TaxTMI Updates e-Newsletter
Jul 24,2026

Scope of supply - assignment of leasehold rights - immovable property - sale/transfer of benefits arising out of land - Schedule II - renting/lease as supply of services - Schedule III - sale of land and sale of building excluded - strict construction of taxing statute - The High Court [2025 (1) TMI 516 - GUJARAT HIGH COURT] held that, the assignment of leasehold rights by the lessee to a third-party assignee is not a taxable supply of services under section 7(1)(a) of the GST Act read with Schedule II and Schedule III, and GST is not leviable on such transaction - HELD THAT:- The special leave petitions were dismissed in view of dismissal of a similar special leave petition.

Interest on delayed GST payment where tax was credited to Electronic Cash Ledger - Non-application of binding precedent in rejection of refund claim - Entitlement to refund of excess interest paid on belated GST returns where the tax amount had been credited to the Electronic Cash Ledger before the due date of filing returns. - HELD THAT: - It is pertinent to note that the respondent authority has denied the grant of refund of excess amount of interest by rejecting the application of the petitioner only for the reason that the Proviso to Rule 88B of the CGST Rules only applies prospectively, by ignoring the judgement of this Court rendered in the case of Arya Cotton Industries and anr.[2024 (7) TMI 239 - GUJARAT HIGH COURT]. The petitioner repeatedly pointed out the said decision in his replies however, the respondents have not acceded to the request and examined the case of the petitioner in light of the said judgement.

This is a classic case of selective denial. On one hand, they acknowledge that the ratio of the decision in case of Arya Cotton Industries and anr. (supra),applies to the claim of interest, but, simultaneously, they deny by taking shelter under the self-determined prospective effect of Rule 88B of the CGST Rules. The respondents were supposed to process the application filed by the petitioner for refund in light of the aforesaid judgement, but instead, they chose an alternative route to reject the application by applying the analogy that the Proviso to Rule 88B of the CGST Rules would apply prospectively.

The rejection of the refund claim and the recovery notice were quashed, and the respondents were directed to process and grant the refund with statutory interest.

Final Conclusion: The writ petition was allowed. The petitioner was held entitled to refund of excess interest, with statutory interest, as the refund rejection had disregarded the applicable judicial ruling.

Seeking extension of instalment schedule for payment of outstanding CGST and SGST interest - HELD THAT:- The writ petition was disposed of by permitting payment of the outstanding interest in equal monthly instalments up to the end of December 2026, subject to automatic withdrawal of that facility upon default.

Detention of goods for expired e-way bill-Absence of tax evasion - Hyper-technical Approach - Validity of detention of a vehicle carrying TMT boxes solely because its e-way bill had expired, where the vehicle had reached Vijayawada but could not reach the nearby destination owing to breakdown. - HELD THAT: - The detention order disclosed no ground other than expiry of the e-way bill. As the vehicle had reached Vijayawada within the stipulated period and could not proceed to the destination because of breakdown, and the remaining distance was less than 8 km., the Court found no tax evasion. Invocation of the detention power in these circumstances was held to be improper and hyper-technical. [Paras 7, 8]

All further proceedings arising from the detention were directed to be dropped.

Final Conclusion: The writ petition was allowed and the proceedings initiated on the sole ground of expiry of the e-way bill were directed to be dropped.

Waiver of mandatory pre-deposit on financial incapacity - HELD THAT: - In the peculiar facts, the petitioner was afforded an opportunity to explain the financial inability to make the pre-deposit. On filing such application, the Appellate Authority may consider it in accordance with law; the order was expressly confined to the facts of the case and was not to be treated as a precedent. [Paras 3]

The petition was disposed of with liberty to file an application before the Appellate Authority for consideration of waiver of the pre-deposit condition.

Final Conclusion: The petitioner was permitted to seek consideration of financial incapacity for waiver of the statutory pre-deposit before the Appellate Authority. The direction was confined to the peculiar facts and declared non-precedential.

Alternative statutory remedy under the CGST Act - Maintainability of writ petition against GST demand - wrongful availment and utilisation of input tax credit when an appeal to the Appellate Authority - HELD THAT: - Since the statutory appellate remedy was available and the petition had been instituted within the period in which that remedy could be invoked, the Court declined to entertain the writ petition directly without exhaustion of the alternative remedy. [Paras 5, 6, 7, 8]

The writ petition was dismissed with liberty to pursue the statutory appeal; the time spent before the Court was directed to be excluded for limitation purposes if the appeal was filed within 30 days.

