TaxTMI Updates e-Newsletter
Jul 21,2026

Violation of principles of natural justice in GST adjudication - Condonation of delay in GST appeal - Sufficient Cause for Delay - Pre-deposit - Stay of Recovery Proceedings

Validity of dismissal of the GST appeal as time-barred where the show-cause notice had been uploaded only under the 'Additional notice and orders' tab and the recovery proceedings related to periods different from that covered by the appellate order - HELD THAT: - The Court found that uploading the show-cause notice only under the specified portal tab prevented the petitioner from replying and constituted a violation of the principles of natural justice. It also noted the material discrepancy between the Financial Year covered by the appellate order and those mentioned in the recovery/garnishee proceedings, warranting interference and a further opportunity. [Paras 6, 7]

The appellate order was quashed and the appeal was directed to be entertained and decided on merits; all merits were left open.

Condonation of delay in GST appeal - HELD THAT: - The Court held that the reasons stated in the writ petition sufficiently explained the delay and were required to be considered by the appellate authority while deciding the appeal on merits. [Paras 8]

The appeal was directed to be entertained without requiring any further pre-deposit.

Final Conclusion: The writ petition was disposed of by setting aside the time-bar dismissal and directing adjudication of the GST appeal on merits within the stipulated period.

Non-compliance with the standard operating procedure (SOP) - Statutory Liability for Late Fee - HELD THAT:- The writ appeal was dismissed, with liberty to the appellant to pursue the statutory appeal within the period granted.

Maintainability of advance ruling on completed transactions - Scope of advance ruling jurisdiction - Transitional Taxation - Double Taxation - Prospective or Ongoing Supply - Maintainability of an advance-ruling application concerning amounts received under an arbitral award after completion of the underlying pre-GST contractual works and adoption of a tax position in statutory returns. - HELD THAT: - The institution of Advance Ruling under Chapter XVII is a distinct statutory mechanism conceived to provide certainty regarding the tax implications of transactions before disputes arise. It is intended to facilitate voluntary compliance by enabling an applicant to obtain clarity regarding the GST implications of a proposed transaction or a transaction in the course of being undertaken.

The facts of the present case reveal that the contractual work stood completed prior to 01.07.2017. The disputes arising out of the contract were subsequently referred to arbitration and culminated in an arbitral award passed in the year 2023. Pursuant to the award, the applicant received the awarded amounts and thereafter furnished the relevant return in Form GSTR-3B, consciously treating the receipts as non-taxable on the ground that they represented compensation and not consideration for a supply.

An advance ruling under Chapter XVII is confined to supplies being undertaken or proposed to be undertaken and is intended to provide advance certainty. The categories of questions specified in section 97 do not enlarge that jurisdictional condition. Where the applicant had completed the contractual work, received the awarded amounts, formed and implemented its view of non-taxability by filing its return, the application sought affirmation of an already adopted tax position rather than advance certainty. Further, characterisation of the individual award components required detailed examination of contractual terms, arbitral pleadings and award, accounts, returns and supporting evidence, which lies within the scrutiny and adjudicatory jurisdiction of the proper officer, not the advance-ruling mechanism. The appellate authority could examine this foundational question notwithstanding admission of the application by the original authority. [Paras 24, 25, 26, 28, 29]

The application ought not to have been entertained; the advance ruling was therefore unsustainable.

Final Conclusion: The impugned advance ruling was set aside because the application concerning completed transactions and receipts already treated by the applicant as non-taxable was not maintainable under the advance-ruling scheme. No opinion was expressed on the taxability of the arbitral-award amounts, which may be independently examined by the jurisdictional proper officer in accordance with law.

Validity of reopening of assessment - reasons given for proposed reopening - excessive share premium - delay in filling SLP

As decided by HC reasons given for proposed reopening u/s 148 in these petitions are almost similar to the reasons recorded in [2024 (2) TMI 166 - BOMBAY HIGH COURT], therefore, all notices and orders impugned in these petitions are quashed and set aside.

HELD THAT:- Though there is delay of 217 days in filing this Special Leave Petition, we nevertheless have heard learned counsel for the petitioners on the merits of the case also.

No merit in the Special Leave Petition. Hence, the Special Leave Petition is dismissed both on the ground of delay as well as on merits.

Period of limitation to issue notice for reopening of assessment - whether notice is issued beyond the period of limitation provided for in Section 149? - applicability of Section 3 of TOLA - exclusion of Covid period - HC [2024 (3) TMI 1496 - BOMBAY HIGH COURT] set aside orders passed u/s 148A(d) and the notices issued u/s 148

HELD THAT:- The Special Leave Petition was dismissed on the ground of unexplained delay as well as on merits.

Time-barred reassessment notices under the pre 2021 and post 2021 regimes - Section 3(1) of TOLA - executive extension of limitation - repeal and substitution of reassessment provisions by the Finance Act, 2021 without savings - proviso to the substituted Section 149(1) not operating as a savings clause - ultra vires notifications issued under TOLA (Notification No. 20/2021 and No. 38/2021) - treatment/conversion of old Section 148 notices as notices under newly inserted Section 148A(b) -

Inordinate delay in filing the Special Leave Petitions - HELD THAT:- Special Leave Petitions were dismissed on the ground of unexplained delay.

Revision of search assessment u/s 263 - Principal Commissioner's revisionary jurisdiction over an assessment completed pursuant to search for an unabated assessment year

Exercise of revisional jurisdiction u/s 263 over a search assessment for an unabated assessment year where the AO made no addition beyond income arising from incriminating material - HELD THAT: - The Court applied Abhisar Buildwell (P) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] under which completed or unabated assessments cannot be reopened in a search assessment unless incriminating material concerning the relevant assessment year is found. Since the Assessing Officer had adopted the correct view, the Principal Commissioner could not invoke section 263 to disturb the assessment. [Paras 8, 9]

No substantial question of law arose; the Revenue's appeals were dismissed.

Final Conclusion: The appeals were dismissed, the Court holding that the completed unabated search assessments, correctly confined to incriminating material, could not be revised under section 263.

Assessment Orders passed u/s 172(4) assessments were done in relation to four vessels, namely, “Maersk Kate”, “Maersk Kara”, “Maersk Kiera” and “Maersk Adriatic” - as argued once the Petitioner had opted for being assessed on its total income on an annual basis by invoking the option available to it under Section 172(7), AO could not have proceeded with assessments of the four different vessels mentioned above u/s 172(4) and pass separate Assessment Orders.

HELD THAT:- We find that arguable questions are raised which require a further and deeper consideration. In these circumstances, we issue Rule. Revenue, waives service.

As far as interim relief is concerned, at-least prima facie, we find substance in the arguments canvassed on behalf of the Petitioner-Assessee.On the one hand, you have the Assessment Orders passed under Section 172(4), whereas on the other, you have a return which is processed under Section 143(1) which has resulted in a refund to the Petitioner and which has now become final.

Rule was issued and recovery pursuant to the assessments under Section 172(4) was stayed pending final disposal of the writ petition.

Depreciation on vehicles under operating lease - Ownership of leased vehicles notwithstanding registration in lessee's name - Failure to decide a ground of appeal

Depreciation on vehicles under operating lease - Ownership of leased vehicles notwithstanding registration in lessee's name - Entitlement to depreciation on vehicles given on operating lease where the registration certificate stood in the name of the customer using the vehicles - HELD THAT: - The Master Lease Agreements established that the assessee was the absolute owner of the leased vehicles and that the customers had only a right of use.

