TaxTMI Updates e-Newsletter
Jul 18,2026

Challenged to the show-cause notices and the assessment order - HELD THAT:- The writ petitions were disposed of without adjudication on merits, leaving the petitioners to pursue the statutory appellate remedy against any final assessment order, with liberty in the second petition to raise all available contentions before the appellate authority.

Erroneous classification of interest as tax in GST demand summary - Statutory pre-deposit for GST appellate remedy - Maintainability of the further statutory appeal where interest demanded for delayed reversal of input tax credit was reflected as tax, thereby requiring a pre-deposit on an amount not constituting disputed tax. - HELD THAT: - The dispute concerning wrong availment and reversal of input tax credit involved factual matters requiring examination by the statutory fact-finding authorities. However, the demand determined comprised reversal of input tax credit, interest and penalty, without any component of disputed tax; yet the interest demand was entered under the head of tax in Form GST DRC-07 and stood affirmed in appeal. Although the original order was subsequently rectified to reclassify the amount as interest, the appellate authority could not rectify its order owing to limitation. Relegation to the Appellate Tribunal would consequently compel pre-deposit against interest wrongly treated as tax and would not subserve justice. [Paras 5, 6, 7]

The appellate order was set aside and the appeal was remitted to the appellate authority for fresh decision on merits, after hearing the petitioner and uninfluenced by the earlier order.

Final Conclusion: The writ petition was disposed of by setting aside the appellate order and remitting the appeal for fresh adjudication on merits.

Alternative statutory remedy and writ jurisdiction - Exceptions to the rule of alternative remedy - Principles of natural justice - Maintainability of the writ petition challenging a GST adjudication order when an appeal lay under the statutory appellate mechanism and the petitioner alleged inadequate consideration of its replies and supporting documents - HELD THAT: - It is well settled that the existence of an alternative statutory remedy does not operate as an absolute bar to the exercise of writ jurisdiction. In Commercial Steel Limited [2021 (9) TMI 480 - SUPREME COURT], the Supreme Court reiterated that notwithstanding the availability of an efficacious statutory remedy, the High Court may entertain a petition under Article 226 of the Constitution in exceptional circumstances

The Supreme Court further observed that the mere assertion of one of the aforesaid grounds would not, by itself, justify bypassing the statutory remedy. The High Court is required to independently examine whether the facts of the case disclose circumstances warranting the exercise of its extraordinary jurisdiction notwithstanding the availability of an efficacious appellate remedy.

The principal grievance of the Petitioner is that if the adjudicating authority considered the material placed on record to be insufficient for determining the liability, it ought to have called upon the Petitioner to furnish such further documents or clarifications as were considered necessary instead of proceeding to pass the Impugned Order. The contention does not commend acceptance.

A noticee who had participated in the proceedings, filed detailed replies and documentary material, and received personal hearings could not contend that natural justice required the adjudicating authority to call for further documents before deciding the matter.

A perusal of the Impugned Order demonstrates that the reply submitted by the Petitioner has, in fact, been noticed by the adjudicating authority. Whether the reply has been adequately dealt with, whether each contention raised therein has been correctly appreciated, or whether the reasons recorded by the adjudicating authority are sufficient, are all matters which pertain to the correctness of the adjudication. Such questions neither disclose a violation of the principles of natural justice nor establish any jurisdictional infirmity warranting interference under Article 226 of the Constitution.

No recognised exception to the rule requiring exhaustion of the statutory appellate remedy was made out; the writ petition was dismissed, leaving the petitioner to pursue the statutory appeal.

Final Conclusion: The writ petition was dismissed for failure to establish an exceptional ground for bypassing the statutory appeal. The period during which the writ petition remained pending was directed not to be reckoned while considering limitation for any appeal, subject to the appellate authority deciding limitation independently.

Rejection of the application for revocation of cancellation of GST - Quantification of Tax Liability - HELD THAT:- The writ petition was disposed of without interference, with liberty to the petitioner to challenge the quantified tax-liability order in appropriate proceedings and thereafter seek revocation of GST registration in accordance with law.

Alternative statutory remedy against GST adjudication order - Maintainability of a writ petition challenging a GST demand order without availing the statutory appellate remedy. - HELD THAT: - The Court, agreeing with the co-ordinate Bench viewin Punj Lloyd Ltd.- Varaha Infra Ltd. (JV) [2026 (5) TMI 1819 - RAJASTHAN HIGH COURT], held that the petitioner should pursue the efficacious statutory appeal available under the CGST Act. All contentions raised in the writ petition were left open for determination by the Appellate Authority. [Paras 3]

The writ petition was disposed of with liberty to file a statutory appeal; the time spent in pursuing the writ petition was directed to be excluded for limitation purposes if the appeal is filed within four weeks.

Final Conclusion: The writ petition was disposed of, leaving the petitioner to pursue the statutory appellate remedy and preserving all its contentions before the Appellate Authority.

Alternative statutory remedy under the GST appellate framework - violation of principles of natural justice - Maintainability of the writ petition challenging penalty proceedings and the appellate order when an appeal to the GST Tribunal was available - HELD THAT: - The Court held that, with Presiding Officers appointed to the GST Tribunal and time granted for filing appeals, the petitioner had an efficacious statutory remedy. Questions concerning compliance with natural justice and the competence of the officer issuing the show-cause notice involved disputed facts requiring examination on documents by the Tribunal. The writ jurisdiction could not be invoked merely to avoid the statutory pre-deposit requirement, particularly when the specialised Tribunal comprising judicial and technical members had been constituted for GST disputes. [Paras 5, 6]

The petition was dismissed with liberty to the petitioner to pursue the statutory appeal before the concerned GST Tribunal.

Final Conclusion: The writ petition was dismissed on account of the available statutory appellate remedy before the GST Tribunal, without adjudication on the merits of the challenge to the penalty proceedings.

Waiver of interest and penalty on payment of tax demand - Substantial compliance with procedural requirements for exemption - Payment of the full tax liability under an incorrect GST head, instead of the appropriate CGST and SGST heads - HELD THAT: - A provision for waiver or exemption is required to be construed strictly with regard to substantive requirements. As regards procedural requirements, substantial compliance is sufficient. This principle was affirmed by the Supreme Court in cases such as Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company and Others[2018 (7) TMI 1826 - SUPREME COURT (LB)].

Since the full tax liability under the order was discharged within the stipulated period and the incorrect tax head resulted from an uncontroverted clerical error, the requirement of payment stood substantially complied with. [Paras 5, 6]

The rejection of the waiver application was set aside and the matter remanded for reconsideration after affording reasonable opportunity and taking account of the payment being placed under the appropriate tax head.

Final Conclusion: The writ petition was disposed of by setting aside the rejection of waiver and remanding the application for fresh consideration, subject to compliance with procedural requirements for crediting the tax under the appropriate head.

Grant and release the due refund as claimed in the ITR - application in Form 1 under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) was submitted by the petitioner and tax liability was settled but representation was made before the respondent No. 3 but till date it has not been decided - HELD THAT:- Having considered limited prayer made this petition, at this juncture, is disposed of with a direction to the respondent No. 3 to decide pending representation of the petitioner dated 18.01.2023, preferably within a period of 90 days, strictly in accordance with the law.

Rent reasonableness certificate - consideration of lease deed and fair-rent assessment norms - Validity of the rent reasonableness certificate issued without considering the lease deed furnished by the petitioner and the applicable fair-rent assessment/re-assessment material. - HELD THAT: - The hiring committee had received the lease deed but did not consider it while issuing the certificate. It also failed to consider the prescribed alternative methods for assessment or reassessment of fair rent for private buildings taken on lease by Central Government departments, namely recognised valuation principles and prevailing market rent. The certificate was therefore vitiated by non-consideration of relevant material. [Paras 6, 7, 8]

The certificate was set aside, and the competent respondents were directed to reconsider the request after taking the lease deed and the applicable fair-rent assessment material into account.

Final Conclusion: The writ petition was disposed of by quashing the rent reasonableness certificate and directing fresh consideration of the petitioner's request within the stipulated period.

Limitation for penalty for cash-receipt contraventionu/s 271DA - Initiation of penalty proceedings by competent authority - Reasonable opportunity of hearing in penalty proceedings

Limitation for penalty for cash-receipt contravention - Initiation of penalty proceedings by competent authority - Commencement of limitation and permissible time for initiation of penalty proceedings for contravention of the statutory restriction on cash receipts - HELD THAT: - A proposal or reference by the Assessing Officer merely forwards material for consideration and does not amount to initiation, since the decision whether to proceed lies exclusively with the Joint Commissioner competent to impose the penalty. Proceedings commence only upon issuance by that authority of notice affording the assessee an opportunity of hearing. Accordingly, the six-month period for passing the penalty order runs from the end of the month in which such notice is issued.

Though no express period is prescribed for initiation after receipt of the proposal, the power must be exercised within a reasonable time; having regard to the statutory scheme, six months from the end of the month of receipt of the proposal was held reasonable. The earlier view treating the Assessing Officer's reference as the commencement of limitation was held inconsistent with the subsequent Supreme Court exposition of initiation of proceedings. [Paras 46, 47, 48, 63, 64]

The penalty orders in four appeals were barred because the Joint Commissioner's notices were issued beyond the reasonable six-month period; the remaining penalty orders were restored, as the notices and consequential orders were within the respective six-month periods.

