TaxTMI Updates e-Newsletter
Jul 20,2026

Penalty for typographical discrepancy in e-way bill particulars - Invocation of detention and penalty provisions in absence of tax evasion - Human error - Mismatch between e-way bill particulars stated in tax invoices and those produced during transportation of aluminum roofing sheets - HELD THAT: - The discrepancy was found to be a human error. The goods corresponded with the declaration in the e-way bills and the accompanying documents, and the Revenue could not establish that the mistake conferred any benefit upon the petitioner or resulted in avoidance of tax. A minor inadvertent error, without intent to deceive the Revenue or financial implications, attracted only the penalty contemplated by clause 5 of the circular dated 14th September, 2018 and did not warrant action under Section 129. [Paras 6, 7, 8, 9]

The penalty order was quashed; the deposited amount was directed to be refunded after deduction of penalty in accordance with clause 5 of the circular.

Final Conclusion: The writ petition was allowed and the penalty imposed under Section 129 was quashed, subject to levy of the minor penalty specified in clause 5 of the circular dated 14th September, 2018.

Imposition of penalty without issuance of a show cause notice - opportunity of hearing - Violation of principles of natural justice - HELD THAT: - The revenue did not dispute that no show cause notice initiating penalty proceedings had been issued. As no penalty may be imposed without affording an opportunity of hearing, the absence of a show cause notice constituted non-compliance with the statutory discipline governing penalties and a breach of principles of natural justice. [Paras 5]

The penalty imposed upon the petitioner could not be sustained.

Final Conclusion: The writ petition was disposed of by holding the penalty unsustainable for breach of the statutory requirement of hearing and principles of natural justice.

Parallel show cause notices for wrongful input tax credit - Duplication of tax demand on common supplier transactions - wrongful availment of input tax credit from suppliers already covered by an earlier show cause notice. - HELD THAT: - The Court held that multiple show cause notices alleging wrongful availment of input tax credit in respect of the same supplier transactions could not be issued. As the second notice and the consequential order duplicated the tax liability concerning seven suppliers common to both proceedings, they were unsustainable to that extent. [Paras 6, 7]

The second show cause notice and consequential order were quashed insofar as they concerned the seven common suppliers; they survived in respect of the two additional suppliers, against whom the petitioner could pursue the statutory appeal.

Final Conclusion: The petition was disposed of by quashing the duplicated proceedings relating to the common supplier transactions, while preserving the proceedings concerning the two additional suppliers.

Validity of show-cause notice for cancellation of GST registration - Specificity of allegations and opportunity of hearing - violations of Rule 21(b), (e) and (g) of the CGST Rules, 2017 without disclosing their factual basis - Principles of Natural Justice - Meaningful Opportunity of Hearing - HELD THAT: - A notice forming the foundation of proceedings for cancellation of registration must specify the manner and factual basis of the alleged rule violations. A routine and mechanical notice containing only bare allegations deprives the noticee of an effective opportunity to reply and defend, and consequently causes prejudice in breach of the principles of natural justice. [Paras 4, 5]

The impugned show-cause notice was quashed, with liberty to the respondents to issue a fresh notice in accordance with law after disclosing the alleged violations.

Final Conclusion: The writ petition was allowed and the vague notice proposing cancellation of GST registration was quashed. Fresh proceedings may be initiated only upon a notice containing the requisite particulars.

Violation of principles of natural justice in GST adjudication - Opportunity of personal hearing - Principles of Natural Justice - HELD THAT: - The notice was merely uploaded on the GST portal under the wrong tab titled “Additional Notices & Orders” instead of “Notices and Orders”, thereby depriving the petitioner of an opportunity to respond.

The respondents did not dispute that no personal hearing was afforded before the adjudication order was passed. The order was therefore set aside on the accepted ground of breach of the principles of natural justice, without adjudication of the underlying demand on merits. [Paras 3, 4]

The matter was remitted for fresh adjudication after a proper opportunity of personal hearing; no coercive action was to be taken pending such adjudication, and any recovery already made was made subject to the fresh order.

Final Conclusion: The writ petition was disposed of by setting aside the impugned GST adjudication order and remitting the matter for fresh decision in accordance with law after hearing the petitioner.

Independent application of mind in issuance of show cause notice - Use of artificial intelligence tools in statutory proceedings - Validity of a show cause notice issued primarily by relying upon an artificial intelligence tool without independent examination of the facts by the competent authority. - HELD THAT: - The statute requires the competent authority to examine the facts and apply independent mind before issuing a show cause notice. Use of an artificial intelligence tool for preparation and issuance of the notice was not shown to have statutory sanction; the explanation that the AI-generated references had inadvertently been uploaded was not accepted. [Paras 5, 6, 7]

The show cause notice and consequential proceedings were quashed, with liberty to the competent authority to proceed afresh in accordance with law upon independent application of mind.

Final Conclusion: The writ petition was allowed. The impugned show cause notice and consequential proceedings were quashed, while reserving liberty for fresh action in accordance with law.

Judicial interference with customs show-cause notice - Jurisdictional facts for verification of certificate of origin - Challenged to the customs show-cause notice concerning duty exemption claimed on import of areca nuts under certificates of Sri Lankan origin. - HELD THAT: - A show-cause notice may be interfered with for absence of jurisdictional facts where it rests upon undisclosed and inconclusive overseas enquiry material, as in Kothari Filaments [2008 (12) TMI 28 - SUPREME COURT] and Pooja Batra [2009 (3) TMI 201 - SUPREME COURT]. That principle did not apply here: one certificate was confirmed not to have been issued by the issuing authority, while the other disclosed an undisputed mismatch between the invoice number in the certificate of origin and that relied upon by the importer. Referral of the latter certificate to CID investigation did not remove that apparent discrepancy. These facts furnished a sufficient basis for issuance of the notice; the importer's explanation of the discrepancy is for examination by the customs authority in the first instance. [Paras 7, 9, 10, 11]

The show-cause notice was held to be founded on jurisdictional facts, and the writ petition was dismissed while leaving the petitioners free to explain the identified discrepancies before the competent customs authority.

Final Conclusion: The writ challenge to the composite customs show-cause notice failed, since the material concerning the certificates of origin disclosed jurisdictional facts requiring adjudication by the competent customs authority.

Cancellation of GST registration on grounds not stated in show cause notice - Specific grounds and supporting documents in GST cancellation notice - Principles of Natural Justice - HELD THAT: - The show cause notice alleged obtaining of registration by fraud, willful misstatement or suppression of facts in teeth of Section 29(2)(e) of the Central Goods and Services Tax Act, 2017; for issuance of invoice or bill without supply of goods or services or both in violation of Rule 21(b) of the Rules and in not conducting any business from declared place of business in teeth of Rule 21(a) of the Rules.

The cancellation order rested on alleged non-furnishing of consecutive returns, a ground for which the petitioner had not been put to notice. A proposed cancellation notice must specify the grounds and be accompanied by supporting documents, enabling the registered person to submit an effective reply. [Paras 4, 6]

The cancellation order and show cause notice were quashed and the GST registration was restored, with liberty to the Revenue to issue a fresh notice on specific grounds, if available, and decide the matter in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the cancellation proceedings and restoring the GST registration. The Revenue was left at liberty to initiate fresh cancellation proceedings in accordance with law.

Challenged to the tax demand - Statutory Pre-deposit - Delay condonation application - HELD THAT:- The writ petition was disposed of with liberty to file a statutory appeal, along with the prescribed pre-deposit and an application for condonation of delay; coercive action was restrained for the period allowed for filing the appeal.