Applying I.C.D.S. Ltd V/S Commissioner of Income Tax & Anr.[2013 (1) TMI 344 - SUPREME COURT] the Court held that registration of the vehicles in the lessees' names did not displace the lessor's ownership; nor did use by the lessees disentitle the lessor to depreciation. [Paras 9, 10]

The Revenue's proposed questions concerning depreciation did not give rise to any substantial question of law and were not entertained.

Failure to decide a ground of appeal - Deferred maintenance charges - Revenue's ground concerning disallowance of deferred maintenance charges, which had been raised before the Tribunal but remained undecided - HELD THAT: - The Court found that, although the Revenue had specifically raised the ground before the Tribunal, the Tribunal had not rendered any finding on it and had decided only the depreciation issue. The omission required fresh determination of that limited ground, without adjudication by the Court on its merits. [Paras 11, 12]

The matter was remanded to the Tribunal solely to determine the additional question relating to deferred maintenance charges.

Final Conclusion: The appeal was disposed of - the challenge to allowance of depreciation on vehicles under operating lease was not entertained, while the undecided ground concerning deferred maintenance charges was remanded to the Tribunal for limited consideration.

Delay challenging to the Settlement Commission's orders - writ petition was filed seven years after the settlement order and two years after the rectification order - HELD THAT:- Pertinently, the order was passed in presence of both the parties therefore it cannot be presumed that petitioners were not aware of the outcome of the applications moved by the respondents No. 2 to 6 before the Settlement Commission. They took five years to move application for rectification and ultimately, said application was also rejected.

In para-7, it is stated that there is no delay in approaching this Court but the order dated 31.10.2012 has been challenged after seven years whereas the order dated 3.2.2017 has been challenged after two years. Thus, in opinion of this Court, petitioners herein failed to explain the delay properly.

The writ petition challenging the Settlement Commission's orders was dismissed for unexplained delay and absence of grounds for interference.

Delay in giving effect to appellate orders and pendency of rectification and appellate proceedings

HELD THAT:- We note that Orders have been passed by the CIT(A) in July / August 2025 for the Assessment Years 2014-15 to 2016-17 and almost a year has passed but effect has not been given to these Orders.

Appeal of the Petitioner before the CIT(A) for Assessment Year 2009-10 filed on 18th March 2023 and the Application dated 10th March 2023 before Respondent No. 1 are also pending for a long time.

Accordingly, we direct Respondent No. 1 to pass Orders giving effect to the CIT(A)’s Orders for Assessment Years 2014-15 to 2016-17 within a period of three weeks from the date of this Order being uploaded on the High Court website. Respondent No. 1 will take the Applications dated 26th June 2026 into account when passing Orders giving effect to the CIT(A)’s Orders for Assessment Years 2014-15 to 2016-17.

For Assessment Year 2009-10 we are informed that CIT(A) / NFAC (National Faceless Assessment Centre) is not a party to the present Petition. Notwithstanding the aforesaid, we direct the CIT(A)/NFAC to decide the Appeal of the Petitioner, filed on 18th March 2023, as expeditiously as possible and preferably within a period of eight weeks from the date of this Order being uploaded on the High Court website.

Interest on delayed payment of statutory refund interest - Rectification of short-granted refund interest

Rectification of short-granted refund interest - Entitlement to the outstanding interest under Section 244A after acceptance of the rectification application - HELD THAT: - The Revenue did not dispute that the assessee's grievance regarding short computation of interest under Section 244A was correct; the failure to give effect to the accepted rectification was attributed to the system. The computation in the second rectification application was therefore required to be accepted. [Paras 7]

The Revenue was directed to rectify the computation and pay the outstanding statutory interest.

Interest on delayed payment of statutory refund interest - Entitlement to interest or compensation for delayed payment of the admitted interest under Section 244A - HELD THAT: - A refund due, comprising tax and accrued statutory interest, is a debt owed by the Revenue. Delayed payment of the admitted interest, where the delay was not attributable to the assessee, warrants interest or compensation; this does not amount to impermissible compounding of interest but compensates for undue retention of the amount payable. [Paras 8, 9]

Interest or compensation at 6% per annum was directed on the unpaid Section 244A interest from 19th April 2022 until payment.

Final Conclusion: The writ petition was allowed. The Revenue was directed to pay the admitted outstanding interest under Section 244A together with interest or compensation at 6% per annum for the period of delayed payment.

Adjustment of refund against stayed tax demand - Binding effect of unchallenged stay order

Whether refund determined for one assessment year could be adjusted against an earlier tax demand that stood stayed by an unchallenged interim stay order? - HELD THAT: - The demand for assessment year 2022-23 had been stayed, subject to specified instalment deposits, by an order which the Revenue neither challenged nor displaced. The stay order had also been uploaded on the ITBA Portal by the jurisdictional Assessing Officer. Consequently, adjustment of the refund under Section 245 against the stayed demand was contrary to the subsisting stay order and could not be sustained. [Paras 6, 7, 8, 9]

The adjustment was quashed, and the adjusted refund was directed to be refunded forthwith with applicable interest in accordance with law.

Final Conclusion: The writ petition was allowed to the extent that the refund adjustment against the stayed demand was held unsustainable. The Revenue was directed to restore the refund with applicable interest.

Receipts from ancillary services connected with software licensing - taxable as fees for technical services -income deemed to accrue in India under section 9(1)(vi) - HELD THAT:-The order impugned herein was followed by the Tribunal in the case of respondent itself and the said order passed by the Tribunal for the Assessment Year 2015-16 was the subject matter [2025 (10) TMI 1439 - KARNATAKA HIGH COURT]. The said ITA was disposed of placing reliance on the decision of Hon'ble Apex Court in Engineering Analysis Centre for Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]. Further, it is brought to our notice that the review filed against the Engineering Analysis Centre for Excellence Private Limited (supra) was also dismissed by the Hon'ble Apex Court [2026 (5) TMI 1076 - SC ORDER] vide order dated 11.05.2026.

No substantial question of law arises.

Tax deduction at source on interest earned from compensation deposits - TDS u/s 194A - Interest on Motor Accidents Claims Tribunal compensation

Applicability of the exemption from tax deduction at source to interest accrued on bank fixed deposits made from compensation, including interest, awarded by the Motor Accidents Claims Tribunal - HELD THAT: - What is contemplated under Section 194A(3)(ix) and (ixa) is the amount credited as interest on the compensation amount awarded by the Motor Accidents Claims Tribunal. As far as the interest accrued on the deposit made with the respondent Bank is concerned, the same would not come within the category of the income of interest referred to in Sub-clause(ix) and (ixa) of Section 194A(3) of the Act, as it is an income on the deposit and as it is not an interest on the amount awarded by the Motor Accidents Claims Tribunal.

The exemption applies only to interest credited on the compensation amount awarded by the Motor Accidents Claims Tribunal. Once the compensation amount, inclusive of the interest awarded by the Tribunal, is deposited with the bank, interest subsequently accruing on that deposit is income from the deposit and constitutes other income; it does not retain the character of interest on compensation awarded by the Tribunal.

The tax deduction at source on interest accrued on the bank deposits was not covered by the claimed exemption. The petitioners may pursue statutory remedies for refund, if available, after complying with the requisite requirements.