Reasonable opportunity of hearing in penalty proceedings - Contents of notice for penalty proceedings - Validity of notices initiating penalty proceedings on the ground that they did not contain detailed factual particulars - HELD THAT: - The governing provisions require the assessee to be heard or afforded a reasonable opportunity before imposition of penalty, but do not prescribe a detailed show-cause notice of the kind required under the distinct statutory scheme considered in the Supreme Court decision AMITABH BACHCHAN [2016 (5) TMI 493 - SUPREME COURT] relied upon by the assessees. The assessees were issued notices, submitted replies and explanations, and those replies were considered before the penalty orders were made. Additional procedural requirements cannot be imported into a fiscal statute contrary to its text. [Paras 53, 54, 55, 57]

The notices satisfied the statutory requirement of reasonable opportunity of hearing and were not invalid for want of detailed particulars.

Recording of satisfaction for penalty initiation - Requirement of a recorded satisfaction by the Joint Commissioner before initiation of penalty proceedings - HELD THAT: - The provision imposing penalty and the procedural and limitation provisions neither mandate nor contemplate recording of satisfaction by the Joint Commissioner as a condition precedent to initiation. A requirement not contained in the statutory text cannot be introduced by interpretation; the decision relied on by the assessees turned on a different factual setting involving a de novo assessment. [Paras 60, 61]

Absence of a separately recorded satisfaction by the Joint Commissioner did not vitiate the penalty proceedings.

Final Conclusion: The Revenue appeals were partly allowed. Penalty orders in the cases where initiation was beyond the reasonable six-month period were held time-barred, while the remaining orders were restored.

Document Identification Number in departmental communications - Substantial compliance with Circular No.19/2019 - Electronic communication of manually prepared orders

Validity of orders initially communicated electronically without a Document Identification Number, followed by communication of the generated DIN through an intimation letter enclosing the order with a manually entered DIN - HELD THAT: - Circular No.19/2019 mandates a DIN to secure an audit trail and authenticity of departmental communications. Where an order prepared outside the ITBA system is uploaded for DIN generation and is automatically communicated in that process, a prompt subsequent intimation bearing its own DIN and correctly specifying the DIN assigned to the enclosed order sufficiently establishes the order's identity and traceability. On a purposive construction of the Circular together with Instruction No.5, such procedure constitutes substantial compliance; invalidity arises only where no DIN is generated or communicated at all. [Paras 31, 33, 38, 40]

The DRP directions and the revisional order were not invalid merely because the orders were initially communicated without a DIN; the Tribunal's orders were set aside and the appeals were remitted for consideration on the remaining grounds.

Prior approval for manual communication without DIN - Electronic communication of manually prepared orders - Requirement of prior approval of the Chief Commissioner or Director General for orders initially uploaded and communicated electronically without a DIN - HELD THAT: - The exception requiring reasons and prior approval concerns communications manually issued without a DIN. The orders in question were electronically communicated upon uploading for DIN generation and were thereafter re-communicated with the generated DIN, on the same day or the next day. They were therefore not manual communications attracting the prior-approval requirement. [Paras 34, 35]

Absence of prior approval did not render the electronically communicated orders invalid.

Incorrectly quoted Document Identification Number - Effect of an incorrect DIN manually entered in the DRP directions and the revisional order when the accompanying intimation letter correctly identifies the order and its DIN - HELD THAT: - The manual entry of the DIN assigned to the intimation letter instead of the DIN assigned to the order was a typographical error. Since the intimation letter identified the statutory provision, date and correct DIN of the concerned order, the error did not impair authentication, traceability or compliance with Circular No.19/2019. [Paras 41, 43, 44, 46]

The erroneous manual DIN entry did not invalidate either order.

Final Conclusion: The Revenue's appeals were allowed. The Tribunal's orders quashing the DRP directions and the revisional order for DIN-related non-compliance were set aside, and the respective appeals were remitted to the Tribunal for adjudication of the remaining issues.

Addition for suppression of sales - Unexplained money

Suppression of sales - Corroborative evidence - Addition for alleged suppression of sales based solely on statements recorded during search - HELD THAT: - The Tribunal's finding that no material substantiated suppression of sales was upheld. The allegation rested solely on statements without corroborative material; there was no unaccounted investment, unexplained asset or expenditure, and the source of the alleged suppressed turnover had been disclosed in the return and subjected to tax. Such factual findings could not be re-examined in appeal. [Paras 5]

No substantial question of law arose regarding the deletion of the addition for suppression of sales.

Unexplained money - Unaccounted cash - Addition of cash as unexplained money in the absence of material establishing unaccounted cash - HELD THAT: - The Tribunal had found no material to establish unaccounted cash. The High Court held that this factual finding did not warrant interference and did not give rise to a substantial question of law. [Paras 5]

The Tribunal's deletion of the addition for unexplained cash was sustained.

Final Conclusion: The revenue's appeals were rejected, as the Tribunal's findings on absence of corroborative material for suppression of sales and unaccounted cash were factual and disclosed no substantial question of law.

Place of effective management - turnover threshold exclusion - Rectification and refund of tax paid under mistaken residence status

Place of effective management - turnover threshold exclusion - Indian taxability of a New Zealand-incorporated company which filed returns on the belief that its place of effective management was in India - HELD THAT: - The Board circular excludes the place-of-effective-management residence rule from application to a company having turnover or gross receipts within the stipulated threshold, with effect from Assessment Year 2017-18. Being binding on the Department, the clarification meant that the petitioner was not liable to Indian tax on the basis of its assumed Indian residence. [Paras 44, 45]

The tax paid on the basis of the assumed Indian residence was held refundable.

Rectification of assessment for foreign tax paid after settlement of dispute - Double taxation relief - Refund of Indian tax paid on income subsequently taxed in New Zealand after clarification of the petitioner's New Zealand residence - HELD THAT: - Section 155(14A) provides for amendment where foreign-tax credit was withheld because the foreign-tax payment was disputed and the dispute was subsequently settled. Court held that the petitioner, having become liable to tax in New Zealand, was entitled to rectification and that procedural impediments could not defeat substantive relief where tax was not due as revenue in India double taxation of the same income could not be sustained. Procedures are handmaids of justice and cannot obstruct substantive relief. [Paras 50, 51, 52, 57, 58]

The rejection of refund was quashed, and the matter was remitted for refund of the tax paid with interest in accordance with law.

Final Conclusion: The writ petition was allowed. The impugned rejection was quashed and the respondent was directed to refund the tax paid for the assessment years in question, with interest in accordance with law.

Unexplained income from family remittances - Failure to examine identified creditors - Non examination of their source and creditworthiness - HELD THAT: - After the petitioner disclosed that the remitters were family members, the Revenue was required to pursue examination of their source of income and creditworthiness. The absence of notice to the remitters for production of their returns constituted a procedural error, consistently with Commissioner of Income-tax V/s Orissa Corpn, (P.) Ltd. [1986 (3) TMI 3 - SUPREME COURT].

The assessment order was quashed and the matter restored for re-adjudication, with opportunity to the petitioner to produce the family members' documents.

Final Conclusion: The petition was allowed, the assessment treating the family remittances as unexplained income was quashed, and the proceedings were restored for fresh adjudication after enabling the petitioner to furnish relevant documents.

Bogus purchases - addition restricted to profit element - Accepted sales and corresponding purchases

Addition on alleged bogus purchases of old batteries where the corresponding sales were not disputed - HELD THAT: - The stock records admitted as additional evidence showed no variation between purchases and sales, and the sales were stated to arise from the purchases.

Though the purchases could have been made from unknown sources, their entire value could not be assessed as income when the sales were accepted and no disproportionate sales were identified. Tax being chargeable on income and not gross receipts, only a reasonable profit element embedded in such purchases was liable to be added.

See Mohammad Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] wherein it was held that the Tribunal correctly restricted the additions limited to the extent of bringing the gross profit rate on purchases at the same rate of other genuine purchases.

Hon’ble Supreme Court in the case of CIT vs. Willamson Financial Services [2007 (12) TMI 4 - SUPREME COURT] has held that under the Income Tax Act, the tax is on the income and not on gross receipts. Further held that, what is to chargeable to tax under the Income Tax Act is the profit and gains of a year. [Paras 9, 10, 11, 12, 13]

The addition was restricted to profit estimated at 1.15% of the alleged bogus purchase value, and the Assessing Officer was directed to assess only that amount as income.

Final Conclusion: The appeal was partly allowed. The impugned addition for bogus purchases was confined to the estimated profit element.

Condonation of delay in statutory appeal - Dismissal of appeal without adjudication on merits - as explained Director of the company, who was looking after the legal and financial matters, had suffered heart stroke and, therefore, he could not attend the matter in time and the other directors had no idea about the legal matters and the procedure.

HELD THAT: It has been held in the case of Vareli Textile Industries Limited [2006 (2) TMI 102 - GUJARAT HIGH COURT] that meritorious case should not be thrown out on ground of limitation. Considering the fact that the two appeals of the assessee were against penalty orders u/s. 271BA and u/s. 271G of the Act, the Ld. CIT(A) should have adjudicated the matter on merits rather than summarily rejecting the appeal of the assessee on the ground of delay.

