TaxTMI Updates e-Newsletter
Jul 22,2026

Issuance of SCN u/s 74 of the UPGST Act on the ground that the petitioner has claimed ITC through GSTR-3B for the tax period April, 2021 - claim of forged ITC - HC [2025 (9) TMI 919 - ALLAHABAD HIGH COURT] held that proceedings under section 74 UPGST against the petitioner were unjustified and quashed the impugned assessment and appellate orders. The petitioner established actual movement of goods and payment of tax, and no findings of fraud, wilful misstatement or suppression to evade tax were recorded. - HELD THAT:- The special leave petition was dismissed after condoning delay.

Eligibility for Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Redemption fine in lieu of confiscation - Strict Construction of Exclusions - Amount in Arrears - HELD THAT: - The exclusions specified for making a declaration under the Scheme do not cover cases involving confiscation or redemption fine. Redemption fine in lieu of confiscation forms part of the amount recoverable under the indirect tax enactment and cannot be segregated from the demand of duty for purposes of the Scheme. The departmental interpretation founded on the communication excluding redemption fine was contrary to the statutory scheme and was not accepted. The Court agreed with Synpol Products Pvt. Ltd. v. Union of India [2020 (9) TMI 257 - GUJARAT HIGH COURT], whose challenge before the Supreme Court [2021 (3) TMI 292 - SC ORDER] had been dismissed. [Paras 11, 16, 17, 18]

The petitioner could not be held ineligible merely because its declaration included redemption fine; the rejection was set aside and the declaration was directed to be treated as eligible and considered on merits in accordance with law.

Final Conclusion: The writ petition was allowed. The rejection of the SVLDR-1 declaration was set aside, and the department was directed to treat it as eligible and consider it on merits under the Scheme.

Service of GST adjudication order - Recovery proceedings without communication of order - Communication of an unuploaded GST adjudication order and consequential bank-account recovery proceedings - HELD THAT: - The respondents acknowledged that the order in Form GST DRC-07 had not been uploaded on the petitioner's portal, with the result that the petitioner remained uninformed of it. Since the recovery notice in Form GST DRC-13 had also been withdrawn and the bank was requested to permit normal operation of the account, the Court directed service of the impugned order in accordance with section 169 of the HPGST Act. Any applicable limitation for challenging that order was directed to run from its service. [Paras 5]

The impugned order shall be served in accordance with section 169, and any applicable limitation for challenge shall be reckoned from the date of such service.

Final Conclusion: The writ petition was disposed of with directions for valid service of the adjudication order; the recovery notice having been withdrawn, the petitioner's bank account was to function normally. Questions concerning limitation available to either side were left open.

Alternative statutory remedy under the GST appellate mechanism - Exclusion of time spent in writ proceedings for limitation - HELD THAT: - Since an appeal against the impugned adjudication order was statutorily available under section 107 of the CGST Act, the Court declined to entertain the writ petition directly. As the writ petition had been instituted within the available appellate period, including the period amenable to condonation, the time spent before the Court was directed to be excluded in computing limitation, subject to filing of the appeal within the stipulated period. [Paras 5, 7, 8]

The writ petition was dismissed with liberty to pursue the statutory appeal; the Appellate Authority was directed to exclude the time spent in the writ proceedings if the appeal is filed within 30 days of upload of the order.

Final Conclusion: The writ petition was disposed of on the ground of availability of an efficacious statutory appeal, with protection for exclusion of the time spent in the writ proceedings while computing appellate limitation.

Regular bail in alleged fake-invoice input tax credit fraud - Entitlement to regular bail in prosecution alleging issuance of fake invoices without underlying supply of e-top-up services for fraudulent input tax credit. - HELD THAT: - The Court considered that the applicant had remained in custody since April-2026, the complaint had been filed, the documentary material, computer gadgets and e-ledger had been secured, and the case rested on documentary evidence. Having regard to the maximum sentence of five years and the absence of any prospect of early disposal, further detention was held unnecessary. [Paras 6]

Regular bail was granted subject to conditions.

Final Conclusion: The bail application was allowed and the applicant was ordered to be released on regular bail, subject to the stipulated conditions.

Consolidated show cause notice and adjudication order for multiple financial years under the CGST Act - Jurisdiction of the Proper Officer to issue a consolidated show cause notice and pass a consolidated adjudication order for the financial years 2017-18 to 2019-2020. - HELD THAT: - Following M/s. Tata Projects Limited[2026 (6) TMI 576 - GAUHATI HIGH COURT], the Court held that the CGST Act, 2017 does not bar a consolidated show cause notice or a consolidated order for different financial years. The Proper Officer consequently had jurisdiction to initiate and conclude the consolidated proceedings. [Paras 5]

The jurisdictional challenge failed; all other challenges to the legality and validity of the adjudication order were left open for statutory appeal.

Final Conclusion: The writ petition was disposed of, declining interference on the jurisdictional objection. Liberty was granted to pursue the statutory appeal, with protection regarding limitation and continuation of interim protection until consideration of the stay application, subject to timely filing of the appeal.

Cancellation of GST registration - specificity of show cause notice - Validity of a show cause notice proposing cancellation of GST registration without identifying the provisions of the Act or Rules allegedly contravened. - HELD THAT: - The notice was vague and omitted material particulars, including the specific provisions of the Central Goods and Services Tax Act, 2017 or the Rules alleged to have been violated. A notice lacking such particulars could not be sustained in law. [Paras 6, 7]

The show cause notice was quashed, without precluding the authorities from taking action in accordance with law for any infraction.

Final Conclusion: The writ petition was disposed of by quashing the vague notice for cancellation of GST registration, while reserving the authorities' liberty to proceed afresh in accordance with law.

Consolidated show cause notice and adjudication order for multiple financial years under the CGST Act - Jurisdiction of the Proper Officer to issue a consolidated show cause notice and pass a consolidated adjudication order for multiple financial years. - HELD THAT: - Following M/s. Tata Projects Limited [2026 (6) TMI 576 - GAUHATI HIGH COURT], the Court held that the CGST Act does not bar a consolidated show cause notice or a consolidated order for different financial years under the relevant adjudicatory provisions. The Proper Officer consequently had jurisdiction to issue the consolidated notice and pass the impugned order for the financial years in question. [Paras 5]

The jurisdictional challenge failed; all challenges to the merits of the adjudication were left open for statutory appeal.

Final Conclusion: The writ petition was disposed of, declining interference with the consolidated adjudication on the jurisdictional ground. The petitioner was granted liberty to pursue the statutory appeal, with the stated protection regarding limitation and interim relief.

Service of show cause notice through GST portal - Opportunity of Hearing -Violation of principles of natural justice - notice uploaded only under the GST portal tab 'Additional Notice and Orders' without separate intimation - HELD THAT: - The Court found a prima facie case that, since the show cause notice was uploaded only under the specified portal tab and no separate intimation was given, the petitioner was unable to respond. This was held to constitute a violation of the principles of natural justice. As the appeal had been dismissed on limitation without a decision on merits, interference was warranted in the peculiar facts of the case. [Paras 5, 6]

The adjudication and appellate orders were quashed, and the matter was remitted for consideration of the appeal on merits after affording a hearing and passing a fresh reasoned order.

Final Conclusion: The writ petition was disposed of by setting aside the impugned orders and directing fresh merits consideration of the appeal in accordance with law.

Natural justice-cross-examination of persons whose statements are relied upon for penalty - Principles of Natural Justice - Right to Cross-Examination - Reasonable Opportunity of Hearing - Penalty for alleged issuance of invoices without actual supply and availment of input tax credit without receipt of goods or services-denial of cross-examination of persons whose statements were relied upon. - HELD THAT: - The petitioner had specifically sought cross-examination of the two persons whose statements were relied upon for imposition of penalty. Passing the adjudication order without granting that opportunity constituted a gross violation of the principles of natural justice. The merits of the penalty allegations were not examined. [Paras 9, 10, 11]

The penalty order and consequential notices were set aside and the matter was remanded for fresh adjudication after supplying relevant documents, affording cross-examination and permitting a fresh reply.

Final Conclusion: The writ petition was disposed of by remanding the matter for fresh consideration in accordance with law, without any opinion on the merits of the allegations.

Personal hearing in GST adjudication - Violation of principles of natural justice - Validity of an order passed under the CGST/UKGST Act for Financial Year 2020-21 without fixing or affording a personal hearing to the petitioner-firm. - HELD THAT: - It was undisputed that the show-cause notice did not fix a date for personal hearing and that no such hearing was afforded before the impugned order was made. This constituted a clear breach of the mandatory requirement under Section 75(4) and of the principles of natural justice, thereby vitiating the order. The objection of slight delay in invoking writ jurisdiction was consequently overruled. [Paras 4, 5]

The impugned order was quashed, with liberty to pass a fresh order after affording an opportunity of hearing in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the adjudication order for denial of personal hearing and permitting fresh adjudication after due hearing.

Anticipatory bail in alleged fraudulent input tax credit offences - Necessity of arrest and custodial interrogation - Necessity of Arrest - Custodial Interrogation - Reasons to Believe - Grant of anticipatory bail to partners accused of fraudulent availment and utilisation of input tax credit on invoices allegedly issued without actual supply of goods. - HELD THAT: - The statutory power of arrest under the CGST Act is not automatic and requires objectively founded reasons to believe; arrest is an investigative measure, not pre-trial punishment. Although economic offences warrant effective investigation, gravity alone cannot curtail personal liberty. The material was predominantly documentary, financial and electronic and had substantially been secured by the authorities; there was no material of likely abscondence or tampering with evidence, and the petitioners undertook to cooperate. The stated investigative objectives did not establish that custodial interrogation was indispensable at that stage. The pendency of tax adjudication did not bar criminal investigation, but personal liberty could not be determined solely from the standpoint of tax recovery. [Paras 21, 22, 23, 24, 25]

Anticipatory bail was granted subject to conditions requiring surrender, cooperation with investigation, availability to the investigating agency, restraint on travel and non-interference with evidence; the competent authority may exercise its statutory arrest power subsequently, strictly in accordance with law if valid grounds arise.

Final Conclusion: The criminal petition was allowed and anticipatory bail was granted on stringent conditions. The order was confined to the bail application and expressed no opinion on the merits of the investigation.

Violation of principles of natural justice in GST adjudication - Service of GST notices and orders through the portal - Validity of an ex parte GST adjudication and appellate order where the show-cause notice and adjudication order were uploaded only under the portal tab "Additional Notices and Orders". - HELD THAT: - The Court found that uploading the show-cause notice and adjudication order only under the specified portal tab had deprived the petitioner of knowledge of the proceedings and thereby violated the principles of natural justice. The State's objection that the matter had attained finality could not prevail over this procedural irregularity. As the disputed tax had already been recovered, the petitioner was entitled to an opportunity of hearing; the merits were expressly left open. [Paras 8, 9, 10]

The appellate and ex parte adjudication orders, with consequential recovery notices, were quashed, and the adjudicating authority was directed to undertake fresh consideration by a reasoned and speaking order after granting a personal hearing.

Final Conclusion: The writ petition was disposed of by setting aside the impugned orders and consequential notices and remitting the matter for fresh adjudication in accordance with law. The adjudicating authority was directed to decide independently without being influenced by the Court's observations.

Extraordinary writ jurisdiction to condone marginal delay in GST appeal - Sufficient Cause - Condonation of a two-day delay in filing an appeal against a demand order - HELD THAT: - In New Kabady shop [2026 (6) TMI 391 - JAMMU AND KASHMIR AND LADAKH HIGH COURT], whereby a Division Bench of this court allowed the writ petition and, in the exercise of extraordinary jurisdiction vested under Article 226 of the Constitution of India, set aside the similar order passed by the Appellate Authority and condoned a day’s delay in filing the appeal.

Though the Appellate Authority lacks statutory power to condone delay beyond the prescribed period, the High Court may, in exercise of its extraordinary jurisdiction under Article 226, grant relief where the assessee was prevented from filing the appeal in time for reasons beyond control. Having regard to the marginal delay and the stated circumstances of death in the family and illness, the Court held that indulgence was warranted on the peculiar facts, notwithstanding that the reasons did not constitute exceptional circumstances. [Paras 5, 6]

The delay was condoned; the appellate order was set aside and the appeal was directed to be restored and decided on merits. The relief was confined to the peculiar facts and was not to operate as a precedent on parity.