Final Conclusion: The writ petition was dismissed, without prejudice to the petitioners' right to seek refund through the appropriate statutory remedy.

Penalty u/s 271B - failure to obtain tax audit - reasonable cause based on bona fide belief of mutuality

Levy of penalty for failure to obtain tax audit in respect of liquor supplied by a members' sports and recreation club to its members - HELD THAT: - Where the penalty rested solely on treating receipts from supply of liquor to members as business receipts, the assessee's bona fide belief that its mutual activities did not attract the tax-audit requirement constituted reasonable cause. Following Koramangala Club [2016 (3) TMI 286 - KARNATAKA HIGH COURT] the Tribunal held that such bona fide belief attracted the protection of section 273B. [Paras 7, 8]

The penalty under section 271B was held unsustainable and was directed to be deleted.

Final Conclusion: The appeal was allowed and the penalty for failure to obtain the tax-audit report was deleted.

Charitable exemption - benefit to specified person - Refund of charitable donation - violation of Section 13(1)(c)(ii) of the Act, r.w.s. 13(3)(b) - Return of a part of CSR funds by a charitable trust to its donor - whether it constituted application of income or property for the benefit of a specified person so as to deny charitable exemption? -

HELD THAT: - The Tribunal found no evidence that the donor derived any benefit from the refund. The amount was immediately passed on to another charitable organisation conducting rural education programmes; consequently, the refund did not attract the prohibition against benefit to a specified person. [Paras 3]

The finding allowing the claimed charitable exemption was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The refund to the donor, without evidence of any benefit to it and where the amount was immediately applied through another charitable organisation, did not warrant denial of charitable exemption.

Unexplained money u/s 69A - cash forming part of disclosed property sale consideration - Double addition of disclosed income

Addition as unexplained money in respect of cash intercepted while the assessee was returning after sale of immovable property - HELD THAT: - The returned income already included the cash component of the sale consideration, and its separate addition resulted in double addition. The sale deed, registered on the date of interception, and the banking receipt of the balance consideration supported the explanation that the intercepted cash represented the remaining part of the disclosed sale consideration. The explanation was plausible and no part of the cash could be treated as unexplained money. [Paras 7]

The addition u/s 69A was deleted.

Final Conclusion: The appeal was allowed and the addition for unexplained money was deleted.

Review Jurisdiction - error apparent on the face of the record or any other ground - impugned order in [2025 (5) TMI 1051 - MADRAS HIGH COURT] held that, Review jurisdiction is confined to correcting an error apparent on the face of the record and cannot be used to rehear issues already decided or to reargue the merits as an appeal in disguise. The review applications merely sought reconsideration of questions previously examined and rejected, and no manifest error in the earlier judgment was shown. - HELD THAT:- The Special Leave Petitions were dismissed, the Court declining to interfere with the impugned order(s) [2025 (5) TMI 1051 - MADRAS HIGH COURT]; [2024 (12) TMI 479 - MADRAS HIGH COURT] under Article 136 of the Constitution of India.

Whether the Authority for Advance Rulings, Mumbai was right in ruling that Tello Drone merits classification under subheading 95030010 of the first schedule to the Customs Tariff Act, 1975 and would attract basic Customs duty @ 60% adv. and IGST @ 18% ? - HELD THAT:- The Advance Ruling Order was passed on 10th May 2022 and three years from the said date expired on 9th May 2025 [as per Section 28J as it stood then]. Considering the statement of the Respondent that it has not taken any advantage of the Order passed by the CAAR, coupled with the fact that now the said Ruling is no longer in force.

The appeal was disposed of as infructuous because the advance ruling had ceased to be in force; the question of law on classification was kept open.

Alternative statutory remedy in customs appeals - Condonation of delay-sufficient cause - Violation of Natural Justice - Lack of Jurisdiction

Maintainability of a writ petition challenging the Tribunal's refusal to condone delay where a statutory appeal is available under the Customs Act - HELD THAT: - It is well settled by the Hon’ble Supreme Court in catena of judgments that alternate statutory remedy is not an absolute bar to invoke writ jurisdiction under Article 226 of the Constitution of India. In exceptional case, writ can be issued, if there is breach of fundamental right, violation of natural justice principle, challenge to the vires of the provisions of the statute or delegated legislation or excess of jurisdiction.

The existence of an alternative statutory remedy does not absolutely bar writ jurisdiction, but its exercise is confined to exceptional cases involving breach of fundamental rights, violation of natural justice, challenge to vires, or excess of jurisdiction. None of those exceptions was established from the impugned order; the statutory appellate machinery could not be bypassed. [Paras 16, 17, 19]

The writ petition was held not maintainable in the absence of any exceptional ground warranting exercise of writ jurisdiction.

Validity of the Tribunal's refusal to condone delay in filing the customs appeal against the classification of imported herbal tea cigarettes - HELD THAT: - Condonation of delay is a question of fact and cannot be granted casually in fiscal matters. Having consciously pursued a writ petition for release of the goods rather than filing the statutory appeal in time, the petitioner was required to establish sufficient cause for the delayed appeal; the explanation furnished was not satisfactory. [Paras 17, 19]

The refusal to condone delay was sustained.

Final Conclusion: The writ petition was dismissed, as no exceptional circumstance justified bypassing the statutory appellate remedy and no sufficient cause was shown for the delayed appeal.

Binding effect of detention-cum-waiver certificate - Waiver of detention charges on release of imported perishable goods - Interim release of imported in-shell walnuts after issuance of an unchallenged detention-cum-waiver certificate binding upon the shipping line and cargo stakeholders. - HELD THAT: - The certificate expressly made its directions binding on the concerned cargo stakeholders, including shipping lines and custodians, and its validity was not challenged. The Customs Authorities also accepted that it bound the shipping line for the entire period for which the goods were held. Following Supreme Industries Ltd. [2021 (3) TMI 443 - BOMBAY HIGH COURT], the Court held prima facie that a validly issued certificate under the 2018 Regulations must be complied with; retention of goods and levy of detention charges after its issuance would be illegal. The perishable nature of the goods and the resulting escalation of charges warranted conditional interim release, without examining the parties' underlying claims or counterclaims. [Paras 19, 20, 21, 22, 23]

Subject to each petitioner furnishing the directed security deposit, the respondents were directed to release the subject goods; all claims, recoveries, rights and contentions were kept open for final adjudication, and no equities were created by the interim release.

Final Conclusion: The petitions were admitted and interim release of the perishable imported goods was directed upon the stipulated security deposits. The order was expressly prima facie and confined to interim relief.

Maintainability of writ petition despite alternative remedy where sampling authority is challenged - Statutory competence for sampling imported food articles - Concurrent sampling powers of FSSAI and Customs for distinct statutory purposes - Food Safety Compliance - Overriding Effect - Whether the sampling of the imported consignment of “roasted areca nuts” at Kolkata Port by any Officer other than Food Safety and Standards Authority of India (FSSAI) Authorized Officer is illegal and without jurisdiction ?

Maintainability of the writ petition challenging the statutory competence of the authority that sampled imported roasted areca nuts - HELD THAT: - The challenge concerned the jurisdiction and statutory authority of the officer who initiated sampling, and not merely the correctness of the laboratory findings. The availability of review under the Food Safety and Standards (Import) Regulations, 2017 could not bar writ jurisdiction where the proceedings were alleged to be without jurisdiction. Applying Whirlpool Corporation [1998 (10) TMI 510 - SUPREME COURT] and Harbanslal Sahnia [2002 (12) TMI 564 - SUPREME COURT], the Court held that the dispute raised a pure question of law concerning the interplay of the Food Safety and Standards Act, 2006 and the Customs Act, 1962. [Paras 38, 39, 41, 42]

The preliminary objection based on alternative remedy was rejected and the writ petition was entertained on merits.

