TaxTMI Updates e-Newsletter
Jul 23,2026

Exclusion of limitation law by necessary implication under GST appellate regime - Statutory limitation for GST appeals - Applicability of Section 5 of the Limitation Act to an appeal under Section 107 of the CGST/UKGST Act after expiry of the prescribed and condonable periods. - HELD THAT: - The Supreme Court in Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], wherein Section 35 of the Central Excise Act, 1944, providing for appeal to the Commissioner (Appeals) against any decision or order passed under the Act by the Central Excise Officer, fell for consideration. The said provision provided for a specific period of limitation for filing appeal, which was 60 days from the date of communication of the decision or order to the person aggrieved, and an extended period of limitation of 30 days, upon sufficient cause being shown. Interpreting the provision, the Supreme Court held that once the Legislature had provided a specific period of limitation for preferring appeal and also a time-frame to the extent of which delay could be condoned, the appellate authority, being a creature of statute, has no jurisdiction to condone delay beyond the period expressly permitted by the statute.

The Supreme Court in Deputy Commissioner and Special Land Acquisition Officer vs. S.V. Global Mill Ltd [2026 (4) TMI 505 - SUPREME COURT] was interpreting the provisions of a beneficial legislation enacted to secure just and fair compensation to land owners whose property is compulsorily acquired. The interpretation adopted by the court was guided by the object of advancing the remedy provided under the Act and ensuring that the substantive rights were not defeated on technical considerations relating to limitation.

The CGST Act, on the other hand, stands on an entirely different footing. It is a fiscal statute, constituting a self-contained code governing levy, assessment, recovery and appellate remedies under the GST regimes. The provision relating to limitation under Section 107 is an integral part of the statutory framework intended to ensure certainty, finality and expeditious adjudication of tax disputes. The nature, object and legislative scheme of the GST Act are materially different from those of the Act 2013. The limitation prescribed under Section 107 forms an integral part of the appellate remedy itself and cannot be enlarged by resort to Section 5 of the Limitation Act in absence of any statutory indication permitting such enlargement. In fact, the Supreme Court itself was conscious of the aforesaid distinguishing features and, therefore, the judgment cited before it in relation to various taxing statutes and other legislations were distinguished. While drawing the said distinction, the Supreme Court has itself observed that a statute involving financial implications stands on a totally different footing.

Therefore, unless the Supreme Court expressly overrules or distinguishes the fiscal precedents in the cases of Singh Enterprises (supra), Hongo India Pvt. Ltd. [2009 (3) TMI 31 - SUPREME COURT] and S.V. Global Mill Ltd., the decision in S.V. Global Mill Ltd. cannot be understood as altering the principles governing the interpretation of a fiscal statute as the present one.

The ruling in Deputy Commissioner and Special Land Acquisition Officer vs. S.V. Global Mill Ltd. (supra) was distinguished as arising under a beneficial land-acquisition enactment with a materially different object and statutory scheme.

The Appellate Authority has no jurisdiction to entertain an appeal beyond the period prescribed by Section 107(1) read with Section 107(4), and Section 5 of the Limitation Act is excluded by necessary implication.

Final Conclusion: The batch was answered by holding that the statutory appellate limitation under Section 107 cannot be enlarged by invoking Section 5 of the Limitation Act. The individual writ petitions were directed to be listed for consideration of their respective factual matrices.

Validity of delegated legislation governing capacity-based cess on pan masala packing machines - Proportionate abatement for inoperative machines

Validity of delegated legislation governing capacity-based cess on pan masala packing machines - Validity of Rule 12(4), requiring cess to be calculated with reference to the maximum number of packing machines installed on any day of the month, where additional pan masala packing machines became operational during that month. - HELD THAT: - Sections 4 and 5, Rule 12 and Schedule II were required to be read as an integrated scheme. Cess is computed with reference to the production capacity of installed operational machines, determined by their maximum rated speed and the weight of goods packed, and not merely by the date of installation. Rule 12(4), expressly linked to the monthly computation under Rule 12(1), validly treats the maximum number of installed operational machines during the month as the basis for computation. It neither conflicts with the parent enactment nor suffers from manifest arbitrariness or unreasonableness. [Paras 13, 14, 16, 17]

Rule 12(4) was held intra vires the Cess Act, Schedule II and Articles 14 and 19(1)(g) of the Constitution.

Proportionate abatement for inoperative machines - Entitlement to abatement of cess for the period before newly installed pan masala packing machines became operational. - HELD THAT: - The statutory abatement applies only where a machine remains inoperative for a continuous period of fifteen days or more. Machines installed late in a month and thereafter operated cannot be deemed inoperative for the preceding period merely because they had not then been installed. Their subsequent operational use brought them within Rule 12(4) for monthly cess computation. [Paras 14]

No abatement was available on the asserted ground; the challenge to the rejection order was not entertained in writ jurisdiction in view of the appellate remedy under Rule 29.

Final Conclusion: The writ petition was dismissed. Rule 12(4) was sustained, and the petitioners were left to pursue the statutory appellate remedy against rejection of their abatement application.

Parallel Central and State GST proceedings concerning the same subject matte - Designation of competent GST authority for overlapping proceedings - petitioner's input tax credit claim - scope of ‘initiation of proceedings’, ‘subject-matter’, and the ‘interrelationship between Central and State GST authorities’

HELD THAT: - Applying M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. [2025 (8) TMI 991 - SUPREME COURT] Court held that the statutory bar operates where proceedings formally commenced through show cause notices concern the same subject matter, namely identical or overlapping tax liability, deficiency or obligation arising from the same contravention. The taxable person must furnish replies and supporting material to both authorities; if the proceedings concern the same subject matter, the authorities must determine between themselves which authority will continue, while any authority not so designated must transfer its material to that authority. [Paras 7]

The petitioner was directed to submit replies and supporting documents to both authorities; if the notices concern the same subject matter, the authorities shall decide inter se the authority competent to proceed, which shall thereafter pass a speaking and reasoned order after considering the petitioner's material.

Final Conclusion: The writ petition was disposed of with directions for submission of replies, inter se determination by the Central and State GST authorities in the event of overlapping proceedings, and adjudication by the authority designated to continue the matter.

Input tax credit to bona fide purchasing dealer - Supplier's non-filing of returns - Denial of input tax credit on generators purchased from a registered supplier, on the ground that the supplier had not filed returns despite receipt of tax from the purchasing dealer. - HELD THAT: - Applying National Plasto Moulding [2024 (8) TMI 836 - GAUHATI HIGH COURT], which adopted the principle in On Quest Merchandising India Private Limited [2017 (10) TMI 1020 - DELHI HIGH COURT], the Court held that input tax credit cannot be denied to a bona fide purchasing dealer who paid the tax to the selling dealer against a tax invoice merely because the selling dealer failed to file returns. The statutory remedy is to recover the unpaid tax from the defaulting selling dealer, subject to action against the purchasing dealer where material establishes collusion. [Paras 12]

The demand founded on the alleged excess input tax credit was quashed, without precluding recovery proceedings against the defaulting selling dealer.

Final Conclusion: The writ petition was disposed of by quashing the input tax credit demand for Financial Year 2017-18. The authorities were left free to pursue recovery against the selling dealer in accordance with law.

Refund of accumulated unutilised input tax credit under inverted duty structure - Higher-rated ancillary inputs vis-a -vis lower-rated output supplies - necessary formula for the calculation

Entitlement to refund of accumulated unutilised input tax credit where the principal input and combed cotton yarn output were taxable at the same rate, but chemicals, packing materials and other inputs attracted higher rates of tax - HELD THAT: - As in MK Agrotech Pvt. Ltd [2025 (7) TMI 914 - KARNATAKA HIGH COURT] wherein, following the earlier decision, the Court held that the benefit cannot be restricted solely to the principal input and that a refund cannot be denied merely because other inputs also contribute to the accumulation of credit.

Further in M/s. Nainar Industrial Enterprises Limited v. Union of India [2023 (11) TMI 209 - RAJASTHAN HIGH COURT] where a similar claim for refund under an inverted duty structure was upheld.

Also in M/s. Eveready Spinning Mills Private Limited [2024 (7) TMI 1160 - MADRAS HIGH COURT] wherein, after considering the decisions of various High Courts and noting that the impugned circular had been declared ultra vires, this Court allowed the writ petition and directed the grant of a refund in similar circumstances.