Final Conclusion: The writ petition was allowed, the rejection of the appeal as time-barred was set aside, and the appeal was restored for decision on merits after condoning the two-day delay.

Negative blocking of input tax credit under Rule 86A - Blocking of input tax credit in the electronic credit ledger beyond the credit available, on the allegation of wrongful or fraudulent availment from non-genuine or non-existent suppliers. - HELD THAT: - The coordinate bench of this Court in Rawman Metal & Alloys [2025 (10) TMI 489 - BOMBAY HIGH COURT]. This Court in the said decision held that Rule 86A, as it presently stand, does not permit the blocking of any future credits that the assessee might obtain, thereby, introducing the concept of “negative blocking” despite Rule 86A not allowing such a recourse.

The Court followed Rawman Metal & Alloys and the consistent subsequent view of the Court, holding such negative blocking legally impermissible. [Paras 10, 12, 13]

The impugned blocking orders were quashed and set aside, without precluding the respondent from taking further action permissible in law, including restoration of blocked credit if the law permits.

Final Conclusion: The petition was disposed of by quashing the impugned orders insofar as they resulted in impermissible negative blocking of input tax credit, while preserving the respondent's liberty to proceed in accordance with law.

Reassessment beyond four years - full and true disclosure of material facts - Assessment Order passed u/s 143(3) - Change of opinion in reopening assessment

Validity of reopening the completed scrutiny assessment for capital gains arising from sale of land, plant and machinery, and furniture, beyond four years, on the ground that capital loss had been wrongly set off - HELD THAT: - The computation of capital gains and the claimed set-off had been specifically examined in the original scrutiny assessment. The assessee had furnished the balance sheet disclosures, computation of gains and losses, sale documentation, valuation material and other supporting particulars, which were accepted in the assessment. No new or fresh tangible material was unearthed thereafter. Reopening beyond four years is permissible only where income escaped assessment due to the assessee's failure to make a full and true disclosure of material facts; a reassessment founded on a reappraisal of material already scrutinised is a mere change of opinion. [Paras 5, 6]

The notice reopening the assessment was quashed as it was based solely on a change of opinion.

Final Conclusion: The writ petition was allowed and the impugned reassessment notice for Assessment Year 2012-13 was quashed.

Rectification of mistake apparent from record - Review of Tribunal order under rectification jurisdiction

Validity of recall of a detailed appellate order under the rectification power on the ground that the factual aspects of reassessment proceedings required reconsideration - HELD THAT: - A combined reading of the provisions of Section 254(2) of the Act, the legislative intent underlying the said provision and the judgment of the Supreme Court in the case of M/s. Reliance Telecom Limited [2021 (12) TMI 211 - SUPREME COURT] makes it abundantly clear that the Tribunal, while exercising its powers under Section 254(2) of the Act, can rectify only such mistakes which are apparent from the record. The scope of such power is akin to that under Order XLVII Rule 1 of the Code of Civil Procedure, 1908. Tribunal cannot revisit its earlier order or undertake a re-appreciation of the matter on merits. The power under Section 254(2) of the Act is confined solely to rectifying or correcting a mistake apparent from the record.

The rectification power is confined to correction of a mistake apparent from the record and is akin to review jurisdiction under Order XLVII Rule 1 of the Code of Civil Procedure. It does not permit the Tribunal to revisit a detailed order rendered after consideration of facts and merits, or to re-appreciate the controversy because the original decision is alleged to be erroneous. An aggrieved Revenue must pursue the statutory appellate remedy against such an order. [Paras 24, 25, 26, 27]

The recall order was beyond the Tribunal's rectification jurisdiction and was quashed; the original appellate order in favour of the petitioners was restored.

Final Conclusion: The writ petitions were allowed. The Tribunal's order recalling its earlier merits order was set aside and the original order was restored.

Write-off of expired inventory - write-off of bad debts in respect of outstanding debtors u/s 36(1)(vii)

Write-off of expired inventory - Allowability of write-off of expired pharmaceutical inventory supported by item-wise particulars and physical verification - HELD THAT: - The concurrent findings that the assessee had furnished item-wise stock details and documentary support, and that the goods had expired and were identified during inventory verification, were findings of fact. No substantial question of law arose from the allowance of the write-off. [Paras 8]

The Revenue's challenge to the inventory write-off was rejected.

Bad-debt deduction on write-off in books - Allowability of deduction for bad debts written off after supporting debtor, invoice, ledger and ageing-analysis evidence was furnished - HELD THAT: - The documentary material supported the write-off, and the statutory conditions for deduction were held fulfilled as the debts had been taken into account in earlier years. Once the debts were written off as irrecoverable in the books, the assessee was not required to prove that they had actually become bad. [Paras 10]

The Revenue's challenge to the bad-debt write-off was rejected.

Admit on the following questions of law:

“Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in allowing to write off the investment made without appreciating the facts that the assessee has failed to furnish any evidence to show that the investments in the wholly owned subsidiaries was for the purpose of business and the investments made by the assessee in subsidiaries companies were capital in nature and not for business purpose.”

AND

(ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in allowing to write off the advances made to M/s. Lilac Medicine Private Limited (LMPL) without appreciating the facts that the advances given by the assessee were non trade advances and were capital in nature and the assessee has failed to clarify the reasons for the trade advances and how the same was for the purpose of business.” Respondent waives service.

Final Conclusion: The appeals were rejected insofar as they challenged the inventory and bad-debt write-offs. The questions concerning write-off of investments in wholly owned subsidiaries and advances to another company were admitted for consideration.

Exemption for investment in residential property under Section 54F - Liberal construction of beneficial capital gains exemption - Delay in completion or registration of residential property -

Entitlement to exemption for capital gains invested in construction of a residential villa where completion, delivery and legal title were delayed beyond the prescribed period for reasons beyond the assessee's control - HELD THAT: - In the case of CIT vs. C. Gopalaswamy [2016 (6) TMI 643 - KARNATAKA HIGH COURT] it was held that Section 54F of the Act is a beneficial piece of legislation and cannot be denied to the assessee merely due to non-completion of construction or non-registration of the residential property, as it would override the legislative intent behind the very enactment.

Section 54F is a beneficial provision intended to promote investment of capital gains in a residential property and must be liberally construed. Its essential requirement is investment of the capital gains in purchase or construction of the residential property; non-execution of a registered sale deed, non-completion of construction or non-receipt of possession within the stipulated period, owing to circumstances beyond the assessee's control, does not defeat the exemption once such investment is established. [Paras 13, 14, 16]

The denial of exemption was held illegal, and the assessee was held entitled to exemption under Section 54F.

Final Conclusion: The appeal was allowed and the impugned order denying the claimed exemption was set aside.

Revival application - adjudication of unaddressed challenge -Validity of reopening of assessment - Period of limitation - Time limit for reopening reassessment - applicability of the first proviso to amended Section 149(1) - exclusion of period under the fifth proviso to Section 149(1) - scope of TOLA

HELD THAT:- We are of the view that rather than driving the Petitioner to file a fresh Petition, it would be in the interest of all if the above Writ Petition is revived. We say this because the above Writ Petition was decided by this Court [2024 (3) TMI 1554 - BOMBAY HIGH COURT] only on the ground of limitation, which has now been set aside by the Hon’ble Supreme Court in view of the Judgement of the Hon’ble Supreme Court in the case of Union of India and Ors. Vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]

The other issues raised in the above Writ Petition are completely unrelated to the question of limitation. In fact, they relate to depreciation being disallowed on goodwill. Once these are the facts, we are of the view that justice would be served if the Writ Petition is revived and heard on the other grounds, rather than driving the Petitioner to file a fresh Petition.

From the record, we find that no Affidavit-in- Reply is filed by the Respondents. The Respondents are therefore directed to file their Affidavit-in-Reply, if any, on or before the next date and serve a copy of the same on the Advocates for the Petitioner.

We direct that the Assessing Officer shall not proceed with the Notice issued under Section 148 until further orders.

Deferred sales tax liability - statutory adjustment orders and fresh consideration u/s 43B - Computation of deductions under sections 80HHC and 80-IB

Sales tax deferment qualified for deduction u/s 43B - absence of any material evidencing conversion of the deferred sales tax liability into a Government loan - Claim for deduction of deferred sales tax liability under section 43B where Form VAT 205 adjustment orders were issued after completion of the assessment and appellate proceedings - HELD THAT: - The claim had been rejected solely for want of material establishing conversion of the deferred sales tax liability into a Government loan. The subsequent adjustment orders of the competent Commercial Tax Officer directly addressed that deficiency and, being statutory proceedings unavailable during the earlier proceedings, could not be ignored. The Assessing Authority was required to examine their effect and determine the assessee's entitlement in accordance with law. [Paras 22, 23, 24]

The issue was remitted to the Assessing Authority for limited examination of the Form VAT 205 adjustment orders and fresh determination of the claim under section 43B.

Computation of deductions under sections 80HHC and 80-IB - Restriction against aggregate deductions exceeding eligible business profits - whether Deduction allowed under section 80-IB cannot be reduced from profits while computing deduction under section 80HHC? - HELD THAT: - This issue no longer remains res integra, in view of the law laid down by the Hon'ble Supreme Court, in Shital Fibers Ltd.’s case [2025 (5) TMI 1599 - SUPREME COURT (LB)] wherein the Hon’ble Supreme Court while considering an identical question, has held that the deduction admissible under Section 80IB cannot be excluded while computing the deduction under Section 80HHC. The principle laid down therein squarely governs the controversy involved in the present appeals.

Section 80-IA(9), as applicable to section 80-IB, restricts the ultimate aggregate allowance of deductions under Chapter VI-A so that it does not exceed the eligible business profits; it does not alter the separate computation of deduction under section 80HHC. The respective deductions must first be computed under their governing provisions, following which their aggregate allowance is restricted to the eligible profits. [Paras 27, 28, 29, 30, 31]

The question was answered in favour of the assessee; the deduction under section 80HHC is to be recomputed without reducing the deduction allowed under section 80-IB, subject to the aggregate statutory limit.

Final Conclusion: The appeals were partly allowed. The section 43B claim was remitted for examination of the statutory adjustment orders, and deduction under section 80HHC was directed to be recomputed without reducing the deduction under section 80-IB, subject to the aggregate limit on deductions.

Deduction under Chapter VI-A on a return treated as valid - physical return/submission was later filed and acknowledged by the department. However, during the appellate proceedings, the assessee failed to furnish any documentary evidence to substantiate the claim of filing, verification of return, or eligibility of deduction under Chapter VI-A.

HELD THAT: - Having treated the return as valid, the Revenue could not deny the deduction claimed therein; such denial was held to be inconsistent/oxymoronic with acceptance of the return's validity. [Paras 5]

The Assessing Officer was directed to allow the deduction claimed in the return of income.

Final Conclusion: The assessee's appeal was allowed and the claimed deduction under Chapter VI-A was directed to be granted for Assessment Year 2010-11.

Transfer pricing of royalty payments - Comparable uncontrolled price method for commission payments - Capital gains indexation and transfer expenses - Exemption for shifting industrial undertaking - Commission to non-resident agents - Disallowance of expenditure relating to exempt income

Transfer pricing of royalty payments - Aggregation under transactional net margin method - Internal comparable uncontrolled price - Arm's length price of royalty paid to the associated enterprise for technical know-how used in manufacture of specialised machinery - HELD THAT: - The royalty payment was intrinsically connected with the assessee's manufacturing activity and could validly be benchmarked on an aggregated basis under TNMM where the entity-level operating margins were at arm's length. The domestic royalty rate could not be adopted as a CUP for export sales without establishing comparability of commercial terms, geographical markets, sales volume and business conditions.

The domestic royalty payment of 5% cannot automatically be considered as an appropriate CUP for export transactions since the commercial terms, geographical markets, volume of sales and business conditions may differ significantly.

