TaxTMI Updates e-Newsletter
Jul 14,2026

Writ jurisdiction despite statutory alternative remedy - Protection against limitation for pursuing remedy before wrong forum - HELD THAT: - The Court noted that the impugned order had been passed under Section 74 of the CGST Act and that Section 107 expressly provides a remedy of appeal against such order. Since the petition sought only to assail that adjudication order and the consequential summary communication, the Court relegated the petitioner to the statutory appellate forum. Having regard to the fact that the petitioner had been pursuing the matter in the writ petition, the Court further directed that limitation should not obstruct the filing and entertainment of the appeal, and that the appeal be decided on merits. [Paras 3, 4]

The petitioner was directed to file an appeal before the competent appellate authority within the time granted by the Court, and the appeal was ordered to be entertained and decided on merits without rejection on limitation.

Final Conclusion: The writ petition was disposed of by relegating the petitioner to the statutory appellate remedy against the GST adjudication order. The Court protected the petitioner against limitation and directed the appellate authority to entertain the appeal and decide it on merits.

Cancellation of GST registration for non-filing of returns - Restoration of registration subject to filing of returns and payment of dues - compliance with tax dues and filing obligations - HELD THAT: - The Court found that the registration had been cancelled pursuant to a show cause notice only for non-furnishing of returns under Section 39. It also recorded that it was not the respondents' case that the petitioners had adopted any dubious process to evade tax. On that basis, the Court held that continued suspension or cancellation of registration would be counterproductive and against the interest of the revenue, since the petitioners would be unable to carry on business or raise invoices, which would in turn affect tax recovery. The matter therefore required a pragmatic approach, by permitting the petitioners to continue business on conditions of curing the default through filing returns for the entire default period and paying the applicable tax, interest, penalty and fine. [Paras 4, 5, 6, 7]

The cancellation order was set aside conditionally, with directions to restore registration upon compliance within the stipulated time after activation of the portal and login credentials.

Final Conclusion: The writ petition was disposed of by setting aside the cancellation of registration, subject to the petitioners filing all pending returns and paying the applicable dues within the time granted. Restoration was directed upon compliance, failing which the benefit of the order would stand withdrawn automatically.

Refund of recovered tax pending GST Tribunal appeal - Stay of recovery on compliance with pre-deposit and undertaking requirements - Ignorance of law -provisions of the Circular No. 224/18/2024 – GST - HELD THAT: - The Court held that paragraphs 4, 5 and 6 of Circular No. 224/18/2024-GST make the position clear that, if a taxpayer intended to pursue an appeal before the Appellate Tribunal, stay of recovery of the balance demand was available only on payment of the amount equivalent to the pre-deposit and on furnishing an undertaking to file the appeal within the timeline contemplated by section 112 read with the Removal of Difficulties Order. The petitioner had not followed that procedure and had filed the appeal only after recovery had already been made. The plea that the petitioner was unaware of the circular was rejected on the principle that ignorance of law is no excuse. In those circumstances, no refund could be directed; such a direction would effectively amount to waiver of the pre-deposit, which the Court held to be impermissible. The Tribunal was left free to examine all issues in the appeal. [Paras 5]

The petitioner was held disentitled to refund of the recovered amount, and the writ petition was rejected.

Final Conclusion: The Court declined to order refund of the amount recovered under the appellate order, holding that the petitioner had not complied with the prescribed conditions for obtaining protection from recovery and had filed the Tribunal appeal beyond the stipulated period. The writ petition was therefore rejected, leaving the Tribunal to consider the appeal on its own merits.

GST appellate pre-deposit - Tax already paid under IGST in inter-State versus intra-State supply dispute - HELD THAT: - The Court recorded that the impugned appellate order proceeded on the basis that the petitioner's tax liability lay under CGST and SGST instead of IGST already paid by it, and that the dispute was not one of excess availment of ITC. In that background, and following the position earlier noticed in the petitioner's own case [2025 (5) TMI 2309 - TELANGANA HIGH COURT] and the decision of the Delhi High Court in the case of Infiniti Retail Limited [2025 (5) TMI 2073 - DELHI HIGH COURT] the Court held that while filing appeal before the GST Appellate Tribunal, the petitioner need not be required to make the further statutory deposit of 10% tax. The Court expressly left the merits of the classification of supply as inter-State or intra-State open for decision in appeal. [Paras 6]

The petitioner was permitted to file appeal before the GST Appellate Tribunal within the extended period, without insistence on 10% pre-deposit, and all questions on merits were left open.

Final Conclusion: The writ petition was disposed of by permitting the petitioner to pursue the statutory appeal before the GST Appellate Tribunal, with exemption from the requirement of 10% pre-deposit since the controversy was confined to the head under which GST was payable and not to excess ITC availment. No opinion was expressed on the merits of the underlying tax dispute.

Statutory remedy against assessment order - Time limit for show cause notice under fraud assessment - Prejudice in procedural non-compliance - Opportunity of hearing in tax adjudication - Mandatory and Directory Provisions

Time limit for show cause notice under fraud assessment - Prejudice in procedural non-compliance - Opportunity of hearing in tax adjudication - HELD THAT: - As observed, in the earlier proceedings [2025 (12) TMI 1808 - TELANGANA HIGH COURT], and [2026 (3) TMI 1044 - TELANGANA HIGH COURT] the petitioner had not raised the ground of non-observance of the provisions of Section 74(2) of the Act nor the breach of the observation made in the order dated [2025 (3) TMI 1938 - TELANGANA HIGH COURT] by the Coordinate Bench of this court. It is therefore to be seen whether the petitioner has suffered any real prejudice for non-adherence to the time period of six months in issuing the show cause notice prior to passing of the order-in-original.

The Court held that the requirement of issuing notice at least six months prior to the time limit for passing the order, in the context of the provision governing fraud assessment, was not mandatory merely because the statute used the word "shall", particularly when no consequence for breach was provided. The Court further held that such procedural objection had to be tested on the touchstone of prejudice. On the facts, the petitioner had been granted several notices, repeated opportunities to file reply, and personal hearings even after earlier writ proceedings; it had also participated in the hearing held after the further notice. In that background, and as the assessment order was passed within the statutory limitation, the Court found no real prejudice and no violation of effective opportunity principles. [Paras 16, 17, 18]

The objection founded on the six-month notice period and alleged denial of hearing failed, there being no mandatory breach causing prejudice.

Statutory remedy against assessment order - Writ jurisdiction despite appellate remedy - HELD THAT: - The Court noted that, in the earlier round arising from the grievance regarding missing files and ongoing adjudication, the Supreme Court had taken note of the final assessment order for the relevant period and had observed that the petitioner was left with the option of pursuing the statutory appeal, while permitting all available contentions, including prejudice from missing files, to be raised before the appellate authority. The subsequent modification order was read as declining waiver of the pre-deposit condition and not as diluting the earlier direction relegating the petitioner to appellate remedy. In that background, and there being no ground of jurisdictional or procedural prejudice warranting interference, the Court declined to entertain the writ petition and left the petitioner to avail the statutory remedy. [Paras 18, 19, 20]

The writ petition was dismissed, with liberty to the petitioner to pursue the statutory remedy in terms of the Supreme Court's observations.

Final Conclusion: The Court held that the six-month requirement for issuance of the show cause notice was not mandatory in the absence of statutory consequence and, in any event, no prejudice was shown because repeated opportunities of reply and hearing had been granted. Having regard also to the Supreme Court's earlier direction relegating the petitioner to the statutory appellate remedy, the writ petition was dismissed with liberty to pursue such remedy.

Denial of Input Tax Credit - Retrospective cancellation of supplier registration - Genuineness of underlying supply transaction - Proof of genuine receipt of goods - without examining the genuineness of the supplies - HELD THAT: - Relying on an earlier order of this Court inM/s.Engineering Tools Corporation [2024 (2) TMI 855 - MADRAS HIGH COURT].

The Court noted that the impugned orders rejected the petitioner's input tax credit claim only because the supplier's registration had been cancelled with retrospective effect. It also recorded that most of the transactions were prior to the cancellation order. The determinative principle applied was that the claim could not be rejected solely on retrospective cancellation of the supplier's registration without examining whether the petitioner had established actual supply of goods through documents such as invoices, e-way bills, lorry receipts and similar material.

Since that examination had not been undertaken, the impugned orders could not stand. [Paras 5, 6]

The impugned orders were set aside and the matter was remanded for reconsideration, with a direction to issue fresh orders after giving reasonable opportunity to the petitioner.

Final Conclusion: The Court held that input tax credit could not be denied merely because the supplier's registration was cancelled retrospectively. As the authorities had not examined the supporting documents to determine the genuineness of the supplies, the assessment orders were set aside and the matters remanded for fresh consideration.

Foundational facts for invoking extended limitation under Section 74 - Maintainability of writ challenge to GST show cause notice involving disputed facts - Multiple proceedings under Section 74 for distinct grounds of tax evasion - Distinction between statutory audit and pan-India DGGI investigation

Extended period under Section 74 - Foundational facts in show cause notice - Wrong valuation and inadmissible credit-note adjustment - HELD THAT: - It is evident that there are foundational facts before the 1st Respondent to assume jurisdiction under Section 74 of the respective GST Enactments. There are detailed allegations regarding adoption of incorrect valuation for short payment of tax and short payment of tax on account of issuance of credit notes in contravention of Section 34 of the respective GST Enactments.

The Court held that invocation of Section 74 requires foundational facts, and found such facts to be present in the impugned notices. The notices were issued after investigation under Section 67, referred to the petitioner's business model, recorded detailed allegations on incorrect valuation and reduction of tax liability through credit notes in contravention of Section 34, and were preceded by intimation in Form GST DRC-01A to which the petitioner had replied. The notices also relied on statements recorded during investigation and specifically dealt with the periods and transactions said to have escaped proper tax treatment. In that view, the Court held that the notices were not lacking in material particulars and that disputed factual issues arising therefrom could not be examined in writ jurisdiction. [Paras 53, 55, 56, 57, 58]

The challenge to the show cause notices on the ground of absence of foundational facts for invoking the extended period under Section 74 was rejected.