Final Conclusion: The challenge to the GST demand was relegated to the statutory appellate remedy, with protection for exclusion of the period spent in the writ proceedings subject to filing the appeal within the stipulated period.

Composite show cause notice and assessment order for multiple tax periods - Validity of a composite show cause notice and composite assessment order covering multiple assessment years for GST liability arising from Pandal or Shamiana renting services. - HELD THAT: - A single show cause notice or composite assessment order cannot cover more than one tax period where the due date for filing the annual return has been reached. Such a course would affect the registered person's entitlement to statutory benefit and appellate remedy. The Court applied the co-ordinate Bench decision in W.P. No.11028 of 2025 to the impugned composite assessment. [Paras 7, 8]

The composite assessment order for the relevant assessment years was set aside; the assessing authority may issue separate notices and undertake separate assessments in accordance with law after affording opportunity to the petitioner.

Final Conclusion: The writ petition was allowed and the composite assessment order covering the three assessment years was set aside. Separate proceedings may be initiated for the relevant tax periods, with the intervening period excluded for limitation.

Opportunity to substantiate genuineness of input tax credit transactions - Principles of Natural Justice - Opportunity of Hearing - HELD THAT: - Though the petitioner had not responded to the intimation and show-cause notice uploaded on the portal, it asserted that it was not otherwise served and sought an opportunity to place documents supporting the genuineness of the transactions. In the circumstances, a further opportunity to show cause was warranted, subject to a stipulated timeline and deposit of a reasonable amount. [Paras 5]

The impugned demand order was quashed and the proceedings were restored for fresh consideration, subject to filing of documents within the stipulated time and deposit of 10% of the demand, subject to the final outcome.

Final Conclusion: The petition was partly allowed by restoring the proceedings for the petitioner to substantiate the disputed input tax credit transactions, subject to the conditions imposed.

Cancellation of GST registration for non-filing of returns - Reasonable opportunity to respond to show-cause notice - Principles of Natural Justice - HELD THAT: - An opportunity to file and have the returns verified was necessary, since the resulting statutory obligations could then be examined and cancellation would completely disrupt the petitioner's business. The cancellation order and the order rejecting revocation had been made without considering the reasons that could be offered by the petitioner. [Paras 4]

The cancellation and rejection orders were quashed and the proceedings restored to the show-cause-notice stage, with liberty to file a response and supporting records for fresh consideration.

Final Conclusion: The writ petition was allowed subject to restoration of the cancellation proceedings to the show-cause-notice stage and payment of costs.

Show cause notice as foundation of GST adjudication - Violation of natural justice - Validity of GST adjudication under Section 74 where the show cause notice uploaded on the website was addressed to another entity, though the pre-notice intimation in GST FORM DRC-01A - HELD THAT: - An order confirming liability under Section 74 must be founded on a show cause notice issued in the prescribed form to the person proceeded against. The undisputed show cause notice was addressed to another entity; consequently, the adjudication was without notice to the petitioner. This defect had not been considered in the appellate proceedings.

The adjudication order and the appellate order were quashed, without prejudice to the authorities commencing proceedings afresh if permissible in law and to the petitioner's defences.

Final Conclusion: The petition was allowed and the impugned adjudication and appellate orders were quashed for want of a show cause notice addressed to the petitioner.

Seeking De novo GST adjudication subject to conditional pre-deposit - Principles of Natural Justice - taxable person neither replied to the show-cause notices nor attended the personal hearings and the statutory appellate limitation had expired - HELD THAT: - Recording the taxable person's undertaking to deposit 25% of the disputed tax, the Court directed fresh adjudication on merits upon such deposit and submission of a reply with supporting documents. The impugned orders were directed to be treated as an addendum to the show-cause notices for that purpose. [Paras 9, 10, 11, 12, 13]

The matters were remitted for fresh orders on merits subject to compliance with the stipulated pre-deposit and reply requirements; consequential bank attachment, if any, was to stand vacated subject to those conditions.

Final Conclusion: The writ petitions were disposed of by directing de novo adjudication subject to deposit of 25% of the disputed tax and filing of a substantiated reply. On default, the tax authorities were permitted to recover the demand in accordance with law.

Maintainability of a Revenue appeal having tax effect below the monetary limit - Revenue invoked exceptions introduced by subsequent CBDT Circulars - Prospective application of exceptions to monetary limit circulars - Applicability of revised monetary limits to pending income-tax appeals

HED THAT:- Having heard the Revenue and having gone through the materials on record, we find no good reason to interfere with the impugned orders passed by the High Court. [2025 (12) TMI 1872 - BOMBAY HIGH COURT]

The Special Leave Petitions are, accordingly, dismissed.

Revision of assessment order prejudicial to Revenue - Twin conditions for revisionary jurisdiction - Revisionary jurisdiction in limited scrutiny assessment - Scope of limited scrutiny

HELD THAT:- After going through the impugned order passed by the High Court [2025 (11) TMI 2036 - ALLAHABAD HIGH COURT] as well as the order passed by the Income Tax Appellate Tribunal [2025 (4) TMI 1844 - ITAT AGRA] we are not inclined to entertain the Special Leave Petition.

Revision u/s 263 - Right to be heard / Audi alteram partem in revision proceedings - Treaty shopping and conduit arrangements - Permanent establishment and taxation as fees for technical services - Applicability of DTAA benefits contingent on factual determination - delay in filling SLP

High Court [2024 (11) TMI 368 - DELHI HIGH COURT] dismissed the Revenue's appeal and ITAT's decision setting aside the Commissioner's Section 263 order was upheld because the assessee was not afforded an opportunity to meet the allegation of being a conduit/treaty shopping arrangement; consequently no substantial question of law warranted interference.

HELD THAT:- The Special Leave Petition was dismissed on the ground of inordinate delay in filing.

Revival of writ petition following reversal of limitation decision -Validity of reopening of assessment - Period of limitation - TOLA

Whether the writ petition, previously disposed of solely on limitation, should be restored after the earlier order was set aside, and whether coercive recovery and penalty action should be restrained pending further proceedings? - HELD THAT: - The earlier disposal rested only on limitation. The Supreme Court set aside that decision in light of Union of India & Ors v/s Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] which held the Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 applicable and prescribed the manner of computing limitation. As the remaining challenges, including whether the notice under section 148 was issued within the surviving period, had not been decided, the petition was revived rather than requiring a fresh writ petition. [Paras 6]

The writ petition was restored for consideration of the unresolved issues; coercive action pursuant to the assessment order, demand notice and penalty show-cause notices was restrained until further orders.

Final Conclusion: The interim application was allowed and the writ petition for A. Y. 2013-14 was revived for adjudication of issues not previously decided. The Revenue was restrained from taking coercive action pending further orders.

Extinguishment of statutory tax dues under an approved resolution plan - Binding effect of resolution plan on unsubmitted claims

Enforceability of income-tax dues arising from the assessment order where no claim was lodged by the Revenue during the corporate insolvency resolution process and the approved resolution plan did not provide for such dues -HELD THAT: - In view of the declaration of law made by this Court, all the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 of the IB Code. In this case, the income tax dues of the CD for the assessment years 2012-13 and 2013-14 were not part of the approved Resolution Plan. Therefore, in view of sub-section (1) of Section 31, as interpreted by this Court in the above decision, the dues of the first respondent owed by the CD for the assessment years 2012-13 and 2013-14 stand extinguished.

Once the Resolution Plan is approved by the NCLT, no belated claim can be included therein that was not made earlier. If such demands are taken into consideration, the appellants will not be in a position to recommence the business of the CD on a clean slate.

Once no claim was lodged by the Revenue before the Committee of Creditors or the National Company Law Tribunal during the Corporate Insolvency Resolution Process, the Revenue cannot thereafter assert or seek to enforce its claim on the basis of the assessment order passed by the Assessing Officer. Even assuming that the Revenue were to succeed in its challenge to the order passed by the Commissioner of Income Tax (Appeals), and that a tax demand were to revive, such claim could not be realised unless it had been duly lodged and considered in the insolvency proceedings. Having failed to do so, the Revenue cannot now seek to recover the alleged dues dehors the approved Resolution Plan.

Final Conclusion: The appeal was dismissed, as the Revenue could not enforce income-tax dues that had not been lodged or included in the approved resolution plan.

Recovery of disputed tax during pendency of statutory appeal - Expeditious disposal of pending income-tax appeal - Protection against coercive recovery of tax demanded under assessment orders pending a long-standing statutory appeal - HELD THAT: - The appeal against the assessment order had remained undisposed of for a considerable period, and no reasons for the delay in its disposal were forthcoming. In these circumstances, the appellate authority was required to hear and dispose of the appeal expeditiously, and coercive recovery pursuant to the assessments under appeal could not be initiated until its disposal. [Paras 8, 9]

The appellate authority was directed to dispose of the appeal in accordance with law within four months, and the authorities were restrained from taking coercive recovery action until disposal of the appeal.

Final Conclusion: The writ petition was disposed of with a direction for expeditious disposal of the pending appeal and interim protection against coercive recovery until such disposal.

Reassessment beyond four years - quantification of escaped income - Reassessment - failure to consider objections concerning alleged accommodation entries

Reassessment beyond four years - quantification of escaped income - Validity of reassessment notice issued beyond four years where the recorded reasons did not quantify income alleged to have escaped assessment - HELD THAT: - For invoking the extended period under section 149(1)(b), the recorded reasons must indicate that the income chargeable to tax which escaped assessment amounted to or was likely to amount to the prescribed threshold. The reasons merely reproduced debit and credit entries concerning the transactions with the alleged accommodation-entry provider and stated a belief of escapement, without quantifying such escaped income. [Paras 6, 7]

The reassessment notice was invalid and liable to be quashed for want of the requisite quantification.

Reassessment - failure to consider objections concerning alleged accommodation entries - Validity of reassessment founded on alleged accommodation entries despite the assessee's objections that the underlying information and transaction details were available during the original scrutiny assessment - HELD THAT: - The assessee had disclosed the relevant ledger and supplied the details sought concerning sundry debtors in the scrutiny assessment. Its specific objection that the statement of the proprietor of the counterparty pre-dated the original assessment, and that the assessment had nevertheless been completed without addition, was not dealt with. Nor was the date or month when the alleged subsequent information from the Investigation Wing was received disclosed. The reopening therefore could not be sustained on a bald assertion of subsequently received information. [Paras 8]

The reassessment notice was quashed.

Final Conclusion: The writ petition was allowed and the reassessment notice for Assessment Year 2012-13 was quashed. The notice neither recorded the requisite quantification of escaped income for the extended period nor addressed the assessee's material objections regarding the alleged subsequent information.

Search assessment u/s 153A of unabated assessments - Additions in absence of incriminating material

Validity of disallowance of deduction for infrastructure development activity in search assessments for concluded assessment years where no incriminating material concerning the claim was found - HELD THAT: - This Court in case of Saumya Constructions [2016 (7) TMI 911 - GUJARAT HIGH COURT] which is upheld by the Hon’ble Apex Court in case of Abhisar Buildwell P. Ltd [2023 (4) TMI 1056 - SUPREME COURT] the Tribunal allowed the appeal filed by the assessee without entering into the merits holding that the Assessing Officer could not have made disallowance for the years under consideration because once the proceedings under Section 153A of the Act is initiated which are special proceedings, different treatments for abated and unabated assessments are provided by the legislature. The Tribunal, therefore, held that in respect of unabated assessment legislature has not conferred powers on the Assessing Officer to disturb the assessments already concluded unless incriminating material is found during the course of search.

In an unabated assessment, proceedings under section 153A do not empower the Assessing Officer to disturb an assessment already concluded unless incriminating material relating to the proposed addition is found during the search.

Since no such material was found concerning the deduction claimed under section 80-IA(4), the Assessing Officer could not revisit the claim by relying on the retrospective amendment to section 80-IA(13). [Paras 4, 5]

The Tribunal was justified in deleting the disallowance without examining the merits of the deduction claim.

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

Statutory bar on probation for Income-tax Act offences - Sentencing for false statement in income-tax return - Applicability of the Probation of Offenders Act to a person convicted u/s 277 of the Income-tax Act

Whether a person convicted u/s 277 of the Income-tax Act, 1961, could be released under the Probation of Offenders Act, 1958? -HELD THAT: - Section 292A expressly excludes the application of section 360 of the Code of Criminal Procedure and the Probation of Offenders Act to a person convicted of an offence under the Income-tax Act, unless the person is under eighteen years of age.

Looking to the provisions of law mentioned above and the case laws cited by the learned counsel for the appellant i.e. Union of India Vs. Mamta Sethi And Ors. [2000 (8) TMI 9 - SC ORDER] and Commissioner of Income-Tax Vs. Onkar Nath And Anr [1983 (10) TMI 36 - PUNJAB AND HARYANA HIGH COURT] this Court is of the considered view, that the respondent/opposite party was convicted under Section 277 of the Income Tax Act but was released under Probation of Offenders Act.

The trial court missed to notice Section 292A of the Income Tax Act contemning an express bar against the invocation of the provisions of the Probation of Offenders Act in respect of the offence enumerated in the Income Tax Act, therefore, impugned order dated 28.04.1982, passed by the concerned court, is set aside.[Paras 12]

The order granting probation was set aside, and the matter was remitted to the trial court for fresh determination of sentence alone after hearing both sides.

Final Conclusion: The criminal appeal was allowed. The conviction was not disturbed, but the grant of probation was invalidated and the question of sentence was remitted for fresh consideration.

Penalty u/s 271(1)(c) - exempt society claimed depreciation on assets acquired out of Government grants - "bonafide/inadvertent/human error" - Levy of penalty for claiming depreciation on assets acquired from Government funds by a society whose income was exempt u/s 10(23C)(iiiab) - HELD THAT: - The depreciation claim, though disallowable because the actual cost of assets acquired directly or indirectly from Central Government funds was nil, was accounted for under the prescribed financial regulations and claimed as deduction.

The assessee voluntarily accepted the disallowance and revised its return. Since its entire income was exempt, the claim had no impact on taxable income; there was no wilful suppression or deliberate furnishing of inaccurate particulars. The claim was therefore a bona fide, inadvertent human error not attracting penalty. [Paras 8, 9, 10, 11]

Deletion of penalty under Section 271(1)(c) was upheld.

Final Conclusion: No substantial question of law arose. The income-tax appeal was dismissed and the deletion of penalty was sustained.

Assessment u/s 153A - Limitation for reassessment following search - computation of ten-year period - Validity of reassessment notice for AY 2015-16 where the search was conducted during Financial Year 2024-25 - HELD THAT: - Section 153A prescribes distinct computational regimes for the six-year and ten-year periods. While the six assessment years are those immediately preceding the assessment year relevant to the previous year of search and therefore exclude the search assessment year, the extended ten-year period is reckoned from the end of that assessment year. The latter formulation necessarily includes the search assessment year as the first year of the ten-year block; applying the six-year exclusion model would render the distinct statutory language redundant.

This issue is no more res integra as the same is covered by the judgement of this Court in the case of Jayantibhai Karamshibhai Maniya [2026 (1) TMI 1204 - GUJARAT HIGH COURT]. This Court has taken a view, after considering the earlier judgement in the case of Bhavin Zinzuwadia [2024 (12) TMI 391 - GUJARAT HIGH COURT] that while calculating the period of ten years under Section 153C of the Act, keeping in mind the language of Explanation 1 to Section 153A of the Act, the search year or the year in which seized material is received by the Jurisdictional Assessing Officer of the petitioner is required to be taken into consideration. [Paras 13, 14]

The search assessment year being Assessment Year 2025-26, Assessment Year 2016-17 was the tenth permissible year; consequently, the notice for Assessment Year 2015-16 was barred by limitation and was quashed.

Final Conclusion: The writ petition was allowed and the reassessment notice for Assessment Year 2015-16 was quashed as time-barred.

Estimation of profit on alleged bogus purchases by civil contractor - corresponding sales were not questioned - HELD THAT: - The assessee carried on civil-contract and engineering activities, in which procurement from unregistered dealers could not be ruled out, and the corresponding sales had not been disputed. In the peculiar facts, only the net profit attributable to the impugned purchases, computed with reference to the accepted profit rates, was liable to be brought to tax; the restricted rejection of book entries was not to operate as a precedent. [Paras 4]

The addition was restricted to net profