made merely because the liabilities were old, but because their continued existence was not established after verification. In these circumstances, the burden to prove that the liabilities subsisted remained on the assessee, and the concurrent factual findings of the authorities below warranted no interference. [Paras 44, 45, 47, 48]

The addition under section 41(1) was upheld.

Unexplained sundry creditors - Identity creditworthiness and genuineness - addition under section 68 as assessee failed to prove the identity, creditworthiness and genuineness of the impugned sundry creditors - HELD THAT: - The Tribunal noted that the issue had already been restored in the earlier round for a proper enquiry and that the Assessing Officer thereafter afforded opportunity to the assessee and also made independent enquiries by issuing notices under section 133(6). Despite this, the assessee did not place cogent evidence to establish the genuineness of the creditors or to rebut the findings arising from those enquiries. The Tribunal held that the burden under section 68 squarely rested on the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions, and that burden remained undischarged. [Paras 49, 50, 51]

The addition made under section 68 in respect of the sundry creditors was confirmed.

Final Conclusion: For Assessment Year 2011-12, the Department's challenge to exclusion of eligible SEZ manufacturing profits from book profit under section 115JB failed, while the assessee succeeded only to the limited extent that the disallowance under section 14A was restricted to the exempt income; its claim for deduction under section 10AA on the alleged SEZ trading activity was rejected. For Assessment Year 2012-13, the assessee's claims under section 10AA and its challenge to the additions under sections 41(1) and 68 were all rejected.

Alternative statutory remedy - Maintainability of writ petition against advance ruling - HELD THAT: - The Court held that the order of the Customs Authority for Advance Rulings was appealable under the statutory mechanism provided in Section 28-KA of the Customs Act and that such remedy was available to the petitioner before the High Court by way of CMA. On that ground, the writ petition was treated as not sustainable. The Court also noted that a similar issue had already been decided in M/s. Lenovo India Private Limited [2025 (7) TMI 731 - MADRAS HIGH COURT].

The writ petition was dismissed as not maintainable, with liberty to pursue the statutory appeal by way of CMA, and the period during which the writ petition remained pending was directed to be excluded for limitation purposes.

Final Conclusion: The Court dismissed the writ petition on the ground of availability of an effective statutory appellate remedy against the advance ruling. Liberty was reserved to the petitioner to file a CMA under Section 28-KA of the Customs Act, with exclusion of the pendency period for limitation.

Smuggling of exotic birds and mammals - Burden of proof - Non-notified goods under Section 123 - Confiscation of exotic wildlife seized in domestic movement - Penalty and conveyance confiscation in absence of proof of smuggled nature - statement recorded under Section 108 - tangible and corroborative evidence - Transportation and possession of certain live birds and mammals stated by the Department to be exotic wildlife of foreign origin, allegedly brought into India in contravention of the provisions of the Customs Act, 1962 read with the Wildlife (Protection) Act, 1972 and the Foreign Trade Policy

Confiscation of the exotic birds and mammals, together with the vehicle allegedly used for their transport - HELD THAT: - The Tribunal held that exotic birds and mammals are not notified goods under Section 123 of the Customs Act, 1962 and, therefore, the burden remained on the Revenue to establish their smuggled character. On the material noticed by the Tribunal, the supplier's statement itself showed that the live consignment had been received from a person in Mizoram and supplied thereafter in the domestic area. In that situation, the noticees stood explained as to domestic procurement, and the Revenue was required to prove illegal importation through independent corroborative evidence. As no such proof was produced, mere allegation of foreign origin or suspicion was insufficient to treat the 35 animals and birds seized at Kolkata and the 19 birds seized at Pune as liable to confiscation. Following Rajesh Agarwal @ Raju Sagar [2021 (1) TMI 523 - CESTAT NEW DELHI], the Tribunal held that possession or domestic movement of such exotic species, by itself, did not establish smuggling. [Paras 18, 19, 20, 21, 22]

The confiscation of both sets of seized exotic birds and mammals was set aside and their release was upheld.

Penalty for dealing with alleged smuggled exotic wildlife - Failure to prove smuggled nature - HELD THAT: - The Tribunal treated the penalty issue as consequential to the failure of the Department's case on smuggling. Since the Revenue had not proved that the seized birds and mammals were procured through illicit means or were smuggled in nature, the foundational requirement for penalty under the Customs Act was absent. On that reasoning, the penalty sustained against the assessee was liable to be set aside, and no infirmity was found in the appellate order setting aside the penalty on the co-noticee. [Paras 22]

The penalty on Domnic Jacob Sequeira was set aside, and the setting aside of penalty on Gouse Gaffar Shaikh was affirmed.

Confiscation of vehicle used for transportation of alleged smuggled goods - Conveyance confiscation in absence of proof of smuggled nature - HELD THAT: - The Tribunal held that confiscation of the vehicle could not stand independently once the Department failed to establish the smuggled nature of the exotic birds and mammals. The basis for treating the conveyance as liable to confiscation thus disappeared along with the failure of the main allegation. [Paras 22]

The vehicle was held not liable to confiscation and its release without redemption fine was upheld.

Final Conclusion: The Tribunal held that, since exotic birds and mammals are not notified under Section 123 and the Revenue failed to prove their smuggled character, confiscation of the seized birds and animals could not be sustained. Consequently, the penalty on Domnic Jacob Sequeira was set aside, the relief already granted to Gouse Gaffar Shaikh was maintained, and release of the vehicle was upheld.

Imposition of penalties imposed under Section 112(a)(i) and Section 114AA - abetment of smuggling of prohibited cigarettes - Penalty for false declaration without making or using import documents - Corroboration of inculpatory statement

Penalty for alleged abetment of smuggling of prohibited cigarettes - Corroboration of inculpatory statement - HELD THAT: - The Tribunal held that the Department's case against the respondent rested only on the later statement of another noticee. In that person's earlier statements, as well as in letters addressed to the authorities, the respondent had not been implicated. The Customs Broker who handled the Bill of Entry consistently stated that he dealt only with the importer and did not name the respondent at any stage. The allegation that the respondent had visited the ICD for clearance of the consignment was also not established by any corroborative material, and the conduct attributed to him during investigation did not by itself bring any concrete fact on record connecting him with the import. On this evidentiary position, the respondent's role in the import of the prohibited goods was not proved beyond doubt. [Paras 7, 8, 9, 11, 12]

The deletion of penalty under Section 112(a)(i) was upheld.

Penalty for false declaration without making or using import documents - HELD THAT: - The Tribunal found that there was no evidence showing that the respondent had imported the goods, dealt with them, or played any role in the import documentation. Since the Department failed to establish that the respondent had signed, made or used any declaration or document for the purpose of import, the statutory basis for penalty under Section 114AA was not made out. [Paras 10, 12]

The deletion of penalty under Section 114AA was upheld.

Final Conclusion: The Tribunal found no infirmity in the appellate order dropping the penalties. The Revenue's appeal was dismissed and the order in favour of the respondent was upheld.

Classification of goods - imported consignments of e-rickshaw parts, without motors and batteries - Essential character of incomplete goods - CKD import of electric tricycles - Rule 2(a) of the General Rules for Interpretation - Vicarious liability - HELD THAT: - The Tribunal held that Rule 2(a) could apply only where the incomplete goods, as presented, possessed the essential character of the finished article. In the case of an e-rickshaw, the decisive functional components were the electric motor and battery, without which the imported goods could not operate as a self-propelled vehicle. Since those components were admittedly absent and there was no case that they had been imported under any Bill of Entry, the consignments remained only parts of e-rickshaws and could not be treated as complete vehicles in CKD condition. Following the Twinkle Tradecom Pvt. Ltd. [2024 (5) TMI 472 - CESTAT KOLKATA], the Tribunal held that the reclassification adopted by the department was unsustainable. On that basis, the Revenue's challenge to the dropping of proceedings for the 306 past Bills of Entry failed, and for the 8 live Bills of Entry the duty demand, confiscation, redemption fine and penalties also could not survive. The deposit made during investigation was consequently directed to be released with applicable interest. [Paras 12, 13, 14, 15, 16]

The Revenue's appeals were dismissed, while the importer's and the Directors' appeals were allowed; the confirmed duty demand for the 8 live Bills of Entry, confiscation, redemption fine and all penalties were set aside, and the investigation deposit was directed to be refunded with applicable interest.

Final Conclusion: The Tribunal held that imports of e-rickshaw structural parts, without motor and battery, could not be treated as complete electric tricycles in CKD condition under Rule 2(a). The Revenue's appeals against dropping of proceedings for the past Bills of Entry were dismissed, and the importer's and Directors' appeals were allowed with setting aside of the live demand, confiscation, redemption fine and penalties, along with release of the investigation deposit with applicable interest.

Confiscation of gold jewellery worn on person - Gold of foreign origin -Failure to consider purchase invoice evidence - Imposition of penalty - Opportunity to Produce Evidence - Verification of Documents - Natural Justice - HELD THAT: - The Tribunal found that, although no licit document was produced at the time of seizure, the goods were admittedly being worn by the appellant and there was no case of concealed transportation. It held that, in the ordinary course, a person may not carry the invoice for jewellery worn on the body. The Tribunal further held that, even if the gold was of high purity, the appellant could not be held responsible for contravention if the purchase was shown to be genuine through invoice evidence. Since copies of the purchase invoice had been produced before the appellate authority but were not before the adjudicating authority, the matter required fresh consideration so that the appellant could produce all documentary evidence and the authority could verify those documents. [Paras 5, 6]

The matter was remanded to the adjudicating authority for fresh adjudication after giving the appellant an opportunity to produce documentary evidence and after verification of such evidence.

Final Conclusion: The Tribunal did not affirm the confiscation and penalty on merits. It remanded the matter to the adjudicating authority for fresh adjudication after permitting production and verification of the purchase documents relating to the seized gold jewellery.

Export of Prohibited Goods - Penalty for abetment of export of red sanders concealed in a rice shipment - Conspiracy​​​​​​​ - HELD THAT: - The Tribunal noted that the adjudicating authority had set out the role of both appellants in the attempted export of red sanders, a prohibited export item, and had recorded the material circumstances and statements relied on against them. On examining the appeal grounds, the Tribunal found nothing sufficient to dislodge the express findings in the impugned order. It therefore held that no interference was warranted and that the penalty under Section 114(i) was justified. [Paras 6, 7]

The penalty imposed on both appellants was sustained.

Final Conclusion: The Tribunal found no ground to interfere with the impugned order and upheld the penalties imposed on the appellants for their role in the attempted export of prohibited goods.

Penalty for facilitating fraudulent exports - Conscious involvement in overvaluation of export goods - Penalty based on suspicion and uncorroborated evidence - Penalty on the proprietor of a Customs Broker firm for alleged facilitation of overvalued export consignments and attempted wrongful IGST refund - HELD THAT: - The Tribunal found that the Revenue had not produced any cogent, independent or corroborative evidence to establish any nexus between the appellant and the alleged fraudulent exports, or to show his active role, conscious knowledge or deliberate involvement in the overvaluation of the consignments. It held that mere suspicion, conjecture, presumptions, or the circumstance that documents may have passed through intermediaries, could not justify penal consequences. The Tribunal also followed its earlier decision in the appellant's own case [2026 (4) TMI 1363 - CESTAT KOLKATA] arising from substantially similar facts, where penalties had been set aside for want of concrete proof of knowledge or collusion. In the absence of any contrary decision and there being no material distinction in facts, the same ratio was applied. [Paras 8, 9, 10]

The penalties imposed on the appellant were held unsustainable and were set aside.

Final Conclusion: Following its earlier decision in the appellant's own case and finding no evidence of conscious involvement or collusion, the Tribunal held that the penalties under Sections 114(iii) and 114AA were unsustainable. The impugned orders were set aside to that extent and the appeals were allowed.

Exemption for Enzyme-Linked Fluorescent Assay (ELFA) diagnostic kits - concessional rate of duty is provided to Enzyme-Linked Immunosorbent Assay (ELISA) kits - claimed exemption under Notification No. 50/2017Cus. and IGST Notification No. 01/2017 - Imported ELFA kits and mis-declared the same as ‘ELISA kits’ -Technological advancement in interpretation of exemption entries - Extended limitation for alleged misdeclaration in bills of entry - IGST interest and penalty under Customs Tariff Act - Genus-species principle - Wilful suppression - Misstatement with intent to evade duty - Judicial deference to expert opinion - Principle of consistency

Exemption for ELISA diagnostic kits - HELD THAT: - The principle of strict interpretation cannot be extended to justify a construction which ignores scientific realities or adopts an artificial distinction unsupported by technical evidence. The ratio of Dilip Kumar [2018 (7) TMI 1826 - SUPREME COURT (LB)] applies where genuine ambiguity exists regarding the scope or applicability of an exemption entry.

The material placed on record establishes that ELISA represents the broader class of enzyme-linked immunoassay methodologies based upon antigen-antibody interaction, while ELFA constitutes a technologically evolved variation thereof employing fluorescence-based detection at the terminal stage. The underlying immunological principle and enzyme-linked assay mechanism admittedly remain the same. In Standard Pencils (P) Ltd. Vs CCE Madras [2002 (9) TMI 105 - SUPREME COURT], the Hon'ble Supreme Court held that once exemption is granted to a genus, its various forms and varieties would ordinarily remain covered unless specifically excluded. Similar views are expressed in Alladi Venkateswarlu [1978 (2) TMI 184 - SUPREME COURT], Jain Exports (P) Ltd. [1988 (5) TMI 50 - SUPREME COURT] and Union of India Vs N.S. Rathnam & Sons [2015 (8) TMI 97 - SUPREME COURT]. Applying the aforesaid principles, we are unable to accept the Revenue's contention that adoption of fluorescence detection results in emergence of an altogether distinct diagnostic methodology outside the ELISA framework. Mere technological enhancement in the mode of detection cannot eclipse the foundational ELISA principle upon which the impugned kits admittedly operate.