Audit vis-a-vis DGGI investigation - Overlap of proceedings - Multiple proceedings under Section 74 - HELD THAT: - The Court held that the scope of audit under Section 65 is distinct from a pan-India investigation undertaken by DGGI, the former being confined to a specific jurisdiction and the documents produced before the audit team, while the latter may extend across States and proceed on broader investigation and data analytics. It further held that the earlier Surat investigation covered the earlier period, whereas the Chennai investigation proceeded from 01.01.2019 onwards, and that overlap by itself did not invalidate the notices when the allegations concerned short payment of GST on different bases. The Court also held that there is no bar to initiation of multiple proceedings under Section 74 where tax evasion is alleged on different and varied factors. [Paras 49, 50, 53, 54, 59]

The objection founded on prior audit, earlier investigation, or overlapping notices was rejected, and the impugned proceedings were held maintainable.

Final Conclusion: The writ petitions were dismissed. The Court held that the impugned show cause notices disclosed adequate foundational facts for action under Section 74, that objections based on prior audit or overlapping proceedings did not defeat jurisdiction, and that the petitioner must submit its reply before the adjudicating authority.

Extended period of limitation under Section 74 - Suppression of turnover in GSTR-3B and non-filing of returns - Late fee for non-filing of annual return - Corrigendum for error in revenue abstract

Extended period of limitation under Section 74 - Suppression of turnover in GSTR-3B and non-filing of returns -HELD THAT: - The Court found from the record that the petitioner had admittedly disclosed higher taxable turnover in GSTR-1, but had restricted the liability in GSTR-3B for part of the year and had not filed returns for the subsequent period, with only part payment being made after inspection. On those facts, and applying the principle stated in Fastenex Private Limited. [2026 (6) TMI 1495 - MADRAS HIGH COURT] that the threshold for invoking the extended period under Section 74 is lower under the GST enactments, the Court held that there was sufficient material to conclude that tax had not been paid by suppression of turnover in GSTR-3B and by failure to file returns, and therefore the extended period was validly invoked. [Paras 18, 19, 20, 21, 24]

The challenge to the invocation of Section 74 and the consequent demand was rejected.

Late fee for non-filing of annual return - Corrigendum for error in revenue abstract - HELD THAT: - The Court noticed an inconsistency between the discussion under Defect No.10 and the revenue abstract. While Defect No.10 itself referred to non-filing of annual return and quantified liability under Section 47(2), the revenue abstract did not correctly reflect that conclusion. Since the defect related to late fee for delayed filing of the annual return, the order required correction on that limited aspect. [Paras 22, 23, 24]

The matter was remitted only for issuance of a corrigendum correcting Defect No.10 and the corresponding revenue abstract, with liberty to the petitioner to pursue appellate remedy thereafter.

Final Conclusion: The Court upheld the invocation of the extended period under Section 74 and rejected the challenge to the tax demand for the tax period 2019-2020. It, however, remitted the matter to the respondent only for issuing a corrigendum to correct the treatment of Defect No.10 and the corresponding revenue abstract, leaving the petitioner to avail the appellate remedy thereafter.

Assessment order against deceased assessee - Proceedings against legal representatives - HELD THAT: - The Court found from the death certificate and legal heir certificate that the assessee had died much prior to the impugned assessment order. On that admitted position, the order issued thereafter in the name of the deceased assessee could not be sustained. The respondent was, however, left at liberty to initiate fresh proceedings against the legal representatives by issuing notice to all the legal heirs in accordance with the legal heir certificate. [Paras 3]

The impugned assessment order was set aside, with liberty to the respondent to proceed afresh against all legal representatives after issuing notice to them.

Final Conclusion: The Court set aside the assessment order as having been issued after the death of the assessee. Fresh proceedings, if any, were permitted only against the legal representatives after notice to all the legal heirs.

Reopening beyond four years - Change of opinion - Absence of fresh tangible material - Failure to disclose material facts

Reopening of the completed scrutiny assessment for cost of integrated services, alleged non-deduction of TDS, and advance deposit written off - HELD THAT: - The Court found that, in the original scrutiny proceedings, the AO had specifically called for and examined details relating to the cost of integrated services, TDS deducted thereon, and the advance written off, after which assessment was completed under section 143(3). The later notice under section 148 proceeded on the very same material and issues, without any fresh tangible material coming to the Assessing Officer's notice.

Since the reopening was beyond four years from the end of the relevant assessment year, and the assessee had fully disclosed the information called for in the original proceedings, the statutory condition of failure to disclose material facts was not satisfied. The reassessment was therefore held to be a mere change of opinion. [Paras 8, 9, 10]

The notice for reassessment and the order rejecting the objections were quashed.

Final Conclusion: The High Court held that the reassessment notice issued for AY 2012-13 after expiry of four years was invalid, as it was based on issues already scrutinised in the original assessment and on no new material. The impugned notice under section 148 and the order disposing of the objections were accordingly quashed.

Deduction for profits of eligible units u/s 80IB/80IC - Allocation of research and development expenditure to eligible industrial undertakings - Direct nexus of expenditure with profits of units claiming deduction

Research and development expenditure of separate units - Apportionment of common expenditure to deduction-eligible manufacturing units - Direct nexus test for unit-wise deduction computation - HELD THAT: - The Court held that the controversy was essentially factual and that no substantial question of law arose. It accepted the position that, while computing profits of an eligible undertaking for deduction, only expenditure relating to that undertaking can be reduced. On the facts noted by the Tribunal, the products under development in the R&D units were unrelated to the products manufactured in the units claiming deduction, the R&D activity was of a future-oriented and uncertain nature, and no material had been shown by the Assessing Officer to establish that the claimed R&D expenditure pertained to the eligible manufacturing units. In the absence of such nexus, allocation of that expenditure to those units was unjustified. [Paras 3, 5, 6, 7]

The deletion of the allocation-based disallowance was sustained and the Revenue's challenge was rejected.

Final Conclusion: The Court held that the proposed question was illusory and the matter turned on factual findings showing absence of any nexus between the R&D expenditure and the units claiming deduction under sections 80IB and 80IC. As no substantial question of law arose, the appeal was rejected.

Premature writ petition - Mandamus to compel action on complaint - Apprehended penalty proceedings - writ petition seeking a direction to the Income Tax authorities and Enforcement Directorate to act on the petitioner's complaints regarding the alleged cash transaction - HELD THAT: - The Court held that, after unsuccessfully challenging the conviction arising out of the cheque dishonour proceedings up to the Supreme Court, the petitioner was attempting through the present writ proceedings to obtain a different finding on the underlying cash transaction. The Court further found that the writ petition appeared to have been filed with the intention of settling personal scores with the 8th respondent. On the petitioner's plea that proceedings might otherwise be initiated against him under Section 271D, the Court held that such plea rested only on apprehension and was unsupported by any material. On that reasoning, the writ petition was treated as premature. At the same time, the Court observed that the representation already submitted by the petitioner could be looked into by the Income Tax Department in accordance with law. [Paras 5, 6, 7, 8]

The writ petition was disposed of as premature, without issuing any mandamus, while leaving it open to the Income Tax Department to consider the petitioner's representation in accordance with law.

Final Conclusion: The Court declined to issue directions compelling action on the petitioner's complaints, holding that the writ petition was premature and founded only on an unsupported apprehension of possible penalty proceedings. The petition was accordingly disposed of, with an observation that the Income Tax Department may examine the representation in accordance with law.

Charitable purpose of statutory professional regulatory bodies - Educational activities of professional institutions - Mutuality objection in registration for charitable status - Registration under section 12A and consequential approval under section 80G

Assessee's entitlement to registration and approval could not be denied on the ground that its activities were confined to members of the Institute of Company Secretaries of India, that it charged course and membership fees, or that it operated on principles of mutuality - HELD THAT: - The Tribunal held that the assessee was a professional body functioning for skill enhancement, education and capacity building of professionals governed by statute, and that such activities serve a wider public purpose. Relying on the principle stated by the Supreme Court in ACIT (Exemptions) vs. Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] particularly in relation to statutory professional bodies such as ICAI and similar regulators, the Tribunal held that bodies created by or under statute which prescribe compulsory courses, regulate standards and monitor professional conduct do not ipso facto carry on activities in the nature of trade, commerce or business. The fact that eligibility was confined to members of ICSI did not establish private or mutual benefit, since the expression "members" referred to persons belonging to a statutory professional body and the activities remained educational and regulatory in character. On that reasoning, the finding that no charitable activity was carried on and the consequential rejection of Form 10AB for registration and approval were unsustainable. [Paras 6]

Registration under section 12A and consequential approval under section 80G were held to be wrongly rejected, and the orders of the CIT(E) were set aside.

Final Conclusion: The Tribunal allowed both appeals and held that the assessee's activities were charitable within section 2(15). The rejection of registration under section 12A and the consequential denial of approval under section 80G were set aside.

Dividend stripping - Short-term capital loss on mutual fund units - Return of capital - Absence of statutory authority for recomputation of cost of acquisition - Cumulative conditions under section 94(7)

AO denied the claimed short-term capital loss on redemption of JM Equity Hybrid Fund units by treating the dividend received as return of capital and reducing it from the cost of acquisition - HELD THAT: - The Tribunal found that, despite the assessee's specific objection, the assessment order did not identify any provision of the Act authorising reduction of the dividend amount from the cost of acquisition. It held that section 94(7) is the specific provision dealing with dividend stripping, and its consequences can operate only when its statutory conditions are cumulatively fulfilled. On the facts recorded, one dividend did not satisfy the condition relating to sale within the prescribed period from the record date, and the other did not satisfy the condition relating to purchase within the prescribed period before the record date; hence section 94(7) was inapplicable.