Statutory competence for sampling imported food articles - Validity of laboratory report founded on unauthorised sampling - HELD THAT: - There is a conflict regarding the authority to draw samples of imported food articles like roasted Areca Nuts, between the Food Safety and Standard Act, 2006 (FSS Act) and the Customs Act, 1962. Both the Act operates in distinct legal fair meaning in as much as both authorities are the authorized to act within their respective statutory mandates.

Section 25 read with section 47(5) of the Food Safety and Standards Act, 2006 and regulation 13(1) of the Food Safety and Standards (Import) Regulations, 2017 vested the notified FSSAI Authorised Officer with exclusive authority for food-safety sampling at Kolkata Port. The notified materials established that FSSAI was the authorised officer for that port. A laboratory report founded upon sampling undertaken by an officer lacking statutory competence or contrary to the prescribed procedure could not sustain adverse civil consequences against the importer. [Paras 45, 56, 57, 58, 59]

Sampling by an officer other than the FSSAI Authorised Officer for food-safety purposes was held illegal, without jurisdiction and void; the test report founded on those samples was quashed, with fresh sampling directed through the FSSAI Authorised Officer.

Concurrent sampling powers of FSSAI and Customs for distinct statutory purposes - Overriding effect of food-safety regulation over customs action on food safety - HELD THAT: - The Court held that the overriding operation of section 89 of the Food Safety and Standards Act, 2006 is confined to food safety, standards and adulteration, without displacing the Customs statutory machinery for revenue protection and enforcement of import restrictions. Customs may draw separate samples under section 144 of the Customs Act for classification, valuation, duty liability, misdeclaration or trade-policy compliance, but cannot displace the FSSAI's statutory role in determining whether imported food is safe and edible. The Court referred to M/s Unik Traders Rep.[2025 (10) TMI 833 - MADRAS HIGH COURT] and NBG International Private Ltd.[2026 (3) TMI 1212 - BOMBAY HIGH COURT]. [Paras 47, 49, 52, 53, 57]

FSSAI retained exclusive authority over food-safety sampling and certification, while Customs retained independent sampling power solely for its revenue and classification functions.

Final Conclusion: The writ petitions were disposed of by quashing the test report based on unauthorised food-safety sampling and directing fresh sampling by the FSSAI Authorised Officer. Customs may independently sample the goods only for revenue, classification, valuation, misdeclaration or trade-policy purposes.

Restoration of appeal dismissed in default - Maintainability not determinable in restoration proceedings - Definition of “currency”

Scope of restoration proceedings - Recall of ex parte dismissal - HELD THAT: - In the instant case, learned counsel for the appellant-Department, though argued that the definition of “currency” includes foreign currency and therefore the initial order passed by the Tribunal dismissing the appeal holding it to be not maintainable was proper, legal and justified, in the opinion of this Bench, this aspect is yet to be considered by the Tribunal. This objection raised by the appellant-Department also would give room for the Tribunal to take a decision after hearing both the parties.

The restoration is only so far as giving an opportunity to the respondent before the Tribunal to argue his case on admission which includes “maintainability” part.

A restoration petition is confined to considering the genuine cause for a party's non-appearance when the appeal was dismissed in absentia. On recall of such dismissal, the appeal reverts to the stage at which it stood dismissed and must thereafter be heard and determined afresh. Restoration merely afforded the respondent an opportunity to address the appeal, including its maintainability, and caused no prejudice to the Department. [Paras 12, 13, 14]

The restoration of the appeal for rehearing was maintained.

Maintainability of appeal versus revision - Limits of restoration jurisdiction -HELD THAT: - The question whether the statutory remedy was an appeal or revision, including the contention concerning the treatment of foreign currency, required consideration after hearing both parties. The Tribunal could not decide that question while allowing restoration, since doing so would effectively review and replace its earlier dismissal order. Maintainability must first be decided in the restored appeal by a speaking order. [Paras 12, 13, 14, 15]

The finding that the appeal was maintainable before the Tribunal and not by revision was set aside; the question was left open for fresh determination by the Tribunal.

Final Conclusion: The appeal was disposed of by sustaining restoration of the respondent's appeal for rehearing, while setting aside the Tribunal's finding on maintainability. The Tribunal was directed to determine maintainability first by a speaking order, without any expression of opinion on the merits.

Pre-cognizance hearing on complaint - Applicability of Bharatiya Nagarik Suraksha Sanhita to SEBI prosecutions - Special statute and general criminal procedure - Taking cognizance of an offence under the SEBI Act on the Board's complaint without affording the proposed accused an opportunity of hearing under the first proviso to Section 223(1) of the BNSS, 2023 - HELD THAT: - The decision in the case of State of W.B. Vs. Bejoy Kumar Bose [1977 (12) TMI 153 - SUPREME COURT], which held that, no valid objection could be taken against the Special court taking cognizance on the written complaint without complying with the provisions of Section 200 CrPC, also turned upon the special provisions contained in the said statute.

In the case of Ashok [2025 (4) TMI 1841 - KARNATAKA HIGH COURT], the Supreme Court observed that, it was in agreement with the view of the Karnataka High Court that, the Act, 1881 is a special enactment, and there is no need for the Magistrate to issue summons to the accused before taking cognizance of the complaint. Thus, there was no requirement to issue summons to the accused in terms of Section 223 of the BNSS, 2023 i.e. at a pre-cognizance stage.

Section 46 of the PML Act, 2002 makes the provisions of the Code, 1973 applicable to the proceedings before the Special Court, save as otherwise provided in that Act. Section 65 of the PML Act, 2002 makes the provisions of the Code, 1973 applicable to the proceedings under the PML Act, 2002 in so far as they are not inconsistent with the provisions of the PML Act, 2002.

The BNSS applies to offences under a special enactment unless that enactment prescribes a special or inconsistent procedure. Section 26 of the SEBI Act restricts the mode of initiation to a complaint by the Board but does not regulate the manner of taking cognizance. Sections 26-A and 26-D likewise do not exclude the BNSS procedure; deeming the Special Court to be a Court of Session does not displace the mandatory pre-cognizance hearing. In the absence of a contrary provision in the SEBI Act, the first proviso to Section 223(1), which confers a substantive and mandatory right of hearing before cognizance on a complaint, applies. The contrary authorities concerning special statutes having distinct overriding provisions and cognizance procedures were held inapplicable. [Paras 32, 33, 35, 51, 52]

The cognizance order and consequential process were quashed for non-compliance with the mandatory pre-cognizance hearing requirement, and the Special Court was directed to hear the accused and pass a fresh order in accordance with law; the merits were left open.

Final Conclusion: The writ petition was allowed. The cognizance and process order was quashed solely for failure to afford the accused the mandatory hearing under the first proviso to Section 223(1) of the BNSS, 2023, with fresh consideration directed after such hearing.

Binding effect of approved resolution plan - Extinguishment of uncrystallised sub-judice operational claims - Clean slate principle in corporate insolvency resolution

Finality of approved resolution plan - Challenge to resolution plan on allegations of fraud - The approved Resolution Plan could not be reopened on allegations that the treatment of the operational creditor's claim was vitiated by manipulation or fraud. - HELD THAT: - The Final List of Operational Creditors was never challenged by the operational creditor. The intervenor's challenge to the treatment of its claim under the Plan had been dismissed as withdrawn and that order attained finality. The allegation of fraud was held baseless, since the treatment prescribed by the approved Plan was determinative and binding; moreover, no proceedings seeking recall of the approval order had been instituted. [Paras 52, 53]

The Resolution Plan remained final and binding upon all parties.

Extinguishment of sub-judice operational claims - Notional admission of disputed claims - Clean slate principle - Pending civil and arbitral claims of operational creditors, admitted at a notional value in the Final List of Creditors, survived approval of the Resolution Plan. - HELD THAT: - The Final List quantified the disputed claims at a notional value of one and did not retain the earlier stipulation that liability would abide by adjudication. Read as a whole, the Plan confined pro-rata payment from the operational creditors' settlement amount to crystallised and approved claims, while its provisions expressly required pending proceedings and pre-effective-date liabilities of operational creditors to stand withdrawn, abated, settled or extinguished. Regulation 12(2), as applicable, required operational liabilities to be crystallised and quantified by approval of the Plan by the Committee of Creditors. There was no ambiguity warranting contra proferentem or any reservation mechanism for unquantified claims; permitting such claims to revive would defeat the clean slate and fresh start underlying the Code. [Paras 57, 58, 59, 60, 61]

Only crystallised claims were payable on a pro-rata basis; the pending civil suit and arbitral proceedings stood abated, waived, extinguished or withdrawn.

Final Conclusion: The appeals were allowed. The orders permitting continuation of the recovery suit were set aside, and the pending civil suit and arbitral proceedings concerning the uncrystallised operational claims were dismissed.

Summary order. Civil appeal dismissed; accompanying interlocutory application(s) disposed of.

Locus standi of suspended director-personal guarantor - Belated challenge to corporate insolvency resolution process - Valuation by registered valuers - Commercial wisdom of committee of creditors - Seeking re-valuation and nullification of CIRP - non-compliance with statutory requirements or grounds for appellate interference - Denial of opportunities to the Appellant to submit Resolution Plan -Delay and Laches - Time-Bound Insolvency Resolution - Limited Judicial Review - Material Irregularity - Resolution Plan Compliance - Registered Valuation

Person aggrieved under insolvency appeal - Whether the Appellant as the Suspended Director of the Corporate Debtor, constitutes a "person aggrieved" within the meaning of Section 61(1) of the Code and thereby has the locus standi to file these Appeals ? - HELD THAT: - A personal guarantor retains a direct legal and financial stake in the CIRP outcome because personal assets remain exposed to enforcement by the financial creditor. Such suspended Director is consequently a person aggrieved for purposes of an appeal under the Code. The Tribunal followed Vijay Kumar Jain v. Standard Chartered Bank & nr. [2019 (2) TMI 97 - SUPREME COURT]. [Paras 94, 95, 96]

The appeals were maintainable at the instance of the Appellant.

Delay and laches in challenging resolution process - Time-bound insolvency resolution - HELD THAT: - The Appellant had notice of the CoC proceedings, knew that resolution plans were under consideration, and remained inactive despite knowledge that the plan-approval application was pending and orders had been reserved. The Code requires objections to be raised promptly at the appropriate CIRP stage; a belated challenge seeking to unravel the entire process defeats its time-bound framework. The Tribunal applied the continuum between reserving and pronouncing judgment stated in Loramitra Rath (Suspended director of Maa Durga Commotrade Private Limited) versus JM Financial Asset Reconstruction Co. Limited and Anr. [2023 (11) TMI 107 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB], and the time-bound CIRP principle in Committee of Creditors of Essar Steel India Ltd. [2019 (11) TMI 731 - SUPREME COURT] has emphasised that the IBC is a time-bound framework and that every participant in the CIRP process including the promoters and directors of the corporate debtor are bound to raise objections at the appropriate stage. Belated challenges that seek to unravel an entire CIRP at an advanced stage cannot ordinarily be entertained, as they fundamentally undermine the integrity and object of the Code.

The rejection of the belated application was upheld and the first appeal failed on this ground.

Material irregularity by resolution professional - Procedural lapse in circulation of committee of creditors minutes - HELD THAT: - The Appellant produced no specific, contemporaneous and cogent evidence supporting the allegations. Non-supply of the seventh CoC minutes, though a lapse and despite the Appellant's entitlement to receive them, had been treated by IBBI as procedural rather than material and that determination had attained finality. The Appellant was not a CoC member, did not attend meetings after the first meeting, and had not complied with the CIRP requirements relevant to receiving confidential valuation material. The limited appellate jurisdiction does not permit a roving enquiry into unsupported allegations. [Paras 111, 112, 113, 115, 116]

No contravention of the Code or material irregularity by the Resolution Professional was established.

Revaluation of corporate debtor's assets - Post-commencement valuation by registered valuers - HELD THAT: - Only valuations undertaken after CIRP commencement by IBBI-registered valuers in accordance with the CIRP Regulations are relevant to the CoC's decision. Valuation is an expert exercise which guides, but does not bind, the CoC; the CoC may approve a plan even below liquidation value. Two registered valuers had been appointed in accordance with the statutory framework, their valuations were accepted by the CoC, and no procedural defect in that process was shown. Earlier valuations and the Appellant's own valuation could not displace the accepted CIRP valuations. The Tribunal followed Madhukar Shetty vs Bank of Baroda & Anr.[2024 (7) TMI 196 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB], Praful Satra versus Vaishali Patrikar & Anr. [2025 (9) TMI 484 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI (LB)], Maharashtra Seamless Limited [2020 (1) TMI 903 - SUPREME COURT], Ramkrishna Forgings Limited[2023 (11) TMI 910 - SUPREME COURT], and M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr. [2023 (5) TMI 344 - SUPREME COURT]. [Paras 127, 128, 130, 131, 132]

The request for revaluation was rejected.

Submission of resolution plan under prescribed process - Informal investor commitment letter - HELD THAT: - It is noted that the Appellant never submitted any Expression of Interest despite claiming benefits available to Micro, Small and Medium Enterprises (“MSMEs”). It is contended that if the Appellant genuinely intended to revive the Corporate Debtor, the Appellant could have participated in the CIRP by submitting an EOI and thereafter filing a Resolution Plan. However, the Appellant deliberately abstained from the process and chose to challenge the same only after approval of the Resolution Plan by the CoC with 100% voting share.

The scheme of the Code with respect to submission of resolution plans is governed by Section 25(2)(h) of the Code read with Regulation 36A and Form G of the CIRP Regulations. On the facts, the Appellant has not established that he or any investor connected to him submitted any resolution plan. Further, even if an eligible investor was in the background, a mere commitment letter from an investor does not constitute a resolution plan in the prescribed form. An investor commitment letter however genuine cannot substitute for compliance with the statutory requirements of the Code. The RP and the CoC were under no legal obligation to entertain informal expressions of willingness as resolution plans. The Code requires that a resolution plan be in the prescribed form be submitted within the timelines prescribed in Form G, and comply with all requirements of Section 30(1) and (2) of the code.