TPO was not justified in applying CUP method by treating domestic royalty rate as benchmark for export royalty payments. Accordingly, the adjustment made on account of royalty payment amounting to Rs. 19,18,458/- is directed to be deleted [Paras 9, 15]

The royalty adjustments for AY 2012-13 and AY 2013-14 were deleted.

TP adjustment on account of commission payment - MAM - Comparable uncontrolled price method for commission payments - Functional comparability of commission agreements - Arm's length price of commission paid to associated enterprises for overseas marketing and sales-support services, including consideration of additional comparable agreements - HELD THAT: - Application of CUP requires a high degree of similarity between controlled and uncontrolled transactions. The agreements selected from the database had not been shown to be comparable in functions performed, risks assumed, contractual obligations, geographical factors and commercial circumstances; nor had the DRP examined functional comparability. Since the commission transaction was remitted for fresh benchmarking, the assessee was entitled to place additional comparable material before the TPO. [Paras 10, 16, 17]

The commission adjustments for both years were remanded to the TPO/AO for fresh adjudication under TNMM and CUP after considering relevant material, including additional comparables, and granting hearing.

Capital gains indexation - Transfer expenses attributable to land and building - Computation of long-term capital gains on transfer of leasehold land and building, concerning the first year of indexation and allocation of transfer expenses - HELD THAT: - As the conveyance deed was registered and the asset was capitalised in FY 2002-03, that year was correctly adopted as the first year of holding for indexation. However, transfer expenses specifically relatable to leasehold land could not be apportioned mechanically with common expenses; their nature required verification. The depreciation claim was consequential. [Paras 11]

The indexation claim was rejected, while the allocation of transfer expenses was remanded to the Assessing Officer for verification and consequential relief.

Claim of exemption u/s 54G for investment in plant and machinery - Exemption for shifting industrial undertaking - Additional claim before appellate authority - Additional exemption claimed for investment in plant and machinery upon shifting an industrial undertaking from an urban area to a rural area - HELD THAT: - The additional claim enhanced an exemption already claimed and was based on investment details available on record. The restriction on an AO entertaining a fresh claim without a revised return does not curtail appellate powers, and the claim could not be rejected solely on that procedural ground. [Paras 12]

The claim was remanded to the Assessing Officer to determine whether the investment in plant and machinery fulfilled the prescribed conditions for exemption.

Reversal of provision and double taxation - Relief from adjustment where a provision debited in the relevant year was stated to have been reversed or offered to tax in a subsequent assessment year - HELD THAT: - Verification was necessary regarding the accounting entries and their tax treatment in the subsequent year to ensure that the amount was not subjected to double taxation. [Paras 13]

The matter was remanded to the AO for verification and grant of appropriate relief.

Commission to non-resident agents - Tax deduction at source on overseas services - Disallowance of commission paid to non-resident agents for procuring export orders and providing marketing support outside India without tax deduction at source - HELD THAT: - Commission for services rendered outside India by non-resident agents having neither business connection nor permanent establishment in India was not taxable in India merely because it was paid by an Indian resident. The Revenue produced no material establishing that the agents rendered services in India or had a permanent establishment in India; the amendment referred to did not make every payment to a non-resident taxable. [Paras 19]

Deletion of the disallowance was upheld and the Revenue's ground was dismissed.

Disallowance of expenditure relating to exempt income - Presumption regarding investments from own funds - Recording of satisfaction - Disallowance of expenditure relating to exempt income where the assessee had sufficient own funds for investments - HELD THAT: - Where own funds exceed the investments, a presumption arises that investments were made from own funds unless the Revenue proves a contrary nexus. The Revenue failed to establish use of borrowed funds, and the Assessing Officer had not recorded the statutory satisfaction concerning the correctness of the assessee's claim. [Paras 20]

Deletion of the disallowance was upheld and the Revenue's ground was dismissed.

Final Conclusion: The assessee's appeals were partly allowed for statistical purposes: royalty adjustments were deleted, while commission benchmarking and specified computation claims were remanded. The Revenue's appeal for AY 2013-14 was dismissed.

Limitation for reassessment notice - Penny-stock long-term capital gains - requirement of cogent evidence

Limitation for reassessment notice - Extended reassessment limitation - Validity of the reassessment notice for AY 2013-14 issued after expiry of the limitation prescribed for reassessment - HELD THAT: - The original notice was deemed to be a notice under the pre-notice procedure, and only the unexpired period available on its issue could be utilised. The consequential reassessment notice was issued after that period had expired. Independently, the alleged escaped income did not meet the statutory condition for invoking the extended limitation period; consequently, the notice issued beyond three years was without jurisdiction.

Thus, notice u/s. 148 is also barred by limitation as the alleged income escaping assessment is less than Rs. 50 lacs and therefore, the extended period under section 149(1)(b) is inapplicable, resultantly, the notice issued u/s. 148 after the expiry of three years from the end of the relevant assessment year is without jurisdiction, barred by limitation and liable to be quashed alongwith all consequential proceedings. [Paras 9, 10]

The reassessment notice and consequential assessment were quashed as time-barred.

Penny-stock long-term capital gains-requirement of cogent evidence - Addition for unexplained money and commission expenditure - HELD THAT: - A finding that the share transactions represented accommodation entries cannot rest merely on preponderance of probabilities, abnormal movement in share price, or investigation material without cogent corroborative evidence connecting the assessee with the alleged arrangement. The appellate authority's deletion of the additions was held to be covered by the High Court decisions relied upon and required no interference. [Paras 12]

The deletion of the additions was upheld and the Revenue's grounds on merits were rejected.

Final Conclusion: The reassessment notice and consequential assessment were quashed as barred by limitation. On merits also, the deletion of the penny-stock related additions was upheld and the Revenue's appeal was dismissed.

Unexplained cash credit u/s 68 - unsecured loan - Proof of identity, creditworthiness and genuineness

Addition for an unsecured loan received from a lender company whose name had been struck off from the register of companies. - HELD THAT: - The lender's subsequent restoration as an active company, its income-tax return and GST returns for the relevant period, bank statements and electricity bills established that it was carrying on manufacturing business. The loan having been received through banking channels, the assessee proved the lender's identity and creditworthiness and the genuineness of the transaction; the lender's earlier striking off could not, on these facts, sustain the addition. [Paras 7, 8, 9]

The addition under section 68 was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition in respect of the unsecured loan was deleted.

TP Adjustment - Arm's length price of software development services - Working capital adjustment - Foreign exchange fluctuation as operating income - Transfer-pricing tolerance range

Arm's length price of software development services - Working capital adjustment - Foreign exchange fluctuation as operating income - Transfer-pricing tolerance range - Transfer-pricing adjustment for software development and maintenance support services, including applicability of the APA margin, treatment of foreign exchange fluctuation, working capital adjustment and the statutory tolerance range - HELD THAT: - The APA covered assessment years 2010-11 to 2015-16 and could not be applied to AY 2009-10. Foreign exchange fluctuation, being inextricably linked with the provision of software development services, was operating income. Where the assessee furnishes working-capital workings, the corresponding adjustment is required in determining the arm's length margin; its computation, however, required verification. The margin after working-capital adjustment was to be tested against the applicable tolerance range, and no adjustment could survive if it fell within that range. [Paras 9, 10]

The matter was restored to the TPO/AO solely to verify the working-capital adjustment; upon verification, no transfer-pricing adjustment shall be made if the working-capital-adjusted comparable margin falls within the statutory tolerance range. The comparable-selection grounds were not examined as academic.

Credit for tax deducted at source - Claim for short credit of tax deducted at source - HELD THAT: - The claim required factual verification by the Assessing Officer. [Paras 12]

The issue was restored to the Assessing Officer for de novo adjudication in accordance with law.

Final Conclusion: The cross-appeals were partly allowed for statistical purposes. The transfer-pricing issue was remanded only for verification of working-capital adjustment, while the claim for tax deducted at source credit was restored for factual verification.

Expatriate salary expenditure of Indian permanent establishment- Applicability of section 44C - Interest payments between foreign bank branch and head office - Head office expenditure and treaty non-discrimination - Direct-cost allocation and arm's length price - Refurbishment expenditure on leasehold premises - Year-end revaluation loss on foreign exchange forward contracts

Expatriate salary expenditure of Indian permanent establishment - Head office expenditure - India-UK DTAA business profits -Applicability of provisions of section 44C - Allowability of salary paid to expatriate employees deputed exclusively to the Indian Branch, including the component initially paid by the Head Office outside India - HELD THAT: - Entire salary income of the expatriate employees, including the portion paid in India as well as the portion initially paid by the Head Office in their respective home countries, was subjected to tax deduction at source in India. The assessee had deducted tax at source on 100% of the salary payable to such expatriate employees and the same had been offered to tax in India by the concerned employees in their individual returns of income under the head “Salaries”.

The portion of salary paid outside India by the Head Office was only a mode of payment and represented part of the overall salary cost attributable to the services rendered by the expatriate employees in India. The said amount was subsequently reimbursed by the Indian Permanent Establishment to the Head Office. Therefore, the reimbursement made by the India Branch cannot be regarded as a payment towards any independent service rendered by the Head Office or as expenditure incurred for managing the affairs of an overseas office.

Expenditure represented salary cost of employees who were working exclusively for the Indian operations of the assessee. Since the entire salary income had already suffered tax in India and there was no dispute regarding the genuineness of the expenditure or the services rendered by the expatriate employees, the reimbursement of the salary component paid by the Head Office cannot be disallowed either by invoking section 44C or on the ground of non-deduction of tax at source.

The character of the expenditure depends upon its nature and business nexus, not upon the place from which salary was initially paid. Salaries of employees exclusively rendering services for the Indian Branch were neither common executive and administrative overheads nor expenditure for managing an overseas office. They were incurred wholly and exclusively for the Indian business and were also deductible in computing profits of the Indian permanent establishment under Article 7 of the India-UK DTAA, which was more beneficial than the domestic restriction. [Paras 7]

The allowance of expatriate salary expenditure was upheld and the Revenue's ground was dismissed.

Interest payments between foreign bank branch and head office - Payment to self - Tax deduction at source on non-chargeable payment- TDS u/s 195 - Taxability of interest paid by the Indian Branch of a foreign bank to its Head Office or overseas branches and the consequential deduction of such interest - HELD THAT: - We find that the issue under consideration is no longer res integra in view of the decision of Sumitomo Mitsui Banking Corporation v. DDIT [2012 (4) TMI 80 - ITAT MUMBAI] held that interest paid by the Indian branch of a foreign bank to its Head Office and Overseas Branches is merely payment to self and, therefore, does not give rise to income chargeable to tax in India in the hands of the Head Office. And since such interest is not chargeable to tax in India, there is no obligation to deduct tax at source under section 195 of the Act and, consequently, no disallowance can be made under section 40(a)(i) of the Act.

The Indian Branch and the Head Office formed one legal entity; consequently, interest paid by the Branch to the Head Office or overseas branches was a payment to self and did not give rise to income chargeable to tax in India. Since the payment was not chargeable to tax, no obligation to deduct tax at source arose and the corresponding disallowance for non-deduction of tax could not survive. [Paras 9, 10]

The interest could not be taxed in the hands of the Head Office, and the deduction claimed by the Indian Branch was allowable.

Expenditure attributable to exempt income - Disallowance of expenditure attributable to exempt interest income - HELD THAT: - Following the consistent view in the assessee's own earlier years, the disallowance was confined to one per cent of the exempt income. [Paras 12]

The restricted disallowance was upheld.

Recovery of earlier securities losses - Taxability of recoveries against securities losses allowed in an earlier assessment year - HELD THAT: - The direction regarding taxability of recoveries was consequential upon the final outcome concerning allowability of the underlying securities losses in the earlier year. If those losses were ultimately held allowable, the corresponding recoveries could not be taxed in the year under consideration. [Paras 14]

The consequential direction was upheld, subject to the final appellate outcome for the earlier assessment year.

Head office expenditure and treaty non-discrimination - Domestic limitation on permanent establishment deductions - Applicability of the statutory limitation on deduction of Head Office expenditure in light of Articles 7 and 26 of the India-UK DTAA - HELD THAT: - Harmonious reading of Article 7 of the India–UK DTAA shows that while paragraph (2) lays down the substantive principle for attributing profits to a PE by treating it as a distinct and separate enterprise, paragraph (4) expressly preserves the customary domestic mechanism for such attribution through apportionment, subject to the overriding requirement that the resultant attribution must conform to the principles embodied in Article 7.

Treaty itself expressly preserves the domestic attribution mechanism customarily followed by the Contracting State. The significance of Article 7(4) lies in recognising that the process of attributing profits to a PE is not divorced from domestic computational provisions, but rather permits the application of such domestic mechanisms, so long as the resultant attribution accords with the principles governing Article 7.

The statutory provision is a special computation provision regulating executive and general administrative expenditure incurred outside India; it is not inherently discriminatory merely because it applies to non-residents. Article 7 preserves domestic attribution and computational mechanisms, while Article 26 does not exclude treaty protection where actual less favourable taxation is established. As the lower authorities had not identified the constituent items or their character, the applicability of the statutory limitation and treaty non-discrimination could not be determined on the existing record. [Paras 16]

The issue was restored for classification of the claimed expenditure and fresh determination under the statutory provision and Articles 7 and 26 of the India-UK DTAA.

Interest on income-tax refund - India-UK DTAA interest income - Tax treatment of interest received on income-tax refunds where the underlying refund proceedings had not attained finality - HELD THAT: - The treatment of interest on refund at the treaty rate had been accepted in preceding years. As appeals concerning the underlying refunds remained pending, the Tribunal found no infirmity in the direction already issued. [Paras 18]

The Revenue's challenge to the treatment of interest on income-tax refund was dismissed.

Transfer pricing between associated enterprise and permanent establishment - Applicability of transfer-pricing provisions to transactions between an associated enterprise and its permanent establishment in India - HELD THAT: - The issue stood concluded against the assessee by the Special Bench decision M/s TBEA Shenyang Transformed Group Company Limited [2025 (1) TMI 1274 - ITAT AHMEDABAD] referred to by both sides. [Paras 19]

The assessee's ground challenging applicability of transfer-pricing provisions was dismissed.

Direct-cost allocation and arm's length price - Royalty and fees for technical services - Make available condition - Allowability and arm's length determination of direct technology, managerial and taxation costs allocated to the Indian operations. - HELD THAT: - The allocated direct costs were supported by certified allocation keys and demonstrable business benefits. Routine managerial and administrative support was not fees for technical services, and the Revenue failed to establish any transfer of copyright, process or other right, or that technical knowledge, skill, know-how or processes were made available. The costs were allowable business expenditure and could not be treated as royalty or fees for technical services; determination of their arm's length price at nil was unjustified.

Our aforesaid view is fortified by the decisions of Engineering Analysis Centre of Excellence (P.) Ltd. [2021 (3) TMI 138 - SUPREME COURT] and De Beers India Minerals Pvt. Ltd.[2012 (5) TMI 191 - KARNATAKA HIGH COURT] [Paras 21]

The additions and disallowances relating to the direct costs were deleted; the Revenue's ground was dismissed and the corresponding assessee's grounds were allowed.

Refurbishment expenditure on leasehold premises - Revenue expenditure - Character of expenditure incurred on refurbishment of leasehold business premises - HELD THAT: - The improvements did not create a capital asset belonging to the assessee, which was only a lessee, and were incurred to make the premises suitable for business operations. Consistently with the assessee's earlier years, the expenditure was revenue in character. [Paras 24]

The refurbishment expenditure was allowed as revenue expenditure.

Year-end revaluation loss on foreign exchange forward contracts - Accrued trading loss - Allowability of loss on year-end revaluation of outstanding foreign exchange forward contracts entered into in the banking business - HELD THAT: - The Hon'ble Supreme Court in CIT v. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] has categorically held that the loss arising on account of fluctuation in the foreign exchange rate as on the balance sheet date is an item of expenditure under section 37(1) of the Act and is allowable as a deduction if it is computed in accordance with the regularly employed method of accounting. The principle that stock-in-trade and other revenue items are required to be valued at the close of the accounting year so as to ascertain the true profits of the business also stands recognized by the Hon'ble Supreme Court in Chainrup Sampatram [1953 (10) TMI 2 - SUPREME COURT]

Revaluation of outstanding forward contracts according to the consistently followed RBI/FEDAI accounting methodology reflected an accrued liability capable of reasonable determination at the balance-sheet date. Such loss was not contingent merely because the contracts had not matured and represented an allowable trading loss. [Paras 30]

The deletion of the disallowance of mark-to-market loss was upheld.

Business deduction of direct costs - Duplication of transfer-pricing adjustment and disallowance - Allowability of direct costs disallowed under business-expense provisions after the transfer-pricing officer had determined the arm's length price of the corresponding transaction at nil - HELD THAT: - Once the expenditure's business purpose remained undisputed, deduction could not be denied merely because similar documentary evidence was unavailable for the balance costs before the transfer-pricing officer. In the absence of a finding that the expenditure was sham, fictitious, personal or not incurred for business, the separate disallowance was unsustainable. [Paras 32]

The assessing authority was directed to allow the deduction of the direct expenditure.

Final Conclusion: The cross-appeals were partly allowed. The principal Revenue challenges were dismissed, direct-cost and refurbishment claims were allowed, the Head Office expenditure issue was remanded for fresh examination, and the assessee's transfer-pricing challenge to the applicability of the provisions was dismissed.

Penalty u/s 270A - Specific charge in penalty notice for misreporting of income - Penalty on debatable revenue-expenditure claim - "underreporting" or "misreporting" of income

Validity of penalty for alleged misreporting of income where the notices did not specify the applicable charge u/s 270A(9), and the disallowed riot-damage claim involved a debatable question of capital or revenue expenditure - HELD THAT: - The penalty notices did not indicate any specific charge under section 270A(9)(a) to (f), although those provisions prescribe the particular grounds on which a taxpayer may be charged with misreporting or suppression of income. In the absence of such specification, the Revenue lacked authority to impose the penalty.

On the issue of necessity to indicate specific charges, we have noted the decision of SCHNEIDER ELECTRIC SOUTH EAST ASIA (HQ) PTE LTD [2022 (3) TMI 1295 - DELHI HIGH COURT] as held Respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents have failed to specify the limb - "underreporting" or "misreporting" of income, under which the penalty proceedings had been initiated.

The Tribunal further found that the character of the riot-damage expenditure as capital or revenue was a debatable issue. [Paras 6, 9]

The penalty imposed under section 270A was deleted and the assessee's appeal was allowed.

Final Conclusion: The penalty for alleged misreporting of income was deleted because the notices omitted the specific statutory charge and the underlying expenditure claim was debatable.

Assessment u/s 153A - Search assessment during election period - compliance with Rule 112F certification - Unexplained money - cash availability from disclosed bank withdrawals

Search assessment during election period - compliance with Rule 112F certification - Validity of assessment under section 153A following requisition of cash seized during the election period, in the absence of the certification contemplated by Rule 112F- HELD THAT: - Rule 112F, read with the CBDT circular, requires the investigating officer, with the prescribed approval, to certify the stipulated conditions and communicate that certificate to the jurisdictional authorities in election-period search or requisition cases. The Assessing Officer did not establish issuance of such certificate.

We find that in Vijay Madan Varma [2025 (5) TMI 2126 - ITAT MUMBAI] has held that once the procedure prescribed in Rule 112F as clarified by the CBDT has not been complied with and no certificate has been issued by the Investigation Officer even when the cash was found during the election period, AO could not have issued notices under section 153A for the six earlier assessment years and it was a clear violation of Rule 112F and the procedures laid down by CBDT vide Circular No.10 of 2012 (supra). [Paras 14]

The assessment under section 153A was held bad in law and quashed.

Unexplained money - cash availability from disclosed bank withdrawals - Addition as unexplained money in respect of cash intercepted while being carried for business purposes - HELD THAT: - The assessee demonstrated that the intercepted cash was available from withdrawals from the disclosed bank account. As neither the books of account nor the cash book was rejected, and the withdrawals during the financial year were acknowledged, the cash was held to be from known sources. [Paras 15]

The addition for unexplained money was unsustainable on merits.

Final Conclusion: The appeal was allowed. The assessment framed under section 153A was quashed for non-compliance with Rule 112F, and the assessee also succeeded on the merits of the cash addition.

Reassessment notice - sanction by specified authority - Prospective operation of proviso to sanction provision

Validity of reassessment for AY 2018-19 where notice under section 148, issued after expiry of three years from the end of the assessment year, was approved by the Principal Commissioner instead of the authority specified u/s 151(ii) for such cases - HELD THAT: - Under the substituted reassessment regime, where more than three years had elapsed from the end of the relevant assessment year, approval for the order under section 148A(d) and notice under section 148 was required from the authority specified under section 151(ii), and not from the Principal Commissioner.

The proviso subsequently inserted into section 151 with effect from 01/04/2023, permitting exclusion of the period allowed for reply to the notice under section 148A(b), could not be applied retrospectively to the notice issued in the subject year. The defect was not one concerning the form, authentication or communication of approval and was consequently not cured by section 292BC.

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

The approval having been granted by an authority not competent under section 151(ii), the reassessment was held to be without valid assumption of jurisdiction and was quashed.

Final Conclusion: The reassessment framed for AY 2018-19 was quashed for want of approval by the statutorily specified authority. The remaining contentions were left open.

Benami transaction involving property held in spouse's name - Testamentary permission to occupy office premises - Life interest under a will - Doctrine of election under a will - Permissive occupation and mandatory injunction - Approbation and Reprobation - Suit is essentially one for mandatory injunction to vacate plaint 'C' schedule, which is a portion of the building in the 'A' schedule property, and for a mandatory injunction to execute documents necessary to effect transfer of the plaint 'B' schedule shares, debentures, etc

Whether the property purchased jointly in the names of the father and mother was exclusively owned by the father and consequently unavailable for partition ? - HELD THAT: - Property held in the name of a spouse is expressly excluded from the definition of a benami transaction; consequently, the statutory prohibition against benami transactions did not bar the plea of exclusive ownership. The mother's attestation of the father's will, her omission to include the property in her own will, and her acceptance of the will under the family resolution established her knowledge and acceptance that she was merely a name lender. Further, having accepted a benefit under the will while conscious of the testator's assertion of exclusive title, she could not claim an inconsistent proprietary right; the doctrine of election bound her and her legal representative. [Paras 10, 12, 13, 14, 15]

The father was the exclusive owner of the property; it was not partible among the children.

Whether the testamentary permission to continue the Advocate's Office in the office portion created a life interest in that portion ? - HELD THAT: - The will permitted the defendant to maintain the office only as long as he wished and required removal of the office articles thereafter to the building separately bequeathed to him. The office portion was absolutely bequeathed to the plaintiffs, subject only to the mother's life interest. The permission therefore created neither a life interest nor any proprietary interest in favour of the defendant; moreover, the office had ceased to function there. [Paras 16]

No life interest or other interest in the office portion was created in favour of the defendant.

Whether a suit for mandatory injunction was maintainable to obtain vacant possession of the office portion from a permissive occupant ? - HELD THAT: - The defendant's occupation remained permissive under the will, the plaintiffs' title was never disputed, and no independent right accrued to the defendant merely by lapse of time. Following the principle that a suit substantially seeking possession should not fail merely because it is framed as one for mandatory injunction, the Court held that the relief was maintainable. [Paras 18]

The plaintiffs were entitled to seek vacant possession through the suit for mandatory injunction.

Final Conclusion: The appeal challenging the decree for vacant possession was dismissed. The partition decree was set aside and the partition suit was dismissed.

Entitlement to benefit of notification for sub-contractors in public works contracts - joint venture treated as partnership 'person' for purpose of notification - Monetary Limit for Appeals - The Tribunal [2006 (1) TMI 345 - CESTAT, BANGALORE] allowed the appeal, holding that the appellant, named as sub-contractor under a contract awarded to a joint venture, is entitled to the benefit of Notification No. 17/01-Cus. - HELD THAT:- The appeal was dismissed on the ground that the duty demand was below the monetary limit prescribed for prosecuting appeals.

Rectification of mistake - Classification of optical network terminals and optical line terminals - Error apparent on the record - Applicability of exemption notifications - Binding effect of advance rulings - Expert evidence - Confiscation

Classification of optical network terminals and optical line terminals - Residuary tariff classification - Classification of ONT/ONU and OLT equipment as machines for reception and transmission of data under CTSH 8517 62, rather than under the residual CTSH 8517 69. - HELD THAT: - Nothing in the submissions made by either side in the appeal, during the hearing or even in this application would demonstrate that ONT/ONU do not receive or transmit data. This submission of the learned counsel in Grounds E & G of this application that there was an error in the Final Order is not correct.

The undisputed functions of ONT/ONU were to receive broadband connectivity through optical fibre and transmit it to subscriber devices through cables or Wi-Fi; OLTs similarly received and transmitted data between the service provider and subscribers. Goods answering CTSH 8517 62 cannot be classified under a tariff item within the residual CTSH 8517 69 merely because they are installed at the subscriber's end. The coordinate-bench decision in Reliance Retail Ltd. [2025 (4) TMI 1812 - CESTAT MUMBAI] was not applicable, since the functions of the goods considered there were not evident from that order. An advance ruling in another company's case did not govern the appellant's classification. [Paras 9, 10, 12, 13]

No error apparent on record was established in the classification of ONT/ONU and OLTs under CTI 8517 62 90.

Exemption notifications as applicable from time to time - Expert report in remand proceedings - Correction of the remand directions concerning exemption claims for ONT/ONU and OLTs under notifications amended during the period of dispute. - HELD THAT: - The exemption notifications were amended from time to time and their applicability had to be determined in the form in force during the relevant period. The appellant, having relied on the telecom expert's report in support of its exemption claim, could not require its acceptance without permitting the Commissioner to examine or cross-examine the expert. [Paras 14, 15]

The remand directions were modified to require the Commissioner to apply the notifications as applicable from time to time and to consider the expert report, with liberty to examine or cross-examine the expert.

Confiscation for misdeclaration - Omission to decide the challenge to the finding that the imported goods were liable to confiscation under section 111(m) of the Customs Act. - HELD THAT: - Although no goods had actually been confiscated and no consequential penalty or other action had followed, the appellant had specifically challenged the finding of liability to confiscation. The omission to address that challenge warranted fresh consideration. [Paras 17]

The question of liability to confiscation was remanded to the Commissioner for a fresh decision in the remand proceedings.

Final Conclusion: The rectification applications were partly allowed for correction of a typographical error and clarification of the remand directions on exemption and confiscation. The classification findings were left undisturbed.

Classification of aluminium formwork structures - Aluminium structures for shuttering and in-situ concrete support - Classifiable as aluminium structures under CTH 76109010 Or as moulds under CTH 84806000 - HSN Explanatory Notes - Essential Character - HELD THAT: - Following the ratio laid down in the case of Alcove Construction Private Limited [2024 (9) TMI 712 - CESTAT KOLKATA] and Vijay Nirman Co. Ltd [2025 (1) TMI 747 - CESTAT HYDERABAD]. This Court held that the formwork panels, though removed after the concrete sets and capable of reuse, function as shuttering and support for construction carried out in situ; they do not mould concrete into separately produced end-products. The exclusion of moulds from Heading 7610 applies only where the product is in fact a mould. As the imported custom-designed aluminium plates are assembled at site for construction and are not moulds, they fall within CTH 76109010. [Paras 8]

The Revenue's reclassification under CTH 84806000 was held erroneous; the goods were held classifiable under CTH 76109010.

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

Classification of aluminium formwork structures - Aluminium structures versus moulds for concrete - HSN Explanatory Notes - Classifiable as aluminium structures under CTH 76109010 and not as moulds under CTH 84806000. - HELD THAT: - The ratio laid down in the case of Alcove Construction Private Limited [2024 (9) TMI 712 - CESTAT KOLKATA] and Vijay Nirman Co. Ltd [2025 (1) TMI 747 - CESTAT HYDERABAD] held that the Explanatory Notes applicable to heading 7610 extend to aluminium structures the treatment accorded to equipment for scaffolding, shuttering, propping or pit-propping under heading 7308. The imported custom-designed aluminium plates and accessories function as shutters and support for concrete at the construction site; they do not mould independent concrete articles which thereafter become end products. Their removability and reuse do not render them moulds. The exclusion for moulds under Chapter 84 applies only where the product is in fact a mould. [Paras 8]

The Revenue's proposed classification under CTA 84806000 was rejected and the declared classification under CTH 76109010 was accepted.

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

Customs valuation on evidence of undervaluation - Provisional assessment and jurisdiction to issue demand notice - Redemption fine and penalty for undervaluation

Rejection of the declared value of specified imports covered by four Bills of Entry on the basis of recovered higher-value invoices and evidence of under-invoicing - HELD THAT: - The evidence on record, including invoices recovered during investigation and the admission of declaration of lower value, established undervaluation in respect of the specified imports. The differential duty confirmed for those imports and their liability to confiscation were therefore sustained. [Paras 13]

The demand of differential duty and confiscation in respect of the four specified Bills of Entry were upheld.

Redemption fine and penalty for undervaluation - Quantum of redemption fine and penalty imposed for import of goods at suppressed value. - HELD THAT: - In the absence of a finding on market value for determining the profit margin, redemption fine and penalty required objective fixation. Applying the Tribunal's precedent in CC Cochin Vs. Office Devices [2009 (6) TMI 66 - KERALA HIGH COURT], fine was fixed at 10 per cent and penalty at 5 per cent of the enhanced value. No separate penalty was warranted in the connected appeal, since no penalty had been imposed at adjudication for the imports covered by Annexure-A. [Paras 14, 15]

The redemption fine and penalty were reduced; no penalty was imposed in the connected appeal.

Finalisation of provisional assessments - Demand notice before final assessment - HELD THAT: - The enhanced value of PVC profiles was determined by reference to PVC flooring imported in an earlier year, though the goods were not comparable and their crude-oil-based raw material was subject to frequent price changes. Further, allegations of short-payment arise only upon finalisation of provisional assessments and adjustment of duty under section 18(2). A show-cause notice for finalisation could not be issued by the Commissioner instead of the proper officer; material in that notice may, however, be used independently for finalisation after written disclosure to the appellants and consideration of their response, as held in A.S. Syndicate (Waterhousing) P. Ltd.[2009 (12) TMI 609 - CALCUTTA HIGH COURT] and ITC Ltd.[2006 (10) TMI 149 - SUPREME COURT]. [Paras 16]

The enhancement, demand, interest and penalties relating to the 273 Bills of Entry were set aside, and the jurisdictional Assistant Commissioner was directed to finalise the provisional assessments in accordance with law.

Final Conclusion: The appeal was partly allowed. The duty demand and confiscation for the specified undervalued imports were sustained, with reduction of redemption fine and penalty, while the enhancement and consequential demand concerning the 273 provisionally assessed Bills of Entry were set aside for lawful finalisation of assessment.

Classification of imported floating seals - sole or principal use - Extended period of limitation -classifiable as parts of machinery under tariff item 8431 49 90 or as mechanical seals under tariff item 8484 20 00

Classification of floating seals by sole or principal use - HELD THAT: - In the absence of any admissible evidence regarding the end use of the goods, as per the judgment of the Hon’ble High Court of Delhi in the matter of Maldhari Sales Corporation [2016 (2) TMI 309 - DELHI HIGH COURT] which was upheld by Hon’ble Supreme Court, the classification of goods under Customs Tariff Item (CTI) 8484 2000 as Mechanical Seals adopted by the Revenue is unsustainable.

Revenue produced no evidence that they were used in other machines or equipment. Their classification under heading 8431 was therefore supported by their sole or principal use, and the Revenue's classification as mechanical seals under tariff item 8484 2000 was unsustainable. [Paras 13]

The floating seals were held classifiable under tariff heading 8431.

Validity of the extended-period demand, confiscation, redemption fine and penalty arising from the declared classification of imported floating seals. - HELD THAT: - The supplier's invoices had been furnished to Customs authorities at the time of import, and the dispute concerned classification. In such circumstances, the extended period could not be invoked; consequently, the demand so confirmed and the confiscation, redemption fine and penalty were unsustainable. [Paras 13, 14]

The extended-period demand and consequential confiscation, redemption fine and penalty were set aside.

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

Classification of roasted nuts - Advance ruling barred by prior judicial decision- Availability of preferential basic customs duty exemption under Notification No. 46/2011-Cus - oven-roasted pistachios and almonds - oven-roasted cashew nuts - Specific Entry Prevails Over Residuary Entry - HSN Explanatory Notes - Common Trade Parlance

Maintainability of the request for an advance ruling on classification of roasted areca nuts where the identical classification issue had already been decided by the High Court - HELD THAT: - As far as the classification sought for roasted Cashew Nuts, roasted Almond nuts and roasted Pista nuts are concerned, it is observed from the open-sources information that there are certain processes which are undertaken to get the subject goods from the raw ones and that there are considerable differences between the roasted Cashew nuts, roasted Almond nuts and roasted Pista nuts and that of the Raw Cashew nuts, Raw Almond nuts and Raw Pista nuts. Roasting and drying are not one and same processes and there is a sharp change in the moisture level, colour, appearance and flavour when the process of roasting is undertaken. Needless to say, that in the market and trade also, roasted Cashew nuts, roasted Almond nuts and roasted Pista nuts are well-known products and in common parlance it is called/sold/purchased and understood accordingly as roasted, itself. The Customs Tariff Act, nowhere defines the process of roasting. However, CTI 2008 1910 specifically covers roasted cashew nuts.

It can be seen from the processes specified in Chapters 7, 8 or 11 which mainly include freezing, steaming, boiling, drying, provisionally preserving and milling, thus, any vegetable, fruit, nuts or edible parts of a plant which is prepared or preserved by any "other process" than these are liable to be classified under Chapter-20. Heading 2008 covers fruit, nuts and other edible parts of plants. otherwise, prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. Roasting is a process used for bringing in to existence roasted nuts and the processes mentioned in chapter 8 do not cover roasting process.

It is pertinent to note that the Hon'ble High Court of Madras in a judgement of Commissionerate Vs M/s Shahnaz Commodities International P. Ltd. M/s. [2023 (8) TMI 492 - MADRAS HIGH COURT], upheld the rulings passed by this authority by approving the classification of Roasted Betel Nuts/Areca Nuts under CTI 20081920 (substituted with CTI 2008 19 91 vide the Finance Act, 2025).

The classification of roasted areca nuts had already been upheld by the High Court under the erstwhile tariff item, subsequently substituted by the relevant tariff item. As no new facts were placed, the application attracted the statutory bar against an advance ruling on a question already decided by a High Court. [Paras 8, 15]

No ruling was passed on the classification of roasted areca nuts.

Classification of roasted nuts - Specific tariff entry - HSN Explanatory Notes - HELD THAT: - As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRI. These Section or Chapter Notes and Sub-Notes give detailed explanation as to the scope and ambit of the respective Sections and Chapters. These Notes have been given statutory backing and have been incorporated at the top of each Section/Chapter. Thus, it becomes necessary to refer to relevant Section notes, Chapter notes and Heading notes to decide the classification of the subject goods under consideration.

The Hon'ble Apex Court in the case of Alladi Venkateswarlu [1978 (2) TMI 184 - SUPREME COURT] held that "the commonly accepted sense of a term should prevail in construing the description of an article of food". In common trade parlance, "drying" is a method of food preservation by the removal of water content. On the other hand, "roasting" means the excess or very high heat treatment that produces fundamental chemical and physical changes in the structure and composition of the goods, bringing about a charred physical appearance. Therefore, drying is a moisture removal process involving methods such as dehydration. evaporation; etc., whereas roasting is a severe heat treatment process.