The Tribunal held that the material on record established that ELFA is not a distinct scientific principle unrelated to ELISA, but an advanced application of the same enzyme-linked immunoassay methodology. The difference between the two lay only at the terminal stage of signal detection, namely fluorescence in place of colourimetric detection, while the underlying antigen-antibody and enzyme-linked assay principle remained the same. Relying on technical literature and the clarifications issued by CDSCO and NIB, the Tribunal found the Department's premise that ELISA is confined only to chromogenic detection to be scientifically unsustainable. It further held that exemption entries concerning scientific and diagnostic products cannot be interpreted in a static manner so as to ignore technological advancement, and that a beneficial exemption intended to facilitate healthcare must receive a purposive construction. On that basis, ELFA kits were treated as remaining within the ELISA category for exemption purposes. [Paras 31, 33, 34, 35, 36]

The denial of exemption on the ground that ELFA kits are different from ELISA kits was rejected.

Extended limitation for alleged misdeclaration in bills of entry - Willful suppression and intent to evade duty - demand arising from the description of the imported diagnostic kits as ELISA kits. - HELD THAT: - The Tribunal held that the identity and nature of the imported goods as VIDAS diagnostic kits were fully known to the Department and that the dispute was essentially one of interpretation of the exemption entry in the context of evolving diagnostic technology. The appellant's stand that ELFA operated on the ELISA principle was found to be a bona fide understanding, particularly when the matter itself required examination by specialised expert bodies. In those circumstances, the mere use of the expression ELISA kits in the bills of entry, while claiming exemption, did not establish willful suppression, fraud or deliberate misstatement with intent to evade duty. The ingredients necessary for invoking the extended period were therefore held not proved. [Paras 37, 38]

The extended period demand was held unsustainable.

IGST interest and penalty under Customs Tariff Act - HELD THAT: - The Tribunal accepted the contention that, during a substantial part of the period in dispute, Section 3(12) of the Customs Tariff Act had not specifically incorporated the customs provisions relating to interest, penalty and confiscation insofar as IGST was concerned. Treating the position as settled by the Bombay High Court in Mahindra & Mahindra Ltd.[2022 (10) TMI 212 - BOMBAY HIGH COURT], affirmed by the Supreme Court in Union of India Vs Mahindra & Mahindra Ltd. [2023 (8) TMI 135 - SC ORDER], the Tribunal held that such interest and penalty provisions could not be applied for that period. [Paras 39]

The levy of interest and penalty in relation to the IGST component was held not sustainable for the relevant period.

Final Conclusion: The Tribunal held that the imported ELFA-based VIDAS diagnostic kits remained covered by the exemption entries for ELISA kits, since the underlying assay principle was the same and the change was only in the mode of detection. The demand, extended limitation, interest, confiscation, redemption fine and penalties were therefore set aside, and the appeal was allowed with consequential relief.

Enhancement of value - Waiver of speaking order in customs reassessment - Challenged to enhanced assessable value after importer consent - An importer who, at the time of clearance, expressly declined issuance of show cause notice, personal hearing and speaking order under Section 17(5) of the Customs Act - HELD THAT: - The Tribunal recorded that the appellant had admittedly given a written note stating that no show cause notice, personal hearing or speaking order under Section 17(5) was required. Proceeding on that admitted position, and relying on the decisions cited before it, the Tribunal held that the appellate orders sustaining the reassessment did not call for interference. The decision thus turned on the appellant's own waiver of the procedural requirements at the stage of clearance. [Paras 8, 9, 10]

The challenge to the enhancement of value was rejected and the appellate orders were upheld.

Final Conclusion: The Tribunal upheld the orders sustaining the reassessment and dismissed both appeals, holding that no interference was warranted once the importer had itself waived notice, hearing and speaking order at the time of clearance.

Classification offilter cartridges (replacement cartridges for filtering or purifying machinery for liquid or gases) - Parts suitable for use solely or principally with filtering or purifying machinery - Applicability of CBIC Circular No. 24/2013-Cus. and HSN Explanatory Notes - Essential character - Sole or principal use - Trade parlance - Constituent material - Functional identity - classifiable under tariff item 8421 99 00 as parts of filtering or purifying machinery and apparatus for liquids or gases - HELD THAT: - In the present case, the imported goods are not presented as standalone filtering media, membranes, fabrics, felts, ceramic elements, metallic meshes, or other constituent filtering materials. Nor are they imported as generic materials capable of wider use. Rather, they are complete replacement filter cartridges comprising filtration media permanently integrated with supporting cores, cages, end caps, adaptors, seals, and other components necessary for installation and operation within specific filtration systems.

The goods are designed and engineered for use solely or principally with filtering or purifying machinery and apparatus of Heading 8421. Their dimensions, connection interfaces, sealing arrangements, filtration ratings, and operating parameters are predetermined by the filtration equipment for which they are intended. As imported, they are commercially recognised and traded as replacement filter cartridges and not as constituent filtering materials.

The Authority held that the goods are not imported as rolls, sheets, membranes, fabrics, meshes or other standalone filtering media, but as finished filtration assemblies comprising filtration media permanently integrated with support structures, end caps, seals and mounting interfaces for direct installation in designated filtration systems. Applying Rule 1 of the General Rules for Interpretation and Note 2 to Section XVI, it found that the goods are not independently classifiable elsewhere in Chapters 84 or 85 and satisfy Note 2(b), since they are suitable for use solely or principally with filtering or purifying machinery of Heading 8421 and have no independent commercial utility outside such systems. CBIC Circular No. 24/2013-Cus. and the HSN Explanatory Notes were read as drawing a distinction between separate filtering elements, which may be classified by constituent material, and complete filters or dedicated filtration assemblies, which fall under Heading 8421. Differences in filtration media or materials of construction were held not to alter the good's essential character, dedicated use, or commercial identity as replacement filter cartridges. [Paras 17, 18]

The subject goods, namely Polymeric Media Filter Cartridges, Sealed Capsule Filters, and Metallic Media Filter Cartridges (including those manufactured from stainless steel, nickel alloys, or Hastelloy), are classifiable under tariff heading 8421, and more specifically under under tariff item 8421 99 00 as parts suitable for use solely or principally with filtering or purifying machinery and apparatus for liquids or gases.

Final Conclusion: The Authority held that the imported filter cartridges and capsule filters are complete, dedicated filtration assemblies and not mere filtering media classifiable by constituent material. They were accordingly ruled to fall under tariff item 8421 99 00 as parts of filtering or purifying machinery and apparatus for liquids or gases.

Discovery by interrogatories in oppression and mismanagement proceedings - Applicability of CPC to company law proceedings - Fishing and roving enquiry - oppressive or scandalous pleadings - HELD THAT: - The Court held that the Company Law Board had ample power to permit discovery and inspection, including interrogatories, by virtue of the Companies Act, the Companies (Court) Rules, 1959 and the Company Law Board Regulations, 1991, read with the CPC. Relying on Union of India v. Ibrahim Uddin [2012 (7) TMI 887 - SUPREME COURT], the Court noted that the object of interrogatories is to obtain information on material facts and secure admissions so as to avoid protracted enquiry. It also noticed Suresh Kumar Sanghi [1981 (5) TMI 112 - HIGH COURT OF DELHI] to reiterate that interrogatories are permissible in oppression and mismanagement proceedings when they are relevant to the matters in issue. On the facts, the interrogatories pressed were directly connected with the respondents' reply and sought particulars regarding transfer of business, sale of assets, purchase of alternate land in the name of another company, and the stoppage of the company's business. The Court found that these queries were neither unreasonable, vexatious, oppressive nor scandalous within the meaning of Order XI Rule 7 CPC. The rejection on the ground of delay was also unsustainable since the application had been filed after completion of pleadings and was not pressed for some time owing to settlement efforts; in any case, no limitation applied to such an application. [Paras 27, 28, 29, 30, 31]

The impugned order was set aside to the extent it rejected the interrogatories pressed by the appellants, and the respondents were directed to answer those interrogatories within the time granted by the Court.

Final Conclusion: The Court held that the interrogatories sought by the appellants were maintainable, relevant to the pleaded allegations in the oppression and mismanagement petition, and could not be rejected as a fishing enquiry or on the ground of delay. The respondents were accordingly directed to answer the interrogatories pressed by the appellants.

Maintainability of review petition - Seeking Release of plots to bona fide purchasers in liquidation proceedings - Fraudulent preference in pre-winding-up sale transactions - Locus standi to oppose investor claims and maintain review in winding-up - Effect of RBI prohibition order on completed third-party sale deeds - Ordinary Course of Business - Commencement of Winding Up

Bona fide plot purchasers - Fraudulent preference - Pre-winding-up sale deeds - RBI prohibition order - Entitlement to release and possession of their respective plots, their transactions having been completed bona fide for value prior to the commencement of winding-up and not being hit by Section 531 of the Companies Act, 1956 or by the RBI prohibition order. - HELD THAT: - The Court treated the present applicants as identically placed with the seven purchasers in whose favour release had already been directed, that position having attained finality. Their bookings had commenced much earlier, the sale deeds stood executed and registered before the appointment of the Provisional Liquidator, and the OMC had individually verified and accepted their claims as genuine. The SFIO material also supported the applicants by recording that the Hyderabad project had been launched earlier, that authorised representatives including Col. Ganapathy and Mr. Jai Kumar had been empowered to deal with the plots, and that bona fide purchasers had invested without knowledge of the winding-up proceedings. The Court held that mere proximity of the transfers to the winding-up petition did not establish fraudulent preference, since there was no material to show any dominant intention to prefer particular creditors, and the applicants were purchasers under the company's housing scheme rather than favoured creditors. The RBI prohibition order was held not to invalidate completed third-party sale deeds in favour of bona fide purchasers, particularly when the order was not to be construed as rendering such transfers void. Objections as to lack of authorisation, absence of bank statements, demarcation, or later cancellation of the draft layout were rejected in view of the registered sale deeds, supporting documents, prior findings, and the Official Liquidator's categorical no-objection. [Paras 67, 68, 69, 70, 72]

The applicants' claims were accepted and the Official Liquidator was directed to hand over the plots to them.

Locus standi in winding-up proceedings - Maintainability of review by spouse of ex-director - Proxy litigation - HELD THAT: - It is important to emphasise that the Division Bench was clear and categorical in holding that objections raised by the ex-director in his individual capacity could not be entertained, as he had no locus standi. The Official Liquidator had taken over assets of the company many years earlier, and the Company Court was dealing with the claims of investors.

The Court found that the review petition was, in substance, a proxy attempt by the ex-director to reopen matters already concluded. Ms. Aneeta Sharma had neither been a party to the original proceedings nor an appellant in the appeal against the earlier release orders, and her asserted status as a creditor did not confer an independent right to reopen adjudications that had attained finality. The Court also noted her prior role as authorised representative of the ex-management and held that, once the company was in liquidation and the Official Liquidator had taken over, the ex-management could not continue to obstruct the satisfaction of verified investor claims. The earlier Division Bench ruling had already made it clear that a former director had no locus to challenge orders of the Company Court in winding-up proceedings; the same principle was applied here. On that basis, the review petition was treated as devoid of merit, and the amendment application was rendered infructuous. [Paras 58, 59, 60, 71, 72]

The review petition was dismissed for want of merit and locus standi, and the connected amendment application was held infructuous.

Final Conclusion: The Court allowed the applications of the 14 plot purchasers and directed the Official Liquidator to hand over the plots to them, holding that their claims stood duly verified and their sale deeds were not liable to be invalidated in the winding-up proceedings. The review petition filed by Ms. Aneeta Sharma was dismissed for want of locus standi and merit.

Seeking to Quash the FIR at investigation stage - Prima facie disclosure of cognizable offence - Territorial jurisdiction to investigate cognizable offence - Mala fides of informant - Investigation at threshold - Manifestly absurd or improbable allegations - FIR alleging forgery, use of forged documents and conspiracy in relation to the special power of attorney and sharing of confidential company information

Quashing of FIR at investigation stage - Prima facie disclosure of cognizable offence - Criminal conspiracy in filing forged documents before NCLT - HELD THAT: - It is settled law that at the stage when the High Court considers a petition for quashing of criminal proceeding under section 482 of Cr.P.C., the allegations in the FIR must be read as they stand and it is only if on the face of the allegations that no offence, as alleged has been made out against the accused persons, that the court may be justified in exercising it’s jurisdiction to quash. The allegation of conspiracy made by the petitioners in committing forgery with accused no. 1 has been clearly described in the FIR. It is equally settled law that FIR is not supposed to be an encyclopaedia. Since investigation just started, the State should be given its due chance to investigate and to collect evidence. If the petitioners story as stated in this application is correct, then the police will conclude the investigation by a closure report, otherwise a charge sheet would be filed and in that case, it will be within the jurisdiction of the trial Court to adjudicate upon the truth of the contents of the complaint.

The Court held that, at the stage of considering quashing, it was required only to see whether the allegations in the FIR, read as they stand, disclosed cognizable offences. The FIR contained specific allegations connecting the petitioners with the alleged conspiracy, including the alleged use of a forged special power of attorney, the asserted role of the company functionaries in disclosure of information, and the allegation that the petitioners acted in concert with the principal accused for unlawful gain. The Court found that the allegations could not be termed wholly absurd or inherently improbable. Since investigation had only commenced and material facts were still incomplete and hazy, the High Court could not assess the truthfulness, probability or sufficiency of the allegations, nor could it undertake the function of the investigating agency or the trial court. The proper course was to permit investigation to continue and reach its logical conclusion. [Paras 30, 31, 32, 33, 42]

The prayer for quashing on the ground that no prima facie case was made out was rejected.