An investor's commitment letter or informal willingness to offer a higher amount is not a resolution plan and cannot substitute compliance with the Code and CIRP Regulations. The Resolution Professional and the CoC were under no obligation to entertain such an informal proposal. The Tribunal applied Ebix Singapore Pvt. Ltd.[2021 (9) TMI 672 - SUPREME COURT]. [Paras 135, 136, 137, 138, 139]

The challenge based on alleged denial of an opportunity to submit a plan failed.

Judicial review of approved resolution plan - Commercial wisdom of committee of creditors - HELD THAT: - Section 61(3) of the Code specifically provides that an Appeal under Section 61(1) shall not lie except on the grounds that the order of the Adjudicating Authority is against the provisions of the Code or any law for the time being in force or there has been a material irregularity in exercise of the powers by the Resolution Professional; or the debt owed to operational creditors has not been provided for in accordance with the provisions of the Code.

The Adjudicating Authority's role is confined to verifying compliance with the statutory requirements for plan approval, while appellate review is restricted to the grounds specified under the Code. Allegations that the plan consideration was below fair value concern the CoC's commercial assessment and do not furnish an independent ground for interference. The Tribunal held that neither it nor the Adjudicating Authority could substitute its judgment for the collective commercial decision of the financial creditors. The Tribunal applied K. Sashidhar v. Indian Overseas Bank [2019 (2) TMI 1043 - SUPREME COURT], Committee of Creditors of Essar Steel India Ltd. [2019 (11) TMI 731 - SUPREME COURT], and Torrent Power Ltd. [2026 (3) TMI 42 - SUPREME COURT] [Paras 141, 143, 144, 145, 147]

The approved resolution plan was sustained.

Final Conclusion: Both appeals were dismissed. The Appellant's belated objections, valuation challenge, alleged procedural violations, and challenge to the CoC's commercial decision disclosed no permissible ground for appellate interference with the approved resolution plan.

Summary order. Delay condoned; the Special Leave Petitions seeking bail were dismissed, and pending applications were disposed of.

Extended limitation for suppression of taxable receipts - Penalty for suppression of service tax liability - Work contract services for which the registered service provider did not file ST-3 returns or disclose gross receipts, and consequential penalty for suppression - HELD THAT: - It is a settled position in law that no person can claim the benefit of his own wrongs in any proceedings (Commodum ex injuria sua nemo habere debet or Nullus commodum capere potest de injuria sua propria, it dictates that no party can gain an advantage from a breach of their own obligation).

The appellant neither disputed provision of the work contract services nor their taxability. A registered assessee was statutorily required to file ST-3 returns disclosing gross receipts and to claim any exemption, abatement or deduction in the prescribed manner. Failure to file any return, disclose taxable and exempt receipts, or furnish documents sought by the Department constituted deliberate suppression of the gross amounts received with intent to evade service tax. The demand was not founded solely on information from the Income Tax Department, since the appellant did not respond to departmental requests for records. The extended period was therefore rightly invoked; penalty under Section 78 consequently stood justified. [Paras 4]

The demand for 2016-17, as modified by the impugned order, and the corresponding penalty under Section 78 were upheld.

Final Conclusion: The appeal was dismissed. The modified service tax demand for 2016-17 and the penalty under Section 78 were sustained.

Classification of Taxable Service - composite layout-development activities involving supply of goods and infrastructure works - Extended limitation-wilful suppression - Exclusion of goods and materials sold from taxable value - Classifiable as Site Formation and Clearance, Excavation, Earth Moving and Demolition Service Or as Works Contract Service - Transfer of Property in Goods - Service Component - Exclusion of Material Value - Differences of opinion between learned Member - Third Member Opinion

Classification of composite land-development contracts as works contract service - HELD THAT: - From the Board Circular B1/16/2007-TRU dated 22.05.2007, it gets clarified that if VAT has been paid under State Act as works contract (on composition basis), the same shall be treated as ‘Works Contract’ under Service Tax provisions also.

From the Para 37 of OIO reproduced above, it can be seen that the appellant also has taken the Service Tax Registration under ‘works contract’ and has discharged part of the service tax payable by them. From para 39 of the OIO reproduced above, it can be seen that the works involved require construction services wherein the total value of the goods used is about 70% as has been certified by the Chartered Accountant.

The Third Member held that the contracts involved transfer of property in goods, on which VAT had been paid under the composition scheme, together with construction and infrastructure activities. In light of the Board clarification and the decisions treating composite contracts involving supply of goods and services as works contracts, the activities could be classified only as works contract service, and not as site formation service. This view prevailed over the Technical Member's view that the activities were specifically classifiable as site formation service. [Paras 29, 30, 32, 33, 36]

By majority, the activities were classified as works contract service; the impugned orders were set aside and the assessees' appeals were allowed with consequential relief.

Extended limitation-wilful suppression - HELD THAT: - The Tribunal found no allegation supported by evidence of wilful misrepresentation or suppression with intent to evade tax. Mere failure to intimate the Department of taxable activity could not justify the extended period; the Members were in agreement that the demand was time-barred. [Paras 7, 16]

The extended period was held inapplicable and the demand was set aside as time-barred.

Exclusion of VAT-paid materials used in layout-development activities from the gross value for service-tax assessment - HELD THAT: - The Hon’ble Supreme Court in the case of Larsen & Turbo Ltd. [2015 (8) TMI 749 - SUPREME COURT] and GD Builders [2013 (11) TMI 1004 - DELHI HIGH COURT] extended the benefit of Notification No. 12/2003-ST dated 20.06.2003 on the value of goods, on which VAT has been discharged. Though the above judgment is in relation to works contract services, the principle that was laid down was that service tax can be levied only on the service element contained in the contracts and not on the goods.

Notification No. 12/2003-ST exempted the value of goods and materials sold by the service provider where documentary proof of their value existed. Since the materials used in the pre-construction activities were supported by the Chartered Accountant's certificate and VAT had been discharged, their value was rightly excluded; service tax could be levied only on the service component. [Paras 8, 36]

The Revenue's challenge to exclusion of material cost was rejected and its valuation appeals were dismissed.

Final Conclusion: By majority, the layout-development activities were held classifiable as works contract service. The assessees' appeals were allowed with consequential relief, while the Revenue's valuation appeals were rejected.

Extended period of limitation for service tax demand - Wilful suppression and intent to evade tax - Intent to evade tax - Bona fide belief - Burden of proving mala fides - HELD THAT: - The Hon’ble Supreme Court in the case of Uniworth Textiles Ltd.[2013 (1) TMI 616 - SUPREME COURT], held that mere non-payment of customs duty on furnace oil imports does not constitute collusion, willful misstatement, or suppression of facts warranting extended limitation period under the proviso.

The appellate order contained no finding that the non-payment resulted from deliberate suppression or any other prescribed ingredient accompanied by intent to evade tax. Since the substantial part of the original demand had itself been found unsustainable, the assessee's bona fide belief regarding non-liability was sufficiently established; the demand founded on a presumption of extended limitation was therefore unsustainable. [Paras 4]

The demand raised by invoking the extended period of limitation was held to be bad in law and could not be sustained.

Final Conclusion: The appeal was allowed. The service-tax demand, being founded solely on an unsustainable invocation of the extended period of limitation, was set aside.

Extended limitation for wilful suppression of excise duty liability - Personal penalty for deliberate clearance of excisable goods without payment of duty -Penalties on the Director and Financial Advisor under Rule 26 - Effect of non-mention of the specific words used in the statute

Extended limitation for wilful suppression of excise duty liability - Invocation of the extended period for recovery of excise duty on telephone instruments cleared without compliance with registration, declaration and record-maintenance requirements. - HELD THAT: - It is no doubt true that the show cause notice does not quote in Haec Verba (Formal latin word for “in these exact words”) the proviso to Section 11A(1). However upon holistic reading of the entire show cause notice, it is seen that there is a narration of the entire facts, data collected, the statements of the highest officials of the assessee company and the conduct of the assessee which explicitly manifest clear evidence of fraud, suppression, wilful conscious and deliberate intention to evade excise duty.

Once the material facts constituting the ingredients of the provisions of Section 11A[1] of the Act are specifically pleaded, the mere omission to employ the precise statutory phraseology of the proviso, does not render the show cause notice invalid or legally unsustainable. Further, pursuant to the show cause notice, the assessee has also actively defended itself against those facts during the hearings before the authorities below. Therefore, by mere non-mention of the specific words used in the statute, the assessee cannot be said to have suffered any prejudice. The assessing officer on the basis of the admission of the Director, Financial Advisor and other top officials of the company, concluded that the non maintenance of records for production, stock and sale of finished goods was clearly a conscious and deliberate suppression of the fact of manufacture and clearance of excisable goods with an intent to evade payment of duty. The assessing officer therefore found that he was justified in invoking the proviso to Sub-section 1 of Section 11A of the Act.

The admissions of the company's officials established conscious and deliberate suppression with intent to evade duty, distinguishing the authorities relied upon by the appellants. [Paras 12, 13, 14, 15, 16]

The extended period under the proviso to Section 11A(1) was validly invoked.

Personal penalty for deliberate clearance of excisable goods without payment of duty - HELD THAT: - The factual findings established that the Director gave specific instructions for removal and replacement of price stickers and clearance of excisable goods without payment of duty, while the Financial Advisor was equally involved in the duty evasion. As those findings, affirmed by the Tribunal, disclosed their respective roles and suffered from no perversity, no interference was warranted. [Paras 17, 18]

The personal penalties on the Director and Financial Advisor were sustained.

Final Conclusion: The appeals were dismissed. The extended limitation for demand of duty and the personal penalties imposed on the Director and Financial Advisor were upheld.

Valuation of goods partly cleared to related captive unit - Extended limitation for suppression in excise returns

Assessable value of Bromine cleared to sister unit - Rule 4 valuation where independent sales are available - HELD THAT: - The Hon’ble Supreme Court examined similar facts in the case of Merino Panel Product Ltd. [2022 (12) TMI 453 - SUPREME COURT]. The duty demand in this case pertained to Financial Year 2009-2010 and 2010-2011 and the goods were partly sold to independent buyers at higher price and partly at lower price to related parties. It was held that the price charged from independent parties under Section 4(1)(a) of the central Excise Act, 1944 being readily available, can be transposed onto related party purchases as well, to arrive at assessable value. It also upheld invocation of extended period as undervaluation of sales made to related parties was suppressed facts and assessee failed to provide accurate information to revenue regarding its sales.

Rules 9 and 10 did not govern a case of partial sales to independent buyers and related buyers, and the residuary mechanism under Rule 11 had to be applied consistently with Section 4. Since a substantial part of the Bromine was sold to independent buyers, the pre-amendment Rule 8 cost-based method was inapplicable to the quantity transferred to the sister unit. The readily available normal price charged to independent buyers could be adopted for determining the assessable value of related-party clearances, subject to due consideration of relevant material. [Paras 5]

The differential duty demand based on the price charged to independent buyers was upheld.

Suppression of related-party clearance particulars - Extended period of limitation - HELD THAT: - The returns did not disclose the quantity and value of related-party clearances separately, despite the lower per-unit value adopted for such clearances. This was held to be suppression of full and correct material particulars with intent to evade duty, warranting invocation of the extended period. [Paras 5]

The extended period was validly invoked, and the demand, interest and penalty confirmed by the Commissioner were sustained.

Final Conclusion: The appeal was rejected. The demand based on valuation of sister-unit clearances at the normal price available from independent buyers, together with interest and penalty, was sustained.

Scope of Amendment to Section 35FF - Interest on refund of pre-deposit - Prospective application of amended Section 35FF - Entitlement to interest on refund of a pre-deposit made before the amendment of Section 35FF - HELD THAT: - The substituted provision, effective from 06.08.2014, marks a significant departure by providing for interest from the very date of deposit until the date of refund. Thus, this legislative change was introduced because, for the first time under the Central Excise Act, a mandatory pre-deposit of a prescribed percentage of the duty demanded or, where only penalty was in dispute, of the penalty imposed, was made a statutory precondition for entertaining an appeal before the appellate forum.

In other words, with effect from 06.08.2014, every aggrieved person seeking to file an appeal was mandatorily required by law to make the prescribed pre-deposit before the appeal could be entertained. Prior to this amendment, however, the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, had the discretion to dispense with the requirement of pre-deposit if they were satisfied that insisting upon the deposit of the duty demanded or penalty levied would cause undue hardship to the appellant. Such waiver could be granted subject to such conditions as the appellate authority considered appropriate to safeguard the interests of the Revenue.

The proviso to amended Section 35FF preserves the erstwhile provision for deposits made before the amendment came into force. Since the pre-deposit was made before that date, interest was payable only if the refund was not made within three months from communication of the appellate order. The refund having been sanctioned within that period, no interest accrued. [Paras 8]

The denial and recovery of the interest earlier sanctioned on refund of the pre-deposit were upheld.

Final Conclusion: The impugned order was sustained and the appeal was dismissed, as no interest was payable on the refunded pre-deposit under the applicable erstwhile Section 35FF.

High seas sales of imported cars - Conditional sales-tax exemption-breach of declaration - Appellate power to correct misapplication of exemption notification

High seas sales of imported cars - Situs of sale - Levy of tax on imported cars claimed to have been sold on high seas. - HELD THAT: - The claim of high seas sales was not established. The sale invoices were raised after the vehicles had entered Indian territory and showed the dealer's factory address in Tamil Nadu; customs duty was also paid by the dealer, not by the dealers named in the foreign supplier's invoices. Transport documents did not conclusively establish that the sales had occurred before entry into the customs frontier or outside Tamil Nadu. In the absence of contrary proof, the place of transfer was determinable from the sale invoices. [Paras 28, 29, 30, 31]

The sales were taxable under the TNGST Act and were not high seas sales.

Conditional sales-tax exemption-breach of declaration - Appellate power to correct misapplication of exemption notification - Restoration of tax liability where goods purchased under G.O.Ms.No.381 exemption declarations were not shown to have been used for the declared manufacturing purpose. - HELD THAT: - The exemption under G.O.Ms.No.381 was conditional upon use of the goods for the specified manufacturing purpose. The dealer failed to correlate the purchases with exports or produce proof that the goods were used in manufacture as declared. The notification itself required payment of tax where goods purchased against declaration were disposed of otherwise. The benefit under Section 5(3) of the CST Act was unavailable to a dealer that had availed the State exemption on such declaration. Though the Department had not appealed, the Tribunal was entitled, in the dealer's appeal, to correct the Appellate Authority's apparent misapplication of law; compounding fees could not substitute the tax consequence expressly provided by the notification. [Paras 38, 40, 42, 43, 44]

The Tribunal rightly restored the assessment order levying tax for violation of the conditions of G.O.Ms.No.381.

Final Conclusion: The Tax Case was dismissed. The Tribunal's order was upheld on both the taxability of the imported-car sales and the tax consequence of breach of the conditional exemption declaration.

Transit pass and tax-evasion penalty - Inference of diversion of goods in transit - Revisional jurisdiction over appellate order

Transit pass and tax-evasion penalty - Levy of penalty for attempted evasion in respect of goods declared to be in interstate transit despite surrender of transit passes at the exit check-post. - HELD THAT: - The issuance and surrender of a transit pass is relevant evidence of the declared movement of goods, but is not conclusive proof that the goods reached the declared destination. Discrepancies in accompanying documents, shortage of goods and the vehicle's movement back towards Bengaluru after surrender of the passes furnished a reasonable basis to infer attempted diversion and tax evasion. [Paras 16, 17, 18, 22]

The jurisdiction to invoke penalty was not excluded merely because the transit passes had been surrendered.

Inference of diversion of goods in transit - Requirement of proof of actual unloading, sale or other dealing with transit goods within the State before initiation of proceedings for contravention. - HELD THAT: - Proceedings concerning goods in transit may be founded on verification of the goods, transport records and attendant circumstances. Direct proof of actual unloading within the State is not the sole means of establishing contravention; discrepancies in goods and documents, absence of supporting transport records and circumstances indicative of diversion permit appropriate inferences. [Paras 23]

The authorities were not required to establish actual unloading within the State by direct evidence before initiating proceedings.

Revisional jurisdiction over appellate order - Validity of revision restoring penalty where the appellate authority treated surrender of transit passes as sufficient to negate evasion. - HELD THAT: - The revisional authority was competent to examine the legality and propriety of the appellate order. Since the appellate authority overlooked material circumstances, including documentary discrepancies, shortage of goods and the vehicle's return towards Bengaluru, revision to correct that infirmity was justified. The resultant findings were factual findings supported by relevant material and disclosed no perversity, arbitrariness or legal infirmity warranting appellate interference. [Paras 19, 20, 24, 25, 26]

The exercise of revisional jurisdiction and restoration of the penalty were upheld.

Final Conclusion: The appeal was dismissed. The revisional order was affirmed and the penalty for attempted tax evasion was restored.

Final fact-finding authority's duty to examine material evidence - Opportunity to produce evidence in support of inter-State purchases for works contracts

Final fact-finding authority's duty to examine material evidence - Opportunity to produce evidence in support of inter-State purchases for works contracts - The Tribunal's rejection of the dealer's claim for deduction in respect of inter-State purchases used in works contracts without verifying the asserted record evidence or affording an opportunity to produce it. - HELD THAT: - The orders at all stages contained no discussion of the works contracts or their terms. Despite the dealer's specific assertion that evidence showing that the inter-State movement was pursuant to the works contracts had been produced before the assessing and first appellate authorities, the Tribunal held that no evidence was available without verifying the records. As the final fact-finding authority, the Tribunal was required either to summon and examine the records or to permit the dealer to place the material before it. In the absence of such material before the High Court, the merits of the deduction claim could not be determined. [Paras 10, 11]

The questions concerning consideration of evidence and opportunity to produce it were answered in favour of the dealer; the Tribunal's order was set aside and the matter remanded for fresh consideration of the evidence, with liberty to the dealer to adduce further material if the existing record was insufficient.

Final Conclusion: The revisions were disposed of by remanding the matter to the Tribunal for a fresh evidentiary determination. The remaining questions concerning the merits of deduction under Section 3-B[2][a] were left unconsidered.

Purchase tax on construction materials purchased from unregistered dealers - Independent operation of purchase tax and works-contract deemed-sale provisions - Penalty for incorrect and incomplete returns

Purchase tax on construction materials purchased from unregistered dealers - Consumption of goods otherwise than in manufacture for sale - Liability of a works contractor to purchase tax on sand, gravel and jelly purchased from unregistered dealers and used in execution of works contracts. - HELD THAT: - Purchase tax is an independent charging and remedial levy intended to prevent revenue leakage where taxable goods have not suffered tax at the seller's point. Goods purchased from unregistered dealers and utilised in construction cease to be available in their original form for sale or purchase; their consumption in execution of works contracts falls within consumption or use "otherwise" under the purchase-tax provisions. The contrary view adopted by the appellate authority and the Tribunal was inconsistent with the binding constitutional-bench interpretation. [Paras 11]

The purchases were exigible to purchase tax under Section 7-A of the TNGST Act and the corresponding provision of the TNVAT Act.

Independent operation of purchase tax and works-contract deemed-sale provisions - Effect of levy on transfer of property in goods involved in works contracts upon purchase-tax liability for materials purchased from unregistered dealers. - HELD THAT: - The works-contract provision concerns taxable turnover arising from transfer of property in goods and permits deduction in respect of specified goods purchased from registered dealers and used in the same form. Purchase tax, in contrast, applies to purchases from unregistered dealers where tax was not paid at the seller's point. The provisions operate in distinct fields; consequently, the deemed-sale provision did not exclude purchase-tax liability or establish prior tax sufferance on the goods in question. [Paras 11]

The assessee could not resist purchase tax by invoking the deemed-sale provision applicable to works contracts.

Penalty for incorrect and incomplete returns - Validity of penalty accompanying purchase-tax liability arising from incorrect and incomplete returns. - HELD THAT: - Having held that the assessing authority validly invoked the purchase-tax provision, the Court found that the case involved incorrect and incomplete returns and that imposition of tax and penalty was justified. The same conclusion applied to assessments under the TNVAT Act because of the corresponding purchase-tax provisions. [Paras 11]

The levy of penalty was upheld.

Final Conclusion: The impugned appellate and Tribunal orders were held perverse and were quashed in the allowed revisions. The assessing authority was directed to proceed in accordance with law for recovery of the tax and penalty.

Dishonour of cheque for drawer's signature mismatch - Presumptions as to consideration and legally enforceable debt

Dishonour of cheque for drawer's signature mismatch - Dishonour of the cheque with the endorsement "Drawer's signature differs" in circumstances where the drawer's account lacked sufficient funds. - HELD THAT: - Dishonour on the ground of a differing drawer's signature attracts the offence under Section 138 of the Negotiable Instruments Act where the other statutory requirements are satisfied. The bank evidence established that there were insufficient funds in the drawer's account when the cheque was presented. [Paras 17]

The dishonour of the cheque was held to fall within Section 138 of the Negotiable Instruments Act.

Presumptions as to consideration and legally enforceable debt - Proof of execution of typewritten cheque - Proof of the loan transaction and execution of a typewritten cheque towards discharge of the accused's liability. - HELD THAT: - The advancement of a further loan to a relative while an earlier loan remained unpaid did not, by itself, render the complainant's evidence improbable. Nor was a typewritten cheque legally impermissible or a ground to reject the transaction once its execution was established. The evidence supported the complainant's case, while the accused had not suggested to the complainant that the cheque was not executed and had advanced an inconsistent defence concerning an earlier transaction. The complainant was therefore entitled to invoke the presumptions under Sections 118 and 139 of the Negotiable Instruments Act. [Paras 20, 21, 22, 23]

The acquittal was set aside and the accused was convicted for the offence under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal against acquittal was allowed. The accused was convicted under Section 138 of the Negotiable Instruments Act and sentenced to imprisonment till rising of the court, with fine and consequential compensation.