Section 54(3) does not distinguish between major and minor inputs. Where credit accumulates because inputs used in manufacturing the output bear a higher tax rate, refund is available notwithstanding that the principal input and output attract the same rate. The prescribed computation is to be made under Rule 89(5); the circular restricting the benefit had already been declared unconstitutional. [Paras 17]

The rejection of the refund claims was quashed, and the authorities were directed to process and sanction the refunds with applicable interest in accordance with Rule 89(5), after personal hearing.

Final Conclusion: The writ petitions were allowed. The refund claims for January 2023 and March 2023 were directed to be processed and sanctioned, with applicable interest, under the Rule 89(5) formula.

Retrospective cancellation of GST registration without notice

Retrospective cancellation of GST registration without notice - Validity of retrospective cancellation of GST registration where the show-cause notice did not propose such retrospective cancellation. - HELD THAT: - The controversy was covered by M/s Bansal Casting, S.K. Enterprises vs. Union of India and Another and M/s Shree Ram Industries vs. State of Haryana and Another . As the show-cause notice contained no reference to retrospective cancellation, the cancellation order could not be sustained to that extent. [Paras 4]

The impugned cancellation order was quashed, with liberty to the respondents to issue a fresh show-cause notice and proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the retrospective cancellation of GST registration, while preserving the respondents' liberty to initiate fresh proceedings in accordance with law.

Fresh adjudication of GST demand - Reversal of disputed input tax credit

Fresh adjudication of GST demand - Reversal of disputed input tax credit - GST demand arising from disputed input tax credit claimed to have been reversed before issuance of the show-cause notice. - HELD THAT: - As the rectification application had not been examined to verify whether the disputed input tax credit had in fact been reversed in the relevant returns, fresh adjudication was directed. The petitioner was required to deposit 25% of the disputed tax, subject to adjustment of amounts already recovered or paid upon substantiation by proper documents. [Paras 5, 7, 8]

The impugned orders were remitted for fresh decision on merits, conditional upon the stipulated pre-deposit; consequential bank attachment, if any, was directed to be vacated on compliance.

Final Conclusion: The writ petition was disposed of by remitting the GST demand for fresh adjudication subject to the prescribed pre-deposit and adjustment of substantiated prior payments or recoveries.

Healthcare services by clinical establishment - Composite supply - Essential character of supply - True nature of “composite supply” - characterization of the Appellant’s services as mere “operation and management” or "taxable managerial services"

Exemption for operation and management of Government Urban Health and Wellness Centres, Urban Ayushman Aarogya Mandirs and Polyclinics as “healthcare services by a clinical establishment” under Entry 74 of Notification No. 12/2017-Central Tax (Rate) - statutory definition of “clinical establishment”

HELD THAT: - The various activities undertaken by the Appellant under the UHWCs/UAAMs/Polyclinics project are not intended to exist as independent commercial supplies but are integrally connected with and subservient to the delivery of healthcare services to the beneficiaries. The agreement, when read as a whole, reveals a unified objective of facilitating and operationalising healthcare services through Urban Health and Wellness Centres/ Polyclinics to the public. Therefore, the impugned activities cannot be vivisected into individual elements for the purpose of determining their taxability; rather, they must be assessed in accordance with the essential and dominant nature of the arrangement, which is intrinsically linked to the provision of healthcare services.

AAR in its findings placed undue emphasis upon the contractual payment structure. For the limited purpose of Section 2(93)(a) of the CGST Act, 2017, the person liable to pay consideration, namely Braithwaite & Co. Limited, may be regarded as the recipient of the supply.

Section 2(93) of the CGST Act defines the “recipient” primarily for identifying the person to whom a supply is made and for fixing statutory rights and obligations under the Act. However, determination of taxability and classification of the supply cannot rest solely upon the identity of the payer. The true nature, substance and objective of the contract, the activities actually performed, and the ultimate purpose for which such activities are undertaken are equally relevant considerations.

We note that in M/s Healthcare Global Enterprises Ltd. [2026 (6) TMI 307 - KARNATAKA HIGH COURT] held that the exemption available under Entry No. 74 of Notification No. 12/2017-CT(Rate) cannot be denied merely because healthcare services are provided through another hospital or pursuant to a contractual arrangement with another entity. The Court emphasized that where doctors, specialists and para-medical personnel render healthcare services to patients, the essential character of the supply remains healthcare service notwithstanding the contractual mechanism through which consideration is received. The Court further relied upon CBIC’s Circular No. 32/06/2018-GST dated 12.02.2018 and held that healthcare services do not lose their exempt character merely because they are routed through another institution. Accordingly, the determination of exemption must depend upon the true nature of the activity undertaken and not merely upon the identity of the person making payment for such services.

Thus, where services are performed as an integral part of the delivery of healthcare under a government health programme, the mere fact that consideration is paid by an implementing agency would not automatically transform the supply into a taxable management or support service.

Where the substance of the contract reveals the provision of manpower, administrative support or operational management, the supply cannot acquire the character of healthcare services merely because the ultimate beneficiaries are patients. The classification must therefore follow the real nature and substance of the supply rather than the identity of the person making payment.

We, therefore, find considerable force in the Appellant’s submission that healthcare services can be rendered under diverse commercial structures. In many government healthcare schemes, insurance arrangements, corporate medical arrangements and public-private partnership projects, payment is often made by Government, insurers, employers or nodal agencies instead of the patient. Such arrangements do not alter the character of the underlying healthcare service.

Having considered the contractual documents, project guidelines, operational responsibilities, judicial precedents relied upon by the Appellant and the statutory provisions governing healthcare services, we conclude that the Appellant is engaged in providing healthcare services through clinical establishments i.e. Urban Health and Wellness Centres (UHWCs)/UAAMs and Polyclinics. The role of M/s Braithwaite & Co. Limited being ‘Executing Agency, is limited to implementation and administration of the Government project and does not alter the nature of the serviees supplied by the Appellant.

Consequently, we are of the view that the services supplied by the appellant are correctly classifiable as exempt healthcare services under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding State notification.

Accordingly, the impugned ruling passed by the Authority for Advance Ruling deserves to be set aside.

Since the services supplied by the appellant are held to be exempt healthcare services under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate), the need to examine the alternative claim of exemption under Entry No. 3 of the said notification does not arise.[ Para 5]

Final Conclusion: The appeal was allowed and the advance ruling was set aside. The appellant's integrated operation of the Government healthcare centres was held exempt from GST under Entry 74 of Notification No. 12/2017-Central Tax (Rate).

Accrual of income in India - global online learning platform providing online courses and degrees from leading universities and companies - scope of “Make Available” - chargeable to tax as FTS and FIS a under the Indo-US DTAA

HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court [2025 (11) TMI 2033 - DELHI HIGH COURT]

The Special Leave Petition is dismissed

Seeking release seized cash forthwith along with interest under section 132B(4) - Whether the petitioner's claim for refund of cash seized during search should be considered by the competent income-tax authority in light of the Settlement Commission's order? - HELD THAT:- As the dispute between the assessee and the Revenue has already been settled by the Settlement Commission vide its order dated 4.9.2019 but the amount of Rs. 48,60,000/- seized from the possession of the petitioner has not been refunded, this petition at this juncture, is disposed of with a direction reserving liberty in favour of the petitioner to make a detailed representation before respondent No. 5 within a period of 30 days and in turn, the said authority is directed to decide it strictly in accordance with law preferably, within a period of 60 days.

The authority concerned shall decide the representation in light of the order passed by the Settlement Commission dated 4.9.2019.

Unexplained cash credit in partner's capital account - Discharge of onus u/s 68 - Addition u/s 68 in respect of a newly inducted partner's capital contribution, despite documentary evidence of receipt through banking instruments - HELD THAT: - The assessee had explained that the credit was capital contributed by a partner inducted into the firm, and had produced pay-in slips recording the demand drafts or cheques, the partner's capital account and the balance sheet. The Revenue did not controvert that the credit stood in the partner's capital account or that it was received through demand drafts. The authorities had ignored this material and rejected the explanation solely for want of confirmation from the partner.

Applying Commissioner of Income Tax v. Pankaj Dyestuff Industries [2005 (7) TMI 601 - GUJARAT HIGH COURT] the Court held that the assessee had discharged its onus; mere non-acceptance of an explanation not shown to be false could not justify treating the partner's contribution as the firm's unexplained income. [Paras 18, 19, 20, 21, 22]

The addition under section 68 was held perverse and was deleted.

Final Conclusion: The Tax Appeal was allowed. The addition made under section 68 in respect of the partner's capital contribution was deleted.

