TaxTMI Updates e-Newsletter
Jul 07,2026

Violation of principles of natural justice - Denial of opportunity of hearing - Audi alteram partem - Order passed without hearing - HELD THAT: - The Court recorded the common position of both sides that the impugned order had been passed by the adjudicating authority without granting a hearing to the petitioner. On that admitted basis, the Court accepted that the order stood vitiated for breach of audi alteram partem. Since the defect went to the validity of the adjudication itself, the Court did not examine the merits and directed fresh consideration after hearing the parties. [Paras 4, 5, 6]

The impugned order was set aside and the matter was remanded for de novo hearing, with a direction to pass a fresh reasoned order on merits in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order solely on the ground of breach of natural justice. The adjudicating authority was directed to hear the parties afresh and decide the matter by a reasoned order, all merits being kept open.

Retrospective cancellation of GST registration - Suspension of GST registration pending cancellation proceedings - Challenged to show cause notice - Petitioner deliberately suppressed his address and other particulars pertaining to place of business so as to avoid CGST - HELD THAT: - The Court held that Section 29(2) of the Act of 2017 expressly permits cancellation of GST registration from any date, including a retrospective date. It further held that the second proviso to Section 29(2), which empowers the officer to suspend registration during pendency of cancellation proceedings for such period and in such manner as may be prescribed, had to be read within the scheme of Section 29 itself, which deals with both cancellation and suspension. On that construction, the Court found no substance in the challenge founded on alleged impermissibility of retrospective suspension. The Court also found no valid ground to entertain the challenge to Section 29(2) of the Act of 2017 or Rule 21(a) of the GST Rules. Since the impugned notice itself afforded an opportunity to file a reply and personal hearing, and the petitioner had not filed any reply, the Court held that the plea raised in the writ petition could be urged before the authority in response to the notice. [Paras 6, 7, 8, 10, 11]

The writ petition challenging the show cause notice was dismissed as devoid of merit, with the questions of law kept open for decision in an appropriate proceeding.

Final Conclusion: The Court declined to interfere with the show cause notice. It held that retrospective cancellation of registration is permissible under the statute, found no ground to entertain the challenge to the statutory provision and the rule, and dismissed the writ petition while keeping the questions of law open.

Retrospective cancellation of GST registration - Suspension of GST registration during cancellation proceedings - Challenged to show cause notice without filing reply - Petitioner deliberately suppressed his address and other particulars pertaining to place of business so as to avoid CGST

Retrospective cancellation of GST registration - Suspension of GST registration during cancellation proceedings - HELD THAT: - The Court held that Section 29(2) expressly permits cancellation of GST registration from any date, including a retrospective date. It further held that the second proviso empowers the proper officer, during pendency of cancellation proceedings, to suspend registration for such period and in such manner as may be prescribed, and construed that expression with reference to Section 29 itself, which deals with both cancellation and suspension. On that construction, the contention that suspension with retrospective effect is impermissible was not accepted. [Paras 6, 7]

The challenge founded on the alleged impermissibility of retrospective cancellation or suspension was rejected.

Challenge to show cause notice without filing reply - Constitutional challenge to registration cancellation provisions - HELD THAT: - The Court found no valid ground to entertain the challenge to Section 29(2) or Rule 21(a). It also noted that the impugned show cause notice alleged fraud, granted time to file a reply and afforded personal hearing, yet no reply had been filed by the petitioner. Since the pleas raised in the writ petition could be taken in response to the notice itself, the Court held that the writ petition lacked merit. [Paras 8, 10, 11]

The writ petition was dismissed as devoid of merit, leaving the petitioner to raise its pleas in reply to the show cause notice.

Final Conclusion: The Court upheld the statutory position that cancellation of GST registration may operate retrospectively and declined to accept the challenge to the power of suspension during cancellation proceedings. Since the petitioner had not responded to the show cause notice despite opportunity to do so, the writ petition was dismissed.

Maintainability of writ petition in presence of alternate statutory remedy - Alternate efficacious remedy before GST Appellate Tribunal

Maintainability of writ petition in presence of alternate statutory remedy - Extraordinary jurisdiction - Statutory pre-deposit - Alternate efficacious remedy before GST Appellate Tribunal - HELD THAT: - From a perusal of the statutory provisions under Section 112(1) of the CGST Act, 2017 read with Rule 110 of the CGST Rules, it is evident that the Appeal lies before the Appellate Tribunal.

The Court held that an appeal against the impugned order lay before the Appellate Tribunal under the statutory scheme, and therefore the petitioner could not bypass that remedy by invoking writ jurisdiction. It rejected the request to entertain the petition on the petitioner offering to make the statutory pre-deposit before the Court, holding that exercise of extraordinary jurisdiction in such a situation required an exceptional case, which had not been made out. The Court further clarified that the now constituted and functional Appellate Tribunal was competent to examine all issues sought to be raised by the petitioner, including the plea of revenue neutrality, and accordingly relegated the petitioner to the statutory appellate remedy. [Paras 9, 10, 11]

The petitioner was directed to file an appeal before the Appellate Tribunal after complying with the statutory requirements including pre-deposit, and the merits of the controversy were left open.

Final Conclusion: The Court declined to entertain the writ petition on the ground of availability of an efficacious statutory appeal before the GST Appellate Tribunal. The petitioner was relegated to that remedy, with liberty to raise all contentions there, and no opinion was expressed on the merits.

Alternative remedy in writ jurisdiction - Jurisdictional challenge based on recipient of service - Liability to IGST on imported services - Jurisdictional challenge to tax demand - Confirmation of IGST demand and penalty, on the footing that the CRS services were contracted directly by the CRS companies, while the petitioner asserts that it was neither the recipient nor the payer of the service - HELD THAT: - The Court identified the core controversy as whether the petitioner fell within the definition of recipient in respect of the services in question and, if it was neither the recipient nor the payer, whether any service tax liability could be fastened upon it. On a cursory reading of the impugned order, the Court found that this question required deeper consideration. Since the issue, as formulated by the Court, also pertained to the jurisdiction of the adjudicating authority, the existence of an appellate remedy did not preclude examination by the High Court at that stage. [Paras 7, 8]

Notice was issued and ad-interim relief was granted till the next date; the question of maintainability of the writ petition was expressly kept open.

Final Conclusion: The Court did not finally decide the tax liability or the maintainability of the writ petition. It treated the petitioner's challenge as raising a jurisdictional issue requiring examination, issued notice, and granted ad-interim protection pending further consideration.

IGST refund on exports - Higher rate of duty drawback - Rejection of IGST refund solely on the ground that the exporter had claimed the higher rate of duty drawback by relying on Circular No.37/2018 - HELD THAT: - The Court accepted the submission that Circular No.37/2018 had already been held invalid as being inconsistent with the statutory provisions and the Rules governing grant of IGST refund, and that the said view had also been followed by this Court. Proceeding on the law laid down in those decisions, declared invalid by the Gujarat High Court in Amit Cotton Industries [2019 (7) TMI 472 - GUJARAT HIGH COURT] It was further submitted that the said judgment has been followed by this Court by Division Bench of this Court in M/s. Precot Meridian Limited [2020 (1) TMI 90 - MADRAS HIGH COURT], the Court held that the impugned rejection, founded on that circular alone, could not be sustained and the refund claim required fresh consideration in accordance with law after hearing the petitioner. [Paras 4, 5]

The impugned proceedings were set aside and the refund claim was remitted to the third respondent for fresh consideration in accordance with the judgments referred to and the applicable statutory provisions and Rules.

Final Conclusion: The writ petition was allowed on the basis of the earlier decisions holding the circular invalid. The rejection of the petitioner's IGST refund claim on that basis was set aside and the matter was remitted for fresh consideration after affording an opportunity of hearing.

Entitlement to regular bail -economic offences - evasion of GST and cess -Personal liberty in offences punishable up to seven years - Documentary evidence and necessity of custodial detention - Triple test for grant of bail - Manufacture of pan masala without registration and evasion of GST and cess, having regard to the nature of punishment - HELD THAT: - The applicant has been prosecuted for the offences punishable under Sections 18(1)(a), (b), (c), (d) and Section 19(1)(a) of the Health Security National Security Cess Act, 2025. It is not disputed by either side that the maximum punishment prescribed for the alleged offences is imprisonment extending up to five years. Therefore, the present case falls within the category of offences punishable with imprisonment up to seven years.

The principles governing arrest and bail in offences punishable up to seven years have thereafter been comprehensively reiterated by the Hon'ble Supreme Court in Satender Kumar Antil [2022 (8) TMI 152 - SUPREME COURT], wherein emphasis has been laid upon preservation of personal liberty, particularly where investigation can proceed without continued incarceration. Thus, the statutory framework governing the present case itself requires the Court to examine whether continued detention of the applicant is genuinely necessary.

The Court held that though economic offences are serious, there is no absolute rule that bail must be refused in every such case, and the question must still be tested on settled parameters of personal liberty, need for custodial interrogation, likelihood of tampering, possibility of absconding and the overall facts. The alleged offences were punishable up to five years and therefore fell within the category where arrest and continued detention cannot be treated as routine. The complaint had already been filed, the applicant had remained in judicial custody, and no police custody was sought after remand, which indicated that further custodial detention was not indispensable. The prosecution case was found to rest predominantly on documentary and electronic material, machinery and goods already seized, reducing the force of any apprehension of tampering. The seizure panchnama, while not decisive on merits, did not show seizure of tobacco or gutkha, and the question whether the seized material amounted to pan masala was treated as a matter for trial rather than for conclusive determination at the bail stage. On that prima facie assessment, and in the absence of material showing evasion of process, the Court found that the applicant satisfied the triple test. [Paras 28, 29, 30, 31, 32]

Bail was granted subject to conditions, without expressing any opinion on the merits of the prosecution case.

Final Conclusion: The Court allowed the bail application, holding that the seriousness of the alleged economic offence did not by itself justify continued pre-trial detention once the complaint had been filed, no further custodial interrogation was shown to be necessary, and the case rested substantially on material already seized. Bail was accordingly granted subject to conditions.

Best judgment assessment for non-filing of returns - Belated filing of returns under provisional assessment - time-limit prescribed under the proviso to Section 62 - Directory Or mandatory - HELD THAT: - The Court held that it had consistently taken the view that the period prescribed for filing the return after a best judgment assessment is only directory. Proceeding on that basis, it accepted that once the return is filed, though belatedly, the provisional assessment made for non-filing of return should no longer survive, and the matter must thereafter be dealt with in the regular course while making the further assessment for the year. Finding no compelling reason to depart from the binding precedents already taking that view, the Court followed the same. [Paras 6]

The impugned best judgment assessment order was quashed, and the respondent was directed to consider the matter appropriately while making further assessment for the year.

Final Conclusion: Following the consistent view of the Court that the relevant period for filing the return is directory and that a belatedly filed return displaces the provisional best judgment assessment, the writ petition was allowed. The impugned order was quashed, leaving the respondent to proceed with further assessment for the year in accordance with law.

Maintainability of advance ruling application - Refund of accumulated input tax credit under inverted duty structure - Scope of admissibility of input tax credit in advance ruling jurisdiction - Bar against admission where question is already decided in proceedings - Inclusion of GST paid under reverse charge on mining royalty in refundable input tax credit under the inverted duty structure - HELD THAT: - The Advance Ruling mechanism is a statutory creation and the jurisdiction of this Authority is confined strictly to the matters enumerated under Section 97(2) of the CGST Act.

The Authority held that the questions, though framed by using the expression input tax credit, in substance related to refund entitlement and the computation of refund under the inverted duty structure. It distinguished between admissibility of input tax credit as contemplated under the advance ruling provision and refund of accumulated or unutilized credit governed separately under the refund provisions. Since the applicant was not seeking a determination on availability of credit under the input tax credit provisions, but on whether such credit could be included in refund under the prescribed formula, the matter fell outside the questions permitted for advance ruling. The Authority further found that the applicant's refund claim had already been rejected by the jurisdictional tax authority, and therefore the application was also barred from admission because the same question had already been decided in proceedings under the Act. [Paras 5]

The application was rejected at the admission stage as being beyond the Authority's jurisdiction and also barred because the refund question had already been decided in earlier proceedings.

Final Conclusion: The Authority rejected the advance ruling application as not maintainable. It held that the dispute concerned refund eligibility and refund computation of accumulated credit under the inverted duty structure, which lies outside advance ruling jurisdiction, and in any event the same question had already been decided by the jurisdictional authority in refund proceedings.

Revision under Section 263 - Erroneous and prejudicial order - Plausible view of Assessing Officer - Lack of inquiry and inadequate inquiry - estimation of income on bogus purchases

Revision of the assessment on the footing that the entire alleged bogus purchases ought to have been added, instead of only a part thereof - HELD THAT: - The Court held that the determinative test for exercise of revisional power was whether the assessment order was both erroneous and prejudicial to the interests of the Revenue. On the record, the Assessing Officer had examined the issue and adopted the view that addition of 12.5% of the alleged bogus purchases was warranted. The Principal Commissioner did not point out any illegality making that view unsustainable in law, but proceeded on the basis that the whole amount should have been taxed. The case was therefore not one of lack of inquiry, but one of disagreement with the quantum and manner of addition adopted by the Assessing Officer. In such circumstances, revision could not be invoked merely to substitute the revisional authority's opinion for a legally plausible view already taken in assessment. [Paras 5, 6]

The Tribunal was right in setting aside the revisional order, as the conditions for invoking Section 263 were not satisfied.

Final Conclusion: The High Court held that no substantial question of law arose, since the assessment reflected a legally plausible view taken after inquiry and the revisional power under Section 263 could not be used merely to substitute the Principal Commissioner's opinion. The tax appeal was accordingly dismissed.

Revision u/s 263 - assessment order as erroneous and prejudicial to the interest of the Revenue -as per CIT AO had failed to conduct adequate inquiries regarding the classification of rental income, the allowance of construction expenses and the genuineness of unsecured loans

Revision u/s 263 - error in classification of rental income - HELD THAT: - The Tribunal held that the assessee had only rental income and had consistently disclosed it under the head business income, and the Assessing Officer had accepted that position in line with the past history of the case. That constituted a plausible view, and the Principal Commissioner was therefore not justified in treating the assessment as erroneous on that issue. On construction expenses, the profit and loss account showed that though the amount was debited, the same amount stood reduced through change in inventory, so that the construction expenditure had been capitalised and was not claimed as a deduction. In the absence of any prejudicial allowance on this count, revision on that issue was also unjustified. [Paras 7]

The order under section 263 was set aside on the issues of rental income and construction expenses.

Revision u/s 263 - Unsecured loans - Inadequate examination of creditors - Erroneous and prejudicial assessment - HELD THAT: - The Tribunal found that, despite notices having been issued, the material on record did not show any proper examination by the Assessing Officer of the credits advanced by the three creditors to the assessee. The replies were merely accepted without scrutiny, and the balance sheet material referred to before the Tribunal did not disclose the necessary breakup of the relevant long-term loans and advances. On these facts, the Principal Commissioner was justified in holding that the assessment suffered from lack of proper inquiry, making it erroneous in so far as it was prejudicial to the interests of the Revenue. The Tribunal also noted that a superficial and random investigation can justify revision. [Paras 6, 7]

The order under section 263 was upheld to the extent of verification of the creditors and fresh examination of the unsecured loans.

Final Conclusion: The Tribunal partly allowed the appeal. The revisionary order was quashed insofar as it related to rental income and construction expenses, but was sustained on the issue of unsecured loans, for which the Principal Commissioner was justified in directing fresh verification of the creditors.

Exemption of BSNL VRS-2019 compensation - Retrenchment compensation as capital receipt - Fresh claim before appellate authority

Compensation received by BSNL employees under BSNL VRS-2019 was held to be retrenchment compensation falling under section 10(10B), and not merely a voluntary retirement payment under section 10(10C), with consequential relief denied merely because the claim was raised in appeal - HELD THAT: - The Tribunal found that the controversy was identical to the one already decided in the case of Rajendra Himmatrao Patil [2026 (4) TMI 1179 - ITAT PUNE] where, following other Tribunal decisions on the same BSNL scheme, such payment was treated as retrenchment compensation under the forced retirement scheme and therefore as a capital receipt exempt from tax under section 10(10B).

In the absence of any contrary material from the Revenue, the Tribunal applied the same reasoning to all the present appeals, thereby not sustaining the appellate orders which had rejected the claim on grounds such as delay, non-maintainability, or inability to entertain a fresh claim. The assessees were directed to place revised computations before the respective Assessing Officers for verification and consequential grant of refund, if due. [Paras 8, 9]

The impugned appellate orders were set aside and the assessees' claim for exemption under section 10(10B) on the BSNL VRS-2019 compensation was allowed, subject to verification of revised computation by the Assessing Officer.

Final Conclusion: Following its earlier co-ordinate Bench decision on the same BSNL VRS-2019 scheme, the Tribunal allowed all the appeals and held that the compensation received was exempt under section 10(10B) as retrenchment compensation. The assessees were permitted to furnish revised computations before the respective Assessing Officers for verification and consequential refund, if due.

Revision u/s 263 for lack of enquiry - Failure to examine initiation of penalty proceedings - Penalty for non-filing of return and concealment

As per CIT AO, despite the assessee not having filed the return of income for the relevant assessment year, had not examined or initiated penalty proceedings for the defaults noticed in the record - HELD THAT: - The Tribunal held that the AO had passed the reassessment order without examining the question whether penalty proceedings were required to be initiated for non-filing of return and for concealment or under-reporting of income. Such omission showed absence of proper enquiry and application of mind on issues arising from the assessment record. On that basis, the order was erroneous and prejudicial to the interests of the Revenue, and the Principal Commissioner was justified in invoking revisionary jurisdiction and directing a fresh examination on those issues. [Paras 5]

The revision order was upheld and the direction for fresh assessment on the identified issues was sustained.

Final Conclusion: The Tribunal upheld the exercise of revisionary jurisdiction on the ground that the assessment had been completed without enquiry into initiation of the relevant penalty proceedings. The assessee's appeal was accordingly dismissed.

Exemption on compulsory acquisition of agricultural land - Taxability of interest on land acquisition compensation - Section 10(37) exemption - Section 56(2)(viii) applicability

Whether Interest received on compensation for compulsory acquisition of agricultural land, stated to be under the Land Acquisition Act, was not taxable as income from other sources and was entitled to the same exemption as the compensation itself? - HELD THAT: - The Tribunal found that the acquired land was agricultural land used for agricultural purposes and that the compensation arose from compulsory acquisition.

Relying on Shri Anvar Ali Poolakkodan [2025 (4) TMI 867 - KERALA HIGH COURT] it held that interest received on delayed payment of compensation under the Land Acquisition Act partakes the character of the compensation itself and, where the acquired land qualifies, also gets the benefit of exemption u/s 10(37).

On that basis, such receipt could not be brought to tax u/s 56(2)(viii). The Tribunal also noted that, on the same acquisition, the Assessing Officer had accepted the non-taxability of similar interest in the case of the assessee's father, and therefore a different view on the same facts was unjustified. [Paras 6, 7]

The addition made by treating the interest component as taxable was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that the interest component received along with compensation for compulsory acquisition of agricultural land was not taxable under section 56(2)(viii), but was entitled to exemption under section 10(37). The addition was accordingly deleted.

Consequential assessment upon revision - Survival of assessment after remand of revision order - assessment order passed u/s 147 read with section 263 read with section 144B survival once the underlying revision orders under section 263 had been set aside to the file of the Principal Commissioner for a fresh order - HELD THAT: - The Tribunal found that the impugned assessment was only a consequential order passed in pursuance of the revision orders under section 263. Since those revision orders had already been set aside by the Tribunal and remitted to the Principal Commissioner for passing fresh orders, the foundation of the consequential assessment ceased to exist. On that basis, the impugned assessment order no longer survived, and the appeal against that order, as also the appellate order affirming it, became infructuous. [Paras 7, 8]

The impugned assessment and the appellate order were treated as nullified in consequence of the remand of the section 263 orders, and the appeals were dismissed as infructuous.

Final Conclusion: As the impugned assessment was merely consequential to the revision orders under section 263, and those revision orders had already been set aside for fresh adjudication, the assessment itself was held not to survive. All the appeals for the stated assessment years were therefore dismissed as infructuous.

Assumption of jurisdiction under section 153C - consolidated and defective satisfaction note recorded for multiple assessment years

HELD THAT: - The Tribunal noted that the assessment order itself reproduced a satisfaction note covering assessment years 2011-12 to 2017-18. It found that the very same satisfaction note, in the background of the same search proceedings, had been examined in M/s Vinay Homes Pvt. Ltd. [2026 (2) TMI 1439 - ITAT DELHI] where the co-ordinate Bench held that it was not recorded in accordance with law and that the assumption of jurisdiction under section 153C stood vitiated. Treating the facts as identical, the Tribunal respectfully followed that view and held that the Assessing Officer had assumed jurisdiction on the basis of an invalid and defective satisfaction note. On that basis, the proceedings initiated under section 153C and the consequential assessment were held to be invalid. [Paras 3, 4]

The objection to jurisdiction was sustained, and the assessment framed under section 153C was quashed.

Final Conclusion: Following the earlier co-ordinate Bench decision on the same satisfaction note arising from the same search proceedings, the Tribunal held that jurisdiction under section 153C had been invalidly assumed. The impugned assessment was accordingly quashed and the appeal was allowed.

Fees for technical services under India-Singapore DTAA - receipts for management and business support services rendered to its Indian subsidiary - Make available requirement for management and business support services - Treaty override over broader domestic definition of fees for technical services

HELD THAT: - The Tribunal found that the service agreement under which the assessee rendered management and business support services to its Indian subsidiary continued unchanged from earlier years, and identical controversy had consistently been decided in the assessee's favour by co-ordinate benches.

Following those decisions, it held that the receipts did not satisfy the treaty test of make available under Article 12(4)(b), and therefore could not be taxed as fees for technical services under the treaty. The Tribunal accepted the treaty position as governing the chargeability of the receipt and, on parity of facts with the earlier years [2026 (6) TMI 987 - ITAT MUMBAI] declined to sustain the addition. [Paras 8, 9]

The amount in dispute was held not taxable as fees for technical services under Article 12(4)(b) of the India-Singapore DTAA, and the addition was directed to be deleted.

Final Conclusion: Following the consistent view taken in the assessee's own case for earlier years, the Tribunal held that the management and business support service fee was not taxable in India as fees for technical services under the India-Singapore DTAA for A.Y. 2022-23. The addition was deleted and the remaining grounds were left unadjudicated as consequential or academic.

Transfer pricing of brand royalty - Transfer pricing of ECB interest - AMP expenditure as international transaction - Depreciation on right to use 3G spectrum - Deductibility of DoT subscriber verification charges - Asset restoration cost - Taxability of liabilities written back - Prepaid distributor discount and section 194H - Annual licence fee under telecom licence - Lease rentals for IBM hardware - WPC royalty expenditure

Brand royalty benchmarking - Controlled transaction as CUP comparable - Transfer pricing adjustment on payment of brand royalty sustained by adopting a controlled agreement as the comparable under the CUP method - HELD THAT: - The Tribunal held that the agreement between Virgin Enterprises Ltd. and Virgin Mobile USA LLC, being a controlled transaction, could not be used as a valid comparable for determining the arm's length price under the CUP method. Following the consistent view taken in the assessee's own earlier years and group concerns, and applying the principle recognised in CIT v. EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] and Technimont ICB Pvt. Ltd. [2013 (9) TMI 595 - ITAT MUMBAI] it held that the arm's length price of an international transaction must be determined only by reference to comparable uncontrolled transactions in accordance with Rule 10B. As no distinguishing feature or contrary later decision was shown by the Revenue, the adjustment was unsustainable. [Paras 3]

The adjustment on payment of brand royalty was directed to be deleted.

ECB interest benchmarking - RBI approval as contemporaneous benchmark - Transfer pricing adjustment on interest and upfront fee paid on ECB facilities - HELD THAT: - Following the decision in Vodafone West Ltd. [2026 (6) TMI 1253 - ITAT MUMBAI] Tribunal held that while RBI approval may not be conclusive of arm's length price, it is a highly relevant contemporaneous benchmark. It further accepted that the TPO's benchmarking suffered from material infirmities because the analysis did not duly factor comparability adjustments relating to country risk, currency risk, tenure, borrower profile, nature of borrowing and subordination, and that upfront fee formed part of the effective all-in-cost of the borrowing. As the ECB terms remained unchanged from earlier years and no distinguishing feature was shown, the effective all-in-cost approved under the borrowing arrangement was accepted as the more reliable benchmark. [Paras 5]

The transfer pricing adjustment in respect of interest and upfront fee on ECB facilities was directed to be deleted.

AMP expenditure - Existence of international transaction - Bright Line Test - HELD THAT: - The Tribunal followed Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] and Whirlpool of India Ltd. [2015 (12) TMI 1188 - DELHI HIGH COURT] and held that the existence of an international transaction in respect of AMP expenditure cannot be inferred merely from substantial AMP spend or by applying the Bright Line Test. The Revenue must establish, through tangible material, an arrangement or understanding with the associated enterprise for incurring such expenditure. Since the assessee's AMP expenditure was found to be linked to its own telecom business operations and the Revenue failed to establish any separate international transaction, the adjustment could not stand. [Paras 6]

The AMP adjustment was directed to be deleted.

3G spectrum rights - Depreciation on intangible asset - Depreciation on the right to use 3G spectrum - HELD THAT: - The Tribunal noted that coordinate benches in the assessee's own cases and group entities had consistently held, after examining the nature of the rights acquired under the 3G spectrum licence, that depreciation is admissible thereon. No distinguishing feature in the facts of the year under appeal and no contrary later pronouncement were shown by the Revenue. Judicial discipline therefore required following the consistent earlier view. [Paras 7]

The disallowance of depreciation on the right to use 3G spectrum was deleted.

Disallowance of penalty paid to the Department of Telecommunication (DoT) - Compensatory payment under section 37(1) - Amounts paid to the Department of Telecommunication for subscriber verification defaults were allowable as business expenditure OR hit as penal expenditure - HELD THAT: - Relying on the consistent line of coordinate bench decisions in the assessee's own cases and group entities [2025 (10) TMI 1111 - ITAT DELHI] and [2026 (3) TMI 1481 - ITAT DELHI] the Tribunal held that the payments made to the Department of Telecommunication were compensatory in character and not expenditure incurred for an offence or an act prohibited by law. On that basis, the payment was held allowable under section 37(1). As the Revenue did not show any distinguishing feature or change in the legal position, the earlier view was followed. [Paras 8]

The disallowance of the DoT payment was directed to be deleted.

Depreciation claimed on the addition to the fixed asset account towards Asset Restoration Cost ("ARC") - Depreciation versus revenue deduction - Depreciation on asset restoration cost AND alternate claim of deduction as revenue expenditure under section 37(1) - HELD THAT: - The Tribunal noted that the earlier tribunal view disallowing depreciation on asset restoration cost stood affirmed in DCIT v. Erstwhile Vodafone Digilink Ltd. [2018 (6) TMI 1029 - ITAT DELHI] so far as depreciation was concerned. However, the High Court had simultaneously accepted the alternate plea that asset restoration cost is allowable as revenue expenditure under section 37(1). Following that binding judgment and the decisions in the assessee's own earlier years applying it, the Tribunal maintained the disallowance of depreciation but accepted the alternate revenue claim. [Paras 9]

The disallowance of depreciation was upheld, but the Assessing Officer was directed to allow deduction of asset restoration cost as revenue expenditure under section 37(1).

Addition made in respect of liabilities written back -Sections 41(1) and 28(iv) applicability - HELD THAT: - The Tribunal held that the precise issue had already been decided against the assessee in its own cases for earlier years [2025 (10) TMI 1111 - ITAT DELHI] and [2026 (3) TMI 1481 - ITAT DELHI] after considering the nature of the liabilities written back and the applicability of sections 41(1) and 28(iv). It declined to depart from those earlier binding coordinate bench decisions since no material was produced to show that they had been reversed, modified or overruled by a higher forum. Judicial discipline therefore required adherence to the earlier view. [Paras 10]

The addition on account of liabilities written back was sustained.

Prepaid distributor discount - Commission under section 194H - Disallowance under section 40(a)(ia) - HELD THAT: - The Tribunal treated the controversy as concluded by the Supreme Court decision in Bharti Cellular Ltd. [2024 (3) TMI 41 - SUPREME COURT] which held that discount extended to prepaid distributors does not partake the character of commission within section 194H. Once the payment was not commission, non-deduction of tax at source could not trigger disallowance under section 40(a)(ia). The Tribunal also noted that the same principle had been consistently applied in the assessee's own earlier years. [Paras 11]

The disallowance under section 40(a)(ia) in respect of prepaid distributor discount was directed to be deleted.

Nature of expenditure - Annual licence fee - revenue expenditure under section 37(1) by treating the same as capital expenditure eligible for amortisation under section 35ABB - HELD THAT: - Applying the binding ratio of CIT v. Bharti Hexacom Ltd. [2023 (10) TMI 786 - SUPREME COURT] Tribunal held that annual licence fee payable under the telecom regime is capital in nature and the deduction is governed by section 35ABB, not section 37(1). At the same time, it accepted the assessee's limited grievance that the consequential amortisation had to be recomputed after considering amalgamation of group entities, transfer or cancellation of telecom licences and the surviving licence period. Since those workings required factual verification, the matter was restored only for correct computation of deduction under section 35ABB. [Paras 12]

The disallowance under section 37(1) was upheld, and the matter was remanded to the Assessing Officer for limited verification and recomputation of deduction under section 35ABB.

IBM hardware payments - Finance lease and tax treatment - revenue v/s capital expenditure - HELD THAT: - The Tribunal held that capitalisation in the books under Accounting Standard-19 as a finance lease is not determinative of tax treatment. Since ownership of the hardware continued to vest with IBM and the assessee merely obtained the right to use the assets during the contractual term, the payments represented lease rentals incurred in the course of business. Following the assessee's own earlier years and the supporting authorities, the expenditure was held allowable as revenue expenditure. [Paras 13]

The disallowance of IBM payments as capital expenditure was deleted.

WPC royalty charges - Revenue expenditure for use of spectrum - whether Royalty or WPC charges paid for use of spectrum were allowable as revenue expenditure? - HELD THAT: - The Tribunal followed the consistent earlier decisions in the assessee's own case and group concern, which in turn had applied CIT v. Fascel Ltd. [2008 (12) TMI 743 - DELHI HIGH COURT]. Those decisions had held that royalty or WPC charges paid to the Department of Telecommunications for use of spectrum, being periodic charges linked to operations, are deductible as revenue expenditure under section 37(1). In the absence of any change in facts or law, the same view was adopted. [Paras 15]

The disallowance of WPC royalty charges was directed to be deleted.

Final Conclusion: The appeal was partly allowed. The Tribunal deleted the transfer pricing adjustments on brand royalty, ECB interest and AMP expenditure, allowed the claims relating to 3G spectrum depreciation, DoT payments, prepaid distributor discount, IBM payments and WPC charges, upheld the addition for liabilities written back, allowed asset restoration cost only as revenue expenditure, and remitted the limited question of recomputation of deduction under section 35ABB on annual licence fee.

TP Adjustment - Aggregation approach in transfer pricing - Rule of consistency in benchmarking intra-group services - Deduction under section 80G for CSR contribution

Aggregation approach in transfer pricing - Intra-group services - Rule of consistency - Arm's length price adjustment on payment for Technical Support Services, Business Support Services and Managerial, Administrative and Related Services received from associated enterprises by segregating the service transactions and determining their value at nil - HELD THAT: - The Tribunal held that, when in the assessee's own case for an earlier year the aggregation approach had been accepted and the factum of rendition of services had been found proved, and the Dispute Resolution Panel itself recorded that the facts for the year under appeal were identical, the same approach had to be followed on the principle of consistency. In that factual setting, there was no occasion to separately benchmark the service payments or assign a nil arm's length price. The Tribunal also noted that markup details and supporting material had been furnished but ignored. [Paras 11, 12]

The transfer pricing adjustment relating to Technical Support Services, Business Support Services and Managerial, Administrative and Related Services was deleted.

Deduction u/s 80G for CSR contribution - Corporate Social Responsibility contribution rejected outright for deduction under section 80G merely on the ground that it was not voluntary - HELD THAT: - The Tribunal held that the assessee was eligible to claim deduction under section 80G in respect of CSR funds, subject to satisfying the conditions prescribed in that provision. Since the question of fulfilment of those conditions required verification of evidence, the matter was restored for that limited purpose. [Paras 13]

The claim under section 80G was remitted to the Assessing Officer for verification of the evidences and allowability in accordance with section 80G.

Final Conclusion: The Tribunal deleted the transfer pricing adjustment by applying the aggregation approach consistently with the earlier year decided in the assessee's own case. The claim for deduction under section 80G in respect of CSR contribution was restored to the Assessing Officer for verification of statutory conditions, while interest was treated as consequential and the challenge to penalty initiation as premature.

TP Adjustment - comparable selection - Turnover filter in transfer pricing comparables - Functional comparability under TNMM for trading segment - Subvention receipts in operating profit margin computation

Turnover filter in transfer pricing comparables - Consistency in selection of comparables - Exclusion of ADS Diagnostics Limited from the comparable set for the distribution segment on application of the modified turnover filter - HELD THAT: - The Tribunal held that, apart from functional comparability, size and turnover are relevant comparability criteria. Since the TPO's modification of the filter to include only companies within one-tenth to ten times the turnover of the tested party was upheld by the DRP, and ADS Diagnostics Limited fell below the lower threshold, its exclusion was valid. The Tribunal further held that the assessee's reliance on its inclusion in an earlier year could not prevail, because there was nothing on record to show that the earlier year's order had examined the relevant turnover and functional aspects, and transfer pricing benchmarking has to be undertaken independently each year on the facts prevailing in that year. [Paras 11]

ADS Diagnostics Limited was rightly excluded as a comparable, and the objection founded on consistency was rejected.

Functional comparability under TNMM for trading segment - Medical devices vis-a-vis laboratory instruments - Exclusion of Riviera Glass Pvt Ltd from the comparable set for the distribution segment on the ground of product and customer-profile dissimilarity - HELD THAT: - The Tribunal accepted that under TNMM, broad functional and product comparability, rather than exact product identity, is the relevant test. Even so, it found that the assessee dealt in medical devices used in treatment of patients, whereas Riviera Glass Pvt Ltd dealt in laboratory glassware, laboratory instruments, water analysis and distillation units catering to a different end-use and customer segment. On that basis, the products did not satisfy the test of broad comparability. The plea based on acceptance in an earlier year was also rejected, as there was no material to show that the earlier order had examined the functional profile in question. [Paras 16]

Riviera Glass Pvt Ltd was rightly excluded from the set of comparables.

Subvention receipts in operating profit margin computation - Operating margin for distribution segment - whether Subvention receipts received from the associated enterprise under the distribution arrangement had to be treated as reducing operating cost or as part of operating revenue for computing the assessee's operating margin - HELD THAT: - The Tribunal found that, under the distribution agreement, the pricing mechanism was designed to ensure that the assessee earned an arm's length return for its distribution function, with periodic readjustment of prices to align its margin with that of comparable uncontrolled companies. The subvention receipts therefore offset the initially higher import cost from the associated enterprise and functioned to reduce operating cost rather than augment operating revenue. On that basis, the assessee's operating margin was correctly computed at 5.04%, and the TPO's computation of 3.91% by including the subvention amount in the denominator was held to be erroneous. [Paras 19]

TPO/AO was directed to adopt the assessee's operating margin at 5.04% for benchmarking the distribution transaction.

Final Conclusion: The Tribunal partly allowed the appeal. It upheld the exclusion of ADS Diagnostics Limited and Riviera Glass Pvt Ltd from the comparable set, but accepted the assessee's contention that subvention receipts were not to be included in operating revenue for computing the operating margin, and directed adoption of the margin at 5.04%.

Disallowance u/s 14A restricted to exempt income - Transfer pricing comparability for management support services

Disallowance u/s 14A - Exempt income ceiling - Book profit adjustment u/s 115JB - HELD THAT: - The Tribunal found no dispute as to the quantum of exempt income earned during the year. Although the Assessing Officer recomputed the disallowance by applying Rule 8D and made a further addition over and above the assessee's own disallowance, the assessee had consistently contended that the disallowance could not exceed the exempt income. The first appellate authority had followed the Tribunal's orders in the assessee's own case for earlier years, and the Tribunal also noted the binding view of the jurisdictional High Court that disallowance under section 14A cannot be more than the exempt income. In the absence of any contrary fact or law, the restriction of the disallowance to the exempt income was sustained. [Paras 7]

The Revenue's challenge to the restriction of disallowance under section 14A failed and its appeal was dismissed.

TP Adjustment - Functional comparability - Management support services - Exclusion of comparables - HELD THAT: - The Tribunal accepted the assessee's limited contention that these two companies should be excluded from the final set of comparables. In the case of Axis Integrated Systems Limited, the available material showed trading in digital certificates and liaisoning activity, while complete and clear business details relevant to the year were not available; it could not therefore be treated as comparable to the assessee's support services.

In the case of Inmacs Management Services Limited, the material only reflected professional and consultancy income without clear public-domain data showing the exact nature of activities during the relevant year, and the company could not be reliably matched with the assessee's services. Following the consistent view taken in earlier Tribunal decisions on these entities, the Tribunal directed their exclusion and consequent recomputation of the transfer pricing adjustment. Since this primary contention was accepted, the claim for inclusion of the assessee's other suggested comparables was treated as academic. [Paras 12, 13, 14, 15]

The Assessing Officer/TPO was directed to exclude the two comparables and recompute the transfer pricing adjustment; the assessee's appeal was partly allowed.

Final Conclusion: The Revenue's appeal was dismissed, the Tribunal holding that the disallowance under section 14A could not exceed the exempt income. The assessee's appeal was partly allowed by directing exclusion of two functionally incomparable entities from the transfer pricing comparables and recomputation of the adjustment.

Allowability of business expenditure - Commercial expediency - Disallowance based on suspicion - Routine administrative and operational expenses - adverse finding on genuineness

Routine administrative and operational expenses claimed by the assessees disallowed merely on the premise of minimal business activity or the allegation that the entities were shell concerns - HELD THAT: - Tribunal treated all the appeals as covered by decision in KBK and others [2026 (5) TMI 1826 - ITAT JODHPUR] on identical facts. It accepted that the lower appellate authority had allowed statutory and compliance-related expenses as genuine, yet sustained disallowance of salary, rent, travelling, conveyance, telephone and other administrative expenses only on the view that the assessee had no real business activity.

Tribunal held that, in the absence of any specific adverse finding by either lower authority as to falsity or non-genuineness of the claimed expenditure, such disallowance was perverse on the facts. As accepted statutory expenses themselves presupposed the existence of normal operational expenditure, and therefore the sustained disallowance of the remaining business expenses was deleted. [Paras 7, 9]

The disallowances of the claimed business expenditure sustained by the Commissioner (Appeals) were deleted in all the appeals; the ground relating to interest was treated as consequential.

Final Conclusion: Following the earlier co-ordinate Bench decision on identical facts, the Tribunal allowed all the assessees' appeals and deleted the disallowances of business expenditure sustained by the Commissioner (Appeals). The challenge to interest under sections 234B and 234C was left as consequential.

Diversion of income by overriding title - Taxability of interest differential credited to statutory development funds - Deduction of promotional expenditure by notified institution

Diversion of income by overriding title - Interest differential credited to development funds - Interest differential arising from deposits under the rural infrastructure and allied funds, and credited to FIF, TDF, WDF and PODF pursuant to RBI/GOI directions taxability in the assessee's hands - HELD THAT: - The Tribunal held that the controversy stood concluded by earlier orders in the assessee's own case. It accepted that the assessee acted only as a nodal or implementing agency in relation to those schemes and that the interest differential transferred to the identified funds was diverted at source under the directions governing the scheme. On that footing, the amount debited as interest payment but credited to those funds could not be brought to tax in the assessee's hands. [Paras 6]

The deletion of the addition relating to the interest differential was affirmed.

Deduction of promotional expenditure by notified institution - Section 36(1)(xii) notification - whether Promotional and developmental expenditure claimed by the assessee was allowable because the assessee had been notified for the purposes of section 36(1)(xii) from Assessment Year 2013-14 onwards? - HELD THAT: - The Tribunal found that the disallowance rested on the premise that the assessee was not a notified entity for the relevant deduction provision. Since the record showed that the assessee had been notified by CBDT with effect from Financial Year 2012-13, applicable from Assessment Year 2013-14 onwards, the basis of the disallowance failed for the year under appeal. The appellate order deleting the addition was therefore upheld. [Paras 9]

The deletion of the disallowance of promotional expenditure was affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the appellate order in full. It affirmed that the interest differential credited to the specified funds was not taxable in the assessee's hands and that the promotional expenditure was allowable in view of the assessee's notified status.

Deemed application of charitable income - Exercise of option in writing u/s 11(1) Explanation 2(ii)(b) - Prospective operation of prescribed-form requirement - Distinction between deemed application and accumulation of income - non-filing of Form No. 9A or Form No. 10 - HELD THAT: - The Tribunal held that Explanation 2(ii)(b) to section 11(1), as applicable for A.Y. 2015-16, created a statutory mechanism distinct from accumulation under section 11(2). While section 11(2) governed accumulation for a longer period and required compliance including Form No. 10, the assessee had not invoked that provision and had claimed only deemed application in the immediately succeeding previous year.

For the year under consideration, the law required only that the option be exercised in writing within the time allowed under section 139(1); the requirement of exercising the option in the prescribed form and manner through Form No. 9A was introduced later and could not be imported retrospectively. Since the assessee had disclosed the claim in the return and had furnished the reasons and particulars before the Assessing Officer prior to completion of assessment, the statutory requirement stood satisfied.

Tribunal further held that the decision in CIT v. Nagpur Hotel Owners' Association [2000 (12) TMI 99 - SUPREME COURT] did not support the Revenue because the AO had the necessary information before completing the assessment. The reasons stated for postponement of application, coupled with actual application in the succeeding period, fell within the expression "for any other reason" and could not be rejected on the basis adopted by the lower authorities. [Paras 19, 20, 21, 22, 23]

The disallowance of the claimed deemed application was held to be unsustainable, and the addition made on that account was directed to be deleted with consequential exemption under section 11.

Final Conclusion: The Tribunal allowed the appeal and held that, for A.Y. 2015-16, the assessee's written exercise of option and disclosure before the Assessing Officer were sufficient compliance for claiming deemed application under section 11(1) Explanation 2(ii)(b). The denial of exemption on the basis of non-filing of Form No. 9A or Form No. 10 was held to be legally erroneous.

Maintainability of appeal against order under Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 - Statutory right of appeal under section 129A of the Customs Act - Orders of Principal Chief Commissioner under courier regulations - HELD THAT: - The Tribunal followed its earlier decisions in Pacific Express [2025 (9) TMI 1064 - CESTAT NEW DELHI] and M/s Navalai Enterprises [2026 (2) TMI 551 - CESTAT NEW DELHI] and held that section 129A permits an appeal only where the statute so provides, and the appellate forum cannot enlarge that right. The impugned action arose under the 2010 Courier Regulations, which provide for a representation to the Chief Commissioner against an order under regulation 13(1), but do not provide a further appeal to the Tribunal against the order passed in such proceedings. The Tribunal also accepted the reasoning that the order under the Regulations is not a decision taken under the provisions of the Customs Act so as to attract section 129A, and that, in any event, section 129A does not provide an appeal against an order of the Chief Commissioner or Principal Chief Commissioner in such matters. The reliance placed by the appellant on Kakadiya Brijeshkumar Vinodbhai [2025 (7) TMI 1015 - CESTAT MUMBAI] and Khan Sadaf [2023 (10) TMI 453 - TELANGANA HIGH COURT] was not accepted, the former being a Single Member decision and the latter not being binding on the Tribunal in the face of the jurisdictional position noted by it. [Paras 4, 5, 6, 7, 8]

The preliminary objection was accepted and the appeal was dismissed as not maintainable, with liberty to the appellant to pursue any other appropriate remedy.

Final Conclusion: The Tribunal held that no appeal lay before it against the order passed by the Principal Chief Commissioner under the Courier Regulations in relation to forfeiture of security and penalty. The appeal was accordingly dismissed as not maintainable, leaving it open to the appellant to pursue any other remedy available in law.

Provisional release of seized imported goods - multifunctional devices - Conditional release pending adjudication - HELD THAT: - The Court found that the writ petition stood on the same footing as earlier matter in [2025 (4) TMI 1705 - TELANGANA HIGH COURT], in which seized imported goods had been directed to be released provisionally subject to safeguards. Since, in the present matter, the dispute was at the stage of seizure memo and the prayer was confined to interim release, the Court adopted the same course and directed the authorities to pass orders for provisional release upon payment of the enhanced duty as quantified, furnishing of bank guarantee, and maintenance of transaction details in case of onward sale. The Court further clarified that such conditional release would not impede the statutory adjudication, and that the adjudicating authority must decide the matter independently after permitting the petitioner to participate and without being influenced by the order of release. [Paras 8, 9, 10, 11, 12]

The writ petition was allowed by directing provisional release of the seized goods on stated conditions, with adjudication left open to be decided independently in accordance with law.

Final Conclusion: Following its earlier approach in similar seizure matters, the Court directed conditional provisional release of the imported goods and left the customs adjudication to proceed on its own merits without being influenced by the release order.

Actual User condition under Advance Authorisation - Diversion of duty-free imported gold in contravention of the conditions of the Advance Authorisation Scheme and the applicable provisions of the Foreign Trade Policy - Excess gold jewellery found at the time of export -Procedural lapse in use of unendorsed supporting manufacturers - mens rea - Absolute confiscation of duty-free gold before expiry of export obligation period - Penalty imposed under Sections 112(a)(i) and 114(iii) - fulfilment of 'Actual User Condition’ as per Notification No. 18/2015-Cus.

Diversion of duty-free gold to job workers not originally endorsed as supporting manufacturers -HELD THAT: - The Tribunal found it undisputed that the appellant did not itself manufacture jewellery and got the imported gold converted through job workers and supporting manufacturers. Though some of those supporting manufacturers were not entered in the Advance Authorisation when the gold was sent to them, the appellants had applied for their inclusion and the DGFT subsequently endorsed and regularised them. On these facts, the omission to have their names entered before dispatch of the gold was held to be only a curable procedural lapse. Once the very entities to whom the gold was sent were later approved and regularised by the DGFT, the movement of gold to them could not be treated as diversion to unauthorised entities or breach of the Actual User condition. [Paras 15, 16]

The seizure and confiscation of 266619.708 grams of gold were set aside, and the redemption fine imposed in lieu thereof was also set aside.

Confiscation of excess export jewellery in absence of mens rea - Clerical mistake in export documents - HELD THAT: - The Tribunal accepted the explanation that the excess quantity found over the invoice declaration arose from a clerical mistake and that, because of the seizure, the appellant could not rectify the export documents. It further held that export of a higher quantity than declared would not confer any pecuniary benefit on the appellant and that the circumstances did not disclose any improper intent. In the absence of mens rea, the excess jewellery could not be treated as liable to confiscation merely because the invoice description had not been corrected before interception. [Paras 17, 18]

The confiscation of 4083.900 grams of gold jewellery was set aside and no redemption fine was held imposable.

Absolute confiscation of duty-free gold before expiry of export obligation period - Gold forming part of authorised import - HELD THAT: - The Tribunal noted that the seized quantity was found at the premises of a supporting manufacturer and that the time available under the Advance Authorisation for fulfilling the export obligation had not expired on the date of seizure. Since the seizure took place while the appellant was still within the permitted period for conversion of the imported gold into jewellery for export, the quantity in question was held to be part of the authorised import meant for fulfilment of export obligation. On that basis, the allegation that it had not been imported under the Advance Authorisation or had been procured from unauthorised sources was rejected. [Paras 19, 20]

The order of absolute confiscation of 1796.740 grams of gold was set aside and the gold was directed to be released to the appellant for fulfilment of export obligations.

Penalty for alleged diversion of duty-free imported gold - Absence of evidence and mens rea - Penalties on the firm and connected noticees - diversion rested on assumptions and no mala fides or improper export attempt was proved - HELD THAT: - The Tribunal held that the imports were made under a valid Advance Authorisation and that the appellants were in possession of proper gold intended for export after conversion into jewellery. It found that no mens rea had been established and that the Revenue had produced no evidence of any mismatch between the quantity of duty-free gold imported and the subsequent export of jewellery so as to substantiate diversion. Having already found that the confiscations were unsustainable, the Tribunal concluded that the foundation for penalties also failed. [Paras 21]

All penalties imposed on the appellants under Sections 114(iii) and 112(a)(i) were set aside.

Final Conclusion: The Tribunal set aside the entire impugned order. It held that the use of later-regularised supporting manufacturers was only a procedural lapse, that the excess export jewellery involved no mala fide intent, that the seized gold could not be treated as unauthorised while the export obligation period was still running, and that the penalties were therefore unsustainable.

Penalty on Customs Broker under Section 112(a)(i) - Requirement of act or omission rendering goods liable to confiscation - Contravention of Customs Brokers Licensing Regulations - Violation of the CBLR - HELD THAT: - The Tribunal held that the only allegation against the appellant was breach of duties under the CBLR. It also noticed that, in the earlier licence-suspension proceedings, the Commissioner of Customs had examined the appellant's role and recorded that there was no mens rea, no knowledge or connivance, and no negligence attributable to the appellant, and the suspension was revoked. Section 112(a)(i) applies only where the person is shown to have done or omitted to do something that made the goods liable to confiscation under Section 111. Since the impugned order did not record any such violation by the appellant and proceeded only on the footing of alleged CBLR breach, the statutory foundation for penalty under Section 112(a)(i) was absent. The Tribunal followed M/s Exim Services [2021 (2) TMI 205 - CESTAT CHANDIGARH], which in turn followed P.S. Bedi & Company [2001 (8) TMI 147 - CEGAT, NEW DELHI], to hold that in the absence of a finding that the Customs Broker's commission or omission rendered the goods confiscable, penalty under Section 112(a) cannot be imposed. [Paras 6, 7, 8, 9, 11]

The penalty imposed on the appellant under Section 112(a)(i) was held unsustainable and was set aside.

Final Conclusion: The Tribunal allowed the appeal and set aside the penalty on the Customs Broker. It held that an alleged breach of the Customs Brokers Licensing Regulations, without a finding of any act, omission or abetment attracting confiscation under Section 111, could not support penalty under Section 112(a)(i) of the Customs Act.

Scope of expressions "by-products" arising from refining crude oils - "resultant goods" under Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR) - Admissibility of duty exemption u/s 65 - Duty remission on exported resultant goods - Proportionate attribution of imported inputs - Activity of manufacturing i.e. processing of crude vegetable oils into refined vegetable oils

Advance ruling maintainability - Duty liability and remission under MOOWR - HELD THAT: - The Authority held that the applicant had substantially sought clarity on the treatment of goods emerging from a permitted manufacturing process in bond and on the resulting customs duty consequences. Such questions directly concern duty liability and remission under the statutory warehousing framework and therefore fall within the ambit of advance ruling. The objection that the application was improperly framed or lay outside the Scheme was rejected. [Paras 9]

The application was maintainable and was taken up for decision on merits.

Whether the "by-products" arising during the manufacturing process undertaken by the applicant qualify as "resultant goods" under Section 65 of the Customs Act, 1962 read with the MOOWR, 2019 ? - HELD THAT: - By-products are inherently "resultant goods" because they emerge from the manufacturing process. The law should be interpreted in a purposive manner, if the refining process produces them, they are "resultant goods" under Section 65. Section 65 uses broad language "manufacture or other operations" without excluding incidental outputs. Therefore, export of resultant by- products should qualify as export of manufactured goods. Industries normally distinguish their final products between main products and by-products. The proposal put forth by the office of the Commissioner of Customs in their letter addressed to Authority for Advance Ruling, Mumbai for rejecting the application outright ignores the legislative intent of the MOOWR scheme.

Therefore, exclusion of by-products from "resultant goods" would be inconsistent with statutory language, industry practice, and economic reality.

The Authority held that neither Section 65 nor the MOOWR Regulations define the expression "resultant goods", and it must therefore be understood in its ordinary and commercial sense. In that sense, the expression covers all goods that emerge from the manufacturing process and is not confined to the principal output alone. The refining process necessarily yields refined oils as well as distinct fractions such as Palm Fatty Acid Distillate, acid oils, stearin and distilled fatty acids, which were found to be scientifically distinct and commercially marketable outputs rather than waste or scrap. The absence of the term "by-products" in the Scheme was held not to imply exclusion, because the proper inquiry is whether such goods fall within the broader statutory expression "resultant goods". The Authority further held that the use of broad language in the statutory framework and the Circular showed an intention not to restrict the benefit to main products alone, and a restrictive construction would defeat the facilitative object of the Scheme. Reliance was placed on Jakson Power Pvt. Ltd. [2024 (5) TMI 480 - DELHI HIGH COURT] for the principle that the Section 65 framework does not admit exclusionary interpretation in the absence of express provision. [Paras 9]

The goods described by the applicant as by-products were held to qualify as resultant goods under the MOOWR framework.

Whether export of resultant goods entitles the applicant to remission of duty on the imported inputs contained therein, particularly in view of the finding that all outputs emerging from the manufacturing process qualify as "resultant goods" under Section 65 of the Customs Act, 1962 read with the MOOWR, 2019 ? -HELD THAT: - The Authority held that, although the MOOWR Scheme operates through deferment at the stage of import, the statutory framework read with Section 69 and Clause 7 of Circular No. 34/2019-Customs leads to extinguishment of duty liability to the extent resultant goods are exported. The expression "to the extent" in Clause 7 was treated as embodying a proportionate remission mechanism linked to exports, without any distinction between principal products and other resultant goods. The Authority rejected the contention that absence of an expressly prescribed computational formula negatives apportionment, holding that the scheme itself recognises attribution of imported input content across outputs, and that verifiable yield ratios and material balance can furnish the basis for correlation. It further held that Section 68 read with Clause 8 similarly limits duty on domestic clearances to the imported goods contained in so much of the resultant products as are cleared for home consumption. On that reasoning, where by-products alone are exported and main products are sold domestically, remission is admissible proportionately on the crude input oils attributable to the exported resultant goods, subject to proper accounting, identification and correlation. [Paras 9]

Proportionate duty remission was held admissible on imported crude oils contained in exported resultant goods, including exported by-products, while duty on domestically cleared resultant goods remains payable only to the corresponding attributable extent.

Final Conclusion: The Authority held that the outputs described as by-products are also resultant goods under Section 65 read with the MOOWR Scheme. It ruled that export of such resultant goods attracts proportionate remission of duty on the imported crude oils contained in them, even if the principal refined oils are cleared for home consumption on payment of the attributable duty.

Fraudulent preference under Section 531(1)- Related party transfer of company property - Mutation entries as mode of transfer - Transfer of the company's immovable property to its promoters, reflected through mutation entries without any transfer instrument or disclosed consideration - Preponderance of probability - Winding-up commencement - HELD THAT: - The Court held that Section 531(1) protects the creditors of the company and is attracted where property is transferred within the statutory period in a manner amounting to a fraudulent preference. On the record, the property was moved from the company to its promoters, who wholly controlled the company, without any executed conveyance, without any disclosed valuation, and without any stated or quantified consideration. The promoters' assertion that past loans were due from the company was unsupported by any quantified liability or material showing comparison between such alleged dues and the value of the property. In these circumstances, the absence of consideration itself negatived good faith, and the only reasonable conclusion was that the property was sought to be placed beyond the reach of the company's creditors. The Court further held that the absence of a formal transfer deed did not take the matter outside Section 531(1), since title had in fact been secured through mutation entries and enjoyed as such, including an attempted onward sale. The decisions in Monark Enterprises [1991 (10) TMI 208 - HIGH COURT OF BOMBAY] and Morepen Finance Ltd. [2004 (8) TMI 414 - HIGH COURT OF DELHI] were found inapplicable because those cases involved demonstrated consideration, whereas the present case did not. The mutation in favour of the promoters, including the later mutation following the death of one promoter, was therefore illegal and liable to be reversed by restoring the company's name in the land records. [Paras 24, 25, 26, 27, 29]

A clear case of fraudulent preference was made out; the impugned transaction was declared void and the mutation entries in favour of the promoters were directed to be reversed.

Final Conclusion: The Official Liquidator's Report was allowed. The Court declared the purported transfer of the subject property in favour of the promoters void as a fraudulent preference and directed reversal of the mutation entries so that the property stands restored in the company's name.

Seeking directions for a fresh transaction/forensic audit and re-examination of admitted claims - bogus claimants based on sham cash receipts while abandoning the conduct of forensic audit - HELD THAT:- Civil appeals were dismissed and the cost imposed in the impugned appellate order [2026 (3) TMI 1721 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] was set aside.

Imposition of penalty on Payment to or for the credit of a person resident outside India - Surrender of unutilised foreign exchange by individual resident - Delayed settlement of import dues as foreign currency credit - Separate penalty on power of attorney holder - Body of Individuals - Vicarious Liability - Contravention of Foreign Exchange Regulations - Quantification of Penalty - Standalone Violation

Payment to person resident outside India - Section 3(b) contravention in import advance remittances - Advance remittances made to overseas suppliers for imports, to the extent remaining unmatched with imports - contention that the provision applied only where payment was made through a person other than an authorised person - HELD THAT: - The Tribunal held that the appellants had sought to import into Section 3(b) a requirement drawn from another provision. Section 3(b) plainly prohibits making any payment to or for the credit of any person resident outside India, save as otherwise permitted, and does not require that the remittance should have been routed through a non-authorised person before the provision can be attracted. Since it was not denied that money had been advanced to the overseas supplier in connection with the imports, the challenge to the finding of contravention failed. However, having regard to the factual circumstances noticed and not disputed by the respondent, the penalty on the proprietrix under this count was reduced. [Paras 20, 21]

The finding of contravention under Section 3(b) was sustained, but the penalty on the proprietrix was reduced; the separate penalty on the power of attorney holder was later deleted.

Surrender of unutilised foreign exchange by individual resident - Applicability of Regulation 6(1) to proprietorship - HELD THAT: - From the definition of a word “person”, it is evident that an unlike a company or a firm, a proprietorship is not a ‘person’ for the purposes of FEMA, 1999. A proprietorship would, therefore, fall within the ambit of an ‘individual’. The provisions of Section 10(6) apply to “Any person”. Thus, in this case, the ‘person’ in question, being the proprietrix was an ‘individual’.

While Section 10(6) applies to any person, Regulation 6(1) expressly applies only to a person not being an individual resident in India. The proprietrix being an individual resident, invocation of Regulation 6(1) against her was contrary to the clear language of the regulation. On that construction, the penalty imposed on the proprietrix under Section 10(6) read with Regulation 6(1) was unsustainable. [Paras 29, 30]

The penalty imposed on the proprietrix under Section 10(6) read with Regulation 6(1) was deleted; the separate penalty on the power of attorney holder was later deleted.

Delayed settlement of import dues as foreign currency credit - Penalty for non-settlement of import dues within stipulated period - HELD THAT: - The Tribunal observed that under the FEMA scheme, contravention of rules, regulations, notifications, directions or orders ordinarily attracts monetary penalty, many such requirements being procedural compliances intended to secure timely fulfilment of statutory objectives. In the present case, the appellants produced some material showing correspondence with one authorised dealer bank requesting deletion of outstanding entries, but failed to establish proper due diligence or serious pursuit in respect of the other unsettled import dues. In those circumstances, the contravention was not liable to be erased, but the penalty quantum was liable to be substantially reduced. [Paras 34, 35]

The penalty for delayed settlement of import dues was sustained in principle, but the penalty on the proprietrix under this count was reduced.

Separate penalty on power of attorney holder - Agency under power of attorney - Body of individuals - business of a proprietorship was carried on by a son under a power of attorney from the proprietrix, separate penalties imposed both on the proprietrix and on the power of attorney holder for the same contraventions by treating them as a body of individuals - HELD THAT: - The Tribunal held that a power of attorney creates an agency and the holder acts on behalf of the grantor, whose acts are binding as if done by the grantor herself. Relying on the principle stated in Suraj Lamp & Industries (P) Ld. Tr. Dir [2011 (10) TMI 8 - SUPREME COURT], and referring to Deghamwala Estates [1979 (3) TMI 30 - MADRAS HIGH COURT] and Valsala Amma (R) [1971 (9) TMI 182 - SUPREME COURT] on the concept of a body of individuals, the Tribunal concluded that there was no occasion to treat the proprietrix and her attorney-holder as jointly constituting such a body. Once penalties were imposed on the proprietrix as sole owner of the business, those penalties already covered the acts done through the attorney-holder on her behalf. [Paras 37, 38]

All separate penalties imposed on the power of attorney holder were deleted.

Final Conclusion: The appeals were partly allowed by modification of the adjudication order. The finding of contravention under Section 3(b) and in respect of delayed settlement of import dues was maintained with reduced penalty on the proprietrix, the penalty under Section 10(6) read with Regulation 6(1) was deleted, and all separate penalties on the power of attorney holder were set aside.

Utilization of CENVAT credit for reverse charge service tax on import of services - Prospective operation of substantive prohibition - Extended period of limitation -

Whether the assessee can discharge the service tax liability under reverse charge mechanism in respect of services received from outside India during the period prior to July 2012 by utilizing the Cenvat credit ? - HELD THAT: - The Tribunal held that, under the scheme of the CENVAT Credit Rules read with Section 66A, the recipient in India who was liable to pay service tax on services received from abroad became the person liable for paying service tax and, consequently, the provider of taxable service for the purpose of the Rules. Such service was therefore to be treated as an output service, permitting utilization of CENVAT credit for payment of service tax under reverse charge during the pre-July 2012 period. It was further held that Rule 5 of the Taxation of Services Rules dealt only with availment of credit and did not bar its utilization. The contrary reliance placed on Sangam India Ltd.[2012 (8) TMI 560 - CESTAT, NEW DELHI] was found inapplicable in view of the High Court decisions noticed by the Tribunal. [Paras 10, 11, 12, 13, 14]

Denial of utilization of CENVAT credit for payment of reverse charge service tax for the period in dispute was unsustainable.

Prospective application of Explanation to Rule 3(4) - Substantive prohibition - Limitation on show cause notice - HELD THAT: - The Tribunal found that the Explanation introduced in Rule 3(4) created a substantive prohibition against use of CENVAT credit for payment of service tax where the recipient was liable under reverse charge. As a provision creating liability or imposing prohibition, it could operate only prospectively and was therefore inapplicable to the period October 2011 to March 2012. Once utilization of credit for that period was held lawful and the tax itself stood paid through such credit, there remained no basis to allege evasion so as to justify invocation of the extended period. The show cause notice covering the entire demand period was therefore held barred by limitation. [Paras 9, 13, 14]

The Explanation to Rule 3(4) was held inapplicable to the period in dispute, and the demand was also barred by limitation.

Final Conclusion: The Tribunal held that, for the period prior to 1st July 2012, the assessee was entitled to utilize CENVAT credit for payment of service tax on imported services under reverse charge. As the later Explanation to Rule 3(4) was only prospective and the extended period was not invocable, the demand, interest and consequential penalties were set aside and the appeal was allowed.

Refund of unutilized Cenvat credit on export of services - Input service nexus for exported output services - Exclusion of personal consumption under input service definition - Refund of unutilized Cenvat credit on insurance, rent-a-cab, air travel, hotel accommodation, restaurant, telecommunication and business support services used for exported Online Information and Database Access/Retrieval Service - HELD THAT: - The Tribunal held that, where the disputed services were shown to have been used directly or indirectly in or in relation to provision of the exported output service, and were not shown to have been consumed for personal use of employees, they answered the definition of input service. On the material recorded, the services in question were required for rendering the output service, and the explanation furnished as to their use established the necessary nexus. The Tribunal further held that, once there was material to show that the services were not for personal consumption but were actually used in rendering the output service, entitlement to credit and consequential refund could not be denied.

In the case of Warburg Pincus India Pvt. [2018 (4) TMI 482 - CESTAT MUMBAI] the Mumbai bench of the Tribunal has held services like Courier Agency services, Hotel Accommodation, amongst others as directly used for rendering of output service. In the case of Megta Design Automation Pvt. Ltd. [2015 (9) TMI 939 - CESTAT BANGALORE], it was held that Telecommunication Services and Insurance Services are eligible for Cenvat Credit.

It also accepted the appellant's case that rejection on the footing of non-production of invoices for part of the telecommunication, insurance and business support services was untenable in view of the record relied upon. [Paras 12, 13, 14, 15, 16]

The disputed services were held to qualify as input services, and denial of refund of the unutilized credit was held to be not in accordance with law.

Final Conclusion: The Tribunal allowed the appeal and held that refund of unutilized Cenvat credit could not be denied in respect of the disputed input services, since they were used for providing the exported output service and were not shown to be for personal consumption. The impugned order was therefore set aside with consequential relief as per law.

Rectification of mistake apparent from record - Non-consideration of binding precedent - Recall for rehearing -HELD THAT: - On going through the impugned Final Order, the Tribunal found that the Appellant’s submissions on the basis of the decision of Hon’ble Apex Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] were not considered while passing the said Final Order. Therefore, to that extent, there is a mistake apparent on face of record. As submitted by the Appellant, this bench in the case of Goodyear India Ltd.[2024 (8) TMI 1742 - CESTAT CHANDIGARH] has allowed the ROM application under similar circumstances by recalling its final order; therefore, Tribunal in the instant case also, the impugned Final Order may be recalled and heard again giving an opportunity to either side to present their submissions.

On that basis, it held that the proper course was to recall the order and restore the appeal for fresh hearing after giving both sides an opportunity to address the matter. [Paras 4, 5]

The miscellaneous application was allowed; the final order was recalled and the appeal was restored for rehearing.

Final Conclusion: The Tribunal held that failure to consider the appellant's submissions based on a Supreme Court decision amounted to a mistake apparent on the face of the record. The final order was therefore recalled and the appeal restored for rehearing.

Entitlement to refund claim - Compliance with the Exclusive statutory machinery for refund under section 11B - Appellantfailed to produce any documentary evidence - Taxability of the job of excavation and construction of intercepting drain, bridge/culvert - HELD THAT:- Following the decision in the case of Mafatlal Industries Limited [1996 (12) TMI 50 - SUPREME COURT], where the Apex Court has held that no claim for refund of any duty or tax shall be entertained, except in accordance with the statutory provisions and every claim for refund must be made in accordance with section 11B.

Since in the present case, the appellant has not been able to substantiate that the claim has been made within the limitation prescribed under section 11B, this Court do not find any error in the decision taken by the authorities below.

Validity of restriction on utilisation of CENVAT credit during default in monthly duty payment - Constitutionality of Rule 8(3A) condition requiring payment of duty without utilising CENVAT credit - substantial questions of law - HELD THAT: - The Court followed its earlier decision in Indsur Global Ltd. v. Union of India [2014 (12) TMI 585 - GUJARAT HIGH COURT] challenged before the Hon’ble Apex Court [2024 (7) TMI 1559 - SC ORDER (LB)], was disposed of on low tax effect, as relied on by the Tribunal, and reiterated that the condition in Rule 8(3A) compelling payment of duty without utilizing the CENVAT Credit is unconstitutional. Since that portion of the rule already stood rendered invalid, the Tribunal was justified in setting aside the demand founded on denial of utilisation of CENVAT credit during the defaulted period. The subsequent disclosure that the appeal against Indsur Global Ltd. and that similar matters had also not been entertained on that ground did not alter the binding effect of the Court's own decision. On that basis, no substantial question of law survived. [Paras 6]

The Revenue's challenge to the Tribunal's order failed, as the impugned restriction under Rule 8(3A) could not be enforced.

Final Conclusion: Following its earlier ruling in Indsur Global Ltd., the Court held that the condition in Rule 8(3A) requiring payment of duty without utilising CENVAT credit is unconstitutional. As that issue stood concluded against the Revenue, no substantial question of law survived and the tax appeal was dismissed.

CENVAT credit on fuel used in manufacture of exempt intermediate goods - Intermediate product transferred to another unit of same manufacturer - Interpretation of within the factory of production - Stock-transfer vis-a-vis final product under MODVAT/CENVAT scheme

Fuel input credit for exempt intermediate goods - Intermediate product transferred to another unit - Stock-transfer and final product determination -HELD THAT: - The Court held that no consideration or trading element was involved in the movement of D.B.M. from the Salem unit to the Belpahar unit; both units belonged to the same manufacturer and the transfer was only a stock-transfer. Relying on Escorts Ltd. [2004 (8) TMI 106 - SUPREME COURT], the Court held that mere movement of an intermediate product from one factory of the same manufacturer to another does not make that product the final product for MODVAT/CENVAT purposes. Since D.B.M. was used in the manufacture of dutiable refractory mortars, ramming mass and refractory bricks, the relevant final products were those dutiable goods and not D.B.M. Consequently, the bar under Rule 57AD(1) against credit on inputs used in exempt goods did not apply. The Court distinguished Ballarpur Industries as dealing with valuation and application of the presumptive reversal provision to stock-transfer of exempt final goods, whereas in the present case D.B.M. was held to be only an intermediate product. The Court also accepted the principle stated in Gujarat Narmada Valley Fertilizers Company Limited [2012 (12) TMI 437 - SUPREME COURT] that fuel is not automatically excluded from Rule 57AD(1); however, that principle did not assist the Department because the final products here were dutiable. [Paras 12, 13, 17, 18]

Credit on furnace oil could not be denied on the footing that D.B.M. cleared to the Belpahar unit was an exempt final product.

Meaning of within the factory of production - Input used in one unit and final goods manufactured in another unit -HELD THAT: - The Court rejected a literal construction of the definition of 'input' which would confine eligibility only to cases where every stage of manufacture occurs in the same physical premises. It held that where the input was used in one unit of the same manufacturer to produce an intermediate product, and that intermediate product was transferred to another unit of the same manufacturer for manufacture of dutiable final goods, a narrow reading would create an artificial distinction unrelated to the object of the MODVAT/CENVAT scheme. As both units belonged to the same manufacturer, the intermediate goods were not cleared to third parties, and denial of credit solely because of physical separation of units would defeat the scheme meant to avoid cascading of duties, the expression had to be construed broadly in this factual setting. [Paras 15, 16, 18]

CENVAT credit on furnace oil was allowable notwithstanding that the fuel was used at the Salem unit while the dutiable final goods were manufactured at the Belpahar unit of the same manufacturer.

Final Conclusion: The appeal was allowed. The Court held that credit on furnace oil could not be denied where the nil-rated D.B.M. manufactured at one unit was only an intermediate product stock-transferred to another unit of the same manufacturer for manufacture of dutiable final goods, and the Tribunal's order was therefore set aside with restoration of the appellate order.

Clandestine manufacture and removal - Corroborative evidence for private records and pen drive data - Penalty on Director - Burden of Proof - Tangible Evidence - Presumptions and Assumptions - Preponderance of Probability

Clandestine manufacture and removal - Private records and pen drive data - Corroborative evidence - discrepancies in pen drive data, private records and stock entries without independent corroborative evidence - HELD THAT: - The Tribunal held that a charge of clandestine removal is a serious one and cannot rest merely on discrepancies in pen drive data, private documents or non-matching entries in statutory records. It applied the settled principle that such allegations must be established by positive and tangible evidence showing actual clandestine manufacture and clearance, and not by presumption or inference. Relying on Commissioner of Central Excise, Haldia Vs. Lords Chemicals Ltd.[2009 (7) TMI 831 - CALCUTTA HIGH COURT], Sulekhram Steels Pvt. Ltd. [2008 (12) TMI 423 - CESTAT, AHMEDABAD], Brims Products [2008 (9) TMI 603 - PATNA HIGH COURT], Oudh Sugar Mills Ltd. [1962 (3) TMI 75 - SUPREME COURT], Nabha Steels Ltd. [2016 (5) TMI 777 - CESTAT CHANDIGARH], Century Metal Recycling Pvt. Ltd. [2016 (1) TMI 967 - CESTAT NEW DELHI] and Gupta Synthetics Ltd. [2013 (11) TMI 1525 - CESTAT AHMEDABAD], it found that the Revenue had not fulfilled the accepted criteria for proving clandestine manufacture and removal. The case lacked corroboration through evidence such as excess raw material procurement, actual transportation, identified buyers, receipt of sale proceeds, power consumption or other independent material linking the recovered records to clandestine clearances. On that reasoning, the allegation itself failed. [Paras 9, 10, 11, 12, 13]

The demand of duty with interest, founded on the allegation of clandestine manufacture and clearance, was set aside.

Penalty on Director - Consequential penalty - HELD THAT: - The Tribunal held that, in the facts of the case, no penalty was imposable on the Director once the Revenue failed to establish clandestine manufacture and removal against the manufacturing appellants. The penalty was thus only consequential to the principal charge and could not stand independently after the duty demand and related penalties were found unsustainable. [Paras 14]

The penalty imposed on the Director was also set aside.

Final Conclusion: The Tribunal held that the Revenue had failed to establish clandestine manufacture and clearance by cogent and independent corroborative evidence. The duty demand, interest and penalties against the manufacturing appellants, as well as the penalty on the Director, were therefore set aside and the appeals were allowed with consequential relief.

Alternative statutory remedy - Maintainability of writ petition against VAT order - Challenged the orders of the Deputy Commissioner under the Uttarakhand Value Added Tax Act - HELD THAT: - The Court held that the petitioner had an effective statutory remedy of appeal under the VAT Act, with further forums also available thereafter. It rejected the contention that the appellate remedy was illusory on the ground that the appellate authority could not examine contentions relating to excise policy, and held that all such contentions could be raised before and considered by the appellate authority. On that basis, the Court declined to exercise writ jurisdiction. [Paras 10, 11, 12, 13]

The petitions were disposed of with liberty to the petitioner to file appeals, and the appellate authority was directed to decide them on merits without rejecting them on delay if filed within the time granted.

Final Conclusion: The High Court declined to entertain the writ petitions against the VAT orders on the ground of availability of an effective statutory appellate remedy. Liberty was granted to pursue the appeals, with all contentions left open for consideration by the appellate authority.

Computation of works-contract turnover - Double taxation - Failure to verify turnover already assessed in other assessment years - Expression “turnover” - The authorities had not examined the assessee's specific contention that part of the gross turnover for Assessment Year 2004-05 consisted of amounts already taxed in the previous assessment year and amounts pertaining to the subsequent assessment year which had also been subjected to tax. - HELD THAT: - The expression “turnover” stands defined under Section 2(s) of the Andhra Pradesh General Sales Tax Act, 1957 which if read with Section 5F along with Rule 6(2) and 6(3)(ii) of the Andhra Pradesh General Sales Tax Rules, 1957 would make it explicitly clear that the term “turnover” means the amount payable based on the invoices raised by an assessee for the works executed during any assessment year. It would be entirely different if the case would fall under Rule 6(3)(i) of the Andhra Pradesh General Sales Tax Rules which in the instant case would not be applicable for the reason that the contract in the instant case being executed by the petitioner stands extended beyond the period of more than one year, and it was for this reason alone the petitioner had contended the applicability of provisions of Rule 6(3)(ii) of the Andhra Pradesh General Sales Tax Rules, 1957.

The Court found from the assessment order, the appellate order and the Tribunal's order that the assessee's plea regarding inclusion in gross turnover of amounts already assessed for 2003-04 and amounts relating to 2005-06 had not been verified or answered at any stage. It held that, if such amounts had already been taxed in the respective years, their inclusion again in the gross turnover for Assessment Year 2004-05 would amount to double taxation, which would be impermissible. Since this material contention went unexamined, the orders could not be sustained and the matter required fresh verification of the books of account and the material with the Commercial Tax Officer. [Paras 12, 13, 15, 16]

The substantial questions (a) and (b) were decided in favour of the petitioner; the assessment, first appellate and Tribunal orders were set aside, and the matter was remitted to the Assessing Authority for fresh determination after verifying whether the turnover included amounts already taxed in 2003-04 and 2005-06.

Final Conclusion: The Tax Revision Case was partly allowed. The Court set aside the concurrent orders because the plea of double taxation arising from inclusion of amounts pertaining to other assessment years had not been examined, and remitted the matter for fresh assessment; the question relating to the governing rule under Rule 6(3) was left open for the Assessing Authority.

Right to travel abroad pending criminal proceedings - Balancing personal liberty with speedy trial and administration of criminal justice - Conditions regulating foreign travel of an accused - Return of passport and prior court permission - HELD THAT: - The Court found that, although delay in criminal proceedings cannot always be attributed exclusively to the accused, the chronology disclosed repeated recourse by the respondent no. 2 to proceedings before the High Court and the securing of interim protection which impeded progress of the case. The High Court's reliance on his previous appearances before the Magistrate, the asserted medical need, and his undertaking to return within a stated period was held insufficient in the facts of the case. The Court held that the right to travel abroad, though part of personal liberty under Article 21, is not absolute and must be balanced against the appellant's right to a speedy trial and the societal interest in effective administration of criminal justice. On that balance, the High Court had been unduly indulgent in allowing travel abroad. At the same time, the Court held that the Magistrate's order returning the passport did not require interference; instead of compulsory deposit of passport, the proper safeguard was that the respondent no. 2 should not leave the country without express permission of the Sessions Court after committal, and any such request could be considered on its own merits subject to appropriate conditions. [Paras 9, 10, 11, 13, 14]

The High Court's order permitting travel abroad and the Sessions Judge's order directing deposit of passport were set aside; the respondent no. 2 may retain the passport but cannot leave the country without express permission of the Sessions Court after committal.

Final Conclusion: The Court held that personal liberty, including the right to travel abroad, had to be balanced against the right to a speedy trial and the larger interest of criminal justice. The respondent no. 2 was not required to deposit his passport, but he was restrained from leaving the country without express permission of the Sessions Court, which may consider any future request on its own merits.