Territorial jurisdiction to investigate cognizable offence - Investigation irrespective of area where offence is committed - HELD THAT: - The Court held that want of territorial jurisdiction is not a ground to quash an FIR at the stage of investigation. Referring to section 173(1) of the BNSS and the settled principle under the corresponding provisions of the CrPC, the Court held that registration and investigation of a cognizable offence are not barred merely because the offence may have been committed outside the local limits of the police station. The question of jurisdiction for inquiry or trial is distinct from the power to investigate, and the investigating agency cannot refrain from a proper investigation solely on that ground. The Court further held that the embargo against challenging police proceedings on the ground of territorial power applied, and the issue of the appropriate court's jurisdiction would arise only at the later stage when the facts gathered in investigation are placed before the competent court. [Paras 38, 39, 40, 41, 42]

The objection to investigation on the ground of lack of territorial jurisdiction was rejected.

Mala fides of informant - Quashing not justified by allegation of mala fides alone - The allegation that the complaint was mala fide or intended to harass the petitioners did not justify quashing of the criminal proceeding. - HELD THAT: - The Court held that, once information disclosing an offence is lodged and a case is registered, the alleged mala fides of the informant are of secondary importance. The fate of the accused depends on the material collected during investigation and the evidence ultimately adduced in court. Accordingly, allegations of mala fides against the complainant, by themselves, could not furnish a ground to quash the proceeding. [Paras 34]

The challenge founded on alleged mala fides of the complainant was rejected.

Final Conclusion: The High Court declined to quash the FIR and held that the allegations disclosed cognizable offences requiring investigation. It further held that alleged mala fides of the complainant and the objection as to territorial jurisdiction of the police station did not warrant interference at the investigation stage, and accordingly dismissed the criminal revision.

Claims for provident fund interest and damages assessed after the liquidation commencement date - Appellate Tribunal [2024 (9) TMI 1946 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]affirmed that a liquidator cannot admit a claim for provident fund interest and damages founded on assessments made after the liquidation commencement date, notwithstanding that the underlying period of default was earlier. - HELD THAT: - The appeal was dismissed, the Court finding no good ground or reason to interfere with the judgment and order of the National Company Law Appellate Tribunal.

Rejection of unsubstantiated operational creditor claim - National Company Law Appellate Tribuna [2025 (8) TMI 1152 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB] concluded that the IRP/RP and Adjudicating Authority exercised due care in verification; the claimant failed to produce sufficient, specific and corroborative evidence to establish the claimed debt as due from the corporate debtor alone. The appeal is dismissed. - HELD THAT:- The Civil Appeal was dismissed, the Court stating that the National Company Law Appellate Tribunal had committed no error in law or fact. Pending applications were also dismissed.

Maintainability of civil suit - Pre-institution civil suit and subsequent insolvency moratorium - Bar of civil court jurisdiction under the Insolvency and Bankruptcy Code - Rejection of plaint under Order VII Rule 11(d) - Co-extensive liability of guarantor - Strict construction of jurisdictional bar - Civil suit seeking declaration and injunction in relation to alleged discharge of personal guarantees, instituted before filing of applications under Section 95 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT: - It is trite law that, the liability of the guarantor is co extensive as that of the principal debtor unless there is a contract of the contrary. A creditor can choose to initiate proceedings for recovery either jointly or severally against the debtor or the guarantor. Channaveerappa Beleri [2006 (4) TMI 540 - SUPREME COURT], H.R. Basavaraj [2009 (10) TMI 973 - SUPREME COURT] and Gouri Shankar Jain [2019 (11) TMI 1169 - CALCUTTA HIGH COURT] are some of the authorities for such proposition.

According to the appellants they stand released from their personal guarantees. The appellants are entitled to file and maintain a suit seeking a declaration that they stand released from their personal guarantees. Such a declaratory suit is within the jurisdiction of a Civil Court. Pendency of a proceeding under Section 95 of the Insolvency and Bankruptcy Code, 2016 would however impact the suit if filed within the period of embargo under Section 96(1)(b)(ii) or Section 101 thereof.

The foundational fact on which, Section 96 of the Insolvency and Bankruptcy Code, 2016 comes into operation is the filing of a petition either under Section 94 or 95 of the Insolvency and Bankruptcy Code, 2016. In the facts and circumstances of the present case, a petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 was filed on January 15, 2025 which is subsequent to the suit which was filed on November 6, 2024.

Interplay of Sections 231 and 238 along with the relevant sections relating to moratorium under the Insolvency and Bankruptcy Code, 2016 may have to be considered if, the civil suit was filed subsequent to the initiation of the proceedings under the Insolvency and Bankruptcy Code, 2016 which is not the factual scenario here.

In the scenario of a pending civil proceedings instituted prior to the initiation of proceedings under the Insolvency and Bankruptcy Code, 2016 the civil court will not pass an order of injunction in respect of any action taken or to be taken in pursuance to any order passed by the NCLT under the Insolvency and Bankruptcy Code, 2016.

The Court held that Section 96 is triggered only upon filing of an application under Section 94 or 95 of the Insolvency and Bankruptcy Code, 2016. Since the suit had been instituted before the Section 95 proceedings were filed, the subsequent commencement of interim moratorium could, at best, attract the statutory consequence of stay of the pending proceeding for the limited period contemplated by Section 96(1)(b)(i), and not dismissal of the suit as barred by law. The Court further held that the plaintiffs were entitled to institute a declaratory suit before the civil court to establish that they stood released from their personal guarantees; such jurisdiction is not ousted merely because insolvency proceedings are later commenced. On a strict construction, Section 231 does not extinguish jurisdiction en masse upon initiation of insolvency proceedings, but only prevents civil court interference in matters and stages specifically covered by the Code. The Court also found that all consortium members were defendants in the suit whereas all had not initiated insolvency proceedings, and since a plaint cannot be rejected in part, rejection of the entire plaint was impermissible. [Paras 83, 84, 85, 86, 87]

The rejection of the plaint under Order VII Rule 11(d) was unsustainable; the impugned order was set aside and the suit was remanded for disposal.

Final Conclusion: The Court held that a suit filed before initiation of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016 was not barred by Section 96 or liable to rejection under Order VII Rule 11(d). The order dismissing the suit was set aside and the matter was remanded to the trial court for disposal.

Maintainability of a petition under Section 7 - Financial debt - Share subscription and warrants - Commercial effect of borrowing - Share application money - Whether the amount received by the Respondent-Corporate Debtor under the SSA, constitutes “financial debt” within the meaning of Section 5(8), specifically under clause (f) of the said section? - HELD THAT: - In essence the agreement entails that against the amount invested as also bought in through associates, the “investor” shall gain control over the majority voting rights (equity shareholding) as also the composition of the board of directors. Clause 8.1 of the SSA (supra) states that board of directors of the company shall comprise of not more than 6 directors wherein majority warrant holder shall be entitled to nominate at least 3 directors. The remaining 3 directors shall be nominated by the promoters. Clause 9 of the SSA (supra) states that action on fundamental issues, which are listed in clause 9.3, and which cover almost all major decisions pertaining to operations of company, can be taken only after prior written consent of the majority warrant holder. For brevity, this list running from sub clause (a) to sub clause (u) has not been reproduced above, but it includes amendment to constitutional documents, mergers and acquisitions, finalisation of the business plan, purchase of real estate, change in the name of the company, increase or decrease in size of board of directors, change in accounting methods, etc. which are the major critical decisions in governance of a company. Thus, had the agreement been fully implemented, the majority warrant bolder/investor would have acquired majority shareholding, majority position in board of directors and control over running of the company.

On a reading of the Subscription and Shareholders Agreement, the Tribunal found that the transaction was structured as an investment for acquiring controlling equity participation in the corporate debtor, including the right to convert warrants into shares so as to secure majority shareholding, voting rights, board representation and control over fundamental decisions. The agreement contained no stipulation for repayment of the money advanced, and the exit option provided only an exit through IPO, strategic sale or merger, not refund of the investment. The amount was therefore advanced as consideration for shares and warrants, and not under any transaction having the commercial effect of a borrowing. The contention based on Section 42(6) of the Companies Act, 2013 was rejected since the agreement was executed when the Companies Act, 1956 governed, and in any event no private placement attracting that provision was shown. The dispute regarding balance-sheet disclosure was held not to alter the character of the transaction, which had to be determined from the agreement itself. Following the judicial view that amounts paid towards share capital or share application money do not amount to financial debt, the Tribunal held that no debt and default within the meaning of Section 7 were established. [Paras 6]

The Section 7 application was held not maintainable, as the amount advanced under the agreement was an equity investment and not a financial debt.

Final Conclusion: The appeal was dismissed. The Tribunal affirmed that the money advanced under the Subscription and Shareholders Agreement was towards acquisition of shares and warrants with attendant control rights, and not a financial debt capable of supporting initiation of CIRP under Section 7 of the IBC.

Financial debt and default - Section 7 admission where foundational loan documents are seriously disputed as forged or fabricated - Financial debt arising from disbursal into an unauthorised or fraudulent bank account - Doctrine of indoor management and suspicion of irregularity - multiple versions of the facility agreement and corporate guarantee, inconsistencies in dates and signatures, and board resolutions that did not align with the company records

Summary jurisdiction under Section 7 - Forged or fabricated foundational documents - Debt and default in the shadow of fraud allegations - HELD THAT: - The Appellate Tribunal held that the Appellant's reliance on the principle that establishment of debt and default mandates admission was misconceived on the facts of the case.

No reasons to quarrel and quibble with the well-settled legal proposition laid down by the Hon’ble Supreme Court in the judgment Innoventive Industries Limited[2017 (9) TMI 58 - SUPREME COURT] that admission of debt and default is sufficient for admission of a Section 7 petition. Basis the ratio of this judgment, the Appellant has claimed that the Adjudicating Authority cannot decline its jurisdiction under Section 7 of the IBC on grounds of allegation of fraud and forgery particularly when there is sufficient cogent documentary evidence of debt and default. It has been contended that unproven allegations of fraud, pending FIRs or civil suits cannot by themselves bar the admission of a petition under Section 7 of the IBC, hence, the Adjudicating Authority could not have refused adjudication by harping on the principles of summary jurisdiction of the Adjudicating Authority. But what the Appellant has clearly missed out is that the Adjudicating Authority has not accepted that this is a case of unqualified debt and default for it has proceeded to take note of the circumstances surrounding the purported disbursements made by the Appellant and recorded that these circumstances have consequential impact on debt and default.

It was contended that when no conclusive findings of any statutory/quasi-judicial body had come to surface which established the element of forgery and fabrication, merely on the basis of unilateral reports by hand-writing experts and/or by the KPMG in the present case, the Adjudicating Authority could not have summarily concluded the transaction documents and Board Resolutions to be fraudulent/forged documents while considering the present Section 7 petition.

In such circumstances, the controversy travelled beyond the limited summary jurisdiction under Section 7, and the Adjudicating Authority was justified in refusing to undertake what would effectively amount to an enquiry into fraud and genuineness of documents. [Paras 24, 25, 30]

The rejection of the Section 7 application on the ground that the foundational debt and default could not be summarily established in view of the surrounding allegations of fraud and fabrication was upheld.

Disbursal to fraudulent account - Binding financial debt - Indoor management and suspicious circumstances - HELD THAT: - The Appellate Tribunal agreed that valid disbursement creating a financial debt requires the money to reach the borrower and be utilised as such, and that mere advancement of monies to a third-party fraudulent account cannot automatically fasten liability on the corporate debtor or the guarantor. The Tribunal found the surrounding circumstances significant: multiple FIRs had been lodged, charge-sheet had been filed in some proceedings, employees connected with the banking transactions had been arrayed as accused, and the materials showed that Ramakant Pilani was alleged to have acted without authority on behalf of the borrower and guarantor.

The Hon’ble Supreme Court in Mahima Datla [2022 (5) TMI 928 - SUPREME COURT] which categorically held that the doctrine of indoor management cannot apply when there is suspicion of irregularity. It was emphatically asserted that when the circumstances surrounding the transaction are suspicious enough for any prudent party to make necessary inquiries, the Adjudicating Authority cannot be seen to wear blinkers to obvious fraudulent transactions. It has been asserted that the doctrine of indoor management is a shield for the innocent and not a sanctuary for the complicit, collusive or negligent parties and in the present case the doctrine of indoor management does not apply for the Appellant's conduct is not merely negligent but it is actively complicit and collusive. [Paras 26, 27, 28, 29]

The Tribunal held that no simpliciter admission under Section 7 was warranted, as the alleged disbursal to the unauthorised account did not conclusively establish a binding financial debt and the plea of indoor management was unavailable in the facts.

Final Conclusion: The Appellate Tribunal upheld the dismissal of the Section 7 petition. It held that, in view of the serious and documented disputes concerning the authenticity of the facility documents, guarantees, board resolutions and the bank account into which the money was disbursed, the alleged debt and default could not be summarily enforced under the IBC.

Revival of insolvency proceedings on breach of court-recorded consent terms - Exercise of inherent powers for restoration of appeal - Strict compliance with settlement terms - Entitlement to restoration of the disposed appeal and consequential revival of the insolvency proceedings on account of substantial and undisputed default under the consent terms that formed the basis of disposal. - HELD THAT: - The Tribunal held that the earlier disposal of the appeal and setting aside of the admission order were expressly founded on compliance with the Consent Terms and were not unconditional. The consent terms, read with the disposal order, reserved liberty to the Financial Creditor to revive the proceedings upon default. On the record, the Respondents had not disputed the defaults in payment; their defence rested only on later efforts to arrange funds through a proposed property sale. The Tribunal held that such subsequent negotiations, issuance of a provisional NOC, or expected third-party payments could not amount to waiver of earlier defaults, nor could they dilute obligations personally undertaken before the Tribunal. Since the breach of the repayment schedule was substantial and continuing, the very foundation of the settlement-based disposal failed, justifying exercise of inherent powers to recall the order, restore the appeal, and revive the CIRP. [Paras 31, 32, 33, 34, 35]

The restoration application was allowed; the order disposing of the appeal was recalled, the appeal restored to its original number, and the CIRP stood revived.

Final Conclusion: The Tribunal held that the settlement-based disposal order was conditional upon strict compliance with the consent terms, and the admitted defaults entitled the Financial Creditor to invoke the liberty earlier reserved. The appeal was restored and the insolvency proceedings against the corporate debtor were revived.

Interpretation of prior appellate directions - Listing before the same Bench for clarification of an earlier order -HELD THAT: - The Tribunal recorded that the dispute in the appeal turned on the meaning and effect of the earlier order dated 23.04.2026, the appellant asserting that the two interlocutory applications had to be disposed of before consideration of the plan approval application, while the respondents contended that only prior consideration was required. Since a clarificatory application on the interpretation of that very order had already been directed to be listed before Bench No. 1, the Tribunal held that, in the interest of justice, the present appeal should also be placed before the same Bench. Having regard to the appellant's apprehension that orders might meanwhile be pronounced by the Adjudicating Authority, the appellant was also directed to bring to its notice that the matter was under active consideration before Bench No. 1. [Paras 10, 11, 12, 13, 14]

The Registry was directed to list the appeal before Bench No. 1 along with the clarificatory application, and the appellant was directed to inform the Adjudicating Authority accordingly.

Final Conclusion: Holding that the present controversy depended upon the interpretation of the earlier appellate order and that a clarificatory application on that order was already listed before Bench No. 1, the Tribunal directed that this appeal also be listed before the same Bench. The appellant was further directed to apprise the Adjudicating Authority that the matter was under active consideration before the Appellate Tribunal.

Related party status of indirect holding company - Assignment of guarantor's debt - Security interest in immovable property of corporate debtor - Foreign exchange restriction on reimbursement to non-resident guarantor - Commercial wisdom of Committee of Creditors - Rejection of the claim relating to the HSBC facility - Statutory definition of related party under Section 5(24)(i) - Benefit of Notification No. FEMA.29/RB-2000 - Entitlement to obtain any post-facto approval of RBI with respect to amount of claim admitted in the CIRP and the amount allocated in the Resolution Plan to the Tropical

Related party - Step-down subsidiary - Control over board composition -HELD THAT: - The Tribunal held that Tropical held 63% shareholding in Leader Universal (Mauritius), and that entity in turn held 51.2% shareholding in the corporate debtor. Applying section 2(87) of the Companies Act through section 3(37) of the Code, the corporate debtor was a subsidiary controlled through another subsidiary of Tropical, and therefore fell within section 5(24)(i). The admitted shareholding structure also justified the finding of control for purposes of section 5(24)(l). The earlier BIFR status of the corporate debtor was held irrelevant to determination of related party status as on commencement of CIRP. [Paras 25, 26, 27, 28, 29]

The order treating Tropical as a related party was upheld.

HSBC guarantee claim - Subrogation claim - Secured debt rejection - HELD THAT: - The Tribunal found that the payment to HSBC had been made by Leader Cable Industry Berhad and not by Leader Berhad, and that no formal guarantee agreement had been executed between HSBC, Leader Berhad and the corporate debtor. Since Leader Berhad was neither the guarantor nor the payer in respect of the HSBC facility, it had no such debt to assign to Tropical. The rejection of the claim as secured debt was therefore justified. [Paras 30]

The rejection of the HSBC-related claim was sustained.

Secured creditor status - Security interest in immovable property - Restriction under FERA - HELD THAT: - The Tribunal held that the original security interest over the corporate debtor's assets had been created in favour of Indian lenders. A non-resident company could not acquire rights in immovable property in India without Reserve Bank permission under section 31 of FERA. Since no such permission was shown either for Leader Berhad or for Tropical, and no security interest had ever been registered in their favour, the security held by the Indian lenders could not automatically stand transferred to the non-resident guarantor or its assignee. The Tribunal therefore confined the disallowance to security interest in immovable properties and left the Monitoring Committee to consider whether any other security interest existed apart from immovable assets. [Paras 35, 37, 38, 73, 74]

Tropical was held not to be a secured creditor of the immovable properties of the corporate debtor, and the contrary treatment by the resolution professional stood modified to that extent.

Reimbursement to non-resident guarantor - Cap on assigned guarantee claim - Post facto RBI approval - HELD THAT: - Proceeding on the premise that the deed operated as an assignment-cum-subrogation, the Tribunal held that the assignable debt was the amount actually paid by Leader Berhad to the lenders. It rejected the view that the RBI notification dated 26.09.2000 was inapplicable, holding that the notification expressly capped reimbursement by a resident principal debtor to a non-resident guarantor at the rupee equivalent of the amount paid under the guarantee. A claim in CIRP for principal together with enormous interest could not be admitted contrary to that statutory restriction. The Tribunal further held that this was not a case of retrospective application, because the question arose at the stage of verification of claim during CIRP when the notification was already in force. It also rejected the contention that post facto RBI approval could later validate the excess claim, since the notification itself did not contemplate any permission to override the statutory cap. [Paras 61, 64, 65, 73, 74]

The admitted claim was confined to the principal amount actually paid by Leader Berhad, and no post facto RBI approval could be claimed to support admission beyond that amount.

Resolution plan approval subject to pending claim adjudication - Commercial wisdom of Committee of Creditors - Distribution mechanism under approved plan - HELD THAT: - The Tribunal held that the pending disputes regarding Tropical's claim did not invalidate approval of the resolution plan, and that the Adjudicating Authority had committed no error in making the plan subject to the outcome of the pending appeals. The CoC resolution providing that allocations relating to disputed claims be held pending final adjudication was treated as part of its commercial decision-making. In the absence of any ground within the limited appellate scope against plan approval, no interference was warranted. [Paras 70, 71, 72, 73, 74]

The challenge to the plan approval and the CoC distribution mechanism was rejected, though redistribution was directed to be worked out in line with the findings on Tropical's claim and security status.

Final Conclusion: The appeals by Tropical were dismissed, while Pegasus's appeal was partly allowed. Tropical's claim was confined to the principal amount actually paid by Leader Berhad, Tropical was held not to be a secured creditor in respect of the corporate debtor's immovable properties, and the approved resolution plan was affirmed subject to redistribution by the Monitoring Committee in accordance with these findings.

Invocation of personal guarantee before initiation of insolvency proceedings - Contractual mode of service of demand notice under guarantee deed - Existence of debt and default against personal guarantor - Contractual mode of service - Admission of facts - Knowledge versus technical service - Recommendatory report - Whether the Personal Guarantee executed by the Appellants were validly invoked before initiation of proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016, and whether the Adjudicating Authority rightly admitted the application against the Appellant-Personal Guarantor ? - HELD THAT: - It is to be noted that prior to the initiation of the proceedings u/s 95 of the Code, an application U/s 19 of the recovery of Debts Due to Banks and Financial Institutions Act, 1993, was filed before the debt Recovery Tribunal, Lucknow Bench, against the Corporate Debtor as well as the Appellants in their capacity of Personal Guarantor for the recovery of the loan along with costs and interests from the personal guarantors. The invocation letter and recall notice formed part of the proceedings before the DRT.

The statutory demand notice, the DRT proceedings and the subsequent enforcement actions all indicate that the Financial Creditor had consistently asserted its rights under the guarantee. The objection raised by the Appellant is therefore essentially technical in nature and does not dislodge the substantive fact that the guarantee had been enforced by the creditor.

The Tribunal held that, under Clause 3 of the guarantee deed, the real controversy was not whether demand upon the guarantor was necessary, but whether such demand had in fact been made. On the record, the financial creditor had relied upon the invocation letter dated 26.11.2021 much prior to the Section 95 proceedings; that invocation was also reflected in the DRT proceedings, the statutory demand notice in Form B specifically referred to and annexed the invocation notice, and the subsequent recall notice and recovery action formed part of a continuous course of enforcement. Clause 23 of the guarantee deed contractually governed service and proof of service, and once the parties had agreed that dispatch to the last known address and certification by a responsible officer would suffice, non-production of postal acknowledgments could not, by itself, defeat invocation. The Tribunal further found that the appellants had not disputed the correctness of the address and had, in their rejoinder, admitted the factual assertions regarding invocation of the guarantee, issuance and service of the recall notice, and service of the DRT proceedings with the invocation notice annexed. In that background, the objection as to service was treated as hyper-technical and insufficient to negate the substantive fact that the guarantee had been enforced before the statutory demand notice under Rule 7(1). The Tribunal also held that the report of the Resolution Professional was only recommendatory, and the Adjudicating Authority had independently considered the material before admitting the applications. The decision in SBI v. Deepak Kumar Singhania [2025 (4) TMI 455 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] was distinguished because, in the present case, invocation preceded the statutory demand notice. [Paras 72, 73, 74, 75, 76]

The challenge to admission failed, since the material on record sufficiently established prior invocation of the guarantees, valid service in terms of the contractual stipulation, and enforceable debt and default against the personal guarantors.

Final Conclusion: The Tribunal held that the financial creditor had validly invoked the personal guarantees before commencing proceedings under Section 95, and that service of the relevant notices stood established in terms of the guarantee deed and the surrounding record. The impugned orders admitting the applications and initiating the personal insolvency resolution process against both appellants were therefore upheld, and both appeals were dismissed.

Resolution applicant as financial creditor - Voting on own resolution plan - Commercial wisdom of Committee of Creditors - Priority of government dues under the Insolvency and Bankruptcy Code - First charge under Customs Act vis-a-vis waterfall mechanism - compliance of Regulation 38(1B) the Resolution Professional - Principle of nemo judex in causa - Clean slate doctrine - Limited judicial review under insolvency law

Resolution applicant as financial creditor - Voting on own resolution plan - Nemo judex in causa sua - HELD THAT: - The proviso to Section 30(5) has two parts. The first part says that the Resolution Applicant shall not have a right to vote on his own resolution plan. The second part of the proviso gives the exception to the norm laid down in the first part i.e. a financial creditor, if he is a resolution applicant, would have the right to vote on his own resolution plan.

The Appellate Tribunal held that the answer lay in the proviso to Section 30(5) itself, which creates an exception permitting a resolution applicant to vote where it is also a financial creditor. Once the statute expressly contemplates such participation, the principle of nemo judex in causa sua could not be invoked to override the legislative scheme. The Adjudicating Authority therefore erred in treating the approval of the plan as vitiated solely because the successful resolution applicant was also a member of the Committee of Creditors and voted on its own plan. In such a case, after approval by the Committee of Creditors with the requisite voting share, judicial scrutiny was confined to compliance with the statutory requirements of the Code and the CIRP Regulations. [Paras 14, 15, 16, 17, 19]

The rejection of the resolution plan on the ground of conflict of interest and alleged violation of the principle that no one should be a judge in his own cause was held unsustainable.

Priority of government dues under the Insolvency and Bankruptcy Code - First charge under Customs Act vis-a-vis waterfall mechanism - Secured operational creditor - HELD THAT: - The Appellate Tribunal held that the ratio in State Tax Officer vs. Rainbow Papers Ltd.[2022 (9) TMI 317 - SUPREME COURT] was confined to the statutory setting of Section 48 of the Gujarat VAT Act. By contrast, Section 142A of the Customs Act expressly makes the first charge subject to the Insolvency and Bankruptcy Code. Relying on Paschimanchal Vidyut Vitran Nigam Ltd. [2023 (7) TMI 831 - SUPREME COURT], the Tribunal held that the IBC, being the overriding enactment, prevails and the waterfall under Section 53 governs distribution. Government and statutory dues in the present case therefore fell below secured creditors and had to be treated as unsecured operational debt. [Paras 31, 32, 33, 34]

The finding treating Customs and SEBI as secured creditors was set aside, and their claims were held to rank as unsecured operational creditors under the Code.

Payment to dissenting financial creditor - Feasibility and viability of resolution plan - Judicial review of commercial wisdom - HELD THAT: - The Tribunal found that the plan expressly provided that the dissenting financial creditor would receive not less than the liquidation value and in priority to assenting financial creditors; the only ambiguity related to the time period of payment, which stood clarified as payment within thirty days from the effective date, and no infirmity survived on that count. The minutes of the seventh Committee of Creditors meeting showed that feasibility and viability were considered, and the plan itself contained projected financials and the resolution applicant's implementation capability; the Adjudicating Authority could not substitute its own assessment for the commercial wisdom of the Committee of Creditors. The property said to have been omitted from valuation was only a rented registered office and not an asset of the corporate debtor. The supposed inconsistency in Form-H was a misreading, since the entry of "Yes" denoted compliance with Regulation 38(1B), which was also affirmed in the plan. The alleged discrepancy between the figures in the plan and Form-H disappeared once the figure for unsecured financial creditors was distinguished from the total outlay. As to the absence of earlier Committee of Creditors minutes, the Information Memorandum and the RFRP, Regulation 39(4) required submission of the compliance certificate, performance security evidence and the minutes of the meeting approving the plan, and if any further material was required the Adjudicating Authority could have called for it. Since the adverse remarks against the resolution professional arose from these very findings, and those findings were found meritless, the remarks also could not stand. [Paras 39, 40, 41, 42, 43]

The resolution plan was found compliant on these counts, and the adverse remarks against the resolution professional were held unsustainable.

Final Conclusion: Both appeals were allowed. The order rejecting the resolution plan was set aside, the plan was approved, and the adverse remarks against the resolution professional, being founded on grounds that did not survive scrutiny, could not stand.

Pre-existing dispute in operational debt - Plausible contention requiring further investigation - Moratorium under insolvency law - Parallel insolvency proceedings against the same corporate debtor - existence of a pre-existing dispute regarding supply, quality, quantity, dispatch and the genuineness of the claimed operational debt - statutory scheme under sections 8 and 9

Pre-existing dispute in operational debt - Plausible contention requiring further investigation - Qualified reply to demand notice as notice of dispute - HELD THAT: - It is settled law that for purposes of Section 9 proceedings, all that the Adjudicating Authority is required to ascertain is whether there existed a plausible contention or a plausible dispute which requires investigation and not whether the defence raised would ultimately succeed on merits. The documentary material which has been placed on record clearly satisfies the threshold test of pre-existing dispute and therefore the Section 9 petition was liable to be rejected at the threshold.

Applying the test in Mobilox Innovations Pvt. Ltd.[2017 (9) TMI 1270 - SUPREME COURT], the Appellate Tribunal held that the material placed on record disclosed disputes which were neither spurious nor illusory. The contemporaneous emails and meeting minutes directly evidenced disputes relating to defective and expired goods, short supply, non-supply, dispatch discrepancies and rate issues, and the finding of the Adjudicating Authority that such communications were not addressed to the Operational Creditor was found contrary to the record. The Tribunal further held that the GST material and statements of the Operational Creditor's own officers disclosed admissions regarding paper transactions and wrongful input tax credit arrangements, which at least established a serious dispute as to the underlying transactions. The write-off of the receivables in the books of the Operational Creditor, as noticed in the CBI communication, was also treated as another circumstance showing that the claim could not be pursued in insolvency as an undisputed operational debt. The reply to the Section 8 demand notice, stating that accounts would be settled if any payable after verification and reconciliation, was held to be a conditional response and itself a notice of dispute rather than an unequivocal admission of liability. [Paras 25, 29, 32, 33, 34]

The admission of the first Section 9 petition was set aside, the defence of the Corporate Debtor having disclosed a bona fide pre-existing dispute requiring adjudication outside insolvency proceedings.

Moratorium under insolvency law - Parallel insolvency proceedings against the same corporate debtor - Effect of stay of admission order on moratorium - HELD THAT: - The Appellate Tribunal held that the determinative issue was jurisdiction, not debt and default. Referring to the statutory bar on institution or continuation of proceedings against the Corporate Debtor during moratorium, and considering the authorities cited, it held that interim stay of the earlier admission order did not extinguish, quash or obliterate the CIRP or the attendant moratorium. The stay only kept the earlier admission order in abeyance and did not revive the pre-admission position so as to permit a parallel insolvency admission. The Tribunal distinguished Mars Remedies Pvt. Ltd. Vs. BDH Industries Ltd. [2023 (6) TMI 418 - SUPREME COURT] as not authorising a second CIRP admission during the subsistence of an earlier CIRP, and accepted the principle that there cannot be two simultaneous CIRPs against the same corporate debtor. It concluded that the insolvency framework contemplates a single, consolidated CIRP, and that admission of the second Section 9 petition during the subsistence of the earlier proceeding was non est in law. [Paras 44, 45, 46, 47]

The second impugned order was held non est and set aside, with liberty to the Operational Creditor to file a fresh Section 9 application in accordance with law if occasion so arises.

Final Conclusion: Both appeals were allowed. The first Section 9 admission was set aside because the claim was shown to be subject to a genuine pre-existing dispute, and the second Section 9 admission was set aside as non est since a parallel insolvency proceeding could not be admitted against the same Corporate Debtor during the subsistence of the earlier CIRP.

Exclusion of provident fund and gratuity dues from liquidation estate - Workmen's dues for twenty-four months preceding liquidation commencement - Exclusion of time spent in litigation for computing workmen's priority dues - Recovery certificate for salary dues under waterfall distribution - seeking exclusion of period 1656 days which was after expiry of 330 days from the commencement of the CIRP

Exclusion of sums due to workmen and employees from provident fund, pension fund and gratuity fund from the liquidation estate depends on the existence of a segregated fund on the liquidation commencement date - HELD THAT: - The entitlement of gratuity and provident fund has been held to be statutory right of the workman and employee. The Hon’ble Supreme Court in Jaswant Singh Gill v. Bharat Coking Coal Ltd. [2006 (11) TMI 550 - SUPREME COURT], while dealing with gratuity held that payment of gratuity is not a charity but a statutory right provided in favour of the employee.

To accept the submission of the counsel for the Financial Creditor that since only on liquidation commencement date, no funds were in existence with the Corporate Debtor as the employees and workmen shall lose their entitlement to receive benefits from provident fund, pension fund and gratuity fund is to negate the rights of workmen and employees against the statutory scheme. Learned Counsel for the workmen is right in his submission that the expression used in Section 36(4)(a)(iii) that all sums due to any workmen or employee from provident fund, gratuity fund and pension fund are due centric and not asset centric. Thus, the mere fact that on the liquidation commencement date in designated fund sums is not available, the workmen, employees shall lose their rights to receive the payment is clearly contrary to the entire legislative scheme under the IBC.

The Appellate Tribunal held that Section 36(4)(a)(iii) protects all sums due to workmen and employees from provident fund, pension fund and gratuity fund, and that the provision is due-centric rather than asset-centric. It found that, unlike the earlier company law regime, the Code does not retain the requirement that such fund be "maintained by the company". The legislative scheme therefore excludes these dues from the liquidation estate and keeps them outside distribution under Section 53. The Tribunal rejected the contention that the right depends upon the physical existence of a segregated fund on the liquidation commencement date, holding that such an interpretation would negate the statutory entitlement of workmen and employees. It also relied on its earlier decision in the Jet Airways CIRP [2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], affirmed by the Supreme Court, and on the line of authority beginning with Moser Baer [2019 (8) TMI 915 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], including the Supreme Court's [2018 (10) TMI 312 - SUPREME COURT] restoration of the NCLT view in the Lanco matter, to hold that the liquidator remains liable to make payment of such dues notwithstanding absence of a separate fund. [Paras 48, 49, 53, 57, 58]

The direction requiring the liquidator to pay provident fund and gratuity dues and to treat them as outside the liquidation estate was upheld, and the financial creditors' challenge on this issue failed.

Exclusion of litigation period for computing twenty-four months' workmen dues - Liquidation commencement date - Workmen's priority under Section 53(1)(b) - HELD THAT: - The Appellate Tribunal held that the workmen were not seeking alteration of the statutory liquidation commencement date, but only exclusion of time lost in litigation for the limited purpose of calculating the twenty-four months' period under Section 53(1)(b). It found the Adjudicating Authority's reasoning erroneous because the prayer did not seek to change the liquidation commencement date and was not founded merely on equitable considerations. Relying on the principle recognised in ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta [2018 (10) TMI 312 - SUPREME COURT] that time consumed in litigation may be excluded where timelines would otherwise defeat the statutory object, the Tribunal held that prolonged litigation in the CIRP could not be allowed to reduce workmen's priority dues to zero. Since the CIRP had continued far beyond the maximum period and the delay was attributable to litigation, exclusion of 1656 days was necessary to give meaningful effect to the protection intended for workmen's dues under Section 53(1)(b). [Paras 64, 68, 70, 71, 74]

The workmen's appeal was allowed on this issue, and the liquidator was directed to recompute the twenty-four months' workmen dues by excluding 1656 days from the CIRP period and to take consequential action.

Recovery certificate for salary dues - Salary dues within workmen's dues - Waterfall distribution of admitted salary claims - HELD THAT: - The Appellate Tribunal held that the recovery certificate merely quantified salary dues for January to March 2019. Those dues fell within workmen's dues and did not acquire a separate status outside the liquidation estate merely because they were embodied in a recovery certificate. As the liquidator had already admitted the unpaid salary dues, the claim under the recovery certificate had to be dealt with under Section 53(1)(b) and not outside the liquidation process. [Paras 73]

The prayer to honour the recovery certificate outside the liquidation estate was rejected.

Final Conclusion: The appeals by the financial creditors were dismissed, and the direction to pay provident fund and gratuity dues outside the liquidation estate was upheld. The workmen's appeal was partly allowed by directing exclusion of 1656 days spent in litigation for computing the twenty-four months' workmen dues under Section 53(1)(b), while the claim to keep the recovery certificate for salary dues outside the liquidation estate was rejected.

Maintainability of the application under Section 60(5) - seeking to set aside the committee of creditors' decision under Section 21(9) and direct disclosure of creditor claim forms and supporting documents - HELD THAT:- The Tribunal directed filing of short notes on maintainability and merits with supporting judgments and reserved orders. In the resolution plan application, further particulars and explanations were directed to be furnished, and the matter was reserved; the remaining applications were directed to be listed on the next date.

Validity of penalty order - No Opportunity of hearing - contraventions relating to export realization, import documentation, and export advances - The Penalty order under FEMA was liable to be reconsidered in light of additional bank communications, documentary material, and explanations produced in appeal on export write-off, purpose code error, and related transactions, which had not been considered by the Adjudicating Authority. - HELD THAT: - The Tribunal noted that the record disclosed material relating to self-write off of export outstanding, an asserted inadvertent error in mentioning the purpose code for remittances, and subsequent e-mails received from authorised dealer banks, besides a further set of annexures and a detailed break-up sheet filed during appellate proceedings. Since these materials were not before the Adjudicating Authority when the impugned order was passed, and were relevant to the findings of contravention and penalty, the proper course was to remit the matter for fresh adjudication so that both sides could be heard and the entire material could be examined. [Paras 14, 15]

The impugned order was set aside and the matter was remanded for de novo adjudication after affording opportunity of hearing to both sides and considering the additional materials.

Final Conclusion: The appeals were disposed of by setting aside the penalty order and remanding the matter to the Adjudicating Authority for fresh decision on the basis of the additional material and submissions of both sides.

Penalty on Director for non-realisation of export proceeds - Vicarious liability under Section 42(1) - Resignation prior to relevant exports - Burden to establish role and responsibility of Director - Substantial part of the exports related to the period after his resignation and the complaint did not specify his role in the conduct of the company's business - day-to-day control - burden of proof - due diligence - personal role of directors - HELD THAT: - The Tribunal found that the appellant's resignation as director on 29.03.2001 was undisputed. On examination of the show cause notice, it was seen that 16 GR-1 Forms related to exports made after that date and, therefore, the appellant could not be made liable for non-realisation in those cases. As regards one more GR-1 Form, the prescribed period for realisation had not expired, and no penal consequence could follow before expiry of the statutory period. Thus, at the highest, liability could have been examined only with reference to a limited number of pre-resignation exports. The Tribunal then applied the principle that vicarious liability under Section 42 requires strict construction and that the department must establish that the person proceeded against was in charge of and responsible for the conduct of the company's business at the time of contravention. Referring to Girdharilal Gupta [1970 (8) TMI 87 - SUPREME COURT], Umesh Modi [2014 (8) TMI 607 - DELHI HIGH COURT] and Raman Narula [2014 (4) TMI 585 - DELHI HIGH COURT], the Tribunal held that such liability cannot be fastened in the absence of a factual foundation. In the present case, the impugned order itself recorded that the complaint did not mention the specific role of the respective directors and none of the relied upon documents showed that the appellant was responsible for the unrealised export proceeds. The Directorate had therefore failed to discharge the primary burden necessary to sustain vicarious liability. [Paras 45, 46, 47, 48, 49]

The penalty imposed on the appellant was set aside and cancelled.

Final Conclusion: The appeal was allowed. The Tribunal held that the statutory conditions for fastening vicarious liability on the appellant as director were not established and, accordingly, the penalty levied on him stood cancelled.

Permission to travel abroad for medical treatment - Right to travel abroad of an accused under bail conditions - Assessment of flight risk and bona fide medical exigency - Bona fide medical exigency - Seeking permission to travel abroad/UAE on future dates to avail necessary follow-up medical treatment as may be prescribed by his doctor at Khan Kinetic Treatment Orthopedic Spine Centre, Abu Dhabi, UAE - Serious money-laundering prosecution - Whether the petitioner has made out an exceptional, bona fide case of medical exigency that outweighs the state's interest in the uninterrupted progression of the criminal trial ? -HELD THAT: - The Court held that, though the right to travel abroad is part of personal liberty, it is not absolute in the case of an accused facing criminal prosecution and must be balanced against the nature of the allegations, the conduct of the accused, and the risk of evading the process of law. Applying that test, the Court found that the petitioner is facing prosecution in a serious money-laundering case and that permission to travel abroad could prejudice and delay the ongoing trial involving multiple accused. On the medical aspect, the Court found no cogent material to show that the proposed KKT treatment in UAE was the only available line of treatment, that equivalent treatment was unavailable in India, or that refusal of permission would endanger the petitioner's life or cause grave medical consequences. The Court further held that personal preference for treatment in a particular foreign country cannot override the requirements of criminal justice when comparable medical facilities are available domestically. In these circumstances, the apprehension of flight risk and disruption of trial was accepted as well-founded, and no illegality or perversity was found in the Special Court's refusal. [Paras 17, 18, 19, 20, 21]

Permission to travel abroad was rightly refused, and the challenge to the Special Court's order failed.

Final Conclusion: The petition was dismissed. The Court upheld the refusal to permit foreign travel, holding that the petitioner had not shown a genuine medical exigency unavailable in India and that, in the circumstances of a serious money-laundering prosecution, the apprehension of flight risk and disruption of trial outweighed the request.

Jurisdiction of Special Court under the PML Act to try scheduled offence on committal - Committal of scheduled offence under Section 44(1)(c) of the PML Act - Overriding effect of the PML Act - HELD THAT: - Construing Sections 44(1)(a) and 44(1)(c) of the PML Act, the Court held that an offence under Section 4 and the connected scheduled offence are triable by the Special Court constituted for the area concerned, and where cognizance of the scheduled offence has been taken by a court other than the Special Court taking cognizance of the money-laundering complaint, that court is required, on proper application, to commit the scheduled offence case to the Special Court. The Court further held that, by reason of Section 71, the provisions of the PML Act have overriding effect over anything inconsistent in any other law. On that construction, a Special Court under the PML Act, upon committal under Section 44(1)(c), is legally competent and has jurisdiction to try the scheduled offence also, notwithstanding that it is not the separately notified court for trial of such scheduled offence. [Paras 10, 11, 12]

The transfer of the scheduled offence case to the Special Court dealing with the PML Act case was upheld and the challenge to the impugned order failed.

Final Conclusion: The Court held that, upon committal under Section 44(1)(c) of the PML Act, the Special Court under that Act has jurisdiction to try the connected scheduled offence as well. The petition challenging the transfer order was therefore dismissed.

Provisional attachment -Properties acquired before the period of the scheduled offence - attached as proceeds of crime or as value of proceeds of crime - Evidentiary value of statements recorded under Section 50 PMLA - Reason to believe for provisional attachment - Tracing of tainted property - retracted statements - commission derived from the fraudulent gold-loan transactions - Nexus with criminal activity

Proceeds of crime - Value of property - Prior-acquired property - Attachment of the appellants' movable and immovable properties as proceeds of crime or as the value - some properties were acquired prior to the scheduled offence and were disclosed in income-tax records. - HELD THAT: - The Tribunal held that the impugned order contained categorical findings that most of the immovable properties were purchased during the offence period from the commission identified as proceeds of crime, and that even in respect of properties acquired earlier, the loans raised for construction or purchase had been repaid during the offence period out of the tainted funds. The plea based on disclosure in income-tax returns was rejected, as mere declaration of income as legitimate does not alter its character where the allegation is that tainted funds were projected as untainted. On the legal issue, the Tribunal held that attachment is not confined only to property directly purchased from the tainted money, and that even property acquired earlier or from otherwise untainted sources can be attached as the value of the proceeds of crime where the direct or indirect proceeds are unavailable or have been made to disappear. [Paras 14, 15, 16, 17]

The challenge to attachment of the properties on the ground of lack of nexus, prior acquisition, or disclosure in income-tax records was rejected.

Statements under Section 50 PMLA - Retracted statement - HELD THAT: - The Tribunal found that the statement contained material admissions and that there was no formal retraction, but only a later submission before the Adjudicating Authority disputing voluntariness. It treated the so-called retraction as an afterthought and held that, in law, statements recorded under Section 50 are admissible and can be relied upon in proceedings under the Act, including retracted statements where supporting material exists. [Paras 18]

The appellant's objection to reliance on the Section 50 statement was rejected.

Reason to believe for provisional attachment - Property already in court custody - HELD THAT: - The Tribunal held that attachment under Section 5(1) requires recorded reasons to believe not only that the property represents proceeds of crime, but also that it is likely to be concealed, transferred or otherwise dealt with so as to frustrate confiscation. Since the security deposit was already in the custody of the criminal court, the requisite material for such apprehension was lacking. Following its earlier view, the Tribunal held that recording reasons to believe in such a situation reflected non-application of mind to the statutory condition. [Paras 19, 20]

The impugned order was set aside qua the security deposit with the Judicial Magistrate, with liberty to the respondent to act afresh if circumstances giving rise to apprehension under Section 5(1) arise.

Final Conclusion: The appeals were partly allowed only to the limited extent that the attachment of the security deposit lying with the Judicial Magistrate was set aside for want of the statutory basis under Section 5(1). In all other respects, the confirmation of attachment was sustained and the adjudication order stood modified only to that extent.

Retention of seized cash and electronic devices under search proceedings -Reason to believe for search and retention- possession of proceeds of crime - legality of the search​​​​​​​ and retention despite death of person searched - requirement of section 17 for recording of reasons

Retention of seized cash - Credibility of explanation for source of cash - HELD THAT: - The Tribunal found material discrepancies between the appellant's statement recorded on the date of search and the subsequent explanation advanced to justify the seized cash. In the contemporaneous statement, the appellant attributed the cash to a transaction with one person, whereas the documents later relied upon referred to another person. The agreements produced were unregistered, were not recovered during search, and were treated as lacking credibility in view of the appellant's own statement that the sale agreement was not available at that time. The later explanation also did not match the terms of the documents relied upon. On this reasoning, the Tribunal rejected the explanation for the cash and upheld retention confirmed by the Adjudicating Authority. [Paras 25]

The challenge to retention of the seized cash failed and the confirmation order was upheld.

Reason to believe for search under PMLA - Requirement of reasons by Adjudicating Authority at retention stage - HELD THAT: - The Tribunal held that the decision relied upon by the appellant concerning provisional attachment was inapplicable to a seizure under the search provision. It found no material placed to show that reasons had not been recorded for the search, and held that the provision requires recording of reasons and forwarding them to the Adjudicating Authority, but does not mandate disclosure of such reasons to the person searched. The Tribunal further held that, for proceedings before the Adjudicating Authority, the statutory language does not require recording of reasons in the same manner, and that the conduct of adjudication on the original application indicated satisfaction with compliance of the statutory requirements. The contention was therefore treated as conjectural and without merit. [Paras 27, 28]

No infirmity was found in the search or in the retention proceedings on the ground of absence of reason to believe.

Search of person not arraigned as accused - Death of person searched - Effect of supplementary complaint filed after death - HELD THAT: - The Tribunal held that there is no legal requirement that search can be conducted only against a person shown as an accused in the scheduled offence or in the money-laundering offence, since even a non-accused may be in possession of proceeds of crime. It also noted that the appellant was alive when the search was conducted and that prosecution proceedings against other accused persons had already been filed. The subsequent filing of a supplementary complaint after the appellant's death was held to have no bearing on the validity of the earlier search proceedings. As to the seized property, the Tribunal held that the Special Court is empowered to pass appropriate orders in the contingencies contemplated by the statute, including death of an accused, and that such subsequent circumstances did not furnish a ground to interfere with the confirmation of retention. [Paras 23, 29, 30]

The objection based on the appellant's death and the later supplementary complaint was rejected.

Final Conclusion: The Tribunal dismissed the appeal and upheld the order permitting retention of the seized cash, documents and electronic media. It found no credible explanation for the seized cash, no merit in the challenge to the statutory satisfaction underlying the search and retention, and no effect on the validity of those proceedings from the subsequent death of the person searched.

Extended period of limitation - Revenue neutrality - amounts booked towards labour, repair and maintenance, and freight and cartage - classified respectively asmanpower supply, works contract service, and goods transport agency service for reverse charge levy - Cash refund under transitional provisions - demand for the earlier period - non-payment of service tax is by reason of fraud or collusion or wilful mis-statement or suppression of facts or violation of the Act or Rules with an intent to evade payment of service tax

Extended period of limitation - Revenue neutrality - Reverse charge service tax - service tax demand raised under reverse charge for the period covered by the first show cause notice - HELD THAT: - The Tribunal held that a demand beyond the normal limitation period under section 73 of the Finance Act, 1994 could be sustained only if the non-payment was by reason of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax. In a reverse charge case where the assessee, upon payment of service tax, could have immediately availed CENVAT credit and utilised it, the situation was revenue neutral. In such circumstances, intent to evade could not be alleged. Since the entire period covered by the first show cause notice fell beyond the normal period, the order confirming that demand could not be sustained. [Paras 5]

The demand, interest and penalties arising from the first show cause notice were set aside, and the appeals against that order were allowed.

Cash refund under transitional provisions - Reverse charge after GST transition - HELD THAT: - The Tribunal held that, although the liability had to be examined under the Finance Act, 1994 and the CENVAT Credit Rules, the proceedings were initiated after the introduction of GST, when CENVAT credit was no longer available. By reason of section 142(7)(b) of the CGST Act, any amount admissible to the claimant in such proceedings had to be refunded in cash. Therefore, if any service tax liability under reverse charge for the relevant period was ultimately determined and paid, the assessee would be entitled to refund of the entire amount in cash. [Paras 8, 9]

Any service tax determined as payable in the remanded portion was directed to be refundable to the assessee in cash under the transitional provision.

Reverse charge liability on manpower supply - Nature of contract - Remand for factual verification - HELD THAT: - The Tribunal held that the nature of the service had to be ascertained from the contract. Payments to petty contractors for execution of specified work, such as earth work, brick work or flooring work, were payments for completion of work and not for supply of manpower; hence such contracts could not be treated as manpower supply service. Likewise, wages paid by the assessee to its own regular or ad hoc labourers could not be treated as receipt of manpower supply service. At the same time, the Tribunal found substance in the departmental submission that where wages in the names of several labourers were received by a single person, factual verification was necessary to determine whether that person had in fact supplied manpower, and, if so, the corresponding tax liability under reverse charge. [Paras 14, 18]

The demand under manpower supply was set aside except to the limited extent of amounts paid in the names of various labourers and received by one person, which was remanded for fresh determination.

Works contract under reverse charge - Pure repairs - Services from body corporate - HELD THAT: - On the material accepted by the Tribunal, expenditure representing pure purchase of maintenance items was not consideration for any service. Pure repairs, without the elements necessary to constitute a works contract, could not be taxed as works contract service under reverse charge. Further, where the services were received from body corporates, reverse charge did not apply; and, for the limited amount received from service providers other than body corporates, the assessee had already discharged service tax. On this basis, the demand under this head was found unsustainable. [Paras 22]

The demand under works contract service was set aside.

Goods transport agency service - Consignment note - HELD THAT: - The Tribunal held that transport-related expenditure, by itself, did not attract service tax under the category of goods transport agency service. Liability under reverse charge would arise only where a goods transport agency was involved and a consignment note was issued. In the absence of that essential requirement, the demand could not be sustained. [Paras 24]

The demand under GTA service was set aside.

Final Conclusion: The appeals against the first order were allowed in full on limitation, the extended period having been held inapplicable in a revenue neutral reverse charge case. In the appeal against the second order, the demand survived only to the limited extent remanded for verification of whether one person receiving wages on behalf of several labourers acted as a manpower supplier; the remaining demands and the penalty were set aside, and any amount ultimately paid was held refundable in cash under the transitional provision.

Service tax demand based on mismatch between ST-3 returns and income-tax return - Suppression of gross receipts in ST-3 returns - Extended period of limitation - Service tax liability of sub-contractor - Penalty for short-payment of service tax - higher receipts reflected in the income tax return as compared with the ST-3 return - Suppression of Facts - Intent to Evade Tax

Mismatch between ST-3 returns and income-tax return - Declaration of gross receipts in ST-3 returns - Works contract receipts reflected in Form 26AS - HELD THAT: - The Tribunal held that the appellant was required to declare in the ST-3 returns the gross amount charged or received for the services and only thereafter claim admissible deductions or abatements in the prescribed manner. The case was distinguished from Quest Engineers & Consultant Pvt. Ltd. [2021 (10) TMI 96 - CESTAT ALLAHABAD], since the present demand was not founded merely on Form 26AS, which is maintained for income-tax purposes, but on a comparison between the appellant's own income-tax return and the ST-3 returns. The Tribunal found that, after the shift to accrual-based levy under the Point of Taxation regime, the receipts disclosed in the income-tax return could validly be used to test the correctness of the ST-3 declarations. It further held that the appellant had not properly disclosed the gross receipts in the ST-3 returns and could not defeat the demand by contending that abatements had been claimed without first making the prescribed declaration of gross value. The contention that the amount received from NKG Infrastructure represented refund of security was also rejected in view of the deduction of TDS under section 194C. [Paras 4]

The demand on merits was upheld.

Service tax liability of sub-contractor - Payment of tax by main contractor - Revenue neutrality - HELD THAT: - Relying on the Larger Bench decision in Melange Developers Private Limited [2019 (6) TMI 518 - CESTAT NEW DELHI-LB], as followed in Om Sai Fabricators [2022 (10) TMI 60 - CESTAT MUMBAI], the Tribunal held that a sub-contractor providing taxable service does not escape service tax liability merely because the main contractor has discharged tax on the main contract. The legal principle applied was that the taxable service rendered by the sub-contractor remains independently taxable, and the possibility of cascading is addressed through the Cenvat credit mechanism rather than by exempting the sub-contractor from levy. The plea of revenue neutrality or payment by the main contractor was therefore held to be of no avail. [Paras 4]

The plea that no tax was payable by the appellant because the main contractor had paid service tax was rejected.

Extended period of limitation - Suppression of gross receipts - Penalty under Sections 78 and 77(2) - HELD THAT: - The Tribunal found that the appellant was a registered assessee, was filing ST-3 returns, yet had declared gross receipts in those returns substantially below the receipts disclosed in the income-tax return. It held that when the statute and the return format require disclosure of gross receipts in a particular manner, non-disclosure of the actual gross amount constituted deliberate suppression with intent to evade payment of service tax. The Tribunal also rejected the submission that no investigation had been conducted, noting that information had been called for and summons had been issued, but the appellant failed to respond, and could not thereafter rely on its own default. On the limitation objection based on the show cause notice having been issued beyond five years, the Tribunal declined to accept the contention and followed Brunda Infra Pvt. Ltd.[2025 (1) TMI 299 - TELANGANA HIGH COURT] to hold that the Supreme Court's COVID-19 orders extending limitation applied to such proceedings. Since suppression with intent to evade was found established, interest followed as a statutory consequence, and the penalty under Section 78 was upheld. The penalty under Section 77(2) was also sustained for failure to correctly furnish the prescribed particulars in the ST-3 returns. [Paras 4]

The demand was held to be within limitation under the extended period, and the penalties and interest were upheld.

Final Conclusion: The Tribunal dismissed the appeal and upheld the modified demand of service tax for 2014-15 with interest, extended limitation, and penalties. It held that the appellant had suppressed gross receipts in the ST-3 returns, that the demand based on the appellant's income-tax disclosures was sustainable, and that payment of tax by the main contractor did not absolve the sub-contractor of liability.

Service tax exemption for railway projects - Meaning of railways under exemption notification - Whether the railway is for public or private purpose for the use ? - HELD THAT: - The Tribunal held that the sole controversy was whether service tax was leviable on a railway project. Following the earlier decision in the appellant's own case [2025 (11) TMI 1442 - CESTAT CHANDIGARH], and the reasoning extracted therein from Konkan Railway Corporation Ltd. [2023 (6) TMI 1001 - CESTAT MUMBAI]upheld by the Hon'ble Supreme Court [2023 (8) TMI 128 - SC ORDER], it held that Notification No. 25/2012 did not permit any artificial distinction between railways for private purpose and railways for public use. Since neither the notification nor the Finance Act, 1994 defined 'railway' in a manner restricting the exemption, and the earlier coordinate Bench had already held the exemption to be available to railways irrespective of such distinction, the same ratio was applied and the impugned order was found unsustainable. [Paras 6, 7, 8]

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

Final Conclusion: The Tribunal held that service tax was not leviable on the railway project and that no distinction could be drawn between private and public railways for denying the exemption. Applying the earlier decision in the appellant's own case, it set aside the impugned order and allowed the appeal with consequential relief.

Service tax demand based on Form 26AS-ST-3 mismatch - Exemption for construction, repair and maintenance of roads and bridges for governmental authorities - Non-taxability of supply of goods under service tax - Extended period of limitation - Suppression of facts - Works contract exemption

Demand based on mismatch between Form 26AS income figures and ST-3 returns without identifying the actual taxable service or conducting an enquiry -HELD THAT: - The Tribunal found that the demand had been raised merely on the basis of differential figures appearing in Form 26AS and the ST-3 returns. No investigation was undertaken to ascertain what taxable service had in fact been provided. It further noted that, in reply to the show-cause notice, the appellant had furnished details showing that the services were in relation to construction, repair and maintenance of roads and bridges for use by the general public on behalf of governmental authorities, which were covered by Entry 13(a) of Notification No. 25/2012-ST. In the absence of any factual inquiry establishing taxable service liability, and in view of the exemption shown from the record, the confirmation of demand was held to be without basis. [Paras 6, 7, 9]

The service tax demand on the differential receipts was held unsustainable and was set aside in full.

Non-taxability of supply of goods under service tax - HELD THAT: - The Tribunal specifically recorded that the amount received from the Executive Engineer, Morigaon E&D Division was towards supply of goods. Since the receipt related to supply of goods and not to rendition of service, no service tax was payable on that component. [Paras 8, 9]

The component representing supply of goods was held non-taxable under service tax.

Final Conclusion: The Tribunal held that the demand, having been raised solely on Form 26AS-ST-3 mismatch without establishing the taxable nature of the receipts, could not be sustained. The receipts relating to exempt road and bridge works for governmental authorities and to supply of goods were not liable to service tax; accordingly, the entire demand and penalties were set aside.

Tour operator service - Passenger transport under agreement with tourism corporation - Operation of buses from point to point without common tour arrangement - Service tax on buses operated under an agreement with the Rajasthan Tourism Development Corporation - HELD THAT: - The Tribunal followed its earlier decision in the appellant's own case [2026 (1) TMI 1517 - CESTAT NEW DELHI] and held that operation of buses from point to point under the arrangement with the Rajasthan Tourism Development Corporation did not amount to a taxable tour operator service. The determinative reasoning adopted in the earlier order, and accepted again in the present appeal, was that where passengers are transported on pre-fixed fare from one destination to another without a common contract or organised tour arrangement, the activity is in the nature of passenger transport and not operation of tours. The mere existence of an agreement with the tourism corporation, which provided ancillary accommodation facilities to passengers, did not alter the character of the appellant's service into that of a tour operator. [Paras 4, 5]

The demand of service tax, with interest and penalty, under tour operator service was unsustainable and the impugned order was set aside.

Final Conclusion: Following the earlier decision in the appellant's own case, the Tribunal held that the bus operations carried on under the arrangement with the Rajasthan Tourism Development Corporation were not taxable as tour operator service. The impugned order confirming service tax, interest and penalty was therefore set aside and the appeal was allowed.

Service tax valuation from debtors balance - Exclusion of service tax element from gross service charges - VCES immunity from reopening of declared tax dues

Demand of service tax raised from the closing balance of debtors - Without deducting the service tax element from the gross service charges and labour charges received - HELD THAT: - The Tribunal held that the debtors balance, being the principal ledger balance, represented a gross amount inclusive of VAT as well as service tax. Since the adjudicating authority had deducted the VAT component but had not deducted the service tax component from the gross service charges or labour charges, the taxable value was wrongly arrived at. The Tribunal found that if the service tax element was excluded from the gross charges, no demand survived. The correct principle applied was that service tax has to be deducted from the gross charges to determine the actual service tax liability. [Paras 5]

The demand confirmed on this basis, along with interest and penalty, was set aside.

VCES immunity from reopening of declared tax dues - Service tax rate difference for period covered by VCES declaration - HELD THAT: - The Tribunal found that the appellant had already paid the declared tax dues under the VCES before issuance of the show cause notice and that payment had been appropriated by the competent authority. It held that once the scheme had been availed for the period covered by the declaration, the matter could not thereafter be reopened in proceedings under the Chapter merely because a short payment was later noticed on account of rate difference. The Tribunal further relied on section 108(1) of the Finance Act, 2013 to hold that upon payment of the declared dues, the declarant obtains immunity from penalty, interest and other proceedings under the Chapter. The absence of issuance of VCES-3 was not treated as permitting reopening against the declarant in the facts of the case. [Paras 6]

The demand on account of the rate difference, with interest and penalty, was held unsustainable and was set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside both components of the service tax demand with interest and penalty. It held, first, that taxable value could not be computed from gross debtors balance without excluding the embedded service tax element, and secondly, that dues covered by a VCES declaration could not be reopened on a later rate-difference basis.

Benefit of exemption claim under Notification No. 25/2012-ST - Correlation of Form 26AS with work orders- Reverse charge mechanism - Goods Transport Agency liability on freight reimbursement - Royalty on assignment of rights to use natural resources prior to 01.04.2016 -

Demand based on Form 26AS - Works contract exemption for Government works - without correlating Form 26AS with the underlying work orders - HELD THAT: - The Tribunal found that the demand had been raised on the basis of Form 26AS and that the appellant had specifically claimed non-taxability for contracts falling within the exemption entries and for contracts stated to have been executed prior to the cut-off date relied upon by it. Since adjudication of that controversy depended upon matching the Form 26AS figures with the actual work orders and the contracts identified by the appellant, the matter required factual verification at the adjudication stage rather than affirmance of the demand on the existing record. [Paras 16, 17]

The impugned order was set aside on this aspect and the matter was remanded to the adjudicating authority to verify the appellant's claim by correlating Table A and Table B contracts with the work orders and Form 26AS.

Goods Transport Agency service - Consignment note requirement - Rail freight taxability - HELD THAT: - The Tribunal did not adjudicate the taxability of the transportation demand on merits. It held that the relevant facts had to be verified, namely whether service tax on railway freight had already been paid by the railways, whether goods transported through private vendors were supplied to the appellant inclusive of freight, and whether any consignment note had been issued to the appellant. In the absence of such verification, the demand could not be sustained as confirmed. [Paras 18]

This issue was remanded to the adjudicating authority for verification of the factual conditions bearing on Goods Transport Agency liability.

Royalty on natural resource rights - Assignment of rights prior to 01.04.2016 - HELD THAT: - Following Tirupati Builders Pvt. Ltd. v. CCE [2026 (2) TMI 432 - CESTAT NEW DELHI] the Tribunal held that royalty paid to the Government for assignment of rights to use natural resources is not taxable where the rights had been assigned before 01.04.2016. Since the applicability of that principle turned on the date on which such rights were allowed to the appellant, the adjudicating authority was required to examine that fact before determining the demand. [Paras 19]

The royalty demand was remanded for examination of whether the appellant's rights to use natural resources had been granted prior to 01.04.2016.

Final Conclusion: The Tribunal set aside the impugned order and remanded the matter for fresh verification on the works contract and transportation demands, and also for factual examination of the appellant's claim regarding royalty in the light of the Tribunal's earlier decision. All issues were kept open.

Service tax exemption for services relating to transmission or distribution of electricity - Entitlement for benefit of notification 45/2010-ST issued under section 11C and Notification No.11/2010-ST under section 83 - HELD THAT: - The Tribunal held that the adjudicating authority had adopted an unduly narrow reading of the notifications. The scope of the notifications extended to any services provided in relation to transmission and distribution of electricity, and not merely to services rendered by transmission or distribution companies in their own capacity. Since it was not disputed that the appellant's activities were directly relatable to transmission or distribution of electricity, the services fell squarely within the ambit of the notifications issued under section 11C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994. On that basis, the demand and penalty could not be sustained. [Paras 6, 7]

The impugned order confirming service tax and equal penalty was set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that the appellant's services, being directly related to transmission or distribution of electricity, were covered by the notifications granting non-levy of service tax. The contrary view of the adjudicating authority was rejected, and the demand with penalty was set aside.

CENVAT credit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Grounds beyond show cause notice - Determination of tax dues by Designated Committee

CENVAT credit under SVLDRS - Grounds beyond show cause notice - Delivery at unregistered premises - HELD THAT: - The Court found that, after remand, the Designated Committee itself concluded that for the periods in question there was no time limit for availment of the credit and that the invoices were prior to the later amendment introducing such restriction. Once that conclusion was reached, the Committee could not deny the credit on a different ground. Rule 9 of the CENVAT Credit Rules, 2004 did not make delivery of goods at the registered place of business a pre-condition for availment of credit. The impugned order was also defective because the ground on which credit was rejected was not the ground proposed in the show cause notice. On that basis, the rejection of the credit claim was held to be erroneous. [Paras 5, 6, 7, 8, 9]

The impugned order was set aside, and the Designated Committee was directed to proceed on the basis of the declaration and issue the discharge certificate under the Scheme.

Determination of tax dues by Designated Committee - Hearing under SVLDRS - HELD THAT: - The Court held that Section 127 empowers the Designated Committee to examine the amount estimated by the declarant and either accept it or provide its own estimate. Where the Committee's estimate differs from that of the declarant, the Scheme contemplates a hearing before a decision is reached. Therefore, the Scheme envisages a process of determination by the Committee, even if not a full-fledged adjudication. The contention was also untenable because, in the present case, the Committee had in fact undertaken such determination by partly allowing the CENVAT credit claim. [Paras 8]

The Designated Committee was held competent to determine the amount payable under the Scheme, subject to acting within the scope of the show cause notice and the Scheme.

Final Conclusion: The Court held that the Designated Committee wrongly denied the petitioner's CENVAT credit on a ground not contained in the show cause notice and not supported by Rule 9 of the CENVAT Credit Rules. The impugned order was set aside, and the Committee was directed to act on the petitioner's declaration and issue the discharge certificate under the Sabka Vishwas Scheme.

Penalty for alleged abetment of wrongful availment of CENVAT credit - Clandestine manufacture and clearance - evidentiary standard - Bogus invoicing allegations - Assumption and presumption - HELD THAT: - The issue is no longer res integra. Subsequent to the decision of the Allahabad Bench of the Tribunal [2017 (12) TMI 1430 - CESTAT ALLAHABAD], in favour of the manufacturers/ exporters/ dealers in Meerut Commissionerate, this Bench in a plethora of cases has allowed the appeals of many appellants.

The Tribunal held that the controversy was already covered by a consistent line of earlier decisions arising from the same investigation. Those decisions had found that the allegation of bogus procurement of raw material, non-manufacture, and fictitious clearances by the Jammu units rested on assumption and presumption rather than concrete evidence. Once the charge that the Jammu-based units had not manufactured or cleared the goods failed for want of corroborative material, the consequential allegation that the buyers had wrongly availed credit on such supplies also necessarily failed. The Tribunal further emphasised that a charge akin to clandestine activity must be supported by tangible evidence and not by generalised suspicion, and that the Department could not, at the appellate stage, attempt to sustain the case on facts and records not forming part of the impugned proceedings. [Paras 5, 7]

The penalties imposed on the appellants were set aside and all the appeals were allowed with consequential relief.

Final Conclusion: Following the earlier decisions arising out of the same investigation, the Tribunal held that the Department had failed to establish, by concrete evidence, that the Jammu-based units had not manufactured and supplied the goods. The very foundation for alleging wrongful availment of credit by the buyers having failed, the penalties on the present appellants were set aside and the appeals were allowed.

Exclusion of time spent before wrong forum - Condonation of delay in appeal - Absence of appeal preamble in adjudication order - short payment of refund - Exclusion of Time - Bona Fide Mistake - Wrong Forum - HELD THAT: - The Tribunal found that the refund order served on the appellant did not contain the mandatory preamble specifying the forum, form and time-limit for appeal, and accepted that this deprived the appellant of proper notice of the appellate remedy. It further noted that the appellant had, without any response from the authorities, pursued the grievance of short payment of refund before the Deputy Commissioner and thereafter addressed the Commissioner on the same issue. Applying the principle recognised in M.P. Steel Corporation [2015 (4) TMI 849 - SUPREME COURT], and noticing that the same view had been reiterated in Kamdhenu Ispat Ltd. [2015 (9) TMI 1543 - CESTAT NEW DELHI], the Tribunal held that the period spent in bona fide pursuit of relief before the wrong forum was liable to be excluded. On such exclusion, the appeal before the Commissioner (Appeals) fell within the condonable statutory period. [Paras 11, 12, 13]

The delay was condoned and the matter was remanded to the Commissioner (Appeals) for decision on merits in accordance with natural justice.

Final Conclusion: The Tribunal held that, after excluding the time bona fide spent by the appellant in pursuing rectification before the wrong forum and considering the absence of the prescribed appeal preamble in the refund order, the appeal before the Commissioner (Appeals) was within the condonable period. The impugned order rejecting the appeal as time-barred was therefore not sustained, and the matter was remanded for decision on merits.

Rule of consistency - Selective challenge by revenue - Input tax credit on furnace oil used in manufacture - Pick and choose - Estoppel - Finality of unchallenged orders - Change of opinion - Whether the Karnataka Appellate Tribunal has erred in passing the impugned order, holding that there is no error on the part of the appellant in determining inadmissible input tax credit for purchase of Furnace oil, which is purchased both locally and interstate ? - HELD THAT: - The Court held that, before examining the correctness of the computation methodology on merits, it was material that the assessee's method of computing input tax rebate on furnace oil had already been upheld by the Tribunal for several other assessment years in the assessee's own case [2016 (11) TMI 1316 - KARNATAKA HIGH COURT] and the revenue had not questioned those decisions, while challenging only the order for 2008-09. Applying the principle that the revenue cannot pick and choose between identical matters after accepting the same position in earlier years, the Court held that the revenue was bound by consistency and estopped from taking a contrary stand for the year in question. On that ground alone, the revision petition was liable to fail, without any further examination of the computation methodology. [Paras 14, 15]

The substantial question of law was answered against the revenue, and the Tribunal's order was confirmed.

Final Conclusion: The revision petition was dismissed. The Court declined to reopen the dispute on the merits of the input tax credit computation, holding that the revenue, having accepted the same methodology in the assessee's own cases for other years, could not selectively challenge it for 2008-09.

Quashing of criminal proceedings - import and export of diverse commodities - Forgery by maker of false document - Cheating in commercial and fiscal disputes - Abuse of criminal process for collateral fiscal advantage - Essential ingredients of cheating, forgery, cheating by personation and criminal conspiracy

Inherent jurisdiction - Forgery by maker of false document - Absence of original disputed documents - Lack of forensic and handwriting evidence - HELD THAT: - The inherent jurisdiction preserved under Section 482 of the Code of Criminal Procedure constitutes one of the enduring safeguards against misuse of the criminal process. The jurisdiction neither substitutes the function of the Trial Court nor authorises meticulous appreciation of evidence at the threshold. Its true office lies in preserving the purity of judicial process where continuation of criminal proceedings would defeat the administration of justice rather than advance it. The jurisdiction is invoked with restraint, yet restraint cannot mature into judicial indifference where the materials placed before the Court fail to disclose the legal foundation of the prosecution.

The import of the betel nut consignment through the Petrapole Land Customs Station, the appointment of Opposite Party No. 2 as the customs clearing agent, the prolonged delay preceding release of the consignments, the deterioration of the imported goods during that interval, the petitioners' request seeking extension of transit declarations, the prolonged administrative silence, the subsequent disposal of the damaged consignments upon payment of taxes, and finally the initiation of proceedings under the West Bengal Value Added Tax Act, all stand reflected from contemporaneous records. These events preceded the institution of the criminal complaint.

The Court held that an offence under Section 468 IPC necessarily presupposes forgery within the meaning of Sections 463 and 464 IPC, and liability can attach only to the maker of the false document. Applying the principle stated in Sheila Sebastian v. R. Jawaharaj [2018 (5) TMI 2148 - SUPREME COURT] the Court found that the investigation had not recovered the original transit declarations, had not obtained any forensic or handwriting expert opinion, and had not produced material identifying either petitioner as author of the disputed signatures. These deficiencies were not treated as matters of mere evidentiary weight at trial, but as going to the very existence of the foundational material required to sustain the allegation of forgery. [Paras 74, 75, 93, 94, 112]

The allegation of forgery was held not to disclose the essential statutory ingredients necessary for continuation of the prosecution.

Cheating in commercial and fiscal disputes - Cheating by personation - Criminal conspiracy - Abuse of criminal process for collateral fiscal advantage - HELD THAT: - The Court held that cheating requires deception and dishonest inducement at the inception of the transaction, which the complaint and charge-sheet did not disclose, since the commercial relationship had already culminated in delivery of the consignment after customs clearance. There was likewise no material showing false personation by either petitioner or any meeting of minds to constitute conspiracy. Examining the chronology and surrounding circumstances, including the prior proceedings under the West Bengal Value Added Tax Act, the penalty imposed on the customs clearing agent, and the recourse taken before the Taxation Tribunal, the Court concluded that the criminal case arose as a sequel to the adverse fiscal determination and was being used to press a dispute substantially governed by a specialised statutory mechanism. Guided by the principles in State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT], R.P. Kapur [1960 (3) TMI 45 - Supreme Court], Neeharika Infrastructure Pvt. Ltd.[2021 (4) TMI 1244 - SUPREME COURT] and Haji Iqbal @ Bala [2023 (8) TMI 1363 - SUPREME COURT], the Court held that the allegations, even if accepted at their highest, did not disclose the constituent ingredients of the offences alleged and that continuation of the prosecution would amount to abuse of process. [Paras 108, 109, 110, 111, 113]

The criminal proceeding was held to be an abuse of process, lacking the essential ingredients of cheating, personation and conspiracy, and therefore liable to be quashed.

Final Conclusion: The Court held that the dispute fundamentally arose out of fiscal proceedings and that the investigation failed to disclose the essential ingredients of the offences under Sections 419, 420, 468 and 120B IPC. The FIR, charge-sheet, order taking cognizance and all consequential criminal proceedings were accordingly quashed.

Enforcement of foreign arbitral award - barred by limitation under Article 137 of the Limitation Act, 1963 - Public policy of India in enforcement of foreign award - Factoring transaction - Joint and several liability under foreign award - Doctrine of election of remedies - Forbearance agreement and extinguishment of liability - Accrual of the right to apply - Joint and several liability - Most basic notions of morality or justice

Limitation for enforcement of foreign arbitral award - Accrual of right to apply - HELD THAT: - The Award was passed on 17.02.2022 and the limitation period being 3 years expired on 16.02.2025. The major objection of the respondent No. 1 on this issue of limitation is that the Award Holder has failed to place on record documentary proof that the Award was actually received by it on 21.02.2022.

It has been held by the Hon’ble Supreme Court in Vedanta [2020 (9) TMI 1178 - SUPREME COURT] that in case of enforcement of foreign Awards, the date of accrual of the right to apply is not necessarily the date on which the Award was passed, the right to apply can accrue at a later stage as well.

For enforcement of a foreign award, Article 137 governs limitation and the period of three years runs from the accrual of the right to apply, not invariably from the date of the award. In the case of a foreign award, the right to apply depends on the relevant facts and, in the present case, arose on communication of the signed original award to the award holder. Since the record showed that the award was communicated on 21.02.2022, reckoning limitation from that date made the petition filed on 20.02.2025 timely. [Paras 70, 71, 72, 73, 74]

The objection that the petition was barred by limitation was rejected.

Public policy of India in enforcement of foreign award - Factoring transaction - Fundamental policy of Indian law - HELD THAT: - The Court held that refusal of enforcement under the public policy exception is narrowly confined to cases falling within Section 48, and mere infraction of municipal law is insufficient unless it reaches the level of contravention of the fundamental policy of Indian law. On the terms of the agreement, the payment made by the award holder was an advance incentive or prepaid consideration linked to future performance and adjustable against eligible bookings, with repayment consequences in case of shortfall. The arrangement did not involve assignment or acquisition of receivables, which is an essential feature of factoring business under the Factoring Regulation Act, 2011. The transaction was therefore a commercial arrangement, not a factoring transaction, and the objection based on absence of registration under that enactment failed. [Paras 87, 88, 89, 90, 91]

The public policy objection founded on the Factoring Regulation Act, 2011 was held untenable.

Joint and several liability under foreign award - Doctrine of election of remedies - Forbearance agreement and extinguishment of liability - HELD THAT: - The award itself fastened joint and several liability on the respondents. In that situation, pursuit of remedies against one award debtor does not amount to an election barring recourse against the other unless there is a clear stipulation of waiver or substitution, which was absent. The forbearance agreement was only a conditional arrangement between the award holder and respondent No. 2 for temporary abstention from coercive recovery, and it expressly contemplated cessation of forbearance on default. It neither novated the award nor discharged respondent No. 1, and the bankruptcy court order also preserved the award holder's right to proceed against non-debtors, including respondent No. 1. The objections based on election, estoppel and extinguishment of debt were therefore misconceived. [Paras 107, 108, 109, 110, 111]

The Court held that respondent No. 1 remained independently liable under the award and enforcement against it was maintainable.

Final Conclusion: The Court found no ground under Section 48 of the Arbitration and Conciliation Act, 1996 to refuse enforcement of the foreign award. The objections on limitation, public policy, election of remedies and extinguishment of liability were rejected, and enforcement was directed against respondent No. 1 for the unpaid amount with interest under the award.

Negotiable Instruments Act - Dishonour of cheque - legally recoverable debt -Quashing of the complaint under Section 138, after subsequent settlementand consent terms between the parties - Inherent jurisdiction at pre-trial stage- Interpretation of consent terms preserving pending criminal proceedings - Closure of right to cross-examine for repeated adjournment - Challenge to statement of accused on proof of prejudice - Unimpeachable Material - Functus Officio

Quashing of cheque dishonour complaint after subsequent settlement - Interpretation of consent terms preserving pending criminal proceedings - Inherent jurisdiction at pre-trial stage - HELD THAT: - The Court held that exercise of inherent power to quash a complaint at the pre-trial stage is confined to cases where unimpeachable material completely displaces the allegations. In the present case, the defence rested on the consent terms of 01.05.2018 and 03.08.2018, but those terms prima facie did not extinguish the original complaint; rather, they expressly stated that legal remedies were temporarily suspended subject to the action already taken under Section 138 and that the NI Act proceedings were to be kept on hold. The decisions in Gimpex Pvt. Ltd. v. Manoj Goel [2021 (10) TMI 378 - SUPREME COURT] were distinguished because those cases involved settlements that subsumed or displaced the original complaint, whereas here the settlement terms prima facie preserved the pending prosecution. The Court further noted that the settlement cheques were never presented, the record showed repeated adjournments sought for payment, the accused did not press for compounding, and counsel for the accused later asked the Trial Court to proceed further. In these circumstances, the effect of the consent terms and the alleged transfer of liability raised disputed questions of fact and interpretation which could not justify quashing in proceedings under Section 482 of the CrPC. [Paras 25, 27, 28, 29, 30]

The prayer to quash the complaint and consequential proceedings was rejected.

Closure of right to cross-examine for repeated adjournment - HELD THAT: - The Court found that sufficient opportunities for cross-examination had already been granted and that the Trial Court had made it clear earlier that no further adjournment would be granted. The request for adjournment on the ground of recent engagement of counsel was not accepted, particularly when the counsel had already entered appearance earlier, the application for copies had been made only one day before the hearing, no such objection had previously been raised, the file was handed over for perusal, and even after a pass over a further adjournment was sought. On these facts, closure of the right to cross-examine was held to be justified. [Paras 31]

The challenge to the order dated 30.11.2019 was rejected.

Framing of notice after accused sought continuation of proceedings - HELD THAT: - The Court held that the challenge to the order framing notice could not succeed because the Trial Court had proceeded further only after a categorical submission by counsel for the accused, made in the presence of the petitioner concerned, that payment could not be made and the matter may proceed. In that background, the plea that notice had been framed mechanically did not merit interference. [Paras 32]

The challenge to the order dated 29.11.2018 was rejected.

Challenge to statement of accused on proof of prejudice - HELD THAT: - The Court noted that no argument on this challenge was pressed at the hearing and that the petition contained only bald assertions that the statement had been recorded perfunctorily. Though incriminating material ought ordinarily to be put to the accused, the petitioner failed to specify what material had not been put to him or how any prejudice had resulted. In the absence of a concrete showing of prejudice, interference was declined. [Paras 33]

The challenge to the order dated 31.01.2020 was rejected.

Final Conclusion: The Court declined to quash the complaint under Section 138 of the NI Act, holding that the subsequent consent terms prima facie preserved, rather than extinguished, the pending prosecution and that the petitioners' case turned on disputed questions not amenable to interference under Section 482 CrPC. The challenges to the orders framing notice, closing cross-examination, and recording the accused's statement were also rejected, and the petitions were dismissed.