Mandatory notice for reassessment - Revision of a non est assessment order

Mandatory notice for reassessment - Validity of reassessment where no notice under section 143(2) was issued after the assessee's response to the notice for reassessment - HELD THAT: - The finding that no notice under section 143(2) had been issued was not controverted before the Tribunal. The Court held, following the settled legal position in SILVER LINE [2015 (11) TMI 809 - DELHI HIGH COURT] and M/S. HOTEL BLUE MOON [2010 (2) TMI 1 - SUPREME COURT], that absence of the mandatory notice meant that no valid assessment order came into existence. [Paras 10]

The reassessment order was non est.

Revision of a non est assessment order - Sustainability of revision under section 263 where the underlying reassessment order was invalid for want of mandatory notice - HELD THAT: - As the reassessment order was non est, it could not constitute a valid order capable of revision. Consequently, the revisionary jurisdiction could not be invoked in respect of that order. [Paras 10]

The revision order could not be sustained.

Final Conclusion: The appeal was dismissed. The Tribunal's conclusion that the reassessment and the consequential revision order were invalid was upheld.

Addition for unexplained cash credits - Non-consideration of material evidence by appellate Tribunal - Failure to consider precedents relied upon by assessee

Addition for unsecured loans as unexplained cash credits where the Tribunal did not consider the assessee's material on the source of the lenders' funds or examine the applicability of decisions relied upon by the assessee - HELD THAT: - The Tribunal neither discussed the material produced by the assessee nor recorded a finding on the explanation regarding the source of the source of the unsecured loans advanced by the seven lenders, and merely reiterated the Assessing Officer's findings. It also cursorily discarded the decisions relied upon by the assessee without examining their applicability to the facts. The Tribunal's order was therefore unsustainable for failure to consider the material and submissions on record. [Paras 5, 6, 7, 8]

The Tribunal's order on the addition under Section 68 was set aside and the matter was remanded for fresh decision on Ground No. 2 after considering the entire material and affording hearing, without adjudication on the merits.

Final Conclusion: The appeal was disposed of by setting aside the Tribunal's order limited to the unexplained cash-credit addition and remanding that issue for fresh consideration. The merits of the addition were left open.

Unexplained expenditure based solely on jantri valuation - Housing-project deduction on completion certificate - Business character of income disclosed during survey - Interference with concurrent findings of fact in income-tax appeal

Unexplained expenditure u/s 69C based solely on jantri valuation - Addition for unexplained expenditure in respect of a housing project solely on the basis of jantri value fixed by the Superintendent of Stamps - HELD THAT: - The concurrent finding was that no evidence showed that the assessee had incurred expenditure outside its books of account. The survey also yielded no material indicating unrecorded expenditure. Jantri valuation alone could not sustain the addition in the absence of evidence of actual undisclosed expenditure. [Paras 5, 6]

The deletion of the addition was upheld, no substantial question of law arising.

Housing-project deduction on completion certificate - Business character of income disclosed during survey - Deduction for a housing project where completion certificates had been issued, including in respect of income disclosed during survey as arising from the construction business - HELD THAT: - The final completion certificate issued by the competent authority established compliance with the requirements for the claimed housing-project deduction, and the Revenue produced no material to the contrary. Further, as the assessee carried on no business other than construction and the Revenue did not establish that the survey disclosure arose from another source, that income was rightly treated as business income from construction activity. [Paras 5, 6]

The allowance of the claimed deduction, including on the disclosed business income, was upheld, no substantial question of law arising.

Interference with concurrent findings of fact in income-tax appeal - Maintainability of the Revenue's tax appeal against concurrent factual findings unsupported by contrary evidence - HELD THAT: - The Tribunal, as the final fact-finding authority, and the appellate authority had concurrently found that the Revenue failed to produce evidence supporting the disputed additions or disallowance. The High Court declined to re-enter the factual arena in the absence of a question of law. [Paras 6, 7]

No substantial question of law arose from the Tribunal's order.

Final Conclusion: The tax appeal was dismissed as meritless, the challenged findings being concurrent findings of fact that disclosed no substantial question of law.

Denial of credit for foreign tax - Form No. 67 was treated as not having been filed in time - condonation of delay filling appeal

Foreign tax credit - belated filling of Form No. 67 - proof of tax paid in Tanzania - HELD THAT: - Foreign tax credit could not be denied where Form No. 67 was available on or before the return-filing due date and the claim was supported by the return. As the assessee furnished Form No. 67, the tax-deduction certificate and material relating to the corresponding foreign income, the claim required verification; tax cannot be collected without authority of law. [Paras 9, 11, 12]

The matter was restored to the Assessing Officer for verification and grant of foreign tax credit if the claim is found in accordance with law.

Condonation of delay in filing electronic appeal - Condonation of delay in filing an appeal against an intimation where the assessee lacked awareness of the electronic procedure and of the availability of an appellate remedy - HELD THAT: - The assessee's lack of awareness of the electronic filing procedure in Form No. 35 and that an appeal lay against the intimation constituted sufficient cause. Having obtained professional advice, the assessee promptly filed the appeal; consequently, the finding that sufficient cause was not established could not be sustained. [Paras 10, 11]

Final Conclusion: The appeal was allowed for statistical purposes. The foreign tax credit claim was remanded to the Assessing Officer for verification and consequential allowance in accordance with law.

Deduction u/s 80P(2)(a)(i) or u/s 80P(2)(d) - assessee contends that, being a primary agricultural credit co-operative society -Deduction of interest income of a primary agricultural credit co-operative society - Statutory-reserve deposits with a district central co-operative bank - Deduction of cost of funds from interest assessable as income from other sources -

HELD THAT: - The record did not establish whether the deduction had been claimed under section 80P(2)(a)(i) or section 80P(2)(d). The Assessing Officer was therefore required to determine the precise claim and, where deduction is claimed under section 80P(2)(a)(i), examine whether the deposits represented statutory reserves maintained under Rule 28 and whether the resulting interest was attributable to the specified business activities. If the claim is under section 80P(2)(d), interest from a co-operative bank is not deductible under that provision; however, where assessed as income from other sources, the related cost of funds must be allowed, with corresponding adjustment to deduction under section 80P(2)(a)(i), if applicable. [Paras 17, 18, 19]

The issue was remanded to the Assessing Officer for fresh adjudication on verification of the provision under which the claim was made, the source and statutory character of the deposits, and the related cost of funds.

Final Conclusion: The appeal was allowed for statistical purposes. The deduction claim was restored for fresh examination in accordance with the directions regarding statutory-reserve deposits, the applicable deduction provision, and allowance of related cost of funds.

Fees for technical services - receipts from sale of software, SaaS and related services - India-Ireland DTAA - DTAA tax rate-surcharge and education cess

Fees for technical services - automated software and SaaS facilities - Technical service distinguished from standard facility - Taxability of receipts from sale of non-customised software and provision of SaaS as fees for technical services under Article 12(3)(b) of the India-Ireland DTAA - scope of the term “fees for technical services” in the India-Ireland DTAA v/s scope of “Royalty” under the India-USA DTAA - HELD THAT: - The decision Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] relied upon by the assessee concerning software royalties under the India-USA DTAA could not govern the distinct question of fees for technical services under the India-Ireland DTAA. The assessment had not, however, examined whether the automated services had the requisite human element, or whether they were specialised and exclusive services specifically sought by customers rather than standard facilities available to every user. The manner in which training and services were supplied by the assessee or its resellers, including the involvement of human intervention, also required factual examination. [Paras 7]

The assessment on this issue was set aside and restored to the Assessing Officer for fresh adjudication.

DTAA tax rate - taxation of FTS @ 10.92% as against the beneficial tax rate of 10% provided under Article 12 of the DTA - surcharge and education cess - HELD THAT: - In the absence of contrary authority and having regard to Article 2 of the DTAA and the authorities relied upon by the assessee, the treaty rate was held applicable without further surcharge or cess. [Paras 8]

If the disputed receipts are held taxable in the set-aside proceedings, the Assessing Officer shall apply the beneficial treaty rate of 10%.

Non grant of appropriate interest u/s. 244A of the Act and adjusting the TDS amount with the amount of amount refund receivable - HELD THAT:- AO is directed to grant interest u/s. 244A of the Act to the assessee as per law. Further, the AO is directed to verify regarding the addition as submitted by the assessee in its grounds of appeal. [ Para 9]

Final Conclusion: The appeal was partly allowed. The taxability of the software and SaaS receipts was remanded for fresh adjudication, subject to application of the 10% treaty rate if the receipts are held taxable.

Receipt of immovable property u/s 56(2)(x) - allotment of permanent alternate accommodation under a registered redevelopment agreement, before completion of construction and delivery of possession - Redevelopment accommodation in exchange for tenancy rights

Whether the AO was justified in invoking the provisions of section 56(2)(x) of the Act merely because redevelopment agreements were executed and registered during the relevant previous year, notwithstanding the admitted position that the redevelopment project is yet to be completed and the assessee has not received possession of the permanent alternate accommodation till date? - HELD THAT: - Section 56(2)(x) is attracted only upon actual receipt of immovable property during the relevant previous year. Execution or registration of a redevelopment agreement, where construction remains incomplete and neither possession nor enjoyment of the alternate premises has passed to the assessee, creates only a contractual right to obtain accommodation in future and does not amount to receipt of immovable property. Allotment of permanent alternate accommodation in consideration of relinquishment of valuable tenancy rights is a reciprocal commercial exchange and not a receipt without consideration. A charging deeming fiction must be strictly construed and cannot be extended to such a transaction. [Paras 10, 11, 16, 17, 18]

The addition under section 56(2)(x) was unsustainable and was deleted.

Final Conclusion: The appeal was allowed. The redevelopment agreements did not result in receipt of immovable property without consideration so as to attract section 56(2)(x).

Penalty u/s. 271B - belated furnishing of tax audit report - Technical or venial breach

Levy of penalty for failure to furnish the tax audit report within the prescribed time, where the report was available and considered during reassessment proceedings - HELD THAT: - We find that the issue arising in the present appeal is squarely covered by the decision of Shri Annakodiraj v. ITO [2026 (3) TMI 1734 - ITAT CHENNAI] wherein, on identical facts, the Tribunal deleted the penalty levied u/s. 271B and held that where the tax audit report was already available on record at the time of completion of the reassessment and the AO had completed the reassessment after taking note of the said audit report, the belated furnishing of the audit report constituted only a technical or venial breach.

Thus, where the tax audit report, though filed belatedly, was available to and considered by the Assessing Officer before completion of reassessment, and no addition was made, the default constituted only a technical or venial breach, such breach did not warrant penalty. [Paras 6, 7]

The penalty was deleted and the assessee's appeal was allowed.

Final Conclusion: The penalty for belated furnishing of the tax audit report was deleted, since the report was considered before completion of reassessment and the lapse was merely technical.

Deduction of bad debts written off - Actual irrecoverability of debt - Transitional applicability of section 36(2)(iv)

Authorities below have denied the claim by invoking section 36(2)(iv) of the Act on the premise that the bad debts had been written off beyond four years from the year in which the corresponding income had been offered to tax - HELD THAT: - Section 36(2)(iv) is a transitional provision applicable only to debts relating to the assessment year 1988-89 or any earlier assessment year and has no application to the year under consideration. After the amendment brought about by the Finance Act, 1987 with effect from 1 April 1989, section 36(1)(vii) merely requires that the bad debt should be written off as irrecoverable in the books of account of the assessee. It is no longer incumbent upon the assessee to establish that the debt has in fact become irrecoverable. This legal position stands authoritatively settled by Hon'ble Supreme Court in TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT].

For deduction under sections 36(1)(vii) and 36(2), the debt must be written off as irrecoverable in the relevant previous year and must have been taken into account in computing income in that or an earlier year. Since the latter condition stood undisputedly satisfied, the assessee was not required to establish actual irrecoverability.

Section 36(2)(iv) is a transitional provision confined to debts relating to assessment year 1988-89 or earlier and could not be invoked for the year under consideration. Further, absent material showing that the opening debtor balances were fictitious or non-genuine, the Revenue could not question the existence of debts accepted in earlier years at the stage of write-off. [Paras 5]

The claimed deduction for bad debts was directed to be allowed.

Final Conclusion: The appeal was allowed and the disallowance of the claimed bad-debt deduction was deleted.

Estimation of commission income in agency business - Penalty u/s 271A for non-maintenance of books of account

Estimation of commission income in agency business - Estimation of income from bank receipts arising from sale of recharge vouchers, wafers and other goods under principal-agent arrangements - HELD THAT: - The assessee was selling recharge vouchers and goods on commission basis, and the material showed that its arrangements with the principals were in the nature of principal and agent, under which only a limited mark-up was permissible. The application of a 30 per cent net-profit rate to the gross bank receipts was therefore held excessive and impracticable. A commission rate of 5 per cent on the gross receipts credited in the bank account was considered appropriate. [Paras 11, 12]

The estimated income was directed to be recomputed by applying a 5 per cent commission rate on the gross bank receipts; the assessee's appeal was partly allowed.

Penalty for non-maintenance of books of account - Penalty for alleged non-maintenance of books of account where the bank receipts represented agency transactions rather than the assessee's turnover. - HELD THAT: - Once the bank receipts were accepted as pertaining to agency business, ownership of the goods did not vest in the assessee and those receipts could not be treated as its turnover. Further, the Assessing Officer had not placed on record the assessee's turnover in any of the three years immediately preceding the relevant previous year. The penalty for non-maintenance of books of account was consequently unsustainable. [Paras 15, 16]

The penalty imposed for non-maintenance of books of account was directed to be deleted.

Final Conclusion: The estimation of income was restricted to commission at 5 per cent of the gross bank receipts, and the penalty for non-maintenance of books of account was deleted. The assessment appeal was partly allowed and the penalty appeal was allowed.

Allowance of exemption u/s 54 - Capital gains exemption for a residential house comprising multiple floors - Fair market value based on registered valuer's report

Exemption for a residential house comprising multiple floors - Eligibility for exemption u/s 54 in respect of the basement, ground floor and third floor acquired on redevelopment of the same residential property - HELD THAT: - The physical structuring of a residential property into separate floors does not by itself establish acquisition of multiple residential houses. What is material is whether the assessee acquired the floors as one residential property pursuant to investment of the capital gains; section 54 does not prescribe a particular mode of construction. In the absence of material showing that the floors were not part of one residential property, the exemption could not be denied merely because they were separately structured or capable of prospective independent use. [Paras 7, 9]

The denial and restriction of the section 54 exemption to one floor were held unsustainable, and exemption was directed to be allowed for the residential property as a whole.

Rejection of registered valuer's report without reference to DVO - Computation of long-term capital gains on redevelopment consideration - Determination of the fair market value of the inherited land share and computation of long-term capital gains arising from redevelopment of the residential property - HELD THAT: - The Assessing Officer had accepted the valuation of the superstructure but rejected the reports of two Government-registered valuers regarding the land value without identifying any specific defect and without referring the valuation to the DVO. Substitution of those reports by an ad hoc value derived from Government rates was impermissible. The builder's certificate concerning construction cost, filed as additional evidence, was material to the computation and had not been considered. Applying Ved Kumari Subhash Chander [2019 (10) TMI 239 - ITAT DELHI] the unrebutted later valuation report was required to be accepted for the land share. [Paras 15, 16, 17, 18, 19]

The long-term capital-gains computation was held erroneous; the Assessing Officer was directed to recompute it in terms of the computation set out by the Tribunal, taking the land value from the unrebutted valuation report and granting the section 54 benefit.

Final Conclusion: The appeal was allowed. The Assessing Officer was directed to recompute the long-term capital gains on the prescribed basis and allow exemption under section 54 for the residential property.

Validity of Reassessment - addition on issue other than recorded reasons - no addition was made on the cash-deposit issue forming the recorded reasons for reopening, but a disallowance was made for cash payments to suppliers - HELD THAT: - The Assessing Officer accepted the explanation regarding the cash deposits, which constituted the basis of the reopening, and made no addition on that issue. The disallowance for cash payments was made on a new and different issue. The settled position is that, where no addition is made on the issue for which reassessment was initiated, the Assessing Officer cannot assess another issue not forming part of the recorded reasons. See Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] and CIT vs. Adhunik Niryat Ispat Ltd. [2012 (11) TMI 895 - DELHI HIGH COURT] and Jet Airways (I) Ltd. [2010 (4) TMI 431 - BOMBAY HIGH COURT] [Paras 4]

The reassessment order and the consequential disallowance were void ab initio and were quashed.

Final Conclusion: The appeal was allowed and the reassessment order was quashed as the addition sustained did not arise from the recorded reasons for reopening.

Refund claim under Customs Act - scope of appellate consideration - Burden of proof - Principles of natural justice - Remand for verification of pleadings

Consideration of the refund claim under the provision governing refunds generally, rather than the provision earlier invoked for refund on re-export, when the alleged plea before the first appellate authority was not established on record - HELD THAT: - The adjudicating authority had considered and rejected the claim under the provision invoked by the appellant for refund on re-export. The Tribunal held that it could not examine the claim under the provision governing refunds generally unless the appellant established that this specific plea had been clearly raised before the first appellate authority. Since the appellant asserted that such a plea had been taken but did not furnish the relevant appeal grounds or written submissions, verification of those pleadings was necessary. [Paras 8, 9, 10, 11, 12]

The matter was remanded to the Commissioner (Appeals) to verify the pleadings; upon proof that the claim under the provision governing refunds generally was raised, the refund shall be decided on its merits under that provision, failing which the appeal shall be decided under the provision earlier invoked.

Final Conclusion: The appeal was disposed of by remand for verification whether the appellant had raised before the Commissioner (Appeals) its claim for refund under the provision governing refunds generally. The merits of that claim were left to be considered only if such pleading is established.

Redemption fine in lieu of confiscation of non-declared gold ornaments - Proportionality of penalty for baggage import contravention

Redemption fine in lieu of confiscation of non-declared gold ornaments - Absolute confiscation of restricted goods - Entitlement to redeem non-declared gold ornaments imported by an ineligible passenger instead of suffering absolute confiscation. - HELD THAT: - Though the ornaments were liable to confiscation because they were not declared and no licit import documents were produced, confiscability is distinct from the discretion to allow redemption. That discretion must be exercised upon the nature of the contravention, the passenger's conduct and the surrounding circumstances. The goods were finished ornaments, one being worn by the passenger, and their manner of carriage did not disclose an organised smuggling modus operandi; the contravention appeared to arise from a bona fide misconception concerning baggage permissibility. The decisions concerning commercial quantities of primary gold were distinguishable. [Paras 11, 12, 14, 15, 16]

Confiscation was upheld, but absolute confiscation was modified by granting redemption of the gold ornaments on payment of redemption fine.

Proportionality of penalty for baggage import contravention - Quantum of penalty for non-declaration of gold ornaments carried as baggage. - HELD THAT: - The penalty required moderation because the record did not disclose prior similar involvement, organised smuggling activity, or circumstances showing that the ornaments were carried for another person. In view of the personal character of the ornaments and the nature of the contravention, a reduced penalty was sufficient to meet the ends of justice. [Paras 15, 16]

The penalty imposed for the contravention was reduced.

Final Conclusion: The appeal was partly allowed. The confiscation of the non-declared gold ornaments was maintained, subject to redemption on payment of fine, and the penalty was reduced.

Requirement of interest payment on the Customs Duty upon ex-bond clearance - capital goods imported into a warehouse licensed for manufacture or other operations u/s 65 are cleared for home consumption without having been actually used in the warehouse - Scope of words ‘intent to use” and ‘for use”

Whether the cooler (gear box), was ‘intended for use” in the warehouse? - HELD THAT: - Section 61(1)(a) requires that capital goods be intended for use in a warehouse permitted to undertake manufacturing or other operations under Section 65; it does not require their actual installation or use. The distinction between goods intended for use and goods actually used was applied from Apex court decision State of Haryana vs. Dalmia Dadri Cement Ltd [1987 (11) TMI 94 - SUPREME COURT], BPL Display Devices Ltd. [2004 (10) TMI 92 - SUPREME COURT], Acme Akelra Power Technology Pvt Ltd [2024 (7) TMI 1796 - CESTAT NEW DELHI] and Steel Authority of India Ltd. vs. Collector of Central Excise [1996 (7) TMI 147 - SUPREME COURT] concerning capital goods cleared after they could not be deployed for the intended project. As the Revenue did not dispute that the cooler gearbox was imported for intended use in the manufacturing operations, its subsequent clearance for home consumption could not attract interest merely because it had not been put to use. [Paras 30, 31, 32]

The interest demand was held unsustainable; the impugned order was set aside and consequential relief was granted.

Final Conclusion: The appeal was allowed and the interest levied on the deferred customs duty was set aside, with consequential relief in accordance with law.

Classification of Aluminium formwork structures - Aluminium structures versus concrete moulds - CTH 76109010 v/s CTH 84806000 - Customs exemption for aluminium structures

Classification of aluminium formwork structures - Aluminium structures versus concrete moulds - Aluminium formwork structures and accessories, assembled in situ to support concrete while it sets and thereafter removed, are classifiable as aluminium structures under CTH 76109010 or moulds under CTH 84806000. - HELD THAT: - We find that the issue is no more res integra. This matter had come up before the very same Bench in the case of Alcove Construction Private Limited [2024 (9) TMI 712 - CESTAT KOLKATA] as mean that when the goods viz., Aluminium structures in this case, are similar to equipment for scaffolding, shuttering, propping or pit-propping, the same would get classified under heading 76.10 only. Therefore, we hold that the appellant was correct in classifying the impugned goods under CTH 7610 90 10

The formwork serves as shuttering and support at the construction site; it does not mould concrete into separate end-products for subsequent use.

Thus, we hold that the Revenue is in error in classifying the goods in question under CTA 84806000 and the goods are classifiable under CTH 76109010 only.[Paras 8]

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

Customs exemption for aluminium structures - whether imported aluminium formwork structures, being classifiable under CTH 76109010, are eligible for the claimed customs exemption? - HELD THAT: - The eligibility for exemption followed from the accepted classification of the goods as aluminium structures under CTH 76109010. [Paras 8, 9]

The impugned demand was set aside and consequential relief was made available in accordance with law.

Final Conclusion: The appeal was allowed. The impugned order was set aside after accepting classification of the imported aluminium formwork structures under CTH 76109010, with consequential relief in accordance with law.

Penalty for alleged illegal import of Chinese-origin firecrackers - Retracted statement without corroborative evidence - penalty on the appellant under Section 112(a) and 112(b) and under Section 114AA - HELD THAT: - The allegation of illegal import was not supported by recovery of Chinese-origin firecrackers imported by the appellant or by any investigation apart from the statement allegedly obtained under coercion and duress. The retraction of that statement was not considered by the authorities below. In the absence of proof of illegal import and corroborative material, the penalties could not be sustained. [Paras 6, 7, 8]

The penalties imposed under Sections 112(a), 112(b) and 114AA were set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal held that the alleged illegal import was unproved and that a retracted statement, unsupported by recovery or further investigation, could not sustain the penalties. The appeal was allowed.

Transaction value - Differential customs duty - Demurrage charges and transaction value of imported goods - valuation of goods by reference to their value - Demand beyond the show cause notice - Extended limitation for wilful suppression

Demurrage charges and transaction value of imported goods - Inclusion of costs in assessable value - Inclusion of demurrage paid for vessel waiting time in the assessable value of imported phosphoric acid and anhydrous ammonia - HELD THAT: - The contractual clause required demurrage or dispatch settlements to be made separately between buyer and seller and outside the letter-of-credit payment for the goods. Such demurrage was therefore not part of the price actually paid or payable for the imported goods and could not form part of their transaction value. Further, the provision relied upon in the adjudication order for confirming the differential duty had not been invoked in the show cause notice and had been struck down as ultra vires. [Paras 6, 7]

The differential-duty demand founded on inclusion of demurrage in assessable value was unsustainable.

Demand beyond the show cause notice - Confirmation of differential customs duty by invoking a valuation provision not alleged in the show cause notice - HELD THAT: - A demand cannot be confirmed on a ground or statutory provision not put to the importer in the show cause notice. The adjudicating authority's reliance on Rule 10(2) of the Customs Valuation Rules, 2007, though that rule was not invoked in the notice, was beyond the notice. We draw our support from the decision of Toyo Engineering India Ltd [2006 (8) TMI 184 - SUPREME COURT] [Paras 8]

The demand was liable to be set aside on this ground independently.

Extended limitation for wilful suppression - Invocation of the extended period for recovery of customs duty on alleged non-inclusion of demurrage charges - HELD THAT: - Mere oral allegations of suppression could not sustain invocation of the extended period. The Department bore the burden of proving a positive act evidencing wilful suppression with intent to evade duty, and no such evidence was on record. See COSMIC DYE CHEMICAL as it well support our case [1994 (9) TMI 86 - SUPREME COURT] [Paras 9, 10]

The show cause notice, insofar as it covered Bills of Entry filed during April 2012 to July 2016, was barred by limitation.

Final Conclusion: The impugned order was set aside and the appeal was allowed, as demurrage was not includible in the transaction value, the demand travelled beyond the show cause notice, and the extended period was unavailable.