Set aside matters to the file of Ld. CIT(A) with a direction to condone the delay in filing the appeals before him and thereafter, re-adjudicate the appeals of the assessee on merits.[Paras 6]

The impugned orders were set aside and both matters were remanded to the appellate authority to condone the delay and re-adjudicate the appeals on merits.

Final Conclusion: Both appeals were allowed for statistical purposes. The appellate authority was directed to condone the delay and decide the penalty appeals on merits.

Deduction for interest from co-operative banks - deduction u/s 80P(2)(d) -Interest income derived from co-operative societies

HELD THAT: - A co-operative bank registered under the Gujarat State Co-operative Societies Act is a co-operative society for the purpose of the deduction available on interest derived from investments with another co-operative society. Since the entire fixed-deposit interest was received from co-operative banks, the denial of deduction was unsustainable. [Paras 8]

The Assessing Officer was directed to allow the claimed deduction in respect of the interest received from the three co-operative banks.

Final Conclusion: The appeal was partly allowed. The claimed deduction for interest received from co-operative banks was directed to be allowed; the alternative claim was dismissed as not pressed.

Deduction for provision for bad and doubtful debts by co-operative banks - Taxability of interest on non-performing assets on receipt basis - Income recognition on receipt basis - Deduction available to co-operative banks

Deduction for provision for bad and doubtful debts by co-operative banks - Deduction claimed for provisions for non-performing assets was within the eligible deduction u/s 36(1)(viia) - HELD THAT: - For AY 2012-13, the AO's remand report itself computed the eligible deduction at an amount exceeding the provision for which deduction was claimed; the factual basis on which the first appellate authority deleted the disallowance remained uncontroverted. For AYs 2013-14 and 2014-15 also, the deduction claimed was found to be below the eligible deduction, and no infirmity was shown in the appellate findings. [Paras 4, 5, 6]

The deletions of the disallowances of deductions under section 36(1)(viia) were affirmed.

Taxability of interest on non-performing assets on receipt basis - Retrospective application of the amendment extending section 43D to co-operative banks - Accrued interest on non-performing assets of a co-operative bank taxability where it was recognisable on receipt basis under RBI guidelines - HELD THAT: - The assessee was bound by RBI guidelines requiring recognition of interest on non-performing assets only upon receipt and had consistently followed that method, which had been accepted by the Department. The amendment to section 43D extending its benefit to co-operative banks, other than the excluded classes, was held to cure an omission and was therefore retrospective notwithstanding its stated effective date. Following Kangra Central Co-op Bank Ltd. [2022 (12) TMI 449 - HIMACHAL PRADESH HIGH COURT] interest on sticky loans or non-performing assets was taxable on receipt basis. [Paras 5, 6]

The deletion of additions for accrued interest on non-performing assets for AYs 2013-14 and 2014-15 was upheld.

Deduction available to co-operative banks - whether co-operative bank was entitled to the deduction under section 80P(2)(c)(ii)? - HELD THAT: - The deduction was available to co-operative societies, including co-operative banks, and had also been allowed to the assessee in earlier years. This position was not controverted. [Paras 5]

The allowance of the deduction was sustained.

Final Conclusion: The Revenue's appeals for all the assessment years were dismissed, and the orders of the first appellate authority were affirmed.

Genuineness of derivative trading losses - Failure to adjudicate reassessment jurisdictional grounds

Genuineness of derivative trading losses - Burden of proving genuine transactions - Allowability of losses claimed from derivative option transactions alleged to have been undertaken through a manipulated trading syndicate - HELD THAT: - Trading through a recognised stock exchange and a registered broker, supported by contract notes and banking-channel payments, did not by itself establish genuineness. In the light of the investigation findings, the brokers' admissions, the pattern of options being acquired shortly before expiry and allowed to lapse, and the assessee having incurred losses in all but one transaction, the onus lay on the assessee to establish that the losses were genuine. The assessee failed to rebut the material or discharge that onus; apparent transactions could not be accepted as real. [Paras 7]

The disallowance of derivative trading losses was confirmed; the grounds challenging the addition and alleging denial of natural justice were dismissed.

Failure to adjudicate reassessment jurisdictional grounds - HELD THAT: - The specific jurisdictional grounds were raised for the first time before the Tribunal, while the appellate authority had disposed of the general legal ground cryptically. Since the grounds required factual verification, they were admitted in the interests of justice but were not adjudicated on merits. [Paras 7]

The matter was restored to the appellate authority for a detailed adjudication of the legal jurisdictional grounds.

Final Conclusion: The derivative trading loss was disallowed on merits. The reassessment jurisdictional grounds were restored to the appellate authority for fresh detailed adjudication; the appeal was partly allowed for statistical purposes.

Penalty u/s 271(1)(c) - estimated addition on alleged bogus purchases - Consistency with coordinate Bench decisions

Levy of penalty for alleged bogus purchases where the quantum addition was ultimately sustained only on an estimated basis - HELD THAT: - The addition underwent estimation at every stage, being reduced from the original percentage to a lower percentage by the appellate authorities. Penalty u/s 271(1)(c) is not exigible where an addition is made or sustained on an ad hoc or estimated basis.

The coordinate Bench decisions in Shri Ramprakash Vijayvergia [2024 (4) TMI 1418 - ITAT SURAT] and Santosh Singh Hukam Singh [2026 (1) TMI 912 - ITAT SURAT] involving identical facts of estimated additions for alleged bogus purchases, were followed in the absence of any distinguishing feature or contrary subsequent pronouncement; judicial discipline and consistency required adherence to that view. [Paras 6]

The penalty imposed for the estimated addition on account of alleged bogus purchases was held unsustainable and was directed to be deleted.

Final Conclusion: The appeal was allowed and the penalty levied under section 271(1)(c) was deleted, as the addition for alleged bogus purchases ultimately rested on estimation.

Accrual of contingent contractual consideration - Revenue recognition under mercantile system - Allowability of project expenditure under percentage completion method

Accrual of contingent contractual consideration - Real income theory - Reasonable certainty of collection - Taxability of the unpaid third tranche under the Deed of Assignment in A.Y. 2013-14 - HELD THAT: - Under the mercantile system, an amount mentioned in an agreement is not taxable merely because a contractual claim exists; accrual requires a vested, unconditional and enforceable right, with a corresponding debt due. The third tranche was linked to fulfilment of contractual conditions and was subject to the assignee's step-in right and deduction of costs. Its receipt and quantification were therefore uncertain and disputed.

Accounting Standard-9's requirement of reasonable certainty of ultimate collection operates in determining whether real income has accrued. Subsequent recovery proceedings and Consent Terms could be considered as corroborative evidence of the pre-existing uncertainty, but were not treated as the source of non-taxability. The tax treatment adopted by the sister concern could not determine accrual in the assessee's hands. [Paras 28, 29, 31, 33, 34]

The conditional and disputed third-tranche consideration had not crystallised as taxable income in A.Y. 2013-14; deletion of the addition was upheld.

Project expenditure under percentage completion method - Business expenditure - Allowability of property-tax and advertisement expenditure carried in work-in-progress and claimed when project revenue was recognised - HELD THAT: - The Commissioner (Appeals) had found that the payments were made from the assessee's bank account and related to its real-estate project. Where the assessee followed the percentage completion method, expenditure incurred earlier and carried in work-in-progress could be claimed in the year of corresponding revenue recognition. In the absence of contrary material and of any double deduction, the claim could not be rejected solely because certain bills were not in the assessee's name or one bill was unavailable. [Paras 38, 39, 40]

Deletion of the disallowance was upheld.

Final Conclusion: Revenue's appeal was dismissed. The deletion of the addition for the conditional contractual receipt and the deletion of the disallowance of project expenditure were sustained.

Reassessment notice - sanction of specified authority - Invalid assumption of reassessment jurisdiction

Validity of reassessment where notice under section 148, issued after expiry of three years from the end of the relevant assessment year, was approved by the Principal Commissioner instead of the authority specified for such cases - HELD THAT: - Under the substituted reassessment provisions, where more than three years have elapsed from the end of the relevant assessment year, prior approval for the order under section 148A(d) and notice under section 148 must be obtained from the authority specified in section 151(ii), namely the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General.

Approval from the Principal Commissioner, who lacked statutory competence after that period, did not constitute valid sanction. The subsequently inserted provision treating approvals as administrative and supervisory did not cure approval granted by an authority other than the authority specified under the Act.

Thus, in case once the approval for initiation of reassessment proceedings was granted by the Commissioner of Income Tax after expiry of three years from the end of the relevant assessment year, which ought to have been granted by the Principal Chief Commissioner of Income Tax, the Hon’ble Supreme Court in the case of ACIT, International Taxation v. LinkedIn Singapore Pte. Ltd. [2025 (10) TMI 782 - SC ORDER] had upheld the order of the Hon’ble High Court, which had quashed the impugned order passed by the AO under section 148A(d) as well as the notice issued under section 148 of the Act for want of valid assumption of jurisdiction.[Paras 13, 14, 15, 16, 17]

The reassessment assessment was quashed for want of valid assumption of jurisdiction; the remaining contentions, including the addition for the payment towards property sale consideration, were left open.

Final Conclusion: The appeal was allowed and the reassessment assessment was quashed because the notice under section 148 lacked sanction from the statutorily specified authority.

Non-declaration of dutiable gold articles by an arriving passenger - Import of substantial quantities of gold jewellery and gold biscuits - Evidentiary Value of Retracted Statement - Non-availability of CCTV footage - Perversity of Findings - Mandatory Customs Declaration - Whether this Court should interfere with the concurrent findings of fact recorded by the Adjudicating Authority, the Commissioner of Customs (Appeals) and the Revisional Authority holding that the Petitioner had attempted to import substantial quantities of gold jewellery and gold biscuits into India without making the mandatory declaration before the Customs authorities, thereby rendering the goods liable to confiscation under the Customs Act, 1962 ?

Effect of Non-availability of CCTV footage - Sustainability of finding that the petitioner attempted to import gold jewellery and gold biscuits without making the mandatory customs declaration - HELD THAT: - The plea that the petitioner was intercepted before reaching the Red Channel was unsupported by material and was contradicted by the Customs Declaration Form recording 'Nil'.

Although the application seeking preservation had been filed by the Petitioner, the footage had already ceased to exist by the time the order directing its preservation came to be passed and communicated to the concerned authorities.

The mere non-availability of the CCTV footage cannot, by itself, justify acceptance of the Petitioner's version that he had been intercepted at the aerobridge before reaching the Red Channel. More importantly, except for the Petitioner's own assertion, no independent material has been placed on record to substantiate such a plea. The Petitioner also did not file any reply to the Show Cause Notice issued by the Adjudicating Authority, despite having been afforded sufficient opportunity to do so. He was further granted an opportunity of personal hearing before the Order-in-Original came to be passed. Thus, the absence of the CCTV footage, by itself, does not dislodge the contemporaneous documentary evidence relied upon by the authorities below or render their findings unsustainable.

The concurrent finding of non-declaration and consequent liability of the gold articles to confiscation was upheld.

Whether the statement recorded under Section 108 of the Customs Act can be relied upon despite its subsequent retraction ? - HELD THAT: - The detailed statement bore the petitioner's signatures on every page and contained disclosures not indicative of a mechanical statement. Its retraction followed release on bail and was rightly treated as an afterthought.

The evidentiary value of the statement is further reinforced by the contemporaneous Panchnama prepared at the time of recovery of the gold jewellery and gold biscuits. A perusal thereof reveals that every page of the Panchnama also bears the signatures of the Petitioner and stands attested by two independent witnesses. Apart from the belated retraction, no contemporaneous material has been placed on record to demonstrate that the statement was procured by coercion, threat or inducement.

This Court finds no reason to discard the statement recorded under Section 108 of the Customs Act merely because it was subsequently retracted. Likewise, the Petitioner cannot derive any advantage from the subsequent destruction of the CCTV footage, particularly when the footage had ceased to exist in the ordinary course owing to expiry of the prescribed retention period before the learned CMM ultimately passed the order directing its preservation.

The authorities were justified in relying on the retracted statement.

Whether the concurrent findings recorded by the authorities below warrant interference in exercise of the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India ? - HELD THAT: - It is well settled that while exercising such jurisdiction, this Court does not sit as an appellate authority to reappreciate the evidence or substitute its own conclusions for the plausible conclusions arrived at by the statutory authorities. Interference is warranted only where the findings are shown to be perverse, based on no evidence, or suffer from manifest illegality resulting in failure of justice. None of these contingencies arise in the facts of the present case.

The material on record unmistakably establishes that the Petitioner was a frequent international traveller who had been residing and working in the Gulf countries for a considerable period prior to the incident in question. Despite his family residing in Mumbai, he had undertaken repeated international journeys and had entered India through different international airports, including New Delhi, Hyderabad and Lucknow.

The findings so recorded are founded upon relevant evidence, are neither perverse nor arbitrary, and do not suffer from any jurisdictional error or manifest illegality warranting interference by this Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India.

No ground was made out to interfere with the concurrent orders.

Final Conclusion: The writ petition was dismissed. The confiscation-related findings and penalty founded on the petitioner's non-declaration of gold articles were left undisturbed.

Rejection of customs transaction value on NIDB data - Comparability of contemporaneous imports for customs valuation - Confiscation and penalty consequent upon failed valuation enhancement - Reasonable Doubt -

Rejection of the declared transaction value of container-load imports of LED bulbs and consequential redetermination of assessable value solely on NIDB data. - HELD THAT: - Transaction value is the primary basis of assessment and cannot be rejected merely because the declared price appears low. Rule 12 requires reasonable doubt as to its truth or accuracy, which remained unestablished: the Department produced no independent evidence of undervaluation, additional consideration or flow-back, and did not furnish supporting material for the alleged comparable imports. Further, the alleged imports were not shown comparable in quantity, commercial level, manufacturer, branding, quality or specifications; comparison only by wattage was insufficient. NIDB data alone could not support rejection of value, and the Department ought to have verified the importer's records and sale prices before finalising the provisional assessments. [Paras 15, 16]

The rejection of transaction value and enhancement of assessable value were set aside; the consequential differential duty demand and interest could not survive.

Confiscation and penalty consequent upon failed valuation enhancement - HELD THAT: - The confiscation was founded entirely on undervaluation, whereas the valuation enhancement itself was untenable. There was otherwise no evidence of misdeclaration; the goods were covered by commercial invoices, the invoice value was remitted through banking channels, and First Check examination disclosed no discrepancy. Consequently, confiscation could not independently survive, and neither redemption fine nor penalty was sustainable. [Paras 17, 18, 19, 20]

The confiscation, redemption fine and penalty were set aside.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief, as the valuation enhancement based solely on NIDB data, and all consequential demands and penal consequences, were unsustainable.

Refund of illegally collected export duty - Limitation for consequential refund claims - Unjust enrichment-ultimate buyer - Presumption of passing on duty incidence

Refund claim for export duty illegally collected from an SEZ developer - barred by limitation - HELD THAT: - As per the judgment of the Hon’ble Supreme Court in the matter of M/s. ITC Ltd. [1993 (7) TMI 75 - SUPREME COURT] and judgment of Hon’ble High Court of Gujarat in the matter of M/s. Comsol Energy Pvt. Ltd. [2021 (6) TMI 827 - GUJARAT HIGH COURT], the appellant is not bound by limitation prescribed under the Central Excise Act for claiming the excise duty paid by appellant since Appellant was forced to pay said amount even after issuance of stay order by Hon’ble High Court of Karnataka the Writ petition.

The Tribunal found that the refund claim could not be treated as time-barred, since the appellant had first approached the SEZ authority and thereafter filed before the customs authorities as directed. It further held that, the duty having been illegally collected despite the stay order and the underlying levy having been invalidated, the appellant was not bound by the limitation prescribed under the Central Excise Act for recovery of that amount. [Paras 10]

The rejection of the refund claim on limitation was held unsustainable.

Unjust enrichment-ultimate buyer - Refund of export duty borne by SEZ developer - HELD THAT: - The Tribunal held that the statutory presumption of passing on duty incidence was inapplicable because the appellant was the ultimate buyer, had used the steel for setting up the SEZ and had neither resold it nor used it in manufacture of goods for sale. The contractor's certification and the Chartered Accountant certificates established that the appellant bore the duty incidence and had not passed it on to any customer. [Paras 11]

The denial of refund on the ground of unjust enrichment was held unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Classification of industrial shrimp feed manufacturing machinery - Limitation for appeal against provisional customs assessment - classifiable under CTH 8436 10 00 or CTH 8438 80 90 - CVD liability - Industrial Use Exclusion - HSN Explanatory Notes - Specific Entry Prevails Over General Entry

Classification of industrial shrimp feed manufacturing machinery - HSN Explanatory Notes - Classification of the imported integrated shrimp feed production plant as machinery for preparing animal feeding stuffs or as machinery for industrial preparation or manufacture of food. - HELD THAT: - The Hon’ble Supreme Court in Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT] and Simplex Mills Co. Ltd.[2005 (3) TMI 117 - SUPREME COURT] has consistently held that where the Indian tariff is aligned with the Harmonized System of Nomenclature, HSN Explanatory Notes provide valuable and persuasive guidance for proper interpretation. Revenue is therefore justified in relying upon the exclusion clause contained in the HSN Notes to Heading 8436. Further, there is specific inclusion too under 8438 stating that the Heading covers machinery for industrial preparation of food or drink.

Heading 8436, read contextually with its grouping of agricultural, poultry-keeping and allied husbandry machinery and the HSN exclusion for machinery designed for industrial use, does not cover a sophisticated integrated plant for continuous commercial manufacture of shrimp feed. Heading 8438 is not residuary in relation to such goods; it specifically encompasses machinery for industrial preparation or manufacture of food for animal consumption. Classification depends upon the nature, design, character and commercial function of the machinery, rather than merely upon the fact that the feed produced is consumed by animals. Project-import approval cannot determine tariff classification. [Paras 35, 37, 38, 39, 40]

The machinery was correctly classified under CTH 8438 80 90, and the reassessment with consequential levy of additional duty of customs was upheld.