Tribunal further held that general allegations arising from survey proceedings against the mutual fund and alleged violation of SEBI guidelines could not, without material linking the assessee to any manipulation, justify treating the dividend as return of capital or branding the transaction as sham. Since the investment, receipt of dividend and redemption were not in dispute and the controversy stood governed by binding precedent, the addition was unsustainable and no remand to the first appellate authority was required notwithstanding its ex parte order. [Paras 30, 31, 32, 33, 34]

The recomputation of the transaction into short-term capital gain by reducing the dividend from the cost of acquisition was held to be without authority of law, and the entire addition was deleted on merits.

Final Conclusion: The Tribunal allowed the appeal on merits and deleted the entire addition. It held that the assessee's short-term capital loss could not be disallowed by recharacterising the dividend as return of capital in the absence of a specific statutory basis, non-fulfilment of the conditions of section 94(7), and absence of material implicating the assessee in any sham arrangement.

Reassessment notice beyond three years - Approval of specified authority - Prospective operation of proviso to section 151

HELD THAT: - The Tribunal held that under the substituted reassessment regime effective from 01.04.2021, issuance of notice under section 148 and passing of the order under section 148A(d) required prior approval of the specified authority identified in section 151. Since, in the present case, more than three years had elapsed from the end of AY 2018-19 when the notice under section 148 was issued on 28.04.2022, the approval had to be obtained from the authority mentioned in section 151(ii), namely the Principal Chief Commissioner or Principal Director General, or in their absence the Chief Commissioner or Director General.

As the approval was in fact taken only from the Principal Commissioner, the statutory requirement was not met. The Tribunal further rejected the Revenue's contention that the time granted under section 148A(b) should be excluded while computing the three-year period, holding that the proviso to section 151 enabling such computation was inserted only by the Finance Act, 2023 with effect from 01.04.2023 and could not be applied retrospectively. On that basis, the assumption of jurisdiction for reopening was held to be invalid, and the merits of the alleged bogus long-term capital gains were left open as academic. [Paras 12, 13, 14, 15, 16]

The notice under section 148 and the consequential reassessment were held bad in law for want of approval from the competent specified authority under section 151(ii), and the reassessment was quashed.

Final Conclusion: The Tribunal allowed the assessee's cross-objection on the jurisdictional ground and quashed the reassessment for AY 2018-19 because the notice under section 148, issued beyond three years, had not been approved by the competent authority under section 151(ii). Consequently, the Revenue's appeal on the merits of the addition was dismissed as academic and left open.

Scope of reassessment proceedings - Withdrawal of income voluntarily offered in original return - Re-agitation of concluded matters in reassessment - Reduction of house property income in return filed in response to notice under section 148 - Concluded assessment not open to review at assessee's instance

HELD THAT: - The Tribunal held that the amount sought to be excluded had not been brought to tax by any fresh determination in the original proceedings but had been voluntarily disclosed by the assessee himself in the return filed under section 139(1). Reassessment under section 147 is confined to bringing to tax escaped income or under-assessed income and cannot be converted into a proceeding for the assessee to reopen concluded matters or obtain a review of the original assessment on issues unconnected with escapement.

On that principle, the assessee could not, by filing a return pursuant to notice under section 148, withdraw income earlier offered to tax and reduce the assessed income below what had originally been returned. Since such relief was not permissible in reassessment, the Tribunal declined to examine the factual merits of the claim regarding ownership or allocation of rental income and left those aspects open as academic. [Paras 16, 17, 18, 19]

The addition representing the reduced house property income was sustained and the appellate order was upheld, with the merits of the ownership-based explanation left open.

Final Conclusion: The Tribunal held that reassessment proceedings could not be used by the assessee to withdraw house property income voluntarily offered in the original return and thereby reopen a concluded matter unconnected with escaped income. On that basis, the addition was sustained, the order of the CIT(A) was upheld, and the appeal was dismissed.

Amortization of preliminary expenses - Public issue expenses of business trust - Strict construction of deduction provisions

Deduction for public subscription expenses - REIT vis-a-vis company - Issue of units and issue of shares or debentures - Deduction under section 35D(2)(c) for expenditure incurred by a SEBI-registered REIT on its initial public offer, public subscription and listing of units availability to the assessee-trust - HELD THAT: - The Tribunal held that clause (c) of section 35D(2) expressly confines the deduction to cases where the assessee is a company and the expenditure is incurred in connection with the public subscription of its shares or debentures. That limitation was treated as deliberate and incapable of being ignored by resort to harmonious, liberal or substance-based interpretation. A REIT, though recognised as a business trust under the Act and governed by a special taxation regime, is neither a company within the statutory definition nor deemed to be one. The Tribunal further held that units of a REIT are distinct from shares or debentures, and their treatment as securities or equity instruments for limited regulatory purposes under SEBI law does not alter their legal character for section 35D(2)(c).

Since the Act itself maintains a distinction between a company and a business trust, and between shares and units, the company-specific deduction could not be extended to a trust merely because its capital-raising mechanism was functionally similar to that of a listed company. Applying the principle of strict construction of deduction provisions, the Tribunal upheld the disallowance. [Paras 25, 26, 27, 28, 29]

The assessee, being a REIT constituted as a trust and not a company, was held ineligible for deduction under section 35D(2)(c), and the disallowance was confirmed.

Final Conclusion: The Tribunal held that section 35D(2)(c) grants deduction only to a company in respect of expenditure connected with public subscription of its shares or debentures, and that a REIT constituted as a trust cannot be equated either with a company or with the issue of shares or debentures. The disallowance was accordingly sustained and the appeal was dismissed.

TP adjustment on account of operation and maintenance services - Revenue neutrality in specified domestic transfer pricing - Mirror transactions and arm's length consistency

Revenue neutrality in specified domestic transfer pricing - Deduction-eligible related party transactions - Transfer pricing adjustment for operation and maintenance services received from the associated enterprise sustainability where both entities were taxable in India and eligible for deduction under the same provision, rendering the transaction revenue neutral - HELD THAT: - The Tribunal noted that the Revenue did not dispute the factual finding that both the assessee and the service provider were taxable in India and were entitled to deduction under section 80-IA. In the absence of any demonstrated tax base erosion or diversion of profits outside the tax net, the underlying object of transfer pricing provisions, namely prevention of tax avoidance through price manipulation between related entities, was held to lose practical force. Accepting the reasoning drawn from Glaxo SmithKline Asia Pvt. Ltd. [2010 (10) TMI 21 - SUPREME COURT] Tribunal upheld the conclusion that no transfer pricing adjustment was warranted on a revenue neutral transaction of this nature. [Paras 7]

The deletion of the transfer pricing adjustment on account of operation and maintenance services was affirmed.

Mirror transactions and arm's length consistency - Corresponding domestic transfer pricing transactions - Transfer pricing adjustment on sale of port services sustainability when the corresponding transaction had been accepted as at arm's length in the hands of the counter-party associated enterprise - HELD THAT: - The Tribunal held that corresponding or mirror transactions between associated entities cannot ordinarily receive inconsistent arm's length determinations. Once the same transaction has been accepted as being at arm's length in the hands of one contracting party, a contrary view in the hands of the other party would produce incongruous and mutually destructive outcomes. Following the principle recognised in Pr. CIT v. UE Development India (P.) Ltd. [2018 (8) TMI 2104 - KARNATAKA HIGH COURT] and noting that the same reasoning had also been applied in Tecnimont SPA India [2023 (1) TMI 561 - ITAT MUMBAI] the Tribunal found no basis to disturb the deletion of the adjustment. [Paras 8]

The deletion of the transfer pricing adjustment on account of sale of port services was affirmed.

Final Conclusion: The Tribunal upheld the deletion of both transfer pricing adjustments, holding that the operation and maintenance services transaction was revenue neutral and that the sale of port services formed a mirror transaction already accepted as at arm's length in the hands of the counter-party. The Revenue's appeal was dismissed, and the assessee's cross-objection on limitation was dismissed as infructuous without adjudication on merits.

Transfer pricing margin computation under TNMM - Operating nature of export incentive and miscellaneous expenses - Related party transaction filter for comparables - Functional comparability under TNMM - Notional interest on overdue receivables from associated enterprises

Transfer pricing margin computation under TNMM - Operating nature of export incentive and miscellaneous expenses - Rule 10CA percentile computation - whether PLI of the assessee and comparables for the manufacturing segment had to be recomputed by treating export incentive as operating income, miscellaneous expenses as operating expenses, and by applying Rule 10CA for margin computation? - HELD THAT: - The Tribunal held that the jurisdictional Tribunal in ZF Rane Automobile India Private Limited v. DCIT had already decided that export incentive is operating income and miscellaneous expenses are operating expenses for both the assessee and comparables, wherever data is available. Following that ratio, it directed the TPO to recompute the margins accordingly. It further held that the comparable margins must be worked out in accordance with Rule 10CA and directed the TPO to consider the assessee's margin working placed in the paper book and redetermine the margins of the comparables on that basis. [Paras 5]

The ground was partly allowed and the matter was remitted to the TPO for fresh computation of margins in accordance with Rule 10CA after treating export incentive and miscellaneous expenses as operating items.

Related party transaction filter for comparables - Rejection of comparables without disclosing computation basis - Exclusion of the assessee's selected comparables on the basis of the 25% RPT filter - HELD THAT: - The Tribunal held that the TPO could not arbitrarily reject a comparable by applying the 25% RPT filter without providing the basis of that computation. Since the dispute turned on the correctness of the filter application to the concerned comparable companies, the Tribunal considered fresh verification necessary after giving the assessee an opportunity to respond. [Paras 6]

The issue was remitted to the TPO to disclose the basis of the 25% RPT filter computation, permit the assessee to file submissions, and then decide the comparability issue in accordance with law.