Redemption fine for imported old and used multifunctional printers/scanners - quantum computation - Penalty for import in contravention of the Foreign Trade Policy - HELD THAT: - As relying on ACCORD DIGITECH VERSUS C. C-BANGALORE [2020 (12) TMI 647 - CESTAT BANGALORE] and MARQUE ENTERPRISES [2015 (4) TMI 201 - CESTAT NEW DELHI] redemption fine for the imported goods could not exceed 10% of their value. As the penalty already imposed was below 5% of the value, no interference with its quantum was warranted. See [Paras 8]

The redemption fine was reduced to 10% of the value of the goods, while the penalty was retained.

Final Conclusion: Both appeals were partly allowed by reducing the redemption fine to 10% of the value of the imported goods. The penalties imposed were maintained.

Conditional customs exemption for warehoused lithium-ion cells - Compliance with IGCR Rules from the stage of import

Conditional customs exemption for warehoused lithium-ion cells - Compliance with IGCR Rules from the stage of import - Availability of the concessional duty entry for lithium-ion cells at the ex-bond stage where the cells were warehoused under the residual concessional entry and used to manufacture cellular-mobile-phone battery packs. - HELD THAT: - Though the rate of duty for warehoused goods is determined on presentation of the ex-bond Bill of Entry, the concessional entry is conditional upon compliance with the IGCR Rules and prescribed end-use requirements from the stage of import. The entry availed at warehousing carried no such conditions; consequently, the applicant could not subsequently claim the conditional exemption at ex-bonding without having complied with those mandatory requirements. [Paras 5, 6, 7]

The applicant was held ineligible to claim the concessional benefit under Serial No. 320 at the ex-bond stage for goods imported under Serial No. 325 without compliance with the IGCR Rules.

Final Conclusion: The advance ruling application was allowed for determination, but the claimed concessional duty benefit at the ex-bond stage was denied.

Classification of hydrolysed inactive yeast used in animal nutrition - Inactive yeast versus animal-feed preparations

Classification of hydrolysed inactive yeast used in animal nutrition - Inactive yeast versus animal-feed preparations - Classification of Vistacell H, a single-ingredient hydrolysed whole yeast product used as a feed additive, under the competing tariff headings for inactive yeast and preparations used in animal feeding. - HELD THAT: - Applying Rule 1 of the General Rules for Interpretation, the Authority held that animal-feeding use does not by itself exclude goods from the specific heading for inactive yeast. Vistacell H remained hydrolysed inactive yeast derived solely from Saccharomyces cerevisiae, without carriers, added ingredients or standardisation as a premix or compound feed; its essential character was therefore that of inactive yeast. Heading 2309 generally covers complete or supplementary feeds, premixes and preparations comprising mixtures of substances, and could not apply merely on the basis of the product's end use. Heading 2106 was inapplicable as a residual entry for food preparations, and Heading 3507 was inapplicable because the finished goods neither constituted enzyme preparations nor possessed enzyme activity as their essential character. The Brazilian decisions concerning isolated yeast-cell-wall products were distinguishable, since the product retained both cell-wall and intracellular fractions. Regulatory recognition of the product as an animal-feed additive could not determine its tariff classification independently of the tariff terms and HSN principles. [Paras 11, 14, 15, 16]

Vistacell H was held not classifiable under Tariff Item 2309 90 90 and was classified under Tariff Item 2102 20 00 as inactive yeasts; other dead single-cell micro-organisms.

Final Conclusion: The advance ruling rejected classification as an animal-feed preparation and classified the imported hydrolysed yeast product as inactive yeast under Tariff Item 2102 20 00.

Classification of automotive camera components - Analog high-definition surround view camera harness and AHID front/back camera cover - duty exemption benefit in terms of sr. no. 282 and 303 of the notification no. 45/2025 respectively - Exemption for electronic integrated circuits - Exclusion from customs exemption for vehicle wiring sets and motor-vehicle parts

Classification of automotive cameras - HELD THAT:- WCO has clearly outlined the features of the Digital Video camera. Such cameras have been described as Digital cameras that capture light images, convert them to, digital electronic signals and then record such digital image data on internal or removable media (built-in memory or diskettes). These images can be reproduced by connecting the camera to a video monitor (or TV), an ADP machine, or by inserting the media in the ADP, machine. This type of digital cameras can produce both video signals (e.g., NTSC, PAL, SECAM or other similar video format) and computer readable image data like MPEG.

From the above, it is implied that the AHD camera is a digital camera. As there is no specific heading given that covers such type of camera, therefore, the subject goods are classifiable under CTI 85258900 as other.

Classification of monolithic integrated circuits - Classification of electronic memories - Classification of the CMOS image sensor, EEPROM, power management integrated circuit and video encoder IC used in an automotive camera. - HELD THAT: - The image sensor, PMIC and video encoder contained circuit elements inseparably integrated on a semiconductor die and were monolithic integrated circuits; the EEPROM was an electronic memory expressly falling within heading 8542. The applicable tariff entries were determined by their respective functional descriptions within that heading. [Paras 7, 8]

The image sensor, PMIC and video encoder IC were classified under CTI 8542 39 00, and the EEPROM under CTI 8542 32 00.

Classification of electronic passive components - Classification of bare printed circuits - Classification of the crystal oscillator, ceramic capacitor, thick-film chip resistor, TVS diode, Schottky barrier diode, ferrite bead, inductor and bare printed circuit board used in an automotive camera - HELD THAT: - The crystal oscillator, comprising a quartz resonator and an IC, was an electrical apparatus having an individual clock-generating function rather than a mere mounted crystal or an integrated circuit. The diodes, inductive components, multilayer ceramic capacitor, resistor and unpopulated PCB respectively answered the descriptions of diodes, other inductors, ceramic dielectric multilayer capacitors, electrical resistors and printed circuits under their specific tariff headings. [Paras 7, 8]

The crystal oscillator was classified under CTI 8543 70 99; the ceramic capacitor under CTI 8532 24 00; the resistor under CTI 8533 21 29; the TVS and Schottky diodes under CTI 8541 10 00; the ferrite bead and inductor under CTI 8504 50 90; and the bare PCB under CTI 8534 00 00.

Classification of silicone camera sealing ring - Classification of motor-vehicle camera housing parts - Classification of the silicone waterproof ring and the front and back covers designed for an automotive camera - HELD THAT: - The silicone waterproof ring was a finished plastic sealing article and fell under the specific provision for packing rings, O-rings and the like. In contrast, the camera front and back covers were exclusively designed and configured for integration with motor vehicles, were not parts of general use or more specifically covered elsewhere, and satisfied the sole or principal use test for motor-vehicle parts. [Paras 7, 8]

The waterproof ring was classified under CTI 3926 90 29, while the camera front and back covers were classified as other motor-vehicle parts under CTI 8708 99 00.

Classification of automotive camera wiring harness - Classification of the analog high-definition surround-view camera harness connecting the camera to the vehicle processing unit. - HELD THAT: - Though comprising insulated conductors and shielding, the goods constituted a dedicated wiring set solely for installation in motor vehicles. The specific sub-heading for wiring sets of a kind used in vehicles prevailed over the residual provision for other insulated electric conductors fitted with connectors. [Paras 7, 8]

The camera harness was classified under CTI 8544 30 00.

Classification of mounted objective lens for camera - Classification of the objective lens designed to focus light on the image sensor in an automotive camera - HELD THAT: - The lens was a mounted optical element intended for incorporation in a camera and performed the objective-lens function of forming the image and determining the field of view. It therefore answered the specific description of objective lenses for cameras. [Paras 7, 8]

The objective lens was classified under CTI 9002 11 00.

Unconditional exemption for electronic integrated circuits - Eligibility of the image sensor, PMIC and video encoder IC for the exemption available to electronic integrated circuits - HELD THAT: - The exemption entry was unconditional and required only that the imported goods merit classification under heading 8542. Since the three goods were so classified, no further condition could be imposed for grant of the benefit. [Paras 9, 10]

The image sensor, PMIC and video encoder IC were held eligible for exemption under Sl. No. 24 of Notification No. 24/2005-Cus.

Exemption exclusion for automotive camera harness - Exemption inapplicable to motor-vehicle camera housing parts - Eligibility of the automotive camera harness and camera front and back covers for the claimed concessional duty under Notification No. 45/2025-Cus - HELD THAT: - The harness, being classifiable as a vehicle wiring set under CTI 8544 30 00, fell within the express exclusion from the notification entry applicable to heading 8544. The front and back covers, classified as motor-vehicle parts under CTI 8708 99 00 rather than parts under CTI 8529 90 90, did not satisfy the relevant notification entry. [Paras 9, 10]

The claimed exemption under Notification No. 45/2025-Cus. was denied for both the camera harness and the front and back covers.

Final Conclusion: The goods were classified item-wise according to their respective tariff descriptions, functional characteristics and applicable notes. Exemption was allowed for the integrated circuits classified under heading 8542, but denied for the vehicle wiring harness and motor-vehicle camera covers under Notification No. 45/2025-Cus.

Liability of directors for GST dues of company in liquidation - Recovery of GST arrears from accounts of associated entities - Lifting of corporate veil - Joint and Several Liability of Directors - Burden of Proof

Liability of directors for GST dues of company in liquidation - Recovery from partnership firm's bank accounts - HELD THAT: - Under Section 88(3) of the respective GST enactments, where tax dues of a private company in liquidation cannot be recovered, every person who was a director during the period for which the tax was due is jointly and severally liable, subject to establishing before the Commissioner that the non-recovery was not attributable to gross neglect, misfeasance or breach of duty. The former director had held office during the relevant default period and was also a partner of the partnership firm when the default occurred; her subsequent retirement from the firm did not defeat the recovery proceedings. [Paras 29, 30, 31, 32, 33]

The attachments of the former director's account and of the partnership firm's accounts were sustained, with liberty to substantiate the statutory defence before the competent authority.

Lifting of corporate veil - Recovery from subsequently incorporated related company - HELD THAT: - The Court found prima facie indications that the related companies and partnership concerns had been constituted by interchanging family members as directors and partners, and that the subsequently incorporated company may have been formed to avoid payment of the tax arrears. Although it was an independent taxable entity, the circumstances disclosed scope for lifting the corporate veil. [Paras 38, 39, 40]

The challenge to the recovery notice was rejected and the writ petition was dismissed.

Final Conclusion: All the writ petitions were dismissed. The former director and the partnership firm were left at liberty to pursue the statutory defence under Section 88(3) before the competent authority.

Alternative efficacious remedy - invocation of writ jurisdiction of High Court under Article 226 of the Constitution - Interim relief ancillary to final relief - Audi alteram partem

Exercise of writ jurisdiction for investigation into alleged fraud in the affairs of the corporate debtor when remedies under the IBC, PMLA and Companies Act, 2013 were available and proceedings were pending before competent fora - HELD THAT: - As decided in Radha Krishan Industries v. State of H.P. [2021 (4) TMI 837 - SUPREME COURT] held when a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion.

In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.

The correction of the company master data and the display of its CIRP status had already satisfied the first two prayers. The investigation prayer had also become infructuous upon the petitioner's own application and subsequent proceedings. In any event, efficacious statutory remedies were available, the CIRP had been revived and the NCLT was seized of the matter. The Court held that, having declined writ relief on account of the alternative remedies, it could not continue an interim arrangement as the sole final relief; interim relief is only ancillary to relief capable of being granted on final adjudication. [Paras 37, 38, 39, 44, 46]

The writ petition was disposed of without an adjudication on the merits, leaving the parties to pursue remedies in accordance with law.

Audi alteram partem - Validity of the directions permitting the IRP to take protective measures concerning assets of the corporate debtor without hearing the affected property claimants - HELD THAT: - The applicants seeking recall were not parties to the writ petition when the directions were made and had not been afforded an opportunity of hearing. The order was therefore held to have been passed in violation of the principles of natural justice. [Paras 45, 48]

The order directing protective measures in respect of the assets was vacated.

Final Conclusion: The writ petition was disposed of as the primary reliefs stood satisfied or had become infructuous and statutory remedies remained available. The interim order affecting assets was vacated for breach of natural justice.

Pre-existing dispute in operational debt - Appropriation of payments in running account - Additional documents before final insolvency order

Pre-existing dispute in operational debt - Appropriation of payments in running account - Admission of operational debt - Rejection of the operational creditor's insolvency application on the ground of alleged pre-existing disputes concerning short supply, payment appropriation and the statutory threshold - HELD THAT: - The corporate debtor had admitted the outstanding liability in its reply to the demand notice, subject to issuance of the agreed credit note; even after that adjustment, the admitted debt met the statutory threshold. The parties maintained a running account and the corporate debtor had not instructed that payments, including those routed through the financier, be appropriated against identified invoices. In the absence of such directions, the operational creditor could appropriate payments on a first-in-first-out basis.

The statement of accounts also reflects that payments were made on an ad-hoc basis. We also find that there were no instructions issued by the Corporate Debtor to the Operational Creditor that payments were being made against specific invoices. However, at the stage of reply to Section 9 and during the arguments the Corporate Debtor has adopted a contrary reply and shifted its stand without any proof in support of the said stand, which is not permissible in law and reflects a mala fide conduct of the Corporate Debtor. The litigant cannot be permitted to approbate and reprobate. This has been clearly laid down by the Hon’ble Supreme Court in the following two judgments Cauvery Coffee Traders, Mangalore vs M/s Hornor Resources Company Limited [2011 (9) TMI 1082 - SUPREME COURT] AND R N Gosain vs Yashpal Dheer [1992 (10) TMI 254 - SUPREME COURT]

The defences based on the protected period, short supply, debit notes and alleged deficiencies were held to be illusory, spurious and unsupported by a genuine pre-existing dispute; the corporate debtor could not adopt a contrary stand after admitting the running account.

The disputes which have been raised by the corporate debtor are moonshine and spurious and cannot be sustained legally. Therefore, the petition cannot be rejected on the grounds of pre-existing dispute. [Paras 46, 56, 57, 58, 59]

The dismissal of the Section 9 application was set aside; the corporate debtor was directed to make payment within the stipulated period, failing which it was to be admitted into insolvency.

Additional documents before final insolvency order - Validity of permitting the corporate debtor to place WhatsApp chats and financier-related documents on record after conclusion of final arguments - HELD THAT: - There is no absolute bar to filing documents before a final order admitting or dismissing an insolvency application is passed. The additional documents were produced to clarify documents alleged to be forged or fabricated, and the WhatsApp chats were stated to be within the operational creditor's knowledge and possession. No infirmity was found in their being taken on record. [Paras 47, 52, 53, 54]

The order allowing the additional documents was upheld.

Final Conclusion: The appeal was allowed in part: the order rejecting the insolvency application was set aside, while the order taking additional documents on record was sustained. The corporate debtor was afforded the stipulated opportunity to pay, failing which admission into insolvency was directed.

Business Auxiliary Service - sale of Compressed Natural Gas [“CNG”] to the consumers provided by Mahanagar Gas Limited [“MGL”] at and through the petrol pump outlets owned by the respondent-Corporations - passing of title in goods - Concept of Agency - Treatment as sale - commission agent - Principal-agent relationship in CNG distribution - marketing and sale of client's goods - Commission distinguished from trade discount -

Whether the transaction between the respondent-Corporations and MGL in supply of CNG was in the capacity of “Seller and Buyer”? - HELD THAT: - This Court in Bharti Cellular Limited v. CIT [2024 (3) TMI 41 - SUPREME COURT] explained the concept of agency. In that case, the assessees were cellular mobile service providers. The issue involved was regarding the liability to deduct tax at source under Section 194H of the Income Tax Act, 1961 on the amount payable. As per the Revenue, the amount which was payable was the commission to an agent by the assessees under the Franchise/distributor agreements existed between the assessees and the franchise holders.

The law of agency was discussed in the context of the expression “acting on behalf of another person”. After referring to the group of provisions of Section 182 and others of the Contract Act, the Court stated that the agency is a triangular relationship between the principal, the agent, and the third party. It was further observed that in order to comprehend what is required to be examined is an inter-se relationship between the principal and the third party on one hand and the agent and the third party on the other.

‘Sale’ and ‘Agency’ Distinguished - Sri Tirumala Venkateswara Timber and Bamboo [1967 (11) TMI 94 - SUPREME COURT] highlighted the distinction between the contract of sale and contract of agency. It was observed that the agent is authorized to sell or buy on behalf of the principal and account for either the sale proceeds or the goods. It was observed that the essence of the contract of sale is the transfer of title to the goods for the price paid or promised to be paid.

The Agreements between the parties record, as previously stated, that the respondent Corporation concerned approached MGL telling it that they had the facility of outlets/online stations available at different sites in the city of Mumbai and elsewhere through which the respondent-Corporations could facilitate the sale of CNG to the consumers which may be supplied by MGL to them. This offer was agreed upon by MGL resulting into execution of the Agreements containing the terms as above. All the terms in the Agreements came to be accepted by the respondent-Corporations.

The intention of parties was thus evidently reflected that MGL was to supply CNG which would be sold by the respondent-Corporations to the vehicle users by providing various services in the process, to complete the sale occurring from MGL to the vehicle owners.