Validity of rejection of the appeal as time-barred by treating a communication issued during provisional assessment as an appealable order - HELD THAT: - Where the Department treated the Bills of Entry as provisionally assessed, the appellate authority was required first to determine whether assessment had been finalized, whether the communication constituted an appealable order, and the date from which limitation could commence. The communication merely declined issuance of a speaking order and neither finalized assessment nor determined classification or duty liability. The appellate authority also failed to determine the basis for computing delay and to examine the statutory contentions concerning a speaking order upon disputed reassessment and finalization of project-import assessments. [Paras 49, 50, 51, 52, 53]

The order rejecting the appeal as barred by limitation was set aside and the matter was remanded for fresh consideration of maintainability, assessment finalization, limitation and merits, without adjudication on those matters.

Final Conclusion: The appeal challenging classification and consequential additional duty was dismissed. The appeal rejected as time-barred was allowed by remand for fresh consideration in accordance with law.

Oppression and mismanagement-evidentiary foundation - Majority shareholders-access to company records - Seeking directions for production of the company's bank statements and ledger accounts in support of allegations of oppression and mismanagement - HELD THAT: - Ld. NCLT indicated that if the minority shareholders who do not have access to companies account and hence they file application under Section 242(4) for directions of documents and on the Appellants are majority shareholders they have to collect such evidence by exercising their majority rights, failing which they may approach Ld. NCLT. Accordingly. Ld. NCLT held that the method adopted by the Appellants for collecting evidence may not be the process which is permissible and contemplated under law and thereafter proceeded to close the proceedings leaving the rights open for the parties to resort to the initiations of fresh proceedings at an appropriate stage, in case these are any unresolved issues.

At this stage no prejudice is being caused to the Appellant, or either of the parties to the proceedings of the company petition, as all the issues are still left open to be decided, after drawing of an appropriate proceedings because of the fact that the Ld. Tribunal at this stage has not taken a step to decide the controversy on its own merit, thus there is no immediate prejudice.

Proceedings for oppression and mismanagement require sufficient material to satisfy the statutory parameters. The appellants, being majority shareholders and not having shown that they were unable to control the management or powerless to obtain the relevant information, could not seek directions for production of records merely to collect evidence for sustaining their petition. They were required first to exercise their majority rights to obtain the necessary information; the Tribunal had not adjudicated the allegations on merits and had left the parties free to pursue unresolved issues subsequently. [Paras 12, 14, 16, 19, 20]

No interference was warranted with the refusal to direct production of records and closure of the proceedings with liberty to pursue appropriate proceedings later.

Final Conclusion: The appeal, insofar as pressed by the remaining appellants, was dismissed. The parties' substantive rights and the allegations of oppression and mismanagement remain open for appropriate proceedings.

Imposition of Costs in restoration of struck-off companies - Judicial determination of costs occasioned by proceedings - Delay of 16 days in filing the company appeals - HELD THAT: - Rule 87A(4)(c) of the NCLT Rules confers a discretionary power to direct payment of costs occasioned by a restoration appeal or application; it does not mandate costs in every case. Since costs have a penal consequence, their necessity and quantification must be determined through judicious application of mind, having regard to the facts and circumstances. The impugned orders merely acted on the Registrar of Companies' request without determining or justifying the expenditure. Further, the Income Tax Department sought restoration in discharge of its statutory functions to complete pending assessment proceedings, and the Registrar's expenditure in facilitating that function could not, in the circumstances, be fastened upon it. [Paras 13, 14, 15, 16]

The directions imposing costs were quashed, and the costs already remitted were directed to be refunded.

Final Conclusion: The appeals were allowed to the limited extent of setting aside the costs imposed on the Income Tax Department; restoration of the companies was not disturbed. The Registrar of Companies was directed to refund the amount already paid.

Limitation for appeals under the Insolvency and Bankruptcy Code - Mandatory accompaniment of delay-condonation application - Exclusion of Time for Certified Copy - Maintainability of a Company Appeal filed beyond the prescribed period without a delay-condonation application, where such application was filed subsequently. - HELD THAT: - As per the settled principles of law, pertaining to the aspect of limitation, in relation to the Appeals to be preferred under Section 61, no latitude of discretion or deviation from Statute is possible, because of the ouster of the general principles of limitation, governing the field of filing of the Appeals because of the specific restrictions imposed by sub-section 2 of Section 61 of I&B Code.

Section 61(2) prescribes a thirty-day period for appeal and permits condonation only for a further period not exceeding fifteen days upon sufficient cause. An appeal filed beyond the initial period without an accompanying delay-condonation application cannot be treated as validly instituted; it becomes capable of judicial consideration only upon filing of the supporting application. Limitation commences from pronouncement of the order where the party participated in the proceedings; uploading of the order is relevant only where the order was not pronounced on the hearing date. The subsequent filing of the delay-condonation application could not cure institution beyond the maximum condonable period. [Paras 9, 12, 14]

The delay-condonation application was rejected and the Company Appeal was dismissed as barred by limitation.

Final Conclusion: The appeal was held to have been validly instituted only upon the later filing of the delay-condonation application, by which time the maximum period permitted under Section 61(2) had expired. It was accordingly dismissed as barred by limitation.

Money-laundering - knowing assistance in handling proceeds of crime - Quashing of money-laundering complaint - prima facie involvement

Money-laundering - knowing assistance in handling proceeds of crime - Quashing of money-laundering complaint - prima facie involvement - HELD THAT: - As per Section 3 of PMLA, whoever directly or indirectly attempts to indulge, knowingly assists, knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, which include its concealment, possession, acquisition, or use and projects or claims it as untainted property, shall be guilty of the offence of money laundering.

The complaint and material disclosed that funds obtained through the scheduled offence were routed through the petitioner and substantially retransferred to the personal accounts of the first accused and others, rather than being used for the stated construction purpose. Such allegations prima facie showed knowing and active participation in transferring, concealing and disbursing proceeds of crime, attracting the ingredients of the offence of money-laundering. [Paras 17, 18, 19, 20, 23]

Sufficient prima facie material existed to proceed against the petitioner for the offence under the money-laundering law; the complaint was not quashed.

Parity in quashing proceedings - absence of similarly placed accused - HELD THAT: - Since prima facie materials are available on record indicating that the petitioner assisted and actively participated in handling the proceeds of crime by transferring the funds from the trust to the first and second accused’s personal accounts, which were ultimately utilised to acquire several immovable and movable properties, the averments and materials available are sufficient to implicate the petitioner in the complaint.

The earlier order rested on the absence of specific averments or material showing that the Branch Manager had assisted in laundering, projecting or concealing proceeds of crime. The petitioner, however, was attributed specific acts in handling and retransferring tainted funds; he was therefore not similarly situated and could not claim parity. [Paras 21, 22]

The quashing granted to the Branch Manager did not assist the petitioner.

Final Conclusion: The petition was dismissed, as the complaint disclosed prima facie material of the petitioner's knowing involvement in handling proceeds of crime. The earlier quashing in favour of the bank Branch Manager was held inapplicable.

Failure to consider objections in attachment proceedings under the Prevention of Money Laundering Act - Validity of the attachment order affecting the petitioner's bank account without consideration of its detailed objections. - HELD THAT: - The order passed in the attachment proceedings did not advert to the petitioner's detailed objections, though objections of other persons had been considered. The respondents stated that the objections concerning the petitioner would be considered and appropriate orders passed. [Paras 3, 4, 5]

The matter was remitted to the Adjudicating Authority for consideration of the petitioner's objections and passing of necessary orders; all other contentions were left open.

Final Conclusion: The writ petition was disposed of by remitting the matter for consideration of the petitioner's objections to the attachment. The merits of all other contentions were left open.

Discharge in money-laundering prosecution - Scope of enquiry into scheduled offence - Prima facie case at charge stage - Reverse burden of proof - Entitlement to discharge from prosecution for money laundering on the ground that the predicate offences - HELD THAT: - The PMLA is a special legislation enacted to prevent money laundering and to confiscate property derived from or involved in money laundering. The offence under Section 3 is directed not merely against the commission of the scheduled offence but against every process or activity connected with the "proceeds of crime", including its concealment, possession, acquisition, use, projection or claiming of such proceeds as untainted property.

The Hon'ble Supreme Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], has authoritatively held that the offence under Section 3 is an independent offence relating to the process or activity connected with the proceeds of crime and that the burden contemplated under Sections 23 and 24 is a statutory feature of the enactment. The Supreme Court further recognised the validity of the reverse burden provisions incorporated under the Act.

The Special Court is not competent, at the stage of discharge, to examine the correctness or sustainability of pending scheduled offences, which falls within the domain of the court trying those offences. The enquiry is confined to whether the complaint and accompanying materials disclose the ingredients of money laundering and a prima facie case. Statutory presumptions and the reverse burden concerning interconnected transactions and legitimacy of assets cannot be finally adjudicated at this stage; defences concerning absence of proceeds of crime, lawful sources and legitimacy of acquisitions require trial. A pending scheduled offence can be questioned before the Special Court only after a final judicial determination of acquittal, discharge or quashing in accordance with law. [Paras 6]

The materials disclosed sufficient prima facie grounds to proceed under the PMLA, and the refusal to discharge the petitioners was upheld.

Final Conclusion: The Criminal Revision Petitions were dismissed and the order refusing discharge in the money-laundering prosecution was confirmed.

Reverse charge liability on ocean freight in CIF contracts - Ultra vires service tax rules and notification -HELD THAT: - The parties accepted that the controversy was concluded by Messrs Sal Steel Ltd. and Anr. vs. Union of India [2019 (9) TMI 1315 - GUJARAT HIGH COURT], in which the notification and rules imposing reverse charge liability upon importers for such ocean freight were held ultra vires the Finance Act, 1994. The show-cause notice could therefore not survive. [Paras 1, 2]

The show-cause notice was quashed and the writ petition was allowed.

Final Conclusion: Following the binding coordinate Bench decision, the Court quashed the impugned show-cause notice seeking service tax under reverse charge on sea transportation service in CIF contracts and allowed the writ petition.

Service tax on mining royalty under reverse charge - Threshold exemption and reverse-charge liability - Extended limitation for suppression of service-tax liability - Penalties for non-registration and non-filing of returns - Assignment of Right to Use Natural Resources - Small Service Provider Exemption - Nature of "Contemporary exposition"

Reverse charge on royalty paid for the right to use natural resources under a mining lease after 1 April 2016 - HELD THAT: - Royalty was held not to be a tax but contractual consideration paid by the mining lessee for enjoyment of mineral rights. Following the exclusion of services supplied by Government to business entities from the negative list with effect from 1 April 2016, the grant of rights to use natural resources was taxable, and the mining licensee was liable to discharge service tax under reverse charge on royalty paid thereafter. [Paras 4]

The demand of service tax on royalty paid under the mining lease was upheld.

Threshold exemption and reverse-charge liability - HELD THAT: - The threshold exemption applies to taxable services provided by a service provider and expressly excludes taxable services on which tax is payable under reverse charge. Since the appellant was liable as service recipient on the expenditure incurred towards royalty, the exemption was unavailable. [Paras 4]

The claim for threshold exemption was rejected.

Extended limitation for suppression of service-tax liability - Penalties for non-registration and non-filing of returns - HELD THAT: - As the demand of service tax made by invoking the extended period of limitation for the reason of suppression with intent to evade payment of service tax is upheld the penalty imposed under Section 78 is also upheld following the ratio of Hon’ble Apex Court decision in the case of Rajasthan Spinning and Weaving Mills Ltd. [2009 (5) TMI 15 - SUPREME COURT].

The contemporaneous departmental clarification made the reverse-charge liability on payments for governmental permissions or licences clear. Failure to obtain registration, discharge tax and file returns was held to be deliberate suppression with intent to evade payment, and not a mere procedural lapse or conduct founded on a bona fide interpretational belief. The suppression sustained the extended period and penalty for such suppression; the separate civil penalties for non-registration and non-filing of returns were also sustainable. [Paras 4]

The extended-period demand with interest and all penalties were upheld.

Final Conclusion: The appeal was dismissed. The service-tax demand with interest, invoked for the extended period, and the penalties imposed for suppression, non-registration and non-filing of returns were sustained.

Service of show cause notice - Limitation for service of notice under service tax law - Principles of natural justice - Violation of Section 73 of the Finance Act, 1994 - Validity of service tax proceedings founded on a show cause notice which the department failed to establish had been served within the extended limitation period. - HELD THAT: - The language employed in section 73 assumes significance. The expression employed in is “serve notice” and not merely “issue notice”. The distinction is deliberate and carries legal significance. The legislature has consciously used the expression “serve notice”. The statutory requirement is satisfied only when the notice is duly served in accordance with law. The burden of proving such service squarely rests upon the department. In the present case, despite a specific direction of this Tribunal, the department has failed to produce any dispatch register, postal receipt, acknowledgment due, delivery report or any other contemporaneous evidence to establish service of the show cause notice. In these circumstances, mere production of a copy of the notice or reliance upon its date cannot substitute the mandatory requirement of service.

The law is well settled that where communication or service is the statutory requirement, the relevant date is the date of service and not merely the date borne on the notice. The proceedings initiated without establishing valid service of the show cause notice are, therefore, vitiated both on account of violation of the principles of natural justice and failure to comply with the mandatory requirement of Section 73 of the Finance Act, 1994.

Service, and not mere issuance, of the notice is the mandatory statutory requirement. The burden to prove service lies on the department. As no dispatch particulars, postal acknowledgment, delivery report or other contemporaneous proof of service was produced despite specific direction, while the appellant's affidavit of non-service remained uncontroverted, service could not be presumed from the date borne on the notice or production of its copy. Non-service deprived the appellant of the statutory opportunity to reply, adduce evidence and seek hearing; subsequent opportunity in appellate proceedings could neither replace the original adjudication nor cure that foundational defect. In the absence of service even within the extended period, the proceedings were also barred by limitation. [Paras 11, 13, 14, 15, 16]

The demand and adjudication proceedings were held unsustainable and time-barred; the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief, the department having failed to establish service of the show cause notice within the applicable extended period.

Cleaning services rendered to Indian Railways - Exemption for municipal sanitation functions rendered to Government - Extended limitation-absence of suppression where facts were previously known - Commercial Concern - Strict Construction of Taxing Statutes

Cleaning services rendered to Indian Railways - Exemption for municipal sanitation functions rendered to Government - HELD THAT: - Prior to 01.07.2012, cleaning of railway stations and railway coaches was not taxable as cleaning service, since the services were not rendered in relation to commercial or industrial premises and railway coaches, being rolling stock used for public transport, could not be treated as commercial objects or premises. After 01.07.2012, the cleaning activities constituted public health, sanitation conservancy and solid waste management functions rendered to Government and were covered by the exemption available under Entry 25 of Notification No. 25/2012-ST. [Paras 5]

The demand under cleaning service was held unsustainable for the entire period.

Exemption for on-board housekeeping services rendered to Indian Railways - Service tax liability on on-board housekeeping, toilet cleaning and disinfection, and bedroll distribution services rendered to Indian Railways after 01.07.2012. - HELD THAT: - The on-board housekeeping activities rendered to Indian Railways were held to be services of the nature covered by Entry 25 of Notification No. 25/2012-ST and were consequently exempt from service tax. [Paras 6]

The demand under business auxiliary service for the period after 01.07.2012 was set aside.

Extended limitation-absence of suppression where facts were previously known - HELD THAT: - The Department had earlier issued a show-cause notice concerning the same activities on the same material facts. Since the activities were thus within departmental knowledge, suppression could not be alleged in a subsequent notice merely because the demand was raised under a different service category. The extended period could not be invoked again on the same issue. [Paras 6]

The pre-01.07.2012 demand under business auxiliary service was held barred insofar as it rested on the extended period of limitation.

Burden to establish collection and retention of service tax - HELD THAT: - The documentary material established that the amount relied upon was not service tax retained by the appellant but related to settlement of payment disputes with the Railways. The record further showed payment of service tax collected from the Railways and filing of returns; no evidence established retention of collected tax. [Paras 8]

The allegation that service tax collected from the Railways had been retained was rejected.

Final Conclusion: The impugned order, including the service tax demands, interest and penalties, was set aside. The appeal was allowed with consequential relief in accordance with law.

Refund of tax paid under mistake of law - Unjust enrichment in indirect tax refunds - Incidence of Tax - Collection Without Authority of Law

Applicability of the limitation under Section 11B to refund of service tax deposited under mistake of law on construction services - HELD THAT: - The Madras High Court in 3E Infotech [2018 (7) TMI 276 - MADRAS HIGH COURT]. The issue for consideration was whether the provisions of Section 11B of the Act would be applicable to claim of refund made by an assessee when the tax has been paid under mistake of law. The Court observed that indisputably, there was no liability on the petitioner to pay service tax.

Where no law imposed service tax on the construction services concerned, the amount deposited under the service-tax head was a mere deposit made under mistake of law and not duty or tax. Consequently, the statutory limitation governing refund of duty or tax under Section 11B did not apply. [Paras 6, 9, 10]

The refund claim could not be rejected as time-barred.

Entitlement of the housing board to refund of the amount collected as service tax from allottees and buyers - HELD THAT: - The burden of the amount deposited by the appellant as service tax has been borne by the allottees/buyers and since the government as per Article 265 of the Constitution cannot collect any tax except by authority of law, they cannot retain the said amount. It is, therefore, just and logical that liberty is granted to the eligible allottees/buyers to make the refund claim and on verification, the same should be disbursed to them along with interest in accordance with law. Even as per Section 11B for any claim of refund by the allottees/buyers consequent upon this Order, the relevant date for computing limitation will be the date of this Order as per Explanation (B) (ec) to Section 11B. The appellant has also claimed similar relief that refund is sought so that the amount can be returned to the eligible allottees from whom it was collected under mistake. In view of the liberty granted, the appellant is required to provide necessary assistance, so that the allottees are able to make the refund application, which may be decided expeditiously.

The appellant had admittedly recovered the amount from its customers and therefore had not borne its incidence. Applying Mafatlal Industries Ltd [1996 (12) TMI 50 - SUPREME COURT], the claim was barred by unjust enrichment. Since the amount was collected without authority of law, eligible allottees or buyers who bore the burden were granted liberty to claim refund, with the relevant date for limitation being the date of the order; the appellant was required to provide necessary assistance. [Paras 11, 12, 13, 14]

The appellant's refund claim was rejected on unjust-enrichment grounds, while eligible allottees and buyers were permitted to seek refund with interest in accordance with law.

Final Conclusion: The appeal was rejected insofar as the appellant had passed the tax incidence to buyers, but the impugned order was modified to permit eligible allottees and buyers to seek refund in accordance with law.

Unjust enrichment-refund of reversed CENVAT credit - Chartered Accountant certificate as evidence of non-passing of tax incidence - Presumption of Passing on of Duty - Burden of Duty - Chartered Accountant Certificate

Unjust enrichment-refund of reversed CENVAT credit - Accounting treatment of tax amount - Chartered Accountant certificate as evidence of non-passing of tax incidence - HELD THAT: - The mere accounting of the reversed amount as expenditure in the profit and loss account, subsequently reflected as recoverable under current assets, did not establish that its incidence had been passed on. The accounting method cannot determine refund entitlement. The Chartered Accountant certificate, issued after examination of the books and certifying that no invoice had been raised to transfer the burden to any other person, was substantive evidence which could not be disregarded in the absence of contrary material. Since the appellant bore the burden of reversal itself, the refund was not hit by unjust enrichment. [Paras 8, 9, 10]

The impugned credit of the sanctioned refund to the Consumer Welfare Fund was unsustainable.

Unjust enrichment-indirect passing on of duty on imported raw material - Applicability of Solar Pesticide Pvt. Ltd. [2000 (2) TMI 237 - SUPREME COURT] to the refund of reversed CENVAT credit. - HELD THAT: - Solar Pesticide Pvt. Ltd. concerned duty on imported raw material whose incidence was added to the price of finished goods and thereby indirectly passed to purchasers. That principle was inapplicable because, on the evidence accepted, the appellant had not transferred the incidence of the reversed credit to its customers. [Paras 11]

The Revenue's reliance on Solar Pesticide Pvt. Ltd. was rejected as distinguishable.

Final Conclusion: The appeal was allowed and the order crediting the sanctioned refund to the Consumer Welfare Fund was set aside, with consequential relief.

Extended limitation for service tax demand-mens rea - Service tax on wheeling charges and cross-subsidy surcharges

Extended limitation for service tax demand-mens rea - Interpretational dispute and suppression of facts - wheeling charges and cross-subsidy surcharges collected by the electricity distribution company - HELD THAT: - It is well-established that in order to invoke extended period of limitation one of the elements namely fraud, collusion, willful misstatement, suppression of facts or violation of Act or Rules with intent to evade must be established. In other words, mens rea is an essential ingredient to invoke extended period of limitation. To raise a demand for extended period of limitation, one of the above factors must be established including the intent to evade.

Ajmer Vidyut would, obviously, not pay service tax on charges which it considered were not leviable to service tax. It may not even consider them as consideration for some services provided by it. In this case, not only Ajmer Vidyut but even the Finance Ministry itself was not sure whether these were taxable and finally the high level committee of the Finance Ministry decided that service tax was leviable on these charges. After the decision of the high level committee came to the notice of the authority, he issued a show cause notice dated 17.04.2018. Evidently, neither the authority who issued the show cause notice nor the Ajmer Vidyut had any malafide intent. It was purely a question of interpretation as has been correctly held by the Commissioner in the impugned order.

The taxability of the charges was itself uncertain until decided by the high-level committee of the Finance Ministry and was a matter of interpretation. In those circumstances, neither the assessee nor the issuing authority could be attributed mala fide intent to evade service tax. [Paras 10]

The ingredients for invocation of the extended period were absent; the Revenue's appeal against dropping of the demand for the extended period was dismissed.

Service tax on wheeling charges - Service tax on cross-subsidy surcharges - Declared service-agreeing to tolerate an act - HELD THAT: - Wheeling charges are those charges which are collected by Jodhpur Vidyut for transmitting power from independent power producers to their customers. Usually Jodhpur Vidyut, as the public sector undertaking, supplies power to customers. However, there are also private producers who generate and sell power to customers. To transmit it from their power plant to the customers, they use the transmission and distribution network of Jodhpur Vidyut and pay Jodhput Vidyut an amount known as wheeling charges.

Following Southern Power Distribution Company of Andhra Pradesh Limited vs. Commissioner of Central Tax [2022 (9) TMI 625 - CESTAT HYDERABAD], wheeling constitutes transmission of electricity and the charges are not consideration for agreeing to tolerate an act so as to constitute a declared service. Cross-subsidy surcharges, collected under the Electricity Act and regulations in relation to transmission and distribution of electricity, do not arise from any service provided by the distribution company and likewise cannot be treated as consideration for agreeing to tolerate an act. [Paras 14]

No service tax was leviable on the wheeling charges and cross-subsidy surcharges; the demand and penalties were set aside with consequential relief.

Final Conclusion: The Revenue's appeal was dismissed, as the extended limitation period was unavailable. The appeal by the electricity distribution company was allowed, holding that wheeling charges and cross-subsidy surcharges were not chargeable to service tax.

CENVAT credit on deposit insurance premium - Input service for banking and other financial services - Availability of CENVAT credit of service tax paid on insurance premium to the Deposit Insurance Corporation by a bank - HELD THAT: - The Larger Bench of the Tribunal in the case of M/s South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB] came to a conclusion that in order to render any output service under the category of “Banking and Other Financial Services”, it is necessary for a Bank to register itself with the Deposit Insurance Corporation and pay premium after registration. A Bank without obtaining registration and without payment of insurance premium on the deposits outstanding, cannot render any output service of “Banking and Other Financial Services”. The Bench held that the insurance service provided by the Deposit Insurance Corporation to the Banks is an input service and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the Banks for rendering output services.

The deposit insurance service received by the bank consequently constitutes an input service, and the service tax paid thereon is eligible for CENVAT credit. [Paras 4, 5]

The denial of CENVAT credit was unsustainable and the appeal was allowed.

Final Conclusion: The impugned order denying CENVAT credit on deposit insurance premium was set aside and the appeal was allowed.

Extended period of limitation for service tax demand - Wilful suppression with intent to evade tax - Concept of ‘Intermediary Services’ - Intent to Evade Tax - Bona Fide Belief - HELD THAT: - Mere non-disclosure or failure to register does not by itself establish wilful suppression. Invocation of the extended period requires proof of suppression or contravention with intent to evade tax. As the scope of intermediary services was subject to differing interpretations during the disputed period, the assessee's claim of a bona fide belief in not discharging service tax could not be discredited. [Paras 4]

The extended period was held inapplicable; the demand was confined to the normal period with interest.

Final Conclusion: The appeal was partly allowed by restricting the service tax demand to the normal limitation period, with interest.

Exemption for tractor parts used within the factory of production - Mutual exclusivity of service tax and central excise duty on job-work - Extended period of limitation - job-worker to principal manufacturers - Double Taxation

Eligibility of machined tractor parts for exemption where the parts were used within the principal manufacturers' factories for manufacture of tractors - HELD THAT: - The exemption conditions required that the goods be parts, be used within the factory of production, and be used in manufacture of tractors. Applying the analogy of Lohia Sheets Products [2008 (3) TMI 7 - SUPREME COURT], the Tribunal held that the exemption did not require the castings to have been generated in the factory where they were used. The appellant had also discharged service tax on the job-work charges without departmental objection; the Revenue could not levy both service tax and central excise duty on the same work and consideration. [Paras 6]

The appellant was eligible for the claimed exemption and was not liable to central excise duty.

Extended period of limitation - Disclosure of job-work service tax liability - HELD THAT: - The appellant was registered for service tax, paid service tax on the job-work charges and regularly filed returns, without objection from the Revenue. On the reasons advanced by the appellant, the Tribunal held that the extended period was unavailable. [Paras 6]

The demand was also unsustainable on limitation.

Final Conclusion: Both appeals were allowed. The excise duty demands failed on merits, as the exemption was available, and on limitation.

Excise duty demand based on typographical error in ER-1 return - Extended limitation period-absence of suppression -

Demand of excise duty on wax shown as cleared for home consumption in the ER-1 return, despite the invoice evidencing the actual home clearance - HELD THAT: - A harmonious reading of the ER-1 particulars and the invoice established that the quantity entered as home-consumption clearance was a genuine typographical error. The records showed home clearance of only 4,160 kgs, with duty paid thereon, while the balance quantity was cleared for export. [Paras 6]

The confirmed demand was set aside on merits.

Extended limitation period-absence of suppression - HELD THAT: - The ER-1 return had been filed and itself disclosed the apparent inconsistency between the stated home-clearance quantity and the duty paid. As the Department did not question this discrepancy for more than two years, suppression by the appellant was not established. [Paras 7]

The demand was independently held barred by limitation.

Final Conclusion: The impugned order was set aside and the appeal allowed, as the duty demand rested on a typographical error in the ER-1 return and was also time-barred.

Valuation of clearances to alleged related persons - Extended limitation in revenue-neutral transactions - Revenue Neutrality - clearances between the appellant and its sister concern attracted related-person valuation under the Central Excise valuation rules

Related person valuation - Valuation of M.S. Ingots - Valuation of M.S. Ingots cleared to a sister concern as sales to a related person - HELD THAT: - The appellant and the recipient company, being separate companies, could not be treated as related persons. Further, even on the allegation of undervaluation, the value was required to be determined under Rule 11 by reasonable means consistent with the Valuation Rules and the Act. [Paras 9]

The demand founded on valuation applicable to clearances to related persons was held unsustainable.