The explanatory notes specifically cover the roasted Almonds. Further, Oven Roasted Almond Nuts and Pista Nuts falls under the category of "other nuts" to get itself covered into the inclusions as enumerated in the said explanatory note. Further, the subject goods are a resultant of the roasting process as elaborated by the applicant in the application. "Roasted Cashew Nuts" are specifically covered under CTI 2008 1910, therefore 'Roasted Cashew Nuts' merits classification under CTI 2008 1910. Further, roasted Almond Nuts and roasted Pista Nuts merit classification under CTI 2008 1991 as Other roasted nuts and seeds.

Roasted cashew nuts were classified under CTI 2008 19 10, and roasted almond nuts and roasted pistachios under CTI 2008 19 91.

Preferential customs duty exemption-proof of origin - benefit for the imported roasted nuts under Notification No. 46/2011-Cus. - HELD THAT: - The preferential benefit is conditional upon the importer establishing, to the satisfaction of the competent customs officer, that the goods originate in the notified country in accordance with the applicable preferential-origin rules and the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. [Paras 14, 16]

The notification benefit was held available only upon proof of the prescribed originating status.

Final Conclusion: The application for a ruling on roasted areca nuts was declined because the issue stood decided by the High Court. Roasted cashew nuts, almonds and pistachios were classified under their respective Heading 2008 tariff items, subject to fulfilment of the origin conditions for preferential duty.

Classification of gold in semi-manufactured forms such as sheets, plates, wires, rods and bars - Preferential tariff treatment under Notification No. 46/2011-Cus - Limited jurisdiction of advance ruling authority - Jurisdiction to determine the validity, treaty-consistency or applicability of Foreign Trade Policy restrictions on imports from ASEAN countries

Classification of semi-manufactured gold - classifiable as gold in semi-manufactured forms under Heading 7108 Or the appropriate tariff item of sub-heading 7108 13. - HELD THAT: - Heading 7108 expressly covers gold in semi-manufactured forms. The Harmonized System Explanatory Notes, read with Rule 1 of the General Rules for Interpretation, recognise bars, rods, wire, plates and sheets as covered forms. Since the goods are not presented as jewellery, goldsmiths' wares or finished articles, recourse to subsequent interpretative rules was unnecessary. [Paras 8]

The subject goods are classifiable under Heading 7108 and, according to their purity and specifications, under the appropriate tariff item of sub-heading 7108 13.

ASEAN preferential customs duty exemption - Rules of Origin - HELD THAT: - The goods fall within the tariff range at Sl. No. 966 of Notification No. 46/2011-Customs. The preferential treatment is conditional upon the goods originating in a country listed in the relevant Appendix, satisfaction of the applicable ASEAN-India Rules of Origin, and compliance with prescribed documentary and procedural requirements. A customs exemption notification governs duty treatment and does not dispense with independent import-policy requirements. [Paras 8]

The goods are eligible for consideration under Notification No. 46/2011-Customs, subject to fulfilment of its origin and other stipulated conditions, without prejudice to applicable import-policy conditions.

Limited jurisdiction of advance ruling authority - Import policy restrictions - HELD THAT: - The statutory jurisdiction extends to the specified questions concerning classification, applicability of customs notifications, valuation and origin, but not to the validity, enforceability or treaty-consistency of import restrictions framed under the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act, 1992. Preferential tariff eligibility and compliance with import-policy conditions operate in distinct statutory fields; satisfaction of either does not obviate the other. [Paras 8]

No ruling was rendered on the validity, applicability or treaty-consistency of the import-policy restrictions, which must be determined by the competent authorities under the relevant law.

Final Conclusion: The advance ruling classified the proposed semi-manufactured gold under Heading 7108 and held it eligible for preferential tariff treatment subject to the notification's conditions. The challenge to the Foreign Trade Policy restrictions was held to be beyond the Authority's jurisdiction.

Maintainability of advance-ruling application on a question already decided by a Court - Binding judicial precedent and judicial discipline - Admissibility of an advance-ruling application seeking classification of roasted areca nuts where the same question had been decided by a High Court. - HELD THAT: - It is a settled principle of law that rulings of the Tribunal and Courts are binding on subordinate authorities. The AAR, being a statutory authority under the Customs Act, is equally bound by such precedents. To allow fresh applications on questions already adjudicated by higher judicial fora would risk the creation of conflicting rulings and introduce uncertainty, an outcome contrary to the very object of the advance ruling mechanism. Clause (b) therefore operates as a statutory reinforcement of judicial discipline, making it explicit that once a question has been conclusively determined by the Tribunal or Courts, the Authority cannot re-adjudicate the same issue at the behest of another party.

The issue raised in the instant application is squarely covered by the judgement of Hon'ble Madras High Court in the case of M/s Shahnaz International Pvt. Ltd. [2023 (8) TMI 492 - MADRAS HIGH COURT].In terms of Section 28-I (2)(a) of the Customs Act, 1962 and in adherence to the principles of judicial discipline and binding precedent, it is appropriate to refrain from pronouncing any ruling on the question raised in the instant application regarding classification of the subject goods; therefore, in accordance with the provisions of Section 28-I, sub section (2); and proviso (b) of the Customs Act, 1962, decide 'not to allow' the application.

The application was not allowed, and no ruling was pronounced on the classification of the subject goods.

Final Conclusion: The advance-ruling application was rejected as the classification question concerning roasted areca nuts stood covered by binding High Court precedent.

Commercial wisdom of committee of creditors - Validity of the approval of resolution plan submitted by the Successful Resolution Applicant (“SRA”) - dismissal of the objections filed by the Dissenting Financial Creditor (“DFC”) and Unsuccessful Resolution Applicant (“URA”) regarding the approved resolution plan - procedural and substantive material irregularities which undermined the integrity of the CIRP - National Company Law Appellate Tribunal [2026 (4) TMI 874 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] upheld the approval of the successful resolution applicant's plan, holding that no material procedural irregularity or statutory non-compliance had been established. - HELD THAT:- The civil appeals were dismissed, with the accompanying interlocutory application(s) disposed of.

Jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code - powers and substitution of Resolution Professional / Successful Resolution Applicant after approval of resolution plan - part performance under Section 53A of the Transfer of Property Act - compulsory registration of contracts for transfer for consideration under Section 17(1A) of the Registration Act - NCLAT [2025 (12) TMI 1618 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] held that the Adjudicating Authority lawfully proceeded after substitution of the SRA, correctly exercised jurisdiction under Section 60(5) to examine the MoU, rejected the appellant's claim to protection under Section 53A (the MoU being unregistered and of doubtful validity), upheld the direction to hand over possession, and sustained the order for payment of fair usage charges. - HELD THAT:- The appeal was dismissed, with no ground found to interfere with the impugned order.

Denial of a fair opportunity of hearing before admission of the financial creditor's insolvency application - Natural justice - Pendency of compromise scheme and Section 7 admission - Pending counterclaim and financial debt default - Financial Debt and Default - Corporate Insolvency Resolution Process - Scope of Section 7 Jurisdiction - Pendency of Settlement Negotiations - Scheme of Compromise and Arrangement

Effective opportunity of hearing - Natural justice in Section 7 proceedings - Admission of the financial creditor's insolvency application after closure of the Corporate Debtor's right to address oral arguments. - HELD THAT: - The Corporate Debtor had filed its reply, pleadings, applications and written submissions and was repeatedly afforded opportunities to advance oral submissions. Closure of the right to argue followed its failure to avail those opportunities and was not a denial of a fair hearing. The Adjudicating Authority decided the application on the material, reply and written submissions on record; the proceedings were therefore not vitiated by breach of natural justice. The procedural orders had merged into the merits adjudication and did not automatically invalidate the admission order. [Paras 60, 62, 63, 64, 65]

The challenge founded on denial of hearing and the connected challenges to the procedural orders were rejected.

Compromise scheme and insolvency proceedings - Settlement negotiations and Section 7 admission - HELD THAT: - The principles of natural justice require a fair and reasonable opportunity of hearing. They cannot be interpreted to mean that proceedings must continue indefinitely despite repeated opportunities being granted. A party which has participated in the proceedings and has been provided sufficient opportunity to place its case cannot subsequently contend that there has been denial of natural justice merely because further adjournment was not granted.

The principal argument advanced by the Appellant is that the Adjudicating Authority ought to have deferred the Section 7 proceedings because the Corporate Debtor had initiated a Scheme of Compromise under Section 230 of the Companies Act, 2013 and the Consortium of Lenders was considering the same. According to the Appellant, the proposed Scheme had reached an advanced stage and the Consortium had resolved to vote upon the proposal during the period from 14.07.2025 to 14.08.2025. It has also been argued that the Corporate Debtor had agreed to deposit a portion of the settlement amount to demonstrate its bona fides.

The jurisdiction under Section 7 is confined to examining the existence of financial debt, occurrence of default and completeness of the application. A compromise scheme remains a proposal until approved in accordance with law and made binding on stakeholders; settlement negotiations or a possible future settlement cannot require indefinite postponement of insolvency adjudication. The reported failure of the settlement proposal, coupled with established debt and default, justified adjudication of the application. Commercial viability, ongoing projects and anticipated hardship from CIRP did not constitute grounds to refuse admission, since CIRP is a resolution mechanism and not liquidation. [Paras 69, 72, 73, 74, 75]

The pendency of the proposed scheme and settlement discussions did not bar or defer admission of the Section 7 application.

Pending counterclaim and insolvency admission - Exceptional discretion under Section 7 - HELD THAT: - The counterclaim before the Debt Recovery Tribunal remained pending and had not resulted in any determination in favour of the Corporate Debtor. Its mere filing could neither displace the established financial debt and default nor require the Adjudicating Authority to await the outcome of collateral proceedings. The exceptional circumstances considered in Vidarbha Industries Power Limited v. Axis Bank Limited [2022 (7) TMI 581 - SUPREME COURT] were absent, since the proposed scheme, settlement discussions and counterclaim had not attained finality or displaced the default. [Paras 78, 79, 81, 83, 84]

The pending counterclaim did not affect the financial creditor's right to maintain the Section 7 application, and admission of the Corporate Debtor into CIRP was upheld.

Final Conclusion: The appeals challenging admission of the Section 7 application and the connected procedural orders were dismissed. The appeals arising from the separate insolvency petition were dismissed as infructuous.

Limitation for insolvency application against personal guarantor - Part-payment by principal borrower binding on guarantor - Co-extensive Liability of Guarantor - Acknowledgment of Liability - Personal Guarantee

Maintainability within limitation of the application initiating personal insolvency resolution against the personal guarantor, where the principal borrower made part-payment of the debt - HELD THAT: - The creditor specifically relied on the part-payment made by the corporate debtor, whose existence was not disputed. Under the deed of guarantee, a part-payment by the borrower bound the guarantor; further, the guarantor's liability was co-extensive with that of the principal borrower. The part-payment could therefore not be disregarded in determining limitation against the guarantor. [Paras 6]

The application under section 95 was held not barred by limitation.

Effect of dismissal for default of debt recovery proceedings - HELD THAT: - Dismissal of a recovery proceeding for default neither extinguishes the underlying debt nor renders a proceeding under section 95 of the Code non-maintainable. [Paras 7]

The dismissal for default of the recovery proceeding did not defeat the personal insolvency application.

Final Conclusion: The challenge to the admission of the personal insolvency application was rejected. The appeal was dismissed.

Insolvency resolution process costs - Gratuity and leave encashment of employee superannuating during CIRP - Terminal Benefits - Waterfall Mechanism - Priority of Payments - HELD THAT: - Unfortunately, the corporate debtor did not maintain any Gratuity fund to support its employees for the appellant to fee more secured. And, the strategy of the appellant makes evident his underlying anxiety: If his claim of gratuity is made of CIRP cost he will not only be entitled to the actuals but also receive the same in priority.

An analysis of the definition informs that the legislature has opted for a narrower definition when it used the word ‘means’, which implies nothing which is not stated to mean an insolvency resolution process costs within the definition can be read into it. Secondly, except in (b) which deals with remuneration payable to the resolution professional, those in (a), (c) and (d) are expenses actually incurred by the resolution professional. Therefore, IRP cost essentially means those costs which are actually incurred by the resolution professional during the insolvency resolution process, but slated for deferred payment to be paid first in the order of priority when payment happens as per Sec. 53 formula.