As the total effect of the Agreement and the terms thereof is required to be considered to understand the real nature and purport as well as intention of the parties, even if at some place in an isolated context, the word “sale” is mentioned or arrangement for serve limited aspect is described as “Principal-to-Principal”, it would not alter the real jural relationship revealing in substance from the Agreement read in totality.

What is necessary for becoming the payment to be the trade discount is that such discount must be part of the terms of the trade or a condition in the transaction of sale of goods. Trade discount is something, the payment in the nature of which, is by established practice in trade. It is the allowance and the nature of discount known at or prior to the removal of the goods. The concept of trade discount is relevant where the sale is on “Principal-to-Principal” basis, which is indeed not the case here.

The respondent Corporations are the commission agents rendering the services to the appellant in distributing CNG acting on the basis of terms and conditions of the Agreement, of course, they are free to perform the task which they are entrusted with by the appellant-principal as per the terms of the Agreements. They do the business as facilitator and promote to sell CNG for the appellant. The respondent Corporations may be enjoying certain “powers” but they do not have the authority to override the principal–appellant and to hold the goods with any titular authority.

The commission is paid to the respondent Corporations for rendering such services. The respondent Corporations are covered within the ambit of “commission agent” as per Explanation (a) of the definition. The services rendered by the respondent Corporations are “taxable services” as defined and understood in Section 65(105) of the Finance Act.

A sale requires transfer of property in goods for a price; the true relationship must be gathered from the agreement read as a whole, and not from isolated descriptions. Under the agreements, MGL retained control over the equipment, supply, retail price, inspection, unsold stock and its disposal on termination; the risk and title in CNG did not pass to the respondent-Corporations. The Corporations provided sites, infrastructure, utilities and trained personnel to facilitate MGL's sale of CNG to vehicle users, for remuneration linked to the quantity sold. The stipulated commission/profit margin, considered with the contractual terms, was remuneration for agency services and not a trade discount. The Corporations consequently acted as commission agents promoting and marketing CNG belonging to MGL, and their activities fell within Business Auxiliary Service. [Paras 8, 9, 10, 11, 12]

The respondent-Corporations were liable to service tax on the commission received for rendering Business Auxiliary Service to MGL.

Final Conclusion: The appeals were allowed. The CESTAT order was set aside and the service-tax demands as adjudicated against the respondent-Corporations were restored.

Non Service of show cause notice in service-tax recovery proceedings - Burden to prove service of notice - Explanation to Sub-section (1) of Section 73

Validity of the service-tax demand order where the alleged show cause notice was neither produced nor proved to have been served on the assessee - HELD THAT: - Service of a notice requiring the assessee to show cause is mandatory before determination of unpaid or short-paid service tax. Once receipt was specifically denied, the burden lay on the revenue authorities to establish service. Their assertion of dispatch by speed post, unsupported by the notice itself, postal receipt, tracking information or acknowledgment, did not establish either issuance or service of the notice. [Paras 11, 13, 14]

The demand order was quashed as being contrary to the requirement of notice; however, the competent officer was left free to issue a fresh show cause notice, and the period from 07.10.2021 until the order was directed to be excluded in computing limitation for such action.

Final Conclusion: The writ petition was disposed of by quashing the service-tax demand order for failure to establish service of the statutory show cause notice, while preserving the authority's right to recommence proceedings by a fresh notice subject to the directed exclusion of time.

Extended Period of Limitation - service tax on manpower supply service received through employee secondment from overseas affiliates - Wilful suppression and bona fide interpretational dispute

HELD THAT: - We find that the issue involved in the present case is no more res integra and has been settled in the case of C.C., C.E. & S.T., Bangalore (Adjudication) vs. Northern Operating Systems Pvt Ltd [2022 (5) TMI 967 - SUPREME COURT] as well as by the Tribunal in catena of decision wherein after considering the facts and circumstances of the case and the fact that the issue is related to interpretation and there are divergent views, has set aside the demand for extended period of limitation.

Tribunal in the case of Delphi Automotive Systems Private Limited [2025 (7) TMI 1137 - CESTAT CHANDIGARH] in identical circumstances, has set aside the demand outside the normal period of limitation.

Following the settled position that the existence of divergent views on the taxability of secondment arrangements and a tenable bona fide view of non-liability negatives wilful suppression or deliberate misstatement, the extended period could not be invoked merely because service tax had not been paid. [Paras 7, 8]

The demands for the extended period were set aside; the appeals were partly allowed.

Final Conclusion: The extended-period service tax demands arising from the employee secondment arrangements were held unsustainable. The appeals were partly allowed to that extent.

Non payment of service tax on waterproofing for the premises - qualification as ‘original works’ - Extended limitation for service tax demand based solely on Form 26AS data - Wilful suppression by a registered service provider - eligibility for full Service Tax exemption as per Sl No. 14(b) of Notification No.25/2012 ST dated 20.6.2012.

Assessee claimed that even if the Service Tax is payable on WCT basis, he will be eligible for abatement of 60% when the work is undertaken on original works basis - HELD THAT: - The appellant had been registered since 2011, yet the Department made no enquiry regarding non-payment of tax or non-filing of returns for about ten years. The show cause notice treated the entire Form 26AS receipts as taxable consideration without first ascertaining the nature of the works or the appellant's status, and the demand was substantially reduced on subsequent verification. Departmental delay in initiating enquiry could not be characterised as wilful suppression by the appellant. A demand founded solely on Form 26AS or income-tax data, without proper verification and investigation, cannot sustain invocation of the extended period. [Paras 16, 18]

The confirmed demand was held barred by limitation and was set aside.

Final Conclusion: The appeal was allowed on limitation, with consequential relief in accordance with law.

Central excise exemption for goods intended for use in jute mills - Substantive compliance with exemption conditions - Procedural lapse and denial of exemption

Central excise exemption for goods intended for use in jute mills - Substantive compliance with exemption conditions - Procedural lapse and denial of exemption - Eligibility of Aluminium Baxter Flyers manufactured on job-work basis for exemption available to goods required by jute mills for making jute textiles, where the principal manufacturer heat-treated the goods before their ultimate supply to jute mills. - HELD THAT: - Baxter Flyers are components usable only in jute spinning frames. The notification required proof that the goods were cleared for the intended use, and did not require their direct supply to a jute mill or their use in the identical condition in which they left the job worker. The invoices established ultimate supply to jute mills after heat treatment by the principal manufacturer. Further, the notification prescribed no prior or post-clearance intimation to the jurisdictional officer; absence of such intimation was, at most, a procedural breach and could not defeat the substantive exemption, consistently with Sambhaji v Gangabai . [Paras 6]

The exemption condition stood fulfilled; the central excise duty demand was unsustainable, and the consequential interest and penalty were also set aside.

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

Determination of manufacture under Central Excise law - Penalty on authorised representative for goods liable to confiscation

Central excise duty liability as the manufacturer of goods supplied to power supply corporations - Meaning of Manufacture - Job Work - Burden of Proof - Principal-to-Principal Transactions -Central Excise duty liability on goods traded and, to a limited extent, obtained through job workers, where the assessee had represented itself as a manufacturer to Power Supply Corporations - HELD THAT: - A representation to Power Supply Corporations that the assessee was a manufacturer, made to secure orders, could not by itself establish manufacture under the Central Excise Act. There was no other evidence of manufacture; the available material showed absence of requisite manufacturing infrastructure and testing facilities, while the job workers were the actual manufacturers. The earlier decision in the assessee's own case on the same controversy was held squarely applicable.

We rely upon the decision of the Tribunal in the case of Aska Equipment Pvt. Ltd. [2006 (6) TMI 27 - CESTAT, MUMBAI] wherein as held by the Tribunal that the fact that claims made before the Government companies that it was the manufacturer or that it had given warranty or affixed brand name stickers cannot be a reason to conclude that the assessee was a manufacturer within the meaning of the Central Excise Act. Department’s appeal in respect of the said decision of the Tribunal was dismissed on the ground of delay as also on merit as reported in [2009 (2) TMI 806 - SC ORDER]. We find that the ratio of the said decision is squarely applicable to the facts and circumstances of the present case.[Paras 6]

The demand of Central Excise duty was held unsustainable; consequently, the interest demand and penalty on the appellant company were also set aside.

Penalty on authorised representative for goods liable to confiscation - HELD THAT: - The authorised representative had acted bona fide and neither knew nor had reason to believe that the goods were liable to confiscation. Since the duty demand against the appellant company did not survive, no penalty under Rule 26 could be imposed on the authorised representative. [Paras 6]

The penalty imposed on the authorised representative was set aside.

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