Extended period of limitation - Revenue neutrality - HELD THAT: - The arrangement and activities of both units were within the Department's knowledge. The transaction was also revenue-neutral, since duty paid on adoption of the Revenue's valuation could be availed as input credit by the recipient unit. The extended period could therefore not be invoked. [Paras 9]

The demand confirmed by invoking the extended period of limitation was held unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Contractual adjustment of statutory tax variation - Construction of contract as a whole - Unjust enrichment from reduction in excise duty - Entitlement of the contractor to retain the benefit of reduced excise duty under a firm-price works contract whose tender conditions provided for reimbursement of statutory variation in taxes and duties. - HELD THAT: - The world used is “statutory variation”. The word variation means either increase or decrease but in the same breath, it is a condition of the contract that the variation will be re-imbursed.

As per the Clause when a price includes the tax component, the tax is supposed to be paid by the respondent. This amount of tax goes to the corpus of the State and not to any person. The terms of the agreement which provides that if there is variation of tax, there will be reimbursement to the supplier, clearly suggests that increase of tax liability will not affect the supplier and as the same is payable by the respondent- JUVNL and they will absorb the additional burden.

The work order was required to be read with the tender documents, which were expressly incorporated into it and the contract agreement. Though the quoted price was firm and inclusive of taxes and duties, the contract provided for reimbursement of statutory variation on actuals. That stipulation disclosed the parties' intention that the tax component would be borne by the respondent. Statutory variation encompassed both increase and decrease; reimbursement could not be construed as protecting the contractor only against an increased tax burden. Since reduction in excise duty decreased the contractor's tax liability without affecting its cost or profit, retention of that benefit would amount to unjust enrichment. [Paras 20, 22, 23, 24, 25]

The contractor was not entitled to refund of the amount withheld on account of the reduction in excise duty.

Final Conclusion: The writ petition was dismissed. The deduction reflecting the reduced excise-duty component was held consistent with the contractual allocation of statutory tax variation.

Priority of secured creditors over State tax dues - Statutory charge and prior attachment of secured assets - Rights of auction purchasers of secured assets - Encumbrance on property sold in SARFAESI auction - Registration of Security Interest - Attachment and Proclamation

Priority of secured creditors over State tax dues - State first charge vis-a -vis registered security interest - Prior attachment without statutory proclamation - HELD THAT: - The statutory priority conferred on secured creditors for realisation of dues from sale of secured assets prevails over State revenues, taxes, cesses and rates. The use of a non obstante clause or creation of a first charge under the State tax enactments does not displace that priority. Where the State relies on an attachment preceding enforcement of the relevant priority provisions, it must establish not merely attachment but compliance with the statutory recovery procedure, including public proclamation; a bare attachment order is insufficient. The State failed to establish such compliance in the petitions. [Paras 19, 20, 24, 28, 31]

The banks' secured dues were held to have priority, and the impugned State attachment orders, intimations and communications were quashed.

Entitlement of auction purchasers, who had acquired secured assets in a sale conducted on an as is where is whatever is basis and received sale certificates, to removal of State boja or encumbrance entries - HELD THAT: - It is pertinent to note that in one of the petitions, an objection was also raised on behalf of the Respondent State that since the auction purchaser had purchased the subject property in an auction sale conducted on as is where is whatever is basis, the auction purchaser cannot be permitted to turn around and contest the steps taken by the concerned department of the Respondent State in respect of the property in question.

This Court in the case of Indian Overseas bank v. Deputy Commissioner of Sales Tax [2024 (3) TMI 1134 - BOMBAY HIGH COURT], wherein it was categorically held that the State cannot be heard to say that even if the secured creditor has taken steps under the SARFAESI Act and sold the secured asset, the State has the authority to again chase the said asset in order to realise its dues.

the position of law clarified by the Full Bench judgment in the case of Jalgaon Janta [2022 (9) TMI 163 - BOMBAY HIGH COURT] and the Division Benches of this Court in the case of bank of Baroda [2025 (9) TMI 809 - BOMBAY HIGH COURT], the writ petitions in this present batch deserve to be allowed. A reference to the relevant facts of the individual writ petitions would be appropriate in this backdrop.

Upon enforcement of the security interest and completion of the auction sale, the auction purchaser is entitled to enjoy the property free from an encumbrance asserted by the State for its tax dues. The State cannot pursue the same secured asset in the purchaser's hands to recover those dues, since that would negate the statutory priority of the secured creditor. The auction terms did not justify retention of the encumbrance in the revenue record. [Paras 17, 18, 35, 36]

The auction purchasers' challenges were allowed and the State authorities were directed to remove the boja or encumbrance entries from the revenue records.

Final Conclusion: The writ petitions were allowed. The State's attachments, intimations and encumbrance entries were set aside, with consequential removal of the boja or encumbrance from the revenue records.

Dishonour of cheque - Condonation of delay - Presumption of Legally Enforceable Debt - Sufficient cause and litigant diligence - rebuttal of presumptions as to consideration - Presumption of Consideration - Preponderance of Probabilities - Probable Defence - Concurrent Findings - Seeking condonation of delay of 603 days in filing the petition

Condonation of delay - bona fide explanation - Default of counsel - proof and litigant diligence - HELD THAT: - In Thirunagalingam v. Lingeswaran, [2025 (5) TMI 2262 - SUPREME COURT] the Supreme Court reiterated that while considering a plea for condonation of delay, the first and foremost duty of the Court is to ascertain the bona fides of the explanation offered, and only when the explanation and the opposition to it stand on an equal footing may the court look to the merits of the main matter.

The case of Collector, Land Acquisition, Anantnag v. Mst. Katiji and Ors.[1987 (2) TMI 61 - SUPREME COURT] commends a liberal, justice-oriented construction of “sufficient cause”, but does not dispense with the requirement of a bona fide and acceptable explanation. Equally, the principle laid in Rafiq v. Munshilal[1981 (4) TMI 255 - SUPREME COURT] and Concord of India Insurance Co. Ltd. [1979 (4) TMI 29 - SUPREME COURT] that a litigant ought not to suffer for the default of his counsel, protects a litigant whose account of such default is credible and established on record. None of these decisions lays down that a bare and unsupported allegation against a previous counsel must, in every case, be accepted as “sufficient cause”.

The explanation that the previous counsel had falsely assured the petitioner that the revision had been filed was unsupported by any receipt, affidavit, complaint or particulars of the alleged follow-up. The petitioner's conduct in actively contesting the proceedings at every earlier stage was inconsistent with his claim that he remained inactive for a prolonged period without seeking even basic confirmation of filing. Illiteracy did not dispense with ordinary diligence. The governing principle is that bona fides of the explanation must first be established; a liberal construction of "sufficient cause" does not require acceptance of an unsubstantiated allegation of counsel's default. [Paras 22, 23, 24, 25, 26]

The explanation did not constitute sufficient cause, and condonation of delay was declined.

Presumptions under the Negotiable Instruments Act - Probable defence - blank signed cheque - Cheque dishonour - concurrent conviction - HELD THAT: - Admission of the cheque and signature, proof of dishonour, and proof of dispatch of notice attracted the presumptions that the instrument was supported by consideration and issued towards a debt or liability. Though rebuttable on a preponderance of probabilities, those presumptions were not displaced by a defence which materially changed as to the lender, the number of security cheques, and the manner and amount of repayment. The defence passbook did not establish repayment and indicated that the cheque book remained in the petitioner's use after the alleged delivery of blank cheques. The absence of any demand for return of the alleged security cheques or complaint concerning their alleged misuse further rendered the defence improbable. Lack of independent documentation of the friendly cash loan did not assist the petitioner after he failed to discharge the evidential burden. [Paras 40, 41, 42, 43, 44]

The statutory presumptions remained unrebutted; the concurrent conviction and sentence disclosed no illegality, perversity or infirmity warranting interference.

Final Conclusion: The revision was dismissed as barred by unexplained delay and, independently, as disclosing no ground to interfere with the concurrent conviction and sentence for cheque dishonour.

Dishonour of cheque - statutory demand notice - Presentation of post-dated and stale cheques - Service of demand notice

Validity of a statutory demand notice under section 138 of the Negotiable Instruments Act claiming amounts under seven cheques, where one cheque had become stale and another had been presented before its date -HELD THAT: - A cheque presented after expiry of its validity cannot found a prosecution for its dishonour; likewise, no proceeding can be founded upon a post-dated cheque presented prematurely. The demand notice combined the amounts of those two cheques with the remaining cheques in a single demand.

Applying Kaveri Plastics v Mahdoom Bawa Bahruden Noorul [2025 (9) TMI 1264 - SUPREME COURT] which requires the notice to precisely state the amount of the dishonoured cheque, the Court held that the composite demand was invalid. [Paras 13, 14, 15]

The demand notice was not legally valid and could not sustain the prosecution under section 138.

Service of demand notice - Sufficiency of service of the statutory demand notice returned with the postal endorsement "not known". - HELD THAT: - The Court held that an endorsement of "not known" does not constitute good service. As the complainant had not taken appropriate further steps to serve notice, and conviction could not rest merely on an apprehension of deliberate default, the notice requirement remained unfulfilled. [Paras 12, 15]

The returned notice did not establish valid service upon the accused.

Final Conclusion: The appeal was dismissed and the appellate order acquitting the accused of the charge under section 138 of the Negotiable Instruments Act was affirmed.