Save for the resolution professional's remuneration, the specified costs are expenses actually incurred by the resolution professional during the process. Gratuity is a terminal benefit accruing to an employee and is neither an expense incurred by the resolution professional nor equivalent to salary payable for work during the insolvency resolution process. [Paras 7]

The claim for priority payment of gratuity and leave encashment as insolvency resolution process costs was rejected; such dues are to be dealt with under the resolution plan.

Final Conclusion: The appeal was dismissed. The employee's gratuity and leave encashment claims were held not to constitute insolvency resolution process costs and were liable to be addressed in terms of the resolution plan.

Disciplinary suspension of resolution professional across other assignments - Audi alteram partem - Proportionality in regulatory disciplinary action - Interim suspension of the resolution professional's registration in assignments other than the CIRP in which the disciplinary charge arose. - HELD THAT: - The statutory requirement of confirmation by the Board for appointment or replacement of a resolution professional does not answer whether the Board may, on a charge confined to one CIRP, prevent the professional from acting in every other assignment. Regulation 13(7), requiring communication of the disciplinary order to the committees of creditors in other assignments, preserves their statutory role in deciding whether to retain or replace the professional. A blanket exclusion, without any charge or hearing concerning the professional's conduct in those other assignments, offends proportionality and the rule of audi alteram partem. The wider scope of appellate jurisdiction under section 220(7) was expressly left open for final consideration. [Paras 13, 14, 15, 16, 17]

A strong prima facie case having been made out, the suspension was stayed insofar as it barred the appellant from other assignments; the Board may communicate its order to the respective committees of creditors, which may decide whether to retain the appellant.

Final Conclusion: The interim application was allowed to the limited extent of suspending the disciplinary suspension as regards assignments other than the CIRP giving rise to the charge. The merits of the disciplinary action and the full scope of appellate jurisdiction remain open.

Limitation for initiation of corporate insolvency resolution process - Financial debt arising from advances repayable to creditor - Agency of Partners - Financial Debt - Time Value of Money - Date of Default

Authority of partner to institute insolvency proceedings on behalf of partnership firm - Locus standi of legal representative of deceased partner - HELD THAT: - The partnership deed did not automatically admit the deceased partner's nominee into the firm; consequently, a legal representative not admitted as a partner had no locus standi to intervene. The decision to commence insolvency proceedings was a matter connected with the business of the firm and, having been taken by a majority of the surviving partners, bound the dissenting partner. In the absence of any procedural requirement that all majority partners sign Form 1, the Partnership Act permitted one partner, acting in the firm's name, to institute the application for all. [Paras 9, 10]

The Section 7 application was validly authorised, and objections founded on inter se partnership disputes could only be pursued before the competent civil court.

Financial debt arising from advances repayable to creditor - Interest not essential to financial debt - HELD THAT: - The corporate debtor's balance sheets recorded the appellant as a sundry creditor, and the ledger and Form 1 showed advances intended to be repaid. These materials established a debt; a formal loan agreement was not indispensable. Further, payment of interest was not a sine qua non for a debt, and the principal amount itself crossed the statutory threshold for a Section 7 application. [Paras 12, 13]

The advances constituted financial debt for purposes of the insolvency application.

Maintainability of the Section 7 application where the asserted revised date of default - HELD THAT: - The application did not disclose 31.03.2019 as its date of default, while the later affidavit stating 30.05.2022 furnished no basis for that date. The last transaction between the parties was on 31.03.2019, which was the nearest ascertainable date from which default commenced. The limitation period therefore expired before the demand notice and the filing of the Section 7 application; the later date stated in the affidavit was artificial and unsupported by the record. [Paras 14, 15, 16]

The debt was time-barred and the Section 7 application was not maintainable.

Final Conclusion: While the Section 7 application was held to have been validly authorised and founded on financial debt, it was barred by limitation. The appeal was accordingly dismissed.

Impleadment of necessary party in avoidance-transaction proceedings - De-reservation of orders for effective adjudication - Inherent powers of the Adjudicating Authority - an agreement for sale of the corporate debtor's property - HELD THAT: - The foundation for impleading the secured creditor was the separate order in the application for enforcement of the agreement for sale, which considered the creditor's status and dealings concerning the property and remained unchallenged. Since the avoidance application could not be effectively decided without hearing that creditor, its impleadment was justified. The consequential de-reservation of the reserved order was inevitable; the Adjudicating Authority possesses inherent power to re-open a reserved matter and hear a newly impleaded necessary party where required in the interest of justice and effective adjudication. [Paras 10, 11]

The impleadment and de-reservation orders were sustained, and the appeal was dismissed.

Final Conclusion: The appeal challenging the impleadment of the secured creditor and re-opening of the avoidance application was dismissed. The Adjudicating Authority was requested to decide the pending avoidance application expeditiously.

SEZ service-tax exemption for authorised operations - Refund of service tax on specified services - Wholly consumed services - Overriding effect of the SEZ Act - Manufacture of excisable goods - Substantive benefit over procedural irregularity - HELD THAT: - The Chennai Bench of the CESTAT in the appellant's own case for a different period vide Final Order [2021 (3) TMI 681 - CESTAT CHENNAI], following the decision in M/s. GMR Aerospace Engineering Ltd.[2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT], granted the requisite exemption from payment of Service Tax, as operated by virtue of the said notification ibid. As to the charge of not “wholly consumed”, within the SEZ thereby implying that the services in question were consumed outside the SEZ, is certainly not made in the notice issued and to which allegation the appellant was never put on notice. Hence the adjudicators cannot derive any benefit out of such a situation.

It is otherwise a settled law that there is no restriction regarding the consumption of the services and exemption extended to such services rendered to an SEZ unit for purpose of authorised operations of the SEZ.

Section 26(1)(e) of the SEZ Act grants exemption in respect of taxable services provided for authorised operations. Notification No. 17/2011-ST regulates that exemption through refund of tax paid on specified services. The proviso concerning services wholly consumed within the SEZ merely confers an option for ab initio non-payment of tax; it does not impose wholly consumed within the SEZ as a condition for refund. The notification permits proportionate refund where services are shared with a DTA unit, but there was no finding that the impugned services were so shared or were not used for authorised operations. The SEZ Act prevails over an inconsistent notification under the Finance Act, and procedural requirements cannot defeat the substantive exemption. [Paras 9, 10, 12, 15, 16]

Refund of service tax on the specified services used for authorised operations was allowable; the rejection founded on their not being wholly consumed within the SEZ was set aside to the extent claimed in appeal.

Final Conclusion: The appeal was allowed to the extent of the refund claimed for services shown to have been used in the authorised operations of the SEZ unit.

CENVAT credit on repair and renovation of output-service premises - Works contract service and input service exclusion - Definition and scope of ‘input service’ as per Rule 2(l) - Inclusive and Exclusion Clauses - Eligibility of CENVAT credit of service tax paid on RCC column strengthening and related repair and maintenance of existing studio and audio-recording buildings used for providing output services. - HELD THAT: - In the case of Jai Balaji Industries Limited. [2022 (8) TMI 468 - CESTAT KOLKATA] by placing reliance on the decision of Reliance Industries [2022 (4) TMI 729 - CESTAT AHMEDABAD] have held that input credit is admissible in respect of service tax paid on works contract services, and the CENVAT credit cannot be denied.

The basic requirement in terms of clause (ii) of Rule 2(l) of CCR, 2004 have been fulfilled and this cannot be the ground for making the input service tax paid as ineligible for taking CENVAT credit. However, since the authorities below have rejected the CENVAT credit on the ground that this is covered under the exclusion clause provided under Rule 2(k) and 2(l) ibid.

Rule 2(k) concerns inputs in the nature of goods and was inapplicable to credit of service tax paid on disputed services. The repair and strengthening of existing premises from which output services were provided satisfied the means clause of Rule 2(l) and specifically fell within its inclusive expression covering modernisation, renovation or repairs of a provider's premises. Such services were not excluded merely because they involved works contract service; the exclusion applies to construction or execution of works contract of a building or civil structure, not repair, renovation and strengthening of existing output-service infrastructure. The authorities had also failed to properly examine the invoices and accounting material. [Paras 7, 8, 9, 10]

The denial of CENVAT credit was held unsustainable; the credit and consequential penalty were set aside.

Final Conclusion: The appeal was allowed. CENVAT credit on the disputed repair and maintenance services of the existing studio infrastructure was admissible, and the associated penalty was set aside.

Demand of service tax on Delayed Payment Charges[DPC] - Tolerance of an Act - Penal Charges - Taxable value of stock-broking services - delayed payment charges recovered by a stock broker from clients for delay in meeting settlement obligations or margin trading facility obligations - HELD THAT: - The concept of DPC is linked to the payment which is to be made by the clients by a particular settled date but has not been paid so and in view of the delay, the appellant deposited the amount and charged DPC from their clients.

Taking note of the Circular No. 102/21/2019, GST dated 28.06.2019 clarifying that levy of additional/penal interest does not fall within the ambit of entry 5(e) of Schedule II of the CGST Act, i.e., “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act”, as this levy of additional/penal interest satisfies the definition of “interest” as contained in Notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017.

Delayed payment charges were recovered only where clients failed to pay within the stipulated time and were in the nature of penal charges compensating the appellant for payments made to the Exchange on their behalf. They were not consideration for stock-broking services or for an independent agreement to tolerate delayed payment. The Tribunal applied the settled requirement that an activity must be specifically contemplated by the agreement and supported by consideration for that activity; penal provisions safeguarding commercial interests upon breach do not satisfy that test. The service-tax and GST circulars also recognised that delayed payment charges are not charges for taxable services. [Paras 10, 12, 13, 14, 15]

Delayed payment charges were not includible in taxable value and no service tax was leviable under section 66E(e).

Final Conclusion: The impugned order demanding service tax on delayed payment charges, with consequential interest and penalty, was set aside and the appeal was allowed.

Classification of re-rubberisation of printing rollers - Classification of taxable services classifiable under two categories - Specific Description Rule - Processing of Goods on Behalf of Client - Classification of removal of worn-out rubber and re-rubberisation of old and used printing rollers as Business Auxiliary Service or Management, Maintenance or Repair Service. - HELD THAT: - Following the ratio of the own decision [2013 (12) TMI 620 - CESTAT NEW DELHI]. Thus Court held that the activity involved processes undertaken on rollers received from clients and was consequently covered as processing of goods on behalf of the client under Business Auxiliary Service. Although re-rubberisation could also amount to reconditioning, restoration or repair and thus be prima facie classifiable under Management, Maintenance or Repair Service, neither category was more specific and the essential-character criterion did not resolve the classification. The statutory rule applicable to equally meritorious classifications therefore required classification under the sub-clause occurring first; Business Auxiliary Service preceded Management, Maintenance or Repair Service. [Paras 4]

The service was classifiable under Business Auxiliary Service; the impugned order was set aside and the appeal allowed with consequential relief in accordance with law.

Final Conclusion: Following the earlier decision in the appellant's own case, re-rubberisation of old and used printing rollers was held classifiable as Business Auxiliary Service. The appeal was allowed with consequential relief in accordance with law.

Reasoned adjudication of classification dispute - Non-application of mind in remand order - Validity of the remand of the classification dispute concerning Flexible Intermediate Bulk Containers (Jumbo Bags), claimed under Customs Tariff Heading 63053200 and classified by the Customs authorities under Chapter Heading 39232990. - HELD THAT: - The petitioner exported “Jumbo Bags” under six shipping bills filed under Section 50 of the Act, classifying the goods under Customs Tariff Heading 63053200. Thereafter, samples of the exported goods were drawn by the Customs authorities and sent to the Chemical Examiner, who reported that the goods were in the form of white woven plastic articles comprising strip yarn of pigmented polypropylene. Based on the said report, the Customs authorities finalized the classification of the exported goods under Chapter Heading 39232990 by an order dated 02.02.2012.