Alternative statutory remedy against cancellation of GST registration - Maintainability of writ petition challenging GST registration cancellation -HELD THAT: - Section 75 of the CGST Act stipulates the general provision relating to determination of tax. Sub-section (4) of Section 75 stipulates that an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.

Although it is the vehement contention of the petitioner that the representation is required to be considered and opportunity of hearing is required to be afforded before the aspect of revocation is considered, having regard to the purport of the wordings of Section 107 of the CGST Act that “any order” could be challenged, the question of entertaining the present writ petition for the purpose of adjudicating the issues sought to be urged by the contesting parties does not arise.

The statutory appellate provision permits any person aggrieved by any order under the CGST Act to approach the appellate authority. The petitioner's contention that the appellate remedy was unavailable because his representation for revocation had not been considered was held unmerited. The Court declined to invoke its extraordinary discretionary jurisdiction, leaving the parties' merits contentions open. [Paras 21, 23, 24]

The writ petition was disposed of with liberty to the petitioner to avail the statutory appellate remedy.

Final Conclusion: The Court declined to entertain the writ petition in view of the available appellate remedy against cancellation of the GST registration. Liberty was reserved to pursue that remedy, with all merits contentions kept open.

Input tax credit for delayed returns - Benefit of extended time-limit for input tax credit - HELD THAT: - The returns concerned were filed before 30.11.2021, the cut-off specified under Section 16(5). The denial of input tax credit solely on the basis of the earlier time-limit under Section 16(4) could therefore not be sustained. The claim remained subject to the petitioner being otherwise entitled to the credit. [Paras 1, 2, 3]

The order was quashed to the extent it denied input tax credit for delayed filing of the specified returns, and the competent officer was directed to reconsider and grant the benefit under Section 16(5), if otherwise admissible.

Final Conclusion: The writ petition was allowed in part by setting aside the denial of input tax credit founded on delayed filing of returns for the specified months. The remaining finding denying credit for want of supporting documents was left undisturbed.

Anti-profiteering-real estate project-Occupancy Certificate as completion date - Additional input tax credit-commensurate reduction in price - Identifiable homebuyers-refund of profiteered amount with interest - Prospective operation of penalty provision - Exempt Supply - Unjust Enrichment

Whether, for the purposes of Section 171, project completion is to be reckoned from the date of actual issuance of the Occupancy Certificate or date of filing of the application seeking such certificate?- HELD THAT: - A project cannot be regarded as completed merely upon filing an application for an Occupancy Certificate; completion occurs upon its actual grant. As the Occupancy Certificate was issued during the GST regime and input tax credit was availed until then, the project continued during the post-GST period. Since post-Occupancy Certificate sales are exempt supplies and no admissible input tax credit benefit survives in respect of such units, the anti-profiteering investigation was correctly confined to the period from introduction of GST until issuance of the Occupancy Certificate. [Paras 20, 21]

The project was held to have remained ongoing until issuance of the Occupancy Certificate, and the revised investigation period was upheld.

Validity of the revised methodology for quantifying additional input tax credit benefit required to be passed on to homebuyers of an ongoing project - HELD THAT: - The DGAP, in the revised investigation report, has computed the additional ITC benefit by comparing the ratio of ITC to purchase value in the pre-GST and post-GST periods and has confined the investigation period up to 13.10.2017, i.e., the date of issuance of the Occupancy Certificate. The computation is founded on the actual ITC availed and the actual purchase values certified by the Respondent and, therefore, represents a reasonable and fact-based determination of the benefit accrued on account of the implementation of GST.

The project fell within the scenario in Reckitt Benckiser India Pvt. Ltd. [2024 (1) TMI 1248 - DELHI HIGH COURT], where construction commenced before GST but continued thereafter, and purchasers who had paid before GST remained entitled to the benefit of post-GST input tax credit accruing to the builder. The revised computation, based on actual purchase values and input tax credit certified by the Respondent, compared pre-GST and post-GST credit ratios, determined the aggregate saving, and apportioned it per square foot over the sold area. This was held to be a reasonable, fact-based methodology consistent with Section 171 and the principles stated in Reckitt Benckiser. [Paras 21, 22]

The revised computation and quantification of the profiteered amount were upheld.

Applicability of refund to identifiable homebuyers rather than deposit in the Consumer Welfare Funds - HELD THAT: - The homebuyers are clearly identifiable and ascertainable from the records maintained by the Respondent itself. Consequently, the factual matrix of the present case falls squarely within the ambit and scope of clause (b) of sub-rule (3) of Rule 133 of the CGST Rules, 2017, which mandates the return of the profiteered amount to the affected recipients where they are identifiable. The Respondent, having collected excess consideration from the homebuyers in contravention of Section 171 of the CGST Act, 2017, cannot be permitted to retain the same.

Rule 133(3)(c) is a residuary provision applicable only where identification of eligible recipients is genuinely impossible. Non-filing of a complaint, present unavailability, resale of flats, or absence of an initial buyer-wise computation does not make recipients unidentifiable where the supplier's business and statutory records disclose their identities. As the Respondent maintained buyer-specific data and records of the flat transactions, the homebuyers were identifiable. Rule 133(3)(b), requiring restitution to recipients with interest, was therefore applicable. [Paras 23]

The Respondent was directed to refund the profiteered amount to the identifiable homebuyers with interest at 18 per cent from collection of the excess amount until actual refund.

Prospective application of anti-profiteering penalty - HELD THAT: - The penalty provision was introduced after the investigated period and contained no express retrospective operation. Penal provisions cannot be applied retrospectively unless the statute so provides. [Paras 24]

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

Final Conclusion: The supplementary investigation report was accepted and the Respondent was held to have contravened Section 171 by retaining the additional input tax credit benefit. The quantified profiteered amount, inclusive of tax, was directed to be refunded to eligible homebuyers with interest, while no penalty was imposed.

Condonation of delay for filing revised returns - Genuine hardship u/s 119(2)(b) - delay in filing revised returns to claim refund of tax deducted at source on ex gratia compensation received under the BSNL Voluntary Retirement Scheme for AYs 2020-21 and 2021-22 - HELD THAT: - Where relief had consistently been granted by several Tribunal Benches to identically placed BSNL retirees and those decisions had attained finality, the condonation application required a pragmatic and liberal consideration of the genuine hardship involved. The impugned order did not disclose due consideration of those decisions, including the consistent view reiterated by other Tribunal Benches. [Paras 6, 7, 8, 9]

The rejection of condonation was quashed and the matter was remitted for consideration on merits after permitting the petitioner to submit revised income-tax returns.

Final Conclusion: The writ petition was allowed; the order rejecting condonation of delay was quashed and the matter remitted for fresh consideration on merits.

Unexplained investment in residential house property - Telescoping of undisclosed cash receipts - Unexplained investment in fixed deposit receipts

Determination of unexplained investment in the residential house property on the basis of the assessee's disclosed estimate, books of account and unproved claim of expenditure on the old house and land - HELD THAT: - The insurance proposal was only an estimate and could not justify adoption of its stated value. The Tribunal's intermediate valuation was arbitrary and contrary to the evidence, whereas the assessee's estimated value disclosed in the statement and affidavit was liable to be accepted. However, the claimed expenditure on purchase of the old land and building was unsupported by evidence and could not be excluded from unexplained investment. [Paras 8, 9]

The addition for unexplained investment in the residential house property was modified by accepting the disclosed estimated value, while sustaining the unsupported expenditure on the old land and building as unexplained investment.

Telescoping of undisclosed cash receipts - Unexplained cash receipts - Entitlement to telescoping of unexplained cash receipts against unexplained investment in the residential house property, and sustainability of the cash-receipts addition - HELD THAT: - No material established that the residential-house investment and the unaccounted cash recorded in the seized diary related to the same period. The house plot had been purchased years before the search, whereas the unaccounted cash was found during search. Further, the addition for unexplained cash receipts rested on concurrent factual findings of the authorities. [Paras 6, 7, 10]

Telescoping was rightly denied, and the addition for unexplained cash receipts was sustained.

Unexplained investment in fixed deposit receipts - Maturity value and investment value - Addition for unaccounted fixed deposit receipts based on their maturity value rather than the amount actually invested - HELD THAT: - The seized material disclosed only the original investment amounts in the two unaccounted fixed deposit receipts. Their maturity value could not be treated as unexplained investment. [Paras 11]

The addition was restricted to the actual investment value of the fixed deposit receipts.

Final Conclusion: The appeals were partly allowed. The residential-house investment addition was modified and the fixed-deposit addition restricted to the actual investment, while denial of telescoping and the addition for unexplained cash receipts were upheld.

Condonation of delay in filing appealbefore tribunal - Sufficient cause and substantial justice - criteria as to when the discretion to condone delay is required to be exercised by the appellate Court - Condonation of delay in filing the assessee's appeal before the Tribunal where the appellate order had been received by the accounts manager and the assessee became aware of its disposal upon recovery proceedings

HELD THAT: - Condonation of delay is discretionary; the acceptability of the explanation, rather than the length of delay, is the governing criterion.

Hon’ble Apex Court in case of N. Balakrishnan v. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT] wherein Hon’ble Supreme Court in the facts of the said case has succinctly laid down the criteria as to when the discretion to condone delay is required to be exercised and held that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put-forth as part of a dilatory strategy the Court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the Court should lean against acceptance of the explanation.

Refusal to condone forecloses adjudication on merits, and an explanation not tainted by mala fides or a dilatory strategy must receive liberal consideration to advance substantial justice. The explanation supported by the Director's affidavit established bona fide inability to file the appeal in time and constituted sufficient cause. [Paras 17, 18]

The Tribunal ought to have condoned the delay; its order was quashed and the appeal was remanded to the Tribunal for decision on merits after affording the assessee an opportunity of hearing.

Final Conclusion: The substantial question concerning condonation of delay was answered in favour of the assessee. The matter was remanded for adjudication of the appeal on merits after an opportunity of hearing.

Minimum Alternate Tax u/s 115JB liability - statutory corporation not incorporated under Companies Act - assessee National Dairy Development Board - disallowance under section 14A of the Act on the basis of applicability of section 115JB

Applicability of Minimum Alternate Tax to a statutory body constituted under a Central enactment and assessable as a company under the Income-tax Act - HELD THAT: - The statutory body was not a company incorporated under the Companies Act.

Following Kerala State Electricity Board v. Deputy Commissioner of Income-tax [2010 (11) TMI 127 - KERALA HIGH COURT] as affirmed by Supreme court [2022 (10) TMI 363 - SC ORDER] the Court held that the legal fiction under section 115JB could not be applied to it for assessment of tax, notwithstanding the amendment effective from 01.04.2013. [Paras 19]

Minimum Alternate Tax under section 115JB was held inapplicable to the assessee.

Disallowance under section 14A on the basis of applicability of section 115JB - HELD THAT: - As section 115JB did not apply to the assessee, the challenge concerning addition of the disallowance under section 14A in computation of book profit did not give rise to a substantial question of law. [Paras 20]

The consequential book-profit disallowance issue did not survive.

Final Conclusion: No substantial question of law arose from the Tribunal's order. The Revenue's appeals were dismissed.

Reassessment based on inapplicable information - Escaped-income threshold for reopening - Validity of reassessment founded on alleged manipulated share transactions where the assessee's intraday transaction yielded only a disclosed business profit below the threshold stated for reopening

HELD THAT: - The Tribunal found that the recorded reasons proceeded on alleged bogus long-term capital gain, short-term capital loss or business loss entries, whereas the assessee had undertaken an intraday share transaction and disclosed the resulting business profit. Since none of the transactions forming the stated basis of reopening existed in the assessee's case and the profit was below the stated threshold, the very basis for reopening failed. The High Court held in SWATI BAJAJ [2022 (6) TMI 670 - CALCUTTA HIGH COURT] that these findings of fact did not give rise to any question of law, much less a substantial question of law. [Paras 11]

No interference with the Tribunal's order quashing the reassessment was warranted.

Final Conclusion: The appeal was dismissed, the High Court holding that no substantial question of law arose from the Tribunal's factual finding that the basis for reopening was inapplicable to the assessee's disclosed intraday share transaction.

Interest disallowance - presumption from surplus interest-free funds - Minimum alternate tax - section 14A disallowance in book-profit computation

Interest disallowance - presumption from surplus interest-free funds - Capital work in progress - interest capitalisation - Disallowance of interest expenditure attributed to capital work in progress where the assessee had interest-free funds exceeding its investments - HELD THAT: - Where interest-free funds are sufficient to meet the investments, a presumption arises that the investments were made from such funds. The Tribunal's finding that the assessee possessed interest-free funds in excess of investments was therefore decisive. Further, the expenditure concerned an existing building already put to use in earlier years, leaving no basis for capitalising the interest. [Paras 5]

The deletion of the interest disallowance was upheld and the proposed question was answered against the Revenue.

Minimum alternate tax - section 14A disallowance in book-profit computation - Addition to book profit of the expenditure disallowed under section 14A read with rule 8D - HELD THAT: - The issue stood covered by binding decisions of the Court holding that no addition to book profit under section 115JB can be made merely on the basis of a disallowance computed under section 14A read with rule 8D. This appeal is squarely covered by the decision of this Court in the case of Gujarat Fluorochemicals Ltd [2019 (7) TMI 541 - GUJARAT HIGH COURT] as well as Gujarat Urja Vikas Nigam Ltd [2020 (3) TMI 232 - GUJARAT HIGH COURT]

The concurrent findings of the appellate authorities deleting the adjustment consequently called for no interference. [Paras 5]

The deletion of the adjustment to book profit was upheld and the proposed question was answered against the Revenue.

Final Conclusion: Both proposed questions were covered by binding decisions and concurrent factual findings. No substantial question of law arose, and the Revenue's appeal was dismissed.

Delay in electronically furnishing Form 10B - delay in filing charitable trust audit report - Exemption for charitable and religious trust income - Genuine hardship - HELD THAT: - The audit report and Form 10 had been obtained before the return was filed, but were not electronically furnished owing to an inadvertent clerical omission in the circumstances concerning the trust's Chartered Accountant. The Court held that the applicable CBDT circular directly covered A.Y. 2016-17 and that the earlier decision in the trust's own case required the delay to be treated as constituting genuine hardship rather than rejected on a pedantic view of technical compliance. [Paras 6, 7, 8]

The rejection of the condonation application was quashed, and the respondent was directed to condone the delay in filing Form 10B, enabling consideration of the claimed exemption under section 11.

Final Conclusion: The writ petition was allowed. The respondent was directed to condone the delay in furnishing Form 10B for A.Y. 2016-17.

Disallowance of unverifiable business expenditure - Concurrent findings of fact - HELD THAT: - The appellate authorities concurrently found that vouchers and bills produced during remand proceedings had been verified and that the Assessing Officer had identified no defect in them. The Commissioner (Appeals) had nevertheless sustained a disallowance of 30% of expense heads requiring supporting evidence, which the assessee did not challenge. In the absence of material establishing that the remaining expenses lacked supporting bills and vouchers, the deletion of the balance disallowance was justified.

The findings regarding production and verification of vouchers and bills, and the justified extent of disallowance for unverified expenses, were concurrent findings of fact. No substantial question of law arose from the Tribunal's order.[Paras 8, 9]

The Revenue's challenge to deletion of the balance disallowance was rejected.

Final Conclusion: The High Court dismissed appeals, holding that the concurrent factual findings on verification of expenses gave rise to no substantial question of law.

Limitation for reassessment notice under the substituted reassessment regime - Exclusion and extension of time under the provisos to section 149(1) - Revenue concession concerning reassessment notices under TOLA

Validity of the reassessment notice where the notice u/s 148A(b) was issued before expiry of the six-year period but the order under section 148A(d) and notice u/s 148 were issued thereafter - HELD THAT: - Where a notice for reopening is issued after 01.04.2021, the reassessment procedure introduced by the Finance Act, 2021 applies. Section 149(1) imposes a mandatory outer limit for issuance of the notice u/s 148. The period allowed to respond to the notice u/s 148A(b) is excluded under the first proviso and, where less than seven days remain, a further seven days is available under the fourth proviso. Even allowing the resulting extension, the order u/s 148A(d) and the consequential notice under section 148 were issued beyond the permissible period. [Paras 18, 19, 20, 21]

The notice under section 148 and the consequential reassessment were barred by limitation and were quashed.

Revenue concession concerning reassessment notices under TOLA - Applicability of the Revenue's concession in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] concerning reassessment notices issued for Assessment Year 2015-16 under TOLA - HELD THAT: - The concession in Rajeev Bansal was made in the context of the applicability of TOLA and the extensions granted thereunder. Since the Revenue did not rely on TOLA to sustain the impugned proceedings and sought to justify them under sections 148, 148A and 149, that concession could not be extrapolated to the present case. The issue did not affect the relief, which was granted on limitation. [Paras 22, 23]

The concession recorded in Rajeev Bansal was held not germane to the case.

Final Conclusion: The reassessment notice for Assessment Year 2015-16, the consequential assessment order and the penalty order were quashed as the notice under section 148 was issued beyond limitation. The Revenue's concession in Rajeev Bansal was held inapplicable.

Exemption u/s 11 & 12 - Charitable-trust exemption - travelling expenditure for objects of trust - Denial of charitable-trust exemption-benefit to specified persons - invocation of Section 13(1)(c)(ii)

Entitlement of an educational trust to exemption under sections 11 and 12 where travelling expenditure was incurred in the names of its trustee and chairman - HELD THAT: - The finding that the travelling expenditure was incurred for the day-to-day working and development of the school was not rebutted by material showing that it was unrelated to the objects of the trust. Incurrence of the expenditure in the names of the trustee and chairman, by itself, could not justify doubting its genuineness or invoking section 13(1)(c)(ii). [Paras 8, 9]

The deletion of the disallowance and allowance of exemption under sections 11 and 12 were upheld; the consequential challenges concerning development fund and capital expenditure did not survive.

Final Conclusion: No substantial question of law arose from the Tribunal's orders. The revenue's appeals for Assessment Year 2012-13 and Assessment Year 2014-15 were dismissed.

Deduction u/s 80IA(4) - Market value of electricity for captive consumption - Deduction for captive power generation

Computation of profits of a captive power plant for deduction u/s 80IA(4) by adopting the rate at which the Electricity Board supplies power to industrial consumers - HELD THAT:- For determining the profits of the eligible captive power undertaking, the market value of electricity supplied for internal consumption is the rate at which the Electricity Board sells power to its consumers, and not the rate at which the generating undertaking supplies surplus power to the Electricity Board. The latter tariff, being determined under statutory regulation and contractual arrangements, does not represent the open-market rate payable by an industrial consumer.

The issue involved in this appeal is now no more Res-integra and is answered by this Court in case of Jindal Steel and Power Ltd.[2023 (12) TMI 417 - SUPREME COURT] [Paras 7, 8]

The Tribunal's direction to work out the eligible profits on that basis was upheld, and the question was answered in favour of the assessee.

Final Conclusion: The appeal was dismissed, the Court holding that the Electricity Board's tariff to industrial consumers is the relevant market value for computing the deduction in respect of captive power generation.

Rectification of erroneous tax adjustment - Adjustment of tax despite the revised assessment order reflecting nil balance payable

HELD THAT: - The Court noted the submission on behalf of the Income Tax Department that the adjustment appeared to have resulted from an officer's mistake and that rectification could be sought u/s 154. It therefore directed the competent authority to examine the petitioner's rectification application upon verification of the records. [Paras 4]

The authority shall decide the rectification application concerning the impugned adjustment within six weeks of its receipt.

Final Conclusion: The writ petition was disposed of with a direction for expeditious consideration of the petitioner's rectification application.

Valuation of immovable property u/s 56(2)(x) - Departmental Valuation Officer's valuation - Fair Market Value

Addition u/s 56(2)(x) on purchase of an immovable property where the Departmental Valuation Officer's report was received after completion of assessment - HELD THAT: - AO had made the addition by adopting the stamp-duty value, subject to modification upon receipt of the valuation report. As the Departmental Valuation Officer subsequently determined the fair market value of the property, that valuation, rather than the stamp-duty value, was required to be adopted for computing the differential value taxable in the assessee's hands in proportion to his share. [Paras 4, 5]

The addition was restricted to the differential amount determined with reference to the Departmental Valuation Officer's valuation and the assessee's 50% share.

Final Conclusion: The assessee's appeal was partly allowed and the addition under section 56(2)(x) was reduced by adopting the Departmental Valuation Officer's determined value.

TDS u/s 194C OR 194I - Tax deduction at source on common area maintenance charges - Contractual payments for facilities and services

HELD THAT: - Common area maintenance charges, being payments for availing services and facilities and not for the use of premises or equipment, are contractual payments subject to deduction of tax at source under section 194C, and not rent attracting section 194I. Following the orders in the assessee's own case for earlier assessment years [2025 (4) TMI 266 - ITAT DELHI], the contrary action treating the assessee as an assessee in default was reversed. [Paras 7]

The appeals were allowed and the demand founded on deduction of tax at the rate applicable to rent was deleted.

Final Conclusion: Following the orders in the assessee's own case, the Tribunal held that common area maintenance charges attracted deduction of tax at source under section 194C. Both appeals were allowed.

Validity of reassessment - Sanction for reassessment notice beyond three years - Competent authority u/s 151(ii)

Validity of reassessment notice issued beyond three years upon approval granted by the Principal Commissioner of Income-tax - HELD THAT: - We find that issue is covered in favour of the assessee by decision of Rajiv Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] wherein with regard to AY: 2016-17, Hon’ble Supreme Court has laid down that competent authority for giving the approval was Principle Chief Commissioner or Deputy Director General and where these authorities are not there, then, the Chief Commissioner or Director General are the competent authority to grant approval.

For a notice issued beyond three years, approval under section 151(ii) was required from the Principal Chief Commissioner or Deputy Director General, and, in their absence, from the Chief Commissioner or Director General. Approval by the Principal Commissioner of Income-tax was therefore not by the competent authority and vitiated the notice. [Paras 3]

The reassessment notice was held invalid; consequently, the assessment order was quashed.

Final Conclusion: The appeal was allowed and the reassessment assessment order for AY: 2016-17 was quashed for want of sanction by the statutorily competent authority.

Provisional release of seized imported goods - Provisional release of seized multifunctional devices pending customs adjudication - HELD THAT: - Similar writ petitions of identical nature have already been considered by this Bench in [2025 (4) TMI 1705 - TELANGANA HIGH COURT], wherein by way of a conditional interim order this Bench had permitted the release of seized goods subject to the petitioner/importer fulfilling certain conditions.

As the petition concerned only interim release at the seizure stage and involved facts similar to earlier matters, the authorities were directed to decide the application for provisional release upon payment of the enhanced duty quantified by Customs and furnishing a bank guarantee. Such conditional release neither precludes continuation of adjudication nor influences its determination, which must follow consideration of the parties' objections and contentions. [Paras 9, 10, 11, 12]

The goods were directed to be provisionally released subject to payment of quantified enhanced duty, furnishing of bank guarantee, and the stipulated transactional disclosures; customs adjudication was left to proceed independently in accordance with law.

Final Conclusion: The writ petition was allowed by directing conditional provisional release of the seized imported goods, without prejudice to the pending customs adjudication.

Statutory limitation for filing appeal - Power to condone delay beyond prescribed period - Exclusion of Limitation Act - Maintainability of the first appeal filed beyond the statutorily condonable period of delay. - HELD THAT: - The appellate authority's power to condone delay is confined to the additional period expressly provided by the statute. The Supreme Court in Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], had held that the statutory scheme excludes recourse to section 5 of the Limitation Act beyond that period. As the first appeal was admittedly filed after expiry of the condonable period, it could not be entertained on merits. [Paras 4, 5]

The dismissal of the first appeal on limitation was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal upheld the dismissal of the first appeal as time-barred, holding that delay beyond the statutory condonable period could not be condoned.

Additional customs duty exemption for textile materials omitted from the statutory schedule - Extended limitation for exemption claims disclosed in assessed ex-bond Bills of Entry

Whether the appellant is eligible for the benefit of the Notification No.20/2006 dated 01.03.2006 ? - HELD THAT: - This Tribunal in appellant’s own case, in an identical set of facts. The exemption was confined to goods specified in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Since the relevant textile headings had been omitted from that Schedule by the Finance Act, 2011, the imported goods ceased to satisfy the condition for exemption. The notifications had therefore to be strictly construed and could not extend to goods so omitted. [Paras 5]

The denial of exemption on merits was sustained.

Extended limitation for exemption claims disclosed in assessed ex-bond Bills of Entry - HELD THAT: - The ex-bond Bills of Entry disclosed the description and classification of the goods, the duties paid and the exemption notifications claimed, and were assessed by Customs before clearance. In the absence of material showing suppression or deliberate misstatement with intent to evade duty, an incorrect claim of exemption did not justify invocation of the extended period. The Court applied the principle stated in ANAND NISHIKAWA CO. LTD. [2005 (9) TMI 331 - SUPREME COURT] that suppression requires a deliberate non-disclosure and not mere failure or a different classification claim. [Paras 6, 7]

The demand in Appeal No. C/20722/2017 was confined to the normal period and remanded solely for re-quantification; the penalty under Section 114A was set aside. As the entire demand in Appeal No. C/21281/2017 was beyond the normal period, it was set aside.

Final Conclusion: The exemption claim was rejected on merits, but extended limitation was held inapplicable. The first appeal was remanded only for quantification of duty for the normal period without penalty, while the second appeal was allowed in full.

Penalty for misdeclaration of export goods - knowledge of Customs Broker's G-card holder - Imposition of penalty on a Customs Broker's G-card holder for filing export documents where the declared cigarettes were found to be agarbatti - HELD THAT: - The Revenue failed to establish that the G-card holder had knowledge of the misdeclaration of the goods. In the absence of proof of such knowledge, the penalties for the misdeclaration could not be sustained. [Paras 6]

The penalties imposed on the appellant were set aside.

Final Conclusion: The appeal was allowed and the penalties imposed on the Customs Broker's G-card holder were set aside.

Entitlement to preferential customs-duty exemption under the Indo-Thailand Free Trade Agreement - Verification of Certificate of Origin under the Interim Rules of Origin - HELD THAT: - The Revenue had not followed the procedure prescribed under Notification No. 101/2004-Cus. (N.T.) for questioning the credibility of the Certificate of Origin produced by the importer. The denial of exemption under Notification No. 85/2004-Cus. was therefore unsustainable. Consequently, the penalty on the partner for the alleged improper import was also unsustainable. [Paras 11]

The denial of the preferential exemption and the consequential penalty were set aside.

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

Cancellation of Special Bonded Warehouse Licence for non-payment of cost recovery charges - Breach of Licence Conditions - HELD THAT: - The appellant did not contest the demand representing the difference between cost recovery charges and MOT charges for the relevant period, having already paid it. As there was no breach of any licence condition prescribed under Notification No.72/2016-Cus. (NT), cancellation of the Special Bonded Warehouse Licence was not sustainable. [Paras 5]

The demand was retained, but cancellation of the Special Bonded Warehouse Licence was set aside.

Final Conclusion: The appeal was partly allowed by setting aside cancellation of the Special Bonded Warehouse Licence while maintaining the unchallenged demand for differential cost recovery charges.

Penalty imposed on the truck driver for diversion of containers used in attempted smuggling -Action in rem and action in personam - Penalty on driver for diversion of smuggled goods

Penalty on driver for diversion of smuggled goods - Sustainability of penalty on the truck driver for diverting containers in an attempted smuggling of red sanders. - HELD THAT: - The driver had diverted the containers and was actively involved in the attempted smuggling of red sanders. The penalty imposed was already meagre and warranted no interference. [Paras 4]

The penalty on the truck driver was sustained.

Redemption fine for conveyance used in attempted smuggling - Action in rem and action in personam - HELD THAT: - Non-imposition of personal penalty on the truck owner did not preclude redemption fine upon the offending vehicle. Action against the conveyance is in rem and is distinct from action in personam against its owner; however, the owner's non-involvement in the show-cause proceedings and the overall circumstances justified reduction of the fine. [Paras 4]

The redemption fine on the truck was reduced to Rs. 1,00,000.

Final Conclusion: The appeal was partly allowed by sustaining the penalty on the driver while reducing the redemption fine imposed on the truck.

Security of Central Sales Tax dues in insolvency- secured operational debt ​​​- Exclusion of CST dues from secured operational debt - The NCALT [2026 (3) TMI 1731 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] held that, the secured status of State tax dues under the Gujarat Value Added Tax regime is recognised for insolvency distribution, whereas Central Sales Tax dues do not obtain the character of secured operational debt. - HELD THAT:- The Civil Appeals were dismissed after finding no error of law or fact in the order of the National Company Law Appellate Tribunal.

Statutory charge over VAT dues- Secured operational creditor - Distribution under section 53 - Waiver of statutory right - Estoppel by claim form - The NCLAT [2026 (5) TMI 760 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI (LB)], held that appellant was entitled to secured operational creditor status only in respect of the VAT dues covered by the statutory charge under the GVAT Act, while the approved resolution plan was otherwise left undisturbed and the consequent adjustment in distribution was left to be worked out. - HELD THAT:- The Civil Appeal was dismissed, the Court finding no error in law or fact in the order of the National Company Law Appellate Tribunal.

SARFAESI enforcement against personal guarantors - Interim moratorium in personal guarantor insolvency - Principle of election of remedies - Personal Guarantor Liability - Concurrent Remedies - Alternative Remedy - Sanctity of Public Auction - Whether recovery proceedings against the personal guarantors can be maintained under the SARFAESI Act where Corporate Insolvency Resolution Process (CIRP) has been initiated against the Corporate Debtor and is pending before the NCLT?

SARFAESI enforcement against personal guarantors- HELD THAT: - Section 60, sub-sections (1), (2), and (3) contemplate the consolidation of parallel adjudications against the corporate debtor and its personal guarantors by centralizing the adjudication thereof before the Adjudicating Authority/NCLT. The effect of section 60 is thus, to discourage multiplication of proceedings and conflicting decisions in respect of the corporate debtor and its guarantors. However, the relevance of section 60 cannot be muscled into these facts in light of the admitted position of no application under section 95 of the IBC being filed by the Bank under the IBC against the guarantors. As on date, the only CIRP pending before the NCLT is against the corporate debtor (Parameshwara Poultry Farm Pvt. Ltd.). There is no CIRP pending against the guarantors before any NCLT as on date. Consequently, there is no possibility of any parallel proceedings or any conflict of decisions in respect of the corporate debtor.

The Supreme Court in Transcore [2006 (11) TMI 349 - SUPREME COURT] addressed the permissibility of pursuing two remedies simultaneously under Section 19(1) of the DRT Act, 1993, and the SARFAESI Act, 2002, and held that both were complementary remedies against the same debtor.

A demand notice under Rule 7(1) does not by itself amount to an application by a creditor for initiation of the insolvency resolution process against personal guarantors. An interim moratorium in respect of guarantors arises only upon filing of the requisite application; the moratorium applicable to the corporate debtor does not extend to personal guarantors.

The absence of insolvency proceedings against the guarantors on account of no application being filed under section 95 of the IBC, precludes the applicability of the principle of election of remedies, which was the crux in Transcore. Transcore also recognized that the Authorised Officer is empowered to take possession of the secured asset by following the procedure under Rule 8 of the 2002 Rules and auction/sell the secured asset.

The setting aside of the possession notice, public auction and sale certificate, and the consequential directions against the Bank and the auction purchaser, were set aside.

Alternative statutory remedy - Maintainability of writ petition - HELD THAT: - The alternative-remedy objection became academic because the auction purchaser had already carried the DRT order in appeal before the DRAT, and both writ petitions involving the same parties and issues were heard together. [Paras 55]

The Bank's writ petition was held maintainable.

Final Conclusion: The Bank's writ petition was allowed and the DRT order was set aside. The challenge to the DRAT order was disposed of consequentially.

Insolvency proceedings against personal guarantor - Co-extensive liability of surety and principal borrower - Commercial Wisdom of Creditors - Maintainability of insolvency proceedings against personal guarantors of a corporate debtor in the absence of a pending or concluded corporate insolvency resolution or liquidation proceeding against the corporate debtor. - HELD THAT: - The Appellate Tribunal’s earlier judgement in case of State Bank of India, Stressed Asset Management Branch Vs. Mahendra Kumar Jajodia & Anr. 2022 (5) TMI 1469 - SC ORDER], it was held that Applications filed under Section 95 against the Personal Guarantors are maintainable even in the absence of pending CIRP or liquidation proceedings of the Corporate Debtor.

It is the legal prerogative under the scheme of the Code, which gives flexibility to the Financial Creditor to proceeded for CIRP against the Personal Guarantor of the Corporate Debtor under Section 95 of the Code along with CIRP proceedings against the Corporate Debtor under Section 7 of the Code or only against Personal Guarantor of the Corporate Debtor under Section 95 of the Code without even initiating any proceeding, against the Corporate Debtor. Typically, such cases arise when Financial Creditors find that there is very low chances of resolution of the Corporate Debtor.

The guarantor's liability is co-extensive with that of the principal borrower; the creditor has concurrent and independent remedies and is not required to exhaust remedies against the corporate debtor before proceeding against the guarantor. The financial creditor may therefore invoke Section 95 directly against a personal guarantor, and the choice of course is within the creditor's commercial domain. [Paras 18, 19, 20, 21, 22]

The orders rejecting the applications for want of pending or concluded CIRP or liquidation against the corporate debtor were set aside; the original petitions were restored and remanded for decision in accordance with law.

Final Conclusion: The appeals were allowed. The impugned orders were set aside and the applications against the personal guarantors were restored to the Adjudicating Authority for determination in accordance with law.

Financial debt - Disbursement Against Consideration for Time Value of Money - Real estate allotment in satisfaction of service dues - Commercial Effect of Borrowing - seeking condonation of delay in filing the claim by the Appellant with the Resolution Professional - HELD THAT: - Admittedly the flat was allotted to compensate the appellant for the amount it had spent on advertisement as per its invoice, hence on similar logic as of L & L Partners Litigation [2026 (4) TMI 1834 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI], the appellant can neither be treated as a financial creditor, nor would its debt be a financial debt.

A debt qualifies as a financial debt only where its genesis discloses disbursement against consideration for the time value of money. Although an amount raised from an allottee in a real estate project is deemed to have the commercial effect of borrowing, that deeming provision did not apply where no amount had been disbursed by the claimant to the corporate debtor and the flat was allotted merely to compensate advertisement charges covered by its invoice. [Paras 9]

The claimant could not be treated as a financial creditor and its claim was not a financial debt; no interference with the impugned order was warranted.

Final Conclusion: The appeal was dismissed, the claimant having failed to establish a financial debt or its status as a financial creditor.

Discharge in money-laundering prosecution - Prima facie case at stage of framing charge - Entitlement to discharge from the money-laundering prosecution for want of prima facie material connecting her with the alleged offence - HELD THAT: - From the documents available, it is explicitly clear that the petitioner was one of the trustees on the date of obtaining the loan and it was found that the loan was obtained through fraudulent documents and the loan availed has not been utilised for the said purpose, but was diverted to various accounts and the proceeds of crime have been laundered. The Trial Court has rightly taken into consideration the prima facie materials available and rejected the petition for discharge.

At the stage of considering discharge/framing of the charges, the Court is not expected to conduct a roving enquiry weighing evidence like trial, but it is the duty of the Court only to see as to whether from the materials available prima facie case against the accused is made out. The trial court must be satisfied that with the documents and materials available on record, a strong suspicion arises making out a case against the accused for conviction. In this regard it is useful to refer to the decision of the Hon’ble Supreme Court in the case of Tarun Jit Tejpal [2019 (8) TMI 1956 - SUPREME COURT] [Paras 14, 15, 16]

The rejection of discharge was affirmed and the criminal revision was dismissed.

Final Conclusion: Prima facie material disclosed the petitioner's role in the alleged money-laundering offence; consequently, no interference with the order refusing discharge was warranted.

Business auxiliary service - reverse charge mechanism - principal to principal sale versus commission agent - trade discount characterised as deduction from invoice -Condonation of delay - barred by 970 days delay

Tribunal [2023 (7) TMI 200 - CESTAT NEW DELHI] affirmed the Commissioner's decision to drop the show cause notices: the amounts termed 'commission' were reimbursements/discounts in principal to principal sales and not taxable BAS; reliance on contracts filed with replies was proper absent proof of fabrication; and the retraction of the earlier statement was rightly accepted. The departmental appeals are dismissed

HELD THAT:- The application for condonation of delay was rejected for insufficient cause, and the civil appeal was dismissed as time barred.

Service tax exemption for services relating to generation of electricity -Eligibility of fabrication, erection and allied engineering services for hydroelectric power projects - Exemption by virtue of the notifications viz. Notification No. 11/2010-ST dated 27.02.2010 and Notification No. 45/2010-ST dated 20.07.2010 prevailing during the relevant period - HELD THAT: - The work orders showed that the services comprised fabrication, erection, testing, painting, transportation, alignment and commissioning of pressure shaft steel liners and allied structural components for hydroelectric projects. The Revenue did not dispute that the services were intrinsically connected with generation and supply of electricity. The tunnelling formwork supplied and fabricated for another recipient was also accepted as intended for hydroelectric power projects in the absence of contrary material.

Upon a conjoint reading of the notifications (Supra), it becomes manifest that the legislative intent was to exempt taxable services rendered in relation to the generation, transmission or distribution of electricity. Therefore, the activities undertaken by the appellant, being intrinsically and inextricably connected with hydroelectric power generation projects, are unmistakably covered by the above exemption notifications. Once the services are found to answer the statutory description contemplated therein, the inevitable corollary is that they are not exigible to Service Tax during the material period. The impugned demand of Service Tax, as confirmed by the authorities below, cannot therefore be sustained.

Applying the ratio of the decision in M/s. Tamil Nadu Electricity Board [2023 (11) TMI 14 - CESTAT CHENNAI], the services rendered by the appellant in this case were covered by the exemption notifications operating during the relevant period and consequently do not attract levy of Service Tax. The impugned demand, together with the consequential interest and penalties, therefore, cannot be sustained in the eyes of law.

Final Conclusion: The appeal was allowed to the extent that the service tax demand, interest and penalty were set aside, as the services rendered for hydroelectric power projects were exempt. The Revenue's cross-objection was rejected.

Service tax on minimum demand charges for gas transportation - Service tax on marketing margin forming part of sale value of natural gas - Absence of Service Provider and Service Recipient - Precedential Consistency

Minimum demand charges for unavailed booked gas quantity - Transportation of gas through pipeline service - HELD THAT: - Following its earlier orders [2024 (3) TMI 496 - CESTAT KOLKATA] in the appellant's own case, the Tribunal held that Minimum Demand Charges recovered on account of the customer's failure to avail the stipulated quantity of gas were in the nature of a penalty and did not constitute consideration for a service provided by the appellant.

The service-tax demand on Minimum Demand Charges was held unsustainable.

Marketing margin on sale of natural gas - Business auxiliary service - HELD THAT: - Following its earlier orders in the appellant's own case [2024 (3) TMI 496 - CESTAT KOLKATA], which applied GAIL India Limited [2017 (9) TMI 554 - CESTAT NEW DELHI], the Tribunal held that the marketing margin formed part of the sale value of gas on which VAT had been paid and involved no independent service rendered to the purchaser.

The service-tax demand on marketing margin was held unsustainable.

Final Conclusion: Following the earlier final orders in the appellant's own case, the appeal was allowed with consequential relief in accordance with law.

Service tax on statutory university affiliation and recognition functions - Affiliation fees and consideration for taxable service - Levy of service tax on fees collected by a statutory university for affiliation and recognition of educational institutions - HELD THAT: - Affiliation, recognition, renewal and withdrawal of affiliation were performed by the university in discharge of statutory public duties for regulating the standards and quality of education leading to qualifications recognised by law. Such functions, lacking commercial elements and contractual reciprocity, were not activities carried out for consideration so as to constitute taxable services. The decision in Rajeev Gandhi University of Health Sciences [2024 (8) TMI 209 - KARNATAKA HIGH COURT] was held squarely applicable throughout the disputed period. [Paras 5]

The service-tax demand was unsustainable, and the dropping of the demand was upheld.

Final Conclusion: The Revenue's appeal was dismissed and the order dropping the service-tax demand on affiliation and recognition fees collected by the university was sustained.

Post-contractual recovery of alleged unintended tax benefit under a lump-sum EPC contract - Withholding of security deposit on revived audit objections

Entitlement of the State to withhold the security deposit and recover an alleged unintended benefit of central excise duty exemption under a completed lump-sum EPC contract - HELD THAT: - The sequence of events shows that the appellants/State sought to invent new charges and resurrect closed ones solely for the purpose of avoiding the refund of the security deposit to the Contractor/writ petitioner.

The exemption for imported electro-mechanical equipment used in water-supply projects was operative before the tender was issued. The tender and acceptance documents stipulated only a lump-sum value and contained no item-wise tax break-up or allocation of the benefit of the exemption. Having prepared and accepted the tender on that basis, the State could not, after completion of the contract, seek to alter its contractual value by attributing its failure to account for the exemption to the contractor. The audit objections had also been dropped, and the subsequent revival of the allegation during the writ proceedings was held to be a belated, arbitrary attempt to avoid refund of the security deposit. [Paras 24, 32, 33, 34, 35]

The State was not entitled to retain the security deposit or pursue recovery on the alleged unintended benefit; the direction for refund of the security deposit was affirmed.

Continuation of enquiry after rejection of consequential demand - Validity of the liberty reserved to the State to continue an enquiry pursuant to the notice alleging excess payment after the demand founded on that notice had been negated. - HELD THAT: - The notice, the contractor's reply and the subsequent demand formed one continuous process. Since the writ petition had been allowed by rejecting the consequential demand and directing complete refund of the security deposit, permitting a renewed enquiry under the antecedent notice would be inconsistent and contradictory. The State could not revive an enquiry that had culminated in the demand already negated. [Paras 36, 37, 38, 39]

The liberty to proceed with the enquiry was deleted.

Final Conclusion: The State's appeal was dismissed and the contractor's appeal was allowed. The security deposit was directed to be released, and the State was precluded from proceeding with the enquiry concerning the alleged unintended tax benefit.

CENVAT credit on services used for setting up factory - Scope of 'means' clause in definition of input service - 'means' clause - Scope of 'input service' under Rule 2(1) - Eligibility to CENVAT credit of service tax paid on services used for setting up a manufacturing plant after deletion of the expression 'setting up' from the inclusive part of the definition of input service with effect from 01.04.2011. - HELD THAT: - Services used for setting up a factory have a direct nexus with manufacture, since manufacture cannot take place without establishment of the factory. Such services are covered by the main 'means' clause as services used by a manufacturer, directly or indirectly, in or in relation to manufacture of final products. Deletion of 'setting up' from the inclusive clause does not exclude services otherwise covered by the main clause; credit can be denied only where the services fall within a specific exclusion. The services in dispute, being required for erection, commissioning, installation or fabrication of plant and machinery and allied manufacturing activities, were not services relating to construction of a building or civil structure and were not covered by the exclusionary clause. The Tribunal followed Pepsico India Holdings Pvt. Ltd. [2021 (7) TMI 1094 - CESTAT HYDERABAD] and M/S Steel Authority of India Limited [2026 (3) TMI 741 - CESTAT KOLKATA]. [Paras 5]

The appellant was entitled to the disputed CENVAT credit; the demand, interest and penalty were set aside.

Final Conclusion: The appeal was allowed and the impugned order denying CENVAT credit on services used for setting up the manufacturing plant, with consequential interest and penalty, was set aside.

Date of export under ARE-1 procedure - Delayed customs certification of export - Liability to excise duty on goods exported under ARE-1 where certification in Part-B was made after six months from factory clearance. - HELD THAT: - The Let Export Order is to be treated as the date of export. The Let Export Order and EGM filing recorded in Part-B of ARE-1 established that the goods were exported within one month of their clearance from the factory. The subsequent delay by the Customs Preventive Officer in certifying Part-B could not negate the export or sustain the duty demand. [Paras 8, 9]

The demand was unsustainable; the impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal accepted the documentary evidence of timely export and held that delayed customs certification could not justify demand of duty on the exported goods.

Related persons under central excise valuation - Applicability of Rule 9 where goods are not exclusively sold through an alleged related person - Valuation of submersible pumps supplied by Hindustan Pumps & Electricals Engineering Private Ltd. (HEE) to Malkoh Marketing Pvt. Ltd. (MMPL) as transactions between related persons under the central excise valuation provisions - HELD THAT: - Following the decisions in the appellants' own case in [2025 (11) TMI 2003 - CESTAT CHANDIGARH]; [2024 (12) TMI 1192 - CESTAT CHANDIGARH]; and [2018 (10) TMI 532 - CESTAT CHANDIGARH], the Tribunal held that corporate entities could not be treated as relatives under the statutory definition applicable to related-person valuation. It further held that Rule 9 was inapplicable because HEE did not sell the whole of its goods through MMPL, but also made supplies to Government departments and for export. [Paras 6, 7]

The impugned orders were set aside and all the appeals were allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal followed the binding decisions rendered in the appellants' own case and held that the alleged related-person valuation and invocation of Rule 9 were unsustainable. The appeals were allowed with consequential relief in accordance with law.

Revised return after detection of unaccounted stock - Equal addition for purchase and sales suppression - Penalty for wilful suppression of turnover

Taxability of suppressed purchases and consequential sales estimated from unaccounted gold and silver stock, notwithstanding disclosure through a revised return filed after income-tax inspection - HELD THAT: - In the Jayalakshmi Oil Mills case [2012 (2) TMI 450 - MADRAS HIGH COURT] and relied by the trader, the Court upheld the levy of additional tax based on account of stock variation and on the basis of recovered slips. However, the Court deleted the equal addition made on the estimation for probable suppression, since the equal addition was only based on estimate that too probable suppression. It is only a guesswork. There is no material for making equal amount for probable suppression. A similar view taken by another Division Bench of this Court in S.R.S. Industries [2010 (1) TMI 1132 - MADRAS HIGH COURT].

In the Nokia case [2014 (12) TMI 954 - MADRAS HIGH COURT], the disclosure was before the audit inspection. Contrarily, in the case in hand, the disclosure was much after the Income Tax official inspection. The non-disclosure of purchases and the value of the unaccounted stocks were not on any guesswork, but based on materials collected during the Income Tax inspection and the revised return filed by the trader.

A revised return filed after inspection cannot shield a dealer from the consequences of suppressed turnover. Payment of tax on the revised disclosure may justify mitigation of an equal addition, but the dealer must establish that the failure to maintain true accounts was neither wilful nor intentional. The detected stock differences were founded on inspection materials and remained unreconciled even after the revised return; the Tribunal had independently reassessed the facts and restricted the equal additions to 10 per cent. [Paras 17, 18, 19, 20]

The findings of purchase suppression, consequential sales suppression and the reduced estimated additions were sustained.

Validity of penalty for suppression of turnover where the dealer failed to make a full and true disclosure even after inspection - HELD THAT: - The authorities had determined suppression on the basis of the best judgment assessment, and the dealer failed to justify the omissions. The statutory explanation prescribed penalty with reference to the suppressed turnover; on the established facts, no violation of the Act was found in its application. [Paras 19, 20]

The levy of penalty was upheld.

Final Conclusion: The revision was dismissed. The assessment of suppressed turnover, the reduced estimated additions and the penalty were sustained.

Suo motu revision - limitation for initiation and completion - Works contract turnover - deduction of labour and like charges - erroneous and prejudicial order - Scope of discharge of the burden of proof - Principle of ejusdem generis

Limitation for initiation and completion of suo motu revision under Section 64 of the Karnataka Value Added Tax Act - HELD THAT: - It is a settled position of law that where no limitation is prescribed for the initiation or conclusion of proceedings, such proceedings cannot be kept pending indefinitely to the detriment of the taxpayer and contrary to the scheme of the Act. The Hon’ble Supreme Court in State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd. [2007 (10) TMI 300 - SUPREME COURT], approved and prescribed a limitation in such situations.

Calling for records by the revisional authority within four years from the order sought to be revised constitutes valid initiation of revision. Although the statute does not expressly prescribe the period for conclusion after such initiation, the power cannot remain unfettered; having regard to the statutory scheme requiring preservation of accounts for five years, the final revisional order must be made within five years from the order sought to be revised, namely, within one year after expiry of the initial four-year period. [Paras 14, 15, 17, 18, 19]

The revision orders in STA Nos. 03/2023, 11/2022 and 12/2022 were within time; the orders in STA Nos. 07/2025, 05/2025 and 02/2025, having been passed beyond five years, were barred by limitation and set aside.

Input tax credit - burden to prove genuine purchases - Input tax credit claimed on purchases from an alleged non-existent or de-registered selling dealer. - HELD THAT: - The manner and scope of discharge of the burden of proof and the requirements under Section 70 of the Karnataka Value Added Tax Act, 2003 have been considered by the Hon’ble Supreme Court in State of Karnataka v. Ecom Gill Coffee Trading (P) Ltd [2023 (3) TMI 533 - SUPREME COURT].

The tests prescribed by the Hon’ble Supreme Court for determining the eligibility of input tax credit, this Court is of the view that the matter requires reconsideration by the SMR Authority. It is pertinent to note that the order passed by the SMR Authority is much prior to the pronouncement of the judgment of the Hon’ble Supreme Court in the case of Ecom Gill (supra). Since the Hon’ble Supreme Court has indicated the various facets, procedures, and modes of discharging the burden of proving the genuineness of the transactions, the assessee also deserves an opportunity to satisfy the said requirements.

The revisional order was set aside and the matter remitted for fresh adjudication under the principles in Ecom Gill; the validity of the initiation of revision was sustained, while the merits of the input tax credit claim were left open.

Works contract turnover - deduction of labour and like charges - Security, transportation and fuel charges - HELD THAT: - As per clause (l) of sub-Rule (2) to Rule 3 of the Rules, all amounts actually expended towards labour charges and other like charges not involving any transfer of property in goods, in connection with the execution of a works contract, are liable to be deducted from the total turnover for the purpose of determining the taxable turnover. The expression “other like charges” has to be read ejusdem generis with “labour charges”. Applying the principle of ejusdem generis, the expression “other like charges” must be assigned the same or similar meaning as that attributed to “labour charges”. Labour charges are nothing but charges incurred towards the manpower employed in the execution of the work.

Security charges, being manpower charges incurred in executing the works contract, fall within 'other like charges' read ejusdem generis with labour charges. Transportation expenditure relating to goods not involving transfer of property in the execution of the contract is deductible. Fuel expenditure incurred in executing the contract is also covered by the inclusive scope of labour and like charges under the relevant Explanation.

Upon examination of the books of accounts and other supporting documents, and by applying the principles laid down by the Hon’ble Supreme Court in Gannon Dunkerley and Co.[1992 (11) TMI 254 - SUPREME COURT], the Assessing Authority allowed the deductions.

The denial of deductions for these expenditure heads in revision was held unsustainable.

Suo motu revision - erroneous and prejudicial order - Additional deduction claim in revision - HELD THAT: - Section 64 of the Act can be invoked only when the order sought to be revised is both erroneous and prejudicial to the interests of the Revenue. These are the twin conditions required to be satisfied. The absence of either of these conditions would invalidate the exercise of jurisdiction under Section 64 of the Act. For an order to be regarded as erroneous, the view taken by the Assessing Authority must be impermissible in law. As a consequence of such erroneous view, there should also be a loss of revenue so as to render the order prejudicial to the interests of the Revenue. Mere loss of revenue, by itself, is not a sufficient ground to invoke Section 64 of the Act.

It is also a settled position of law that where the view taken by the Assessing Authority is one of the possible views, the mere existence of another possible view, or the fact that the Revisional Authority holds a different view, would not justify the exercise of suo motu revisional power.

Since the deductions had been allowed after examination of accounts and supporting material, the revision was founded only on a change of opinion. Conversely, suo motu revision is not for the assessee's benefit and cannot reduce its tax liability by entertaining a new deduction claim not made in reassessment. [Paras 19]

The revision orders in STA Nos. 11/2022 and 12/2022 were held to suffer from jurisdictional error and were set aside to the indicated extent; the additional labour-charge claim was not allowable in revision.

Final Conclusion: The appeals were partly allowed. Revision proceedings initiated by timely calling for records were sustained only where the final order was made within five years, while time-barred revision orders were set aside; the input tax credit matter was remitted for fresh consideration and the works-contract deductions were restored to the extent indicated.