Functional comparability under TNMM - Computation of comparable margins - HELD THAT: - The Tribunal held that, although under TNMM functional similarity assumes greater importance than product similarity, that does not justify inclusion of a company from a completely different industry. On that reasoning, it directed reconsideration of Durovalves as a comparable. As regards Agrasen, the Tribunal applied its earlier finding that miscellaneous expenses are to be treated as operating in nature and directed recomputation of that company's margin on the same basis. [Paras 7]

The TPO was directed to reconsider the inclusion of Durovalves and to recompute the margin of Agrasen after treating miscellaneous expenses as operating expenses.

Notional interest on overdue receivables from associated enterprises - Debt free company - Parity of treatment between AE and non-AE receivables - Transfer pricing adjustment on account of notional interest on overdue receivables from associated enterprises where the assessee was debt free, incurred no significant interest cost, and did not charge interest from non-AEs either - HELD THAT: - The Tribunal held that the issue stood covered in favour of the assessee by Newgen Digitalworks Pvt. Ltd. [2025 (5) TMI 2308 - ITAT CHENNAI] Respectfully following that decision, it held that where the assessee is a debt free company, does not incur significant interest cost, and has not charged interest on receivables from non-AEs as well, no transfer pricing adjustment for notional interest on overdue receivables from AEs is justified. [Paras 8]

The adjustment towards notional interest on overdue receivables was deleted and the ground was allowed.

Final Conclusion: The Tribunal partly allowed the appeal. The transfer pricing adjustment on overdue receivables was deleted, while the issues relating to manufacturing segment margin computation and comparable selection were remitted to the TPO for fresh consideration in accordance with the directions issued.

Provisional attachment - Benami transaction through routing of demonetised cash - Denial of cross-examination - illegitimate and ill-gotten cash - prejudice in natural justice -Audi alteram partem

Benami transaction through routing of demonetised cash - RTGS entries against alleged sale of gold bullion - HELD THAT: - The Tribunal found that deposit of demonetised cash with the alleged benamidar and transfer of the corresponding RTGS amounts from the three linked firms to the appellant were not in dispute. The appellant failed to show any prior business relationship with those firms, and its explanation of genuine bullion sales rested only on its own bills and allied records, which were found insufficient as independent substantiation. The mismatch and overwriting in the bills, the timing of the transactions immediately after demonetisation, and the statement of the alleged benamidar admitting receipt of cash for providing RTGS entries were treated as supporting the respondent's case. The bank statements, instead of proving genuine trade, were held to corroborate routing of funds from unknown firms. On that basis, the attachment was sustained. [Paras 13, 14, 15, 16, 23]

The Tribunal upheld the finding that the impugned funds represented a benami transaction and affirmed the confirmation of provisional attachment.

Cross-examination and prejudice in natural justice - Denial of cross-examination without demonstrated prejudice - HELD THAT: - Hon’ble Supreme Court in Dharampal Satyapal Ltd.[2015 (5) TMI 500 - SUPREME COURT], opined that law on natural justice has evolved and every violation of principles of natural justice need not result in setting aside an order, unless and until, prejudice has been established by the aggrieved party.

In M/s Telestar Travels Pvt. Ltd. [2013 (2) TMI 396 - SUPREME COURT], has held that denial of request to cross-examine the witnesses by the Ld. Adjudicating Authority does not violate the principles of Natural Justice

The Tribunal held that no question of cross-examining the intermediary arose because no statement of that person was on record. As regards the alleged benamidar, the appellant had been supplied his statement and he had also been summoned for cross-examination but did not appear. The Tribunal further applied the principle that cross-examination is not an inflexible requirement of natural justice and that procedural breach warrants interference only where actual prejudice is shown. On the facts, the appellant failed to establish any prejudice resulting from non-cross-examination, and therefore no violation of natural justice was made out. [Paras 18, 19, 20, 21, 22]

The objection based on denial of cross-examination was rejected and no breach of natural justice affecting the validity of the order was found.

Final Conclusion: The Tribunal dismissed the appeal and upheld the order confirming attachment. It held both that the impugned RTGS credits were part of a benami routing arrangement and that the plea of denial of cross-examination disclosed no prejudice so as to invalidate the proceedings.

Provisional release of seized imported goods - Conditional release pending adjudication - Seizure of imported multifunctional devices -HELD THAT: - The Court found that the writ petition concerned only the seizure memo and a request for interim release of the seized goods, and that identical matters had already been dealt with by the Bench by directing release on specified conditions. Adopting the same course, the Court directed Customs to pass orders on the application for provisional release subject to payment of the enhanced duty as quantified, furnishing of a bank guarantee for a specified percentage of the value of the goods, and maintenance of transaction details in the event of provisional sale. The Court also clarified that such conditional release would not impede further adjudication and that the adjudicating authority must decide the proceedings independently, uninfluenced by the order of release, after permitting the petitioner to participate. [Paras 8, 9, 10, 11, 12]

The seized goods were directed to be provisionally released subject to the conditions stipulated by the Court, and the adjudicating proceedings were left open for determination on their own merits.

Final Conclusion: The writ petition was allowed by directing provisional release of the seized imported goods on payment of the quantified enhanced duty and furnishing of bank guarantee, with consequential conditions. The adjudicating authority was left free to continue and decide the proceedings independently in accordance with law.

Abeyance of adjudicatory proceedings - Binding effect of Supreme Court directions - Classification of micronutrient mixtures -HELD THAT: - The Court did not examine the merits of the proposed classification of micronutrient mixtures either as plant growth regulators or as fertilisers. Proceeding on the submission that the same classification issue was pending before the Supreme Court GMR AIRPORT INFRASTRUCTURE LTD. [2025 (5) TMI 320 - SC ORDER] and noticing the specific direction that hearings before High Courts and the Tribunal on that subject be deferred, the Court held that further proceedings pursuant to the impugned show cause notices should remain in abeyance. On that basis, it also protected the petitioner against coercive recovery and left all contentions open to be decided after the Supreme Court renders its decision. [Paras 5]

The respondents were directed to keep all proceedings pursuant to the impugned show cause notices in abeyance, with no coercive steps for recovery meanwhile, and the merits of the classification dispute were left open.

Final Conclusion: The writ petitions were disposed of by directing that all proceedings pursuant to the impugned show cause notices remain in abeyance until disposal of the pending SLP before the Supreme Court. No opinion was expressed on the merits of the classification dispute, and all contentions were kept open.

Penalty for abetment of improper export - Penalty for use of false or incorrect material - Penalty without show cause notice - fake driving licence and facilitating a bank account for the principal person involved - absence of a show cause notice - Imposition for penalty under Section 114(iii) and Section 117

Penalty for abetment of improper export - Overvaluation and misclassification of export goods - Corroborative evidence - HELD THAT: - The Tribunal held that the material relied upon against the appellant only showed that he had helped the alleged mastermind obtain a fake driving licence and thereby facilitate opening of a bank account. That circumstance, though illegal in itself, did not establish any specific role of the appellant in overvaluation or misclassification of the exported goods or in the drawback claim relating to the shipping bills. The seized goods pertained only to 16 live consignments, whereas the case for the remaining consignments rested substantially on recorded statements without proper corroboration. The Tribunal further noted that the test report for the intercepted consignments could not, by itself, be extended to previously exported goods. In the absence of specific and corroborated material connecting the appellant to acts rendering the goods liable to confiscation, the ingredients for penalty under Section 114(iii) were not made out. [Paras 12, 14, 15]

The penalty imposed under Section 114(iii) was set aside.

Penalty for use of false or incorrect material - False declaration or document - Knowingly or intentionally - HELD THAT: - The Tribunal found that there was no allegation that the appellant was responsible for filing any customs documents, nor was there any finding that he had made, signed or used any false or incorrect declaration, statement or document concerning the impugned consignments. The assistance attributed to him in procuring a fake driving licence might attract criminal consequences, but it did not fall within the statutory contraventions contemplated by Section 114AA, which requires knowing or intentional use of false material in the transaction of business under the Act. [Paras 16]

The penalty imposed under Section 114AA was held legally unsustainable and was set aside.

Penalty without show cause notice - Residual penalty - HELD THAT: - The Tribunal held that imposition of penalty under Section 117 required a show cause notice specifically proposing such penalty. Since the notice issued to the appellant proposed penalty only under Sections 114 and 114AA, the Revenue was precluded from seeking to sustain or impose penalty under Section 117 at that stage. The determinative principle applied was that a person cannot be visited with a statutory penalty on a ground not put to notice in the show cause proceedings. [Paras 18, 19]

The Revenue's request to invoke Section 117 was rejected.

Final Conclusion: The Tribunal allowed the appeal and set aside both penalties imposed on the appellant. It further held that penalty under Section 117 could not be introduced in the absence of a show cause notice proposing such action.

Classification of imported Quick Lime - Scope of Chapter Heading 2522 vis-a-vis Chapter Heading 2825 - Specific Heading Prevails over General Heading - Exclusionary Tariff Entry - Application of General Rules for Interpretation - Inapplicability of GIR 3 - classifiable under Customs Tariff Heading 25221000 Or under Heading 28259090 - HELD THAT: - The Tribunal followed its earlier final decision in M/s Jindal Stainless Ltd. [2024 (12) TMI 618 - CESTAT HYDERABAD], extracted in the order itself, and accepted that Quick Lime is specifically covered by Heading 2522. The determinative reasoning adopted was that Heading 2522 expressly covers quicklime, slaked lime and hydraulic lime, whereas Heading 2825 applies to separate chemical elements or separate chemically defined compounds such as calcium oxide and hydroxide. On that basis, the two headings were treated as mutually exclusive in their field of operation. Since the imported goods were admittedly Quick Lime and not a mixture or combined material, classification fell under the specific entry by application of GIR 1, and Revenue's reliance on GIR 3 on the footing of competing headings was held to be legally unsustainable. [Paras 5, 6]

The demand based on reclassification was not sustainable, and the appeal was allowed.