The Tribunal's basis for remand and its directions to reconsider the Circular and Trade Notice were not decipherable. It adopted directions issued in Messrs CTM Technical Textiles Limited [2020 (12) TMI 1100 - GUJARAT HIGH COURT] without appreciating that those directions required the Union of India itself to re-examine the circulars. Since the relevant evidence and governing decisions were already before the Tribunal, it was required to examine the rival contentions, apply the applicable law and render a reasoned decision on merits, rather than issue an incongruous remand. [Paras 14, 15, 16, 17]

The Tribunal's order was quashed and the appeal was remanded to the Tribunal for fresh merits adjudication after hearing both sides; the merits and all rival contentions were left open.

Final Conclusion: The writ petition was allowed and the Tribunal's unreasoned remand order was set aside. The classification appeal was restored to the Tribunal for fresh adjudication on merits, with all contentions kept open.

Failure to adjudicate challenge to excise-duty levy - Remand for quantification without deciding liability - Propriety of remanding the excise-duty demand for re-quantification without deciding the assessee's challenge that assembling and packing components of LPG/CNG automobile conversion kits did not amount to manufacture. - HELD THAT: - The appellate order showed that the levy itself had been contested on merits, including on the ground that the stated activity did not fall within the statutory definition of manufacture. The appellate tribunal nevertheless remanded the matter solely for re-quantification after allowing the benefit of duty price. Since liability to duty was the foundational controversy, remand for quantification without examining that challenge was arbitrary and uncalled for. The tribunal ought not to have remanded the matter for quantification while the levy was under challenge on the basis of legal precedents. [Paras 6]

The appellate order was quashed and the appeals were remanded to the appellate tribunal for fresh decision on merits, with all rights and contentions left open.

Final Conclusion: The writ petition was allowed as the appellate tribunal had remanded the matter for quantification without deciding the challenge to the excise-duty levy. The appeals were restored for fresh adjudication on merits.

CENVAT credit on aircraft running and executive jet hiring services - Input services used for business activities - HELD THAT: - The Tribunal found that the impugned aviation services had been treated in the cited Tribunal decisions as eligible input services. The invoices stood in the respondent's name and service tax had been paid thereon. In the absence of admissible evidence establishing misuse of the services for purposes other than business, the credit could not be denied; the services were used directly or indirectly in or in relation to manufacture and fell within activities relating to business and sales promotion. [Paras 9]

The respondent was held entitled to the claimed CENVAT credit, and the appellate order allowing the credit was upheld.

Final Conclusion: The appellate order permitting CENVAT credit on the aircraft-related services was upheld, and the Revenue's appeal was dismissed.

CENVAT credit on sales commission services - Retrospective operation of clarificatory amendment to input service definition - Whether the amendment to the definition of input services have retrospective effect or not? - HELD THAT: - The Explanation introduced by Notification No. 2/2016 clarifies that sales promotion includes services by way of sale of dutiable goods on commission basis. Being clarificatory, it operates retrospectively. The Board circular treating such services as eligible for credit was binding on the Department. The decision in Cadila Healthcare [2013 (1) TMI 304 - GUJARAT HIGH COURT], on which the denial rested, could not be applied since it had been set aside and remanded by the Supreme Court. [Paras 8]

CENVAT credit on the service tax paid to commission agents was admissible; consequently, the disallowance, interest and penalty were set aside.

Final Conclusion: The appeal was allowed and the impugned denial of CENVAT credit, with consequential interest and penalty, was set aside.

Prospective application of limitation for availment of Cenvat credit - Accrued right to Cenvat credit - Applicability of the six-month limitation for availment of Cenvat credit to inputs and input services received before the amended provisions imposing that limitation came into effect. - HELD THAT: - Relying on the decisions M/s. Tamil Nadu Newsprint and Papers Limited [2026 (2) TMI 1005 - CESTAT CHENNAI]; Roquette Riddhi Siddhi Pvt. Ltd.[2022 (3) TMI 358 - CESTAT BANGALORE]; and Global Ceramics Pvt. Ltd., M/s. B.R. Ceramics (P) Ltd. [2019 (5) TMI 1432 - DELHI HIGH COURT], the period of 6 months as prescribed under Rule 4(1) of the Cenvat Credit Rules, 2004 read with Notification No. 21/2014-CE (NT) dated July 11, 2014, as the invoices were issued prior to 11.07.2014.

The right to avail credit accrued when the duty-paid inputs and input services were received in the factory, at a time when no limitation for taking credit existed. The subsequently introduced six-month limitation could not be applied to invoices relating to such prior receipts, since it would retrospectively curtail an accrued right. The relevant date was the date of receipt of the inputs and input services, and not the date of entry of credit in the RG-23A Part II register. [Paras 6]

The denial of Cenvat credit was unsustainable; consequently, the demands of interest and penalty also failed.

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

Original fixed capital investment - additional fixed capital investment of at least twenty five per cent - Exemption under section 4A - purposive and liberal construction of fiscal incentives - The High Court [2011 (3) TMI 1541 - ALLAHABAD HIGH COURT] held that, For purposes of section 4A, 'original fixed capital investment' means the initial investment at the time of establishment and the 25% additional fixed capital investment requirement for subsequent expansions/diversifications is to be computed with reference to that original (initial) investment. - HELD THAT:- The appeals were disposed of, with liberty to revive them upon grant of leave by the Company Court.

VAT computation on pressure cooker sale price - Exclusion of tax from sale price - Computation of the balance VAT payable on pressure cookers sold before 2010 where VAT had initially been collected and paid at 4%, but the applicable rate was subsequently held to be 12.5%. - HELD THAT: - Though tax charged or chargeable is excluded from sale price, the earlier 4% VAT had been collected on the original sale price. The subsequent liability at 12.5% had therefore to be computed on that same sale price, with credit for the tax already paid. Reducing the sale price in order to compute the higher rate would distort the basis on which the earlier tax was collected, result in underpayment, and would not avoid any impermissible levy of tax on tax. [Paras 10, 11]

The balance 8.5% VAT was payable on the original sale price of the pressure cooker; the impugned computation was upheld.

Final Conclusion: The revision petitions were dismissed, there being no ground to interfere with the impugned order.

Tax on branded Blended French Coffee sold after first point of sale - Deemed first seller under Section 5AA of the APGST Act - Applicability of Section 5AA of the APGST Act to sales of Blended French Coffee marketed under the dealer's trade name at a point other than the first sale

HELD THAT: - Section 5AA makes a dealer holding a trade mark or patent liable as a deemed first seller where goods are sold under that mark at a point other than the first point of sale. The Court followed the Division Bench ruling in M/s. Vicrocil Oil Company v. The State of Andhra Pradesh [2026 (1) TMI 1655 - TELANGANA HIGH COURT] which held that such liability applies irrespective of whether the trade mark is registered or unregistered. As the petitioner marketed Blended Coffee under its own trade name, the provision was applicable. [Paras 17, 18, 19]

The levy under Section 5AA was upheld and the substantial question of law was answered in favour of the State.

Final Conclusion: The tax revision cases were dismissed. The Tribunal's confirmation of tax on the petitioner's branded Blended Coffee under Section 5AA of the APGST Act was sustained.

Dishonour of Cheque -Presumptions of consideration and legally enforceable debt - Cash loan in contravention of section 269SS and enforceability of debt - Rebuttal of presumption arising from admitted execution of cheque - Presumption in favour of holder - Rebuttable presumption - Burden of rebuttal

Effect of an alleged cash loan exceeding the limit under section 269SS of the Income-tax Act on the enforceability of debt underlying dishonoured cheques -HELD THAT: - Upon admission of execution of the cheques, the presumptions that they were drawn for consideration and received towards a legally enforceable debt or liability arose against the accused. A breach of section 269SS attracts the penalty prescribed under section 271D, but neither provision renders the underlying transaction illegal, invalid or statutorily void. Such breach, therefore, neither makes the debt unenforceable in proceedings under section 138 nor by itself rebuts the statutory presumptions. [Paras 13]

The Trial Court's view that a cash transaction above the statutory limit was illegal and could not constitute a legally enforceable debt was unsustainable.

Rebuttal of presumption arising from admitted execution of cheque - Whether the statutory presumption in favour of the cheque holder stood rebutted by denial of the loan and the accused's assertion of financial capacity. - HELD THAT: - The presumption under section 139 is rebuttable, but a mere denial does not suffice. The accused must explain the circumstances in which the cheque was issued and came into the payee's possession. Proof that the payee lacked financial capacity to advance the amount may assist in dislodging the presumption. As the complainant had led evidence regarding capacity to lend which the Trial Court had not properly considered, the merits required fresh consideration without appellate appreciation of the evidence. [Paras 14, 15, 16]

The remand for fresh decision by the Trial Court was upheld, and the appeal was dismissed.

Final Conclusion: The appeal against the remand order was dismissed. The Trial Court was directed to decide the cheque-dishonour complaint afresh and expeditiously, after properly considering the evidence in light of the statutory presumptions.

Supervisory jurisdiction over arbitral jurisdictional orders - Non-arbitrability of company restructuring disputes - Exclusive jurisdiction of the National Company Law Tribunal - Kompetenz-Kompetenz - Limited Judicial Intervention - Supervisory Jurisdiction

Maintainability of a petition under Article 227 against an arbitral order rejecting a jurisdictional objection under Section 16(2) of the Arbitration and Conciliation Act, 1996 - HELD THAT: - Sub-Section (5) of Section 16 of the Act provides that the Arbitral Tribunal shall decide on a plea referred to in Sub-Section (2) or Sub-Section (3) and, in case it rejects the plea under Sub-Section (2) or Sub-Section (3), proceed with the arbitration. Section 37 of the Act specifically deals with appealable orders. Sub-Section (2)(a) of Section 37 of the Act, states that an appeal shall lie to a court from an order of the Arbitral Tribunal, accepting the plea under Sub-Section (2) or Sub-Section (3) of Section 16 of the Act. In the present case, the Arbitrator had not accepted the plea of the petitioner under Sub-Section (2) of Section 16 of the Act. Therefore, it is beyond doubt that the order impugned in the original petition is not appealable under Section 37 of the Act, before the District Court.

However, where the arbitral tribunal proceeds in respect of a dispute that is non-arbitrable or is governed by a separate statutory mechanism, the High Court may examine the jurisdictional objection under Articles 226 and 227 rather than require the party to await the final award. [Paras 7, 16]

The petition under Article 227 was held maintainable.

Non-arbitrability of company restructuring disputes - Exclusive jurisdiction of the National Company Law Tribunal - Actions in rem - HELD THAT: - It is evident from records that, the claim before the Arbitrator touches upon functioning and restructuring of the companies, which falls under the exclusive jurisdiction of the National Company Law Tribunal under Section 241 read with Section 242 of the Companies Act, 2013, it is inevitable for this Court to hold that process of restructuring and re-division of the assets of the companies is statutory in nature and cannot be the subject matter of the personal contract.

This Courts finds that the dispute before the arbitrator qua the companies is essentially an intra-company dispute. Pertinently, the companies are not signatories to the MOU, whereas it is between two brothers. Moreover, the presence of a specialized statutory forum like National Company Law Tribunal which is given exclusive power to adjudicate on the dispute touching upon the restructuring of the companies and the rights of a minority shareholder, is a clear indication that the subject matter of the dispute is non- arbitrable. Further, it is undeniable that the disputes raised in the claim petition constitute an action in rem and not in personam.

An arbitration clause in an MOU between two individuals cannot render arbitrable claims concerning restructuring and functioning of companies that were not parties to the MOU. The reliefs sought, including division of company assets, sale to third parties, changes in management and division of shares, fell within the extensive statutory powers of the National Company Law Tribunal in proceedings concerning oppression and company affairs. Such intra-company disputes affect third-party and minority-shareholder rights, constitute actions in rem, and require adjudication by the specialised statutory forum; they cannot be resolved through a personal contract. [Paras 25, 26, 27, 28]

The arbitral order rejecting the jurisdictional objection was interfered with, and the arbitral proceedings were terminated insofar as they concerned the three companies; remedies before the National Company Law Tribunal were left open.

Final Conclusion: The original petition was allowed in part. The arbitral proceedings were terminated only insofar as they concerned the three companies, without adjudication on the merits of the parties' inter se rights or statutory remedies.