Final Conclusion: Following its earlier decision on the same classification issue, the Tribunal held that imported Quick Lime is classifiable under Heading 25221000. The impugned reclassification under Heading 28259090 was therefore rejected and the appeal was allowed.

Abatement of appeal on death of appellant- Continuance of proceedings by legal representative - Proceedings against a dead person - HELD THAT: - The Tribunal held that under Rule 22 of the CESTAT (Procedure) Rules, proceedings abate on the death of the appellant unless an application is made for continuance by the successor-in-interest or legal representative within the prescribed time, subject to condonation on sufficient cause. Since no such application had been made, the appeal stood abated. The Tribunal also noted the principle laid down by the Supreme Court in Shabina Abraham & Ors.[2015 (7) TMI 1036 - SUPREME COURT] that proceedings cannot be initiated or continued against a dead person, as the person proceeded against is not alive to defend himself. [Paras 5, 6]

The appeal was held to have abated on the death of the appellant and was disposed of accordingly.

Final Conclusion: The Tribunal held that, in the absence of any application for continuance by the legal representative after the appellant's death, the appeal abated under the procedural rule. It therefore disposed of the appeal as abated.

Abatement of appeal on death of appellant - Continuance of penalty proceedings against deceased person - HELD THAT: - The Tribunal held that under Rule 22 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, proceedings abate on the death of the appellant unless an application for continuance is made by the successor-in-interest or legal representative within the prescribed framework. Since no such application had been made, the appeal stood abated. The Tribunal also relied on Shabina Abraham & Ors.[2015 (7) TMI 1036 - SUPREME COURT], wherein the Supreme Court held that proceedings cannot be initiated or continued against a dead person, since the person proceeded against is no longer alive to defend himself, offending principles of natural justice. Applying that principle, the appeal concerning the personal penalty imposed on the appellant could not survive. [Paras 5, 6, 7]

The appeal was held to have abated on the death of the appellant and was disposed of accordingly.

Final Conclusion: The Tribunal held that, in the absence of any application by a successor or legal representative for continuance, the appeal filed against personal penalty abated upon the death of the appellant. The appeal was therefore disposed of as abated.

Scope of amendment under Section 149 -Post-export amendment of shipping bills - Scheme code conversion for export incentive claims - Inapplicability of circular-prescribed time limit - Amendment of shipping bills to change the scheme code from drawback to RoSCTL - HELD THAT: - In Mahalaxmi Rubtech Ltd. [2021 (3) TMI 240 - GUJARAT HIGH COURT] held that time limits can only be prescribed via "Regulations" framed under Section 157, and not by "Circulars." By now choosing to frame Regulations in 2025 to prescribe time limits, the Department has effectively admitted that the method used in 2010 (vide Circular No. 36/2010 dated 23.09.2010) was legally incompetent. Therefore, while issuing the impugned order in 2021, there was no valid law restricting the time limit and rightly allowed the amendment.

The Tribunal held that the controversy was no longer res integra and stood settled by the decisions relied on by the respondent. It further took note of the subsequent introduction of the Export Entry (Post Export Conversion in relation to Instrument Based Scheme) Regulations, 2025, and on that basis found no error in the adjudicating authority's view that the amendment sought under Section 149 was allowable. The departmental objection founded on the three-month period in Circular No. 36/2010-Cus was therefore not accepted. [Paras 10, 11]

The order allowing amendment of the shipping bills was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal upheld the order permitting post-export amendment of the shipping bills for change of scheme code to claim RoSCTL benefit and rejected the Revenue's challenge based on the three-month limit in the circular. The appeal was dismissed.

Transfer of pending winding-up proceedings to NCLT - Discretion under the fifth proviso to Section 434(1)(c) - Irreversible stage in liquidation - Locus of erstwhile Director in company in liquidation - belated transfer application - Delay, laches, acquiescence and want of bona fides - transfer to the NCLT - mandatory or discretionary - expression "party" in the fifth proviso

Whether the applicant, being an erstwhile Director of the company ordered to be wound up, has the requisite locus standi to maintain an application under the fifth proviso to Section 434(1)(c) of the Companies Act, 2013 seeking transfer of the present winding-up proceedings to the National Company Law Tribunal? - HELD THAT: - The fifth proviso to Section 434(1)(c), enables any party or parties to any proceedings relating to winding up to file an application for transfer and provides that the Court may, by order, transfer such proceedings to the Tribunal. The provision itself does not define the expression “party” exhaustively.

The Court held that, after the winding-up order and assumption of charge by the Official Liquidator, the former Board does not continue to manage the company as of right. The expression "party" in the fifth proviso to Section 434(1)(c) must receive a broad construction, but the principle recognised in Kaledonia [2020 (11) TMI 587 - SUPREME COURT] was in the context of creditors in winding-up proceedings in rem and did not confer an unqualified right on every former functionary of the company. The applicant's standing was therefore treated as limited and precarious, and the request was examined on the stricter footing of delay, bona fides, prejudice to creditors, and stage of liquidation. [Paras 14]

The application was not dismissed solely for absolute lack of locus, but the applicant was held not entitled to claim any representative right over the company in liquidation.

Whether the application filed in the year 2025 seeking transfer of the winding-up proceedings, after the winding-up order dated 09.01.2012 and after substantial liquidation proceedings have been undertaken, is liable to be rejected on the ground of delay, laches, acquiescence and want of bona fides? -HELD THAT: - The Court found that the winding-up order had remained in force for many years, the Official Liquidator had acted throughout that period, earlier recall applications had failed for want of bona fides, and yet the applicant sought transfer only in 2025. It rejected the contention that absence of sale of assets rendered delay irrelevant, holding that Action Ispat [2020 (12) TMI 535 - SUPREME COURT] did not make delay, acquiescence, or prejudice immaterial. In the backdrop of alleged non-compliance with statutory duties and the pendency of proceedings initiated by the Official Liquidator, the belated application was viewed as strategically timed rather than a genuine attempt at insolvency resolution. [Paras 15]

The application was held vitiated by unexplained delay and acquiescence, and lacking bona fides.

Discretionary transfer under the fifth proviso to Section 434(1)(c) - Automatic transfer under the Transfer Rules - HELD THAT: - Section 434(1)(c), as extracted, states that all proceedings under the Companies Act, 1956 including proceedings relating to winding up pending before the High Court or District Court shall stand transferred to the Tribunal and that the Tribunal may proceed from the stage before transfer. The fifth proviso, separately contemplates that any party or parties to any proceedings relating to winding up may file an application for transfer and that the Court may by order transfer such proceedings to the Tribunal.

The statutory scheme must be read as a whole. The main clause states the broad transfer principle, while the provisos and the Transfer Rules regulate how and to what extent that principle operates in the special context of pending winding-up proceedings.

Reading Section 434(1)(c) with Rules 5 and 6 of the Companies (Transfer of Pending Proceedings) Rules, 2016 and Rule 26 of the Companies (Court) Rules, 1959, the Court held that automatic transfer operates only in the limited classes identified by the statutory framework, particularly where service had not been effected at the relevant stage. In the present matter, the petition had already been served, admitted, and culminated in a winding-up order. The fifth proviso uses the expression "may", and the Court held that this language preserves judicial choice; where the statute intended automatic transfer it expressly so provided, but post-admission transfer upon application remained discretionary. [Paras 16]

The proceedings were held not compulsorily transferable, and any transfer could only be ordered in the Court's discretion.

Irreversible stage in liquidation - Pending proceedings by Official Liquidator - Retention of mature winding-up proceedings - HELD THAT: - The Court held that Action Ispat (supra) did not lay down a single-factor rule that absence of sale of assets necessarily required transfer; the question whether the process had become irreversible depended on the facts and circumstances of each case. Here, the company had ceased business long ago, the winding-up order had been operating for years, the Official Liquidator had submitted repeated reports, earlier recall efforts had failed, and proceedings under Sections 454, 468 and 543, along with possession and compliance proceedings, were pending as direct incidents of the winding-up. In that setting, irreversibility could not be confined only to completed sale of assets; transfer would unsettle a mature, court-supervised liquidation structure and no material was shown to indicate any realistic revival or insolvency-resolution purpose. [Paras 17, 18]

The Court held that the liquidation had reached a sufficiently advanced and substantive stage, and the pendency of connected proceedings warranted continuation before the High Court.

Exercise of discretion for transfer - Absence of benefit to creditors or liquidation estate - HELD THAT: - Having regard to the applicant's limited standing, the extraordinary delay, the non-mandatory nature of transfer, the mature stage of liquidation, and the pending proceedings undertaken by the Official Liquidator, the Court concluded that the applicant had not discharged the burden of showing that this was a fit case for transfer. The authorities relied upon by the applicant established only that post-admission transfer was legally permissible in an appropriate case; they did not create a right to transfer. On the facts, transfer was found more likely to delay, fragment, or complicate the existing liquidation than to advance any genuine insolvency objective or confer demonstrable benefit on creditors or the liquidation estate. [Paras 19]

The prayer for transfer was declined and the company petition was directed to continue before the High Court.

Final Conclusion: The Court held that transfer of the winding-up proceedings was not automatic and that, in the facts of the case, no ground existed for exercise of discretion under the fifth proviso to Section 434(1)(c). Company Application No.39/2025 was dismissed, and the company petition with all consequential proceedings was directed to continue before the High Court.

Suit for recovery of money -Interim moratorium under Section 96 of the Insolvency and Bankruptcy Code - Bar to institution of debt recovery proceedings -Order VII Rule 11(d) where statutory embargo applies - Cause of Action - Joint and Several Liability - Whether the suit was maintainable at the time when it was filed in view of Section 96 of the Insolvency and Bankruptcy Code, 2016 or not ? - HELD THAT: - Black’s Law Dictionary Ninth Edition has dwelt on joint and several liabilities. It has observed that liability that may be apportioned either among two or more parties or to only one or a few select members of the group at the adversary’s discretion can be called joint and several liability. It has observed that, each liable party is individually responsible for the entire obligations, but a paying party may have a right of contribution and indemnity from the non-paying parties.

Amrita Lal Ghose has considered the issue of joint and several liabilities in the context of insolvency of one of the parties in a suit for recovery of rent. It has held that, the suit can be decreed as against the solvent tenants since, it is of no consequence that one of the defendants is insolvent. Such insolvency will not affect the obligations of the other defendants to pay the rent, if they were otherwise liable.

The Court held that Section 96 creates a moratorium commencing from the filing of an application under Section 94 or 95 and continuing till its admission. During that period, pending proceedings in respect of the debt are stayed and fresh legal action or proceedings in respect of the debt are prohibited. On the facts found, once the Section 95 proceedings stood revived, the interim moratorium was in operation on the date of institution of the suit. The statutory embargo was therefore attracted, and the suit could neither have been filed nor validly received by the Court. The later insertion of sub-section (4) to Section 96 was held inapplicable, having come into force after institution of the suit. The respondent's lack of knowledge of the insolvency proceedings was held immaterial, since the bar operated by force of statute. The Court further held that the case was not one of absence of cause of action against only some defendants; hence the plaint could not be dissected between the corporate defendant and the other defendants, nor could the decree be preserved against one defendant alone on the footing of joint and several liability. Once Section 96(1)(b)(ii) applied, the matter fell within Order VII Rule 11(d) and the suit was liable to be rejected as barred by law. [Paras 37, 40, 41, 42, 43]

The impugned judgment and decree were set aside, as the suit itself was barred by Section 96(1)(b)(ii) of the Insolvency and Bankruptcy Code, 2016 and was liable to fail under Order VII Rule 11(d).

Final Conclusion: The appeal was allowed on the ground that, on the date of institution, the money recovery suit was hit by the statutory embargo under Section 96(1)(b)(ii) of the Insolvency and Bankruptcy Code, 2016. The decree passed in the suit was therefore unsustainable and was set aside, and the Court left open the question whether the dispute was a commercial dispute.

Director's liability for company contravention - Mere designation as Director insufficient - Requirement of being in charge of and responsible for conduct of business -HELD THAT: - Following the Judgment of the Hon’ble Supreme Court in the matter of S.M.S. Pharmaceuticals Ltd. [2005 (9) TMI 304 - SUPREME COURT], the Tribunal held that liability under Section 42 of FEMA requires a specific finding that the person proceeded against was in charge of, and responsible to, the company for the conduct of its business, or that the contravention occurred with his consent, connivance or neglect. The impugned order imposed penalty without dealing with the appellant's denial of such responsibility and without refuting his explanation that his functions were confined to technical and administrative work. On the material available, the appellant's role was confined to software and hardware related work, and he only substituted the Managing Director in banking matters in the latter's absence. Since the record did not show that he was responsible for the company's export and import business, mere holding of the office of Director could not attract liability under Section 42. [Paras 8, 10, 11]

The penalty imposed on the appellant was set aside and the appeal was allowed.

Final Conclusion: The Tribunal held that the appellant's liability could not be fastened merely because he was a Director when the contravention occurred. As the record did not establish that he was in charge of and responsible for the export-related business of the company, the penalty against him was set aside.

Proceeds of crime - Equivalent value attachment - Statements under Section 50 PMLA - Attachment of property acquired prior to the crime period - preponderance of probabilities

Proceeds of crime - Statements under Section 50 PMLA - Preponderance of probabilities - HELD THAT: - The Tribunal held that the existence of proceeds of crime in the hands of the principal accused stood established, and the bank trail unmistakably showed transfer of a part of that amount to Lokesh Paliwal. The statements of Lokesh Paliwal, Shiv Narayan Joshi and the appellant, read together, showed the appellant's connection with both of them and with the transactions in question. The later statement of Lokesh Paliwal giving specific dates and amounts of cash payments to the appellant, the cash book produced by him, the confirmation of entries therein by two other persons whose names appeared in that record, and the RTGS/NEFT material stating the purpose of remittance as repayment of loan taken from the appellant, constituted sufficient material at the stage of attachment. The discrepancy between the two statements of Lokesh Paliwal regarding the exact cash amount was held not to be so substantial as to destroy the evidentiary worth of the material. Applying the test of preponderance of probabilities, the Tribunal held that the finding of flow of proceeds of crime to the appellant was sustainable at this intermediary stage, the final question of culpability being for trial in the prosecution complaint already filed. [Paras 49, 50, 51, 52, 53]

The attachment was upheld as the material was sufficient at the attachment stage to show receipt and handling of proceeds of crime by the appellant.

Equivalent value attachment - Attachment of property acquired prior to the crime period - Value of such property - Property acquired before the alleged criminal period was still attachable to the extent of value representing the proceeds of crime found to have reached the appellant. - HELD THAT: - Rejecting the contention that a property purchased before the period of the scheduled offence could not be attached, the Tribunal relied on its earlier decision in Sadananda Nayak [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] and held that no such bar could be read into the definition of proceeds of crime under Section 2(1)(u). Since the direct proceeds were not available in the appellant's hands, attachment of the immovable property to the limited extent of the value alleged to have been received by him was treated as permissible. The Tribunal also reiterated that attachment under the Act is only a protective measure to secure availability of the property for action under the statute, and does not by itself amount to taking possession except in exceptional circumstances. [Paras 53, 54]

The objection founded on prior acquisition of the property failed, and attachment of the property as representing the value of the proceeds of crime was sustained.

Final Conclusion: The Tribunal found sufficient material, at the stage of attachment, to hold that part of the proceeds of crime had reached the appellant and that equivalent value attachment of his property was permissible even though the property had been acquired earlier. The appeal against confirmation of attachment was therefore dismissed.

Levy of service tax on construction of residential complexes prior to 01.07.2010 - Taxability of land owner's share in joint development construction

Construction of residential complexes prior to 01.07.2010 - Works contract vis-a-vis construction of complex service - HELD THAT: - The Tribunal followed its earlier decision in M/s R V Nirman Pvt Ltd.[2026 (5) TMI 510 - CESTAT HYDERABAD] and held that, for the period prior to 01.07.2010, no service tax was leviable on construction of residential complexes undertaken by builders or developers. Since the dispute raised by the Revenue proceeded on reclassification of the activity from Construction of Complex Service to Works Contract Service, that controversy did not survive once the underlying levy itself was held inapplicable for the relevant period.

The Revenue appeal against dropping of the larger service tax demand was rejected.

Land owner's share in joint development construction - Taxable service in transfer arrangement - HELD THAT: - Accepting the respondent's cross appeal and applying the ratio of M/s R V Nirman Pvt Ltd.[2026 (5) TMI 510 - CESTAT HYDERABAD], the Tribunal held that the land owner's share was also not exigible to service tax, as the transaction did not involve a taxable service and was only an arrangement involving transfer of property.

The cross appeal was allowed and the impugned demand on the land owner's share was set aside.

Unchallenged demand for goods transported by road service - Absence of appeal or cross-objection - HELD THAT: - The Tribunal recorded that there was neither an appeal by the Revenue nor any cross-objection or cross appeal by the respondent against the demand relating to goods transported by road service. In the absence of any challenge to that part of the order, the Tribunal upheld that demand.

The demand on account of goods transported by road service was upheld.

Final Conclusion: The Tribunal rejected the Revenue's appeal, holding that no service tax was leviable on the builder's residential complex construction prior to 01.07.2010 and that the land owner's share was also not taxable. The respondent's cross appeal was allowed, except to the extent that the demand relating to goods transported by road service was upheld as unchallenged.

Manpower recruitment or supply agency service - Contract for execution of bottling and cleaning activities -HELD THAT: - The Tribunal examined the contract and found that it was directed to performance of specified operational activities in the distillery and did not contain any obligation to supply manpower to the principal. The payment structure and nature of work showed execution of contracted work through the contractor's labour, not provision of labour as such. On that basis, the Department's allegation that the appellant had rendered manpower supply service was held to be unsupported by the contract. The Tribunal also followed its earlier decision in M/s Rama Enterprises [2026 (1) TMI 653 - CESTAT HYDERABAD] dealing with similarly placed contractors of the same distillery. [Paras 6, 7]

The demand under the category of manpower recruitment or supply agency service was held unsustainable and the appeal was allowed.

Final Conclusion: The Tribunal held that the appellant's contract was for execution of specified washing, stacking and cleaning operations and not for supply of manpower. The service tax demand raised under manpower recruitment or supply agency service was therefore set aside and the appeal was allowed.

Refund of pre-deposit - Pre-deposit made through DRC-03 challan - Judicial discipline - Entitlement to compensatory litigation cost for departmental harassment

Refund of pre-deposit - HELD THAT: - There is series of judgments available on this issue concerning failure to make pre-deposit due to improper maintenance of integrated Portal for making such deposits after introduction of Goods and Service Tax region. Even Hon’ble Bombay High Court had given instruction to the Board in the case of SODEXO India Services (P) Ltd. [2022 (10) TMI 264 - BOMBAY HIGH COURT] that to avoid confusion being crept in for improper legal provision to accept payment of pre-deposit under Section 35F of the Central Excise Act 1944 through DRC-3, a clear instruction should have been issued by the Board and Hon’ble Delhi High Court in the case of DD Interiors [2025 (3) TMI 7 - DELHI HIGH COURT] had reiterated its earlier finding [2025 (3) TMI 6 - DELHI HIGH COURT] that a mere deposit in the wrong account, that to, when the Integrated Portal might not have been fully functional or the existence of the same was not within the knowledge of the petitioner, cannot result in even rejection of the appeal on the ground of defects. However, in the instant case appeal was admitted for hearing that would imply that pre-deposit was validly made since Section 35F of the Central Excise Act 1944, applicable to Service Tax matters too had made it mandatory for admission of appeal with a pre-deposit.

In the case of Assistant Commissioner (ST) Vs. Satyamshivam Papers Pvt Ltd [2022 (1) TMI 954 - SC ORDER] and the one passed in the case of S.P. Pandey [2024 (10) TMI 1819 - SUPREME COURT] that stated that when undue harassment was meted out to the assessee with blatant abuse of power of concerned officer, imposition of cost was justifiable by the Tribunal, which is not otherwise empowered to award mandatory compensation.

The Tribunal held that the amount deposited for filing the appeal was a pre-deposit and not a payment of duty. Once the appeal had been entertained and later allowed, the deposit stood accepted for the purpose of Section 35F, and the assessee became entitled to its return with statutory interest. The refund sanctioning authority was already aware of the Board circular directing prompt refund of pre-deposits where the appeal succeeds, and yet declined refund solely on the ground that DRC-03 was a challan used in GST matters. Such refusal was found to be beyond jurisdiction and contrary to judicial discipline, since the appellate order in favour of the assessee had to be given effect to and the form of challan could not defeat refund when the amount had admittedly been credited to the Government account. [Paras 5, 6, 7]

The order directing refund of the pre-deposit with applicable interest was confirmed.

Compensatory litigation costs for departmental harassment - Protected litigation - HELD THAT: - The Tribunal found that repeated Board instructions requiring prompt refund of pre-deposits had not been followed, and that the present proceedings were pursued despite the absence of any sustainable basis to retain the amount. It viewed the denial of refund and continuation of the appeal as an instance of unnecessary harassment causing hardship and financial burden to the assessee. On that basis, the Tribunal held that compensatory litigation cost was justified and also permitted recovery from the concerned officer who had failed to comply with the governing circular. [Paras 6, 7]

The assessee was held entitled to compensatory litigation cost in addition to refund of the pre-deposit with interest.

Final Conclusion: The departmental appeal was dismissed. The Tribunal upheld refund of the pre-deposit with statutory interest, held that denial based solely on deposit through DRC-03 challan was unsustainable, and awarded compensatory litigation cost for the unjustified proceedings.

Refund of unutilised Cenvat credit - Input service invoices issued to unregistered premises - Registered premises requirement for service recipient invoices - HELD THAT: - The Tribunal followed its earlier decision in the appellant's own case in GE India Exports Pvt Ltd.[2016 (7) TMI 558 - CESTAT HYDERABAD], where it had held that Rule 4A of the Service Tax Rules, 1994 does not require the premises of the service recipient to be registered. Since the major portion of the refund had been denied only because the invoices were issued to an unregistered address, that basis for rejection was held to be unsustainable. On that reasoning, the denial of refund was found unjustified. [Paras 9, 10, 11]

The refund denial on the ground that the invoices were issued to unregistered premises was set aside, and the appeals were allowed.

Final Conclusion: Following the earlier decision in the appellant's own case, the Tribunal held that refund of unutilised Cenvat credit could not be denied merely because the input service invoices were issued to unregistered premises. The appeals were accordingly allowed.

Mandatory pre-deposit for second appeal - Maintainability of appeal on cumulative pre-deposit compliance - Question of law - HELD THAT: - The matter was decided on the basis of the Department's express concession that, for the second appeal, the required 10% pre-deposit is inclusive of the 7.5% already deposited at the first appellate stage and that no fresh deposit over and above that amount was required. Since the appeal before the Commissioner (Appeals) had also been dismissed only on the ground of alleged non-compliance with pre-deposit and not on merits, the Court held that the orders dismissing the appeal as not maintainable could not stand. The question concerning the requirement of deposit in terms of the Circular dated 24.06.2019 was expressly left open. [Paras 5, 6, 7]

The orders of the Tribunal and the Commissioner (Appeals) were set aside, and the matter was remitted to the Commissioner (Appeals) for decision on merits.

Final Conclusion: The Court disposed of the appeal by accepting the Department's stand that the earlier 7.5% deposit was to be counted towards the 10% pre-deposit requirement for the second appeal. Consequently, the dismissal of the appeal on maintainability was set aside and the matter was remanded to the Commissioner (Appeals) for decision on merits, while leaving the circular-related question open.

CENVAT credit on concessional CVD on imported steam coal - Availability of Notification No. 12/2012-Cus, as amended by 12/2013 -Choice between alternative exemption notifications - Penalty for reversed credit on civil construction inputs - Extended period of limitation - Penalty Under Section 11AC - levy under Section 3(1) - strict interpretation of taxing statutes - cascading of taxes - bona fide belief

CENVAT credit on concessional CVD on imported steam coal - Additional duty under Section 3 of the Customs Tariff Act - Choice between alternative exemption notifications - HELD THAT: - There are two notifications which are available to the appellants Notification No. 12/2012-Cus dated 17.03.2012 as amended by 12/2013 dated 01.03.2013 exempts the additional duty leviable under subsection 1 of Section 3 of the Customs Tariff Act 1975 as in excess of the additional duty rate specified in the corresponding entry in Column 5 of the table appended to the notification.

At entry no. 123 Steam Coal falling under CTI 2711 9700 is chargeable to 1% additional Customs duty, which popularly referred to as CVD. The appellants have availed this notification. Revenue is of the opinion that as the central excise duty itself is exempted by Notification No. 01/2011 entry no. 28, the appellants are not eligible to Cenvat Credit.

The Tribunal held that where more than one notification is available, the importer is free to avail the notification beneficial to it and no particular notification can be forced upon it. Credit under Rule 3 of the Cenvat Credit Rules is available in respect of the additional duty leviable under Section 3 of the Customs Tariff Act, and the Department had not alleged breach of the prescribed conditions regarding duty-paid inputs, receipt in factory, use in manufacture of dutiable final products, or supporting documents. The denial founded on the central excise exemption notification was therefore unsustainable, since the levy paid remained additional duty of customs and the concessional rate did not alter its eligibility for credit. Following the Chennai Bench decision in the appellant's own case [2026 (4) TMI 1227 - CESTAT CHENNAI] and the other decisions noticed, the Tribunal held that the disputed credit on imported steam coal was admissible. [Paras 8]

The demand disallowing CENVAT credit of CVD on imported steam coal, together with the related penalties, was set aside.

Penalty for reversed credit on civil construction inputs - Extended period and Section 11AC penalty - HELD THAT: - The Tribunal recorded that the credit attributable to inputs used for civil construction had already been paid back and found that, on the facts and circumstances, no case had been made out for invocation of the extended period. On that basis, penalty under Section 11AC was held not imposable. At the same time, the Tribunal declined to grant complete immunity, observing that the appellant, being an established corporate entity, could not be absolved altogether, and therefore restricted the remaining penalty to a reduced amount in the interest of justice. [Paras 9]

The Section 11AC penalty was held unsustainable, but the balance penalty on the civil-construction-related credit was reduced to a limited amount.

Final Conclusion: The Tribunal held that CENVAT credit of concessional CVD paid on imported steam coal was admissible and could not be denied by invoking the central excise exemption notification. The appeal was partly allowed by setting aside the disputed credit demand and related penalties on that issue, while reducing the remaining penalty relating to reversed credit on civil construction inputs.

Extended period of limitation - Suppression of facts in statutory returns - Clearance of Cenvat-availed inputs as such - Demand based on absence of corroborative evidence

Clearance of Cenvat-availed inputs as such - Corroborative evidence - HELD THAT: - The Tribunal found that the show cause notice had been issued purely on the basis of the ER-6 returns. No investigation was undertaken to verify the invoice particulars regarding the quality of coal, and no verification was carried out to ascertain whether the coal cleared to third parties was Cenvat-availed coal or non-Cenvat-availed coal. The Revenue also failed to bring any corroborative evidence to show that only Cenvat-availed coal had been cleared. In these circumstances, the factual basis of the demand remained unproved. [Paras 5, 9, 11, 12]

The confirmed demand was held unsustainable on merits.

Extended period of limitation - Suppression of facts in statutory returns - HELD THAT: - The Tribunal held that the quantity of coal removed and the fact that no duty had been paid on such clearances were already reflected in the statutory returns filed by the appellant, and the very foundation of the show cause notice was drawn from those returns. Once the relevant facts stood disclosed in the returns, suppression with intent to evade duty could not be alleged. The Revenue therefore failed to make out a case for invoking the extended period. [Paras 7, 10, 13]

The demand for the extended period was held barred by limitation.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal. It held that the demand failed both for want of proof that Cenvat-availed coal had been cleared and because the extended period could not be invoked in view of the disclosures made in the statutory returns.

Service tax paid on dealer commissions for sales promotion activities - CENVAT Credit - input service under Rule 2(l) - HELD THAT: - The Tribunal examined the agreements with the dealers and found that they were specifically engaged for promoting sale of the goods manufactured by the appellant. Since sales promotion is expressly included in the inclusive part of the definition of input service in Rule 2(l) of the CENVAT Credit Rules, 2004, the commission charged by the dealers for such activity fell within that expression. The denial of credit was therefore held to be unsustainable. The Tribunal also followed its earlier decision in Henkel Adhesives Technologies [2025 (11) TMI 2023 - CESTAT MUMBAI] and noted that Cadila Healthcare Ltd. [2013 (1) TMI 304 - GUJARAT HIGH COURT] was distinguishable because sales promotion was not the subject-matter there. [Paras 5, 6]

The denial of CENVAT credit was set aside and the credit was held admissible to the appellant.

Final Conclusion: The Tribunal held that dealer services used for promotion of sale of the appellant's finished goods were covered by sales promotion within the definition of input service, and the related CENVAT credit was therefore admissible. The impugned order sustaining denial of credit was set aside and the appeal was allowed.

Declared goods reimbursement - Input tax credit curtailment - Article 286(3) and section 15(b) override - Sub silentio precedent -HELD THAT: - The Court held that the controversy stood covered by Hides and Skin Owners Seva Mandal [2020 (3) TMI 142 - GUJARAT HIGH COURT], which had considered and distinguished Kadwani Forge Ltd. [2014 (12) TMI 909 - GUJARAT HIGH COURT]. The earlier decision in Kadwani Forge Ltd. had upheld the notification in the context of declared goods used in manufacture of new and different goods, and had not consciously determined the question arising under section 15(b) of the CST Act where the goods purchased and sold were both declared goods; on that aspect, it was treated as having passed sub silentio. Applying the later decision, the Court held that though section 11(6) of the VAT Act authorises specification of goods not entitled to whole or partial tax credit, that power cannot be read as permitting the State to override article 286(3) of the Constitution read with section 15(b) of the CST Act and curtail the extent of reimbursement of the State tax leviable on declared goods. The notification therefore remained valid generally, but was inapplicable to declared goods such as coke when purchased within the State and resold in the course of inter-State trade and commerce. [Paras 10, 11]

The petition was allowed to that extent; the notification was held inapplicable to such transactions, full input tax credit was required to be granted, and the impugned show cause notice was quashed while the vires of the notification were otherwise maintained.

Final Conclusion: Following Hides and Skin Owners Seva Mandal, the Court held that the notification restricting input tax credit could not operate against declared goods purchased within the State and resold as declared goods in inter-State trade and commerce. The show cause notice was quashed, but the validity of the notification in general was left undisturbed.

Priority of secured creditor over State tax dues - Registered security interest under SARFAESI - First charge under State tax law - Non-compliance with recovery procedure under land revenue law - Effect of amended first charge provision under MVAT - Proclamation of sale by public auction - HELD THAT: - The Court held that the controversy stood governed by the Full Bench decision in Jalgaon Janta Sahakari Bank Ltd. & Anr. [2025 (9) TMI 809 - BOMBAY HIGH COURT], which recognized that, upon registration of security interest, the dues of the secured creditor under the SARFAESI regime have priority over Government dues, including sales tax dues. The Court further noted that, for cases predating the enforcement of the relevant Central provisions, a mere attachment order was insufficient and the State had to show compliance with the procedure under the Maharashtra Land Revenue Code and the Rules, including due proclamation. Since the bank's security interest had been registered with CERSAI long before the State's attachment, the State had not registered its charge with CERSAI, and the affidavits of the State authorities did not disclose compliance with the prescribed recovery procedure, the State could not defeat the bank's priority. The contention founded on the amendment to section 37 of the MVAT Act was also rejected because an identical contention had already been rejected by the co-ordinate Bench in Bank of Baroda vs. Assistant Commissioner of Sales Tax & Anr.[2025 (9) TMI 809 - BOMBAY HIGH COURT]. The Court thus applied the principle that the statutory priority under the Central enactment overrides the State's claimed first charge in the facts of the case. [Paras 14, 15, 16, 17, 18]

The attachment order and consequential encumbrance were quashed, and the registering authority was directed to register the sale certificate as free from such encumbrance without insisting on no-objection from the sales tax authority.

Final Conclusion: The writ petition was allowed. The Court held that the secured creditor's prior registered security interest had priority over the State's MVAT attachment, rejected the State's reliance on the amended section 37, and directed removal of the encumbrance and registration of the sale certificate.

Dishonour of Cheque - Extraordinary delay in filing the revision petitions - Condonation of inordinate delay - Continuation of cheque dishonour complaints after settlement - Double jeopardy - Adjustment of payments towards fine - Novation of contract - Parallel civil and criminal proceedings - Expression ‘sufficient cause’ under Section 5 of the Limitation Act, 1963

Sufficient cause for delay - Bona fide prosecution of remedy - Incorrect legal advice - The petitioners failed to show sufficient cause for condonation of the delay of 1894 days in filing the revision petitions challenging the judgment affirming their conviction. - HELD THAT: - This Court is conscious of the settled principle of law, that the expression ‘sufficient cause’ under Section 5 of the Limitation Act, 1963, should receive a liberal and justice-oriented interpretation by a court of law, and that a litigant should not ordinarily be non-suited on technical grounds alone. However, the law is equally well-settled that mere filing of an application for condonation of delay does not entitle a party to such relief as a matter of course. The explanation offered must be bona fide, reasonable and should satisfactorily explain the entire period of delay in filing a petition. A mere excuse cannot be elevated to the status of a sufficient cause.

In Rajneesh Kumar [2024 (11) TMI 1408 - SUPREME COURT], the Hon’ble Supreme Court cautioned against the increasing tendency of litigants to attribute the entire blame to their advocates and held that even if an advocate has been negligent, such negligence by itself cannot furnish a ground to condone a long and inordinate delay, as a litigant is equally expected to remain vigilant regarding proceedings initiated at his own instance.

The Court found that the record of the revision petitions filed in 2019 before the Sessions Court expressly confined the challenge to the order on sentence and not to the conviction. The prayer clauses proceeded on the footing that the petitioners accepted their status as convicts and only sought reconsideration of sentence. The later writ petition filed in 2022 also raised only the issue of sentence and alleged double jeopardy, which showed that the petitioners were aware of the nature of the proceedings they had chosen. In these circumstances, the plea that they remained under a bona fide misconception for more than five years due to wrong legal advice was held to be contrary to the record and lacking in bona fides. The Court further held that a litigant actively pursuing proceedings through different counsel cannot, after prolonged inaction, shift the entire blame on counsel and seek condonation of such extraordinary delay. [Paras 95, 96, 97, 98, 99]

The applications for condonation of delay were dismissed, and the revision petitions against conviction were dismissed as barred by limitation.

Settlement agreement and pending Section 138 complaints - Withdrawal of complaints conditional on full payment - No parallel prosecution - HELD THAT: - The Court held that Clause 6 of the Consent Agreement expressly governed the fate of the pending complaints and made their withdrawal contingent upon full payment of the settlement amount. The agreement only required the complainant to defer coercive steps and specifically preserved its liberty to proceed with the existing criminal cases if any of the agreed payments was not made. Since the petitioners admittedly defaulted in complying with the settlement schedule, the contingency for withdrawal of the complaints never arose. The observation in the consent decree that the earlier agreements would not revive was read as applicable only if the entire settlement amount was received, and not as overriding the specific stipulation permitting continuation of the pending complaints upon default. The Court also distinguished the principle relied upon by the petitioners, holding that there were no two parallel prosecutions here because no fresh complaint under Section 138 had been instituted on the settlement cheques. [Paras 116, 117, 118, 119, 120]

The prayer for quashing the complaint cases was rejected.

Civil detention and criminal sentence - Concurrent civil and criminal remedies - Probation refused - HELD THAT: - In D. Purushotama Reddy [2008 (8) TMI 934 - SUPREME COURT], the Hon’ble Supreme Court held that – it is beyond any doubt that, in respect of the same transaction, both a civil suit for recovery and criminal proceedings under Section 138 of the NI Act are maintainable and may continue simultaneously.

Similarly, in Vishnu Dutt Sharma [2009 (5) TMI 862 - SUPREME COURT], the Hon’ble Supreme Court held that the pendency or adjudication of a civil proceeding does not bar prosecution under Section 138 of the NI Act. The Supreme Court also observed that although the factual foundation of the two proceedings may overlap, the causes of action, the nature of the proceedings and the standard of proof applicable in civil and criminal jurisdictions are fundamentally different. It was further held that a judgment in a civil proceeding is not binding upon a criminal court and vice versa.

The Court held that civil execution proceedings for recovery of the decretal amount and criminal prosecution for dishonour of cheques operate in distinct fields and rest on different causes of action. Detention in civil prison is only a mode of execution of a money decree and is not punishment for a criminal offence; therefore, Article 20(2) of the Constitution and Section 300 of the Code of Criminal Procedure had no application. The execution order did not show satisfaction of the decree, and detention did not extinguish the liability. The Court further noted that the Sessions Court had already taken the civil detention undergone by petitioner no. 1 into account while reducing his substantive sentence. On the prayer for probation, the Court declined discretionary relief in view of the petitioner's repeated failure to honour undertakings before the Court and his overall conduct throughout the proceedings. [Paras 139, 140, 141, 142, 143]

The challenge to the sentence on the ground of double jeopardy failed, and the prayer for benefit under the Probation of Offenders Act was rejected.

Adjustment of subsequent payments - Modification of fine - Compensation under Section 138 - HELD THAT: - The Court found no infirmity in the Sessions Court's approach in taking into account earlier payments made by the petitioners while reducing the fine. However, it further noted that during the pendency of the present proceedings, an additional sum had been deposited by petitioner no. 1 and released to the complainant. Since that payment was received towards the liability arising from the present proceedings, the Court held that due adjustment had to be given while computing the balance payable. The sentence was therefore modified only to the limited extent of reducing the quantum of fine in each complaint case in light of that further payment. [Paras 135, 136, 145, 146, 147]

The common judgment on sentence was affirmed subject to a limited reduction in the quantum of fine by giving credit for the additional amount deposited and released to the complainant.

Final Conclusion: The revision petitions challenging conviction were dismissed as time-barred, the plea that the subsequent consent settlement extinguished the pending Section 138 complaints was rejected, and the challenge to sentence substantially failed. The common judgment on sentence was upheld, subject only to a limited reduction in the fine to give credit for the further amount deposited and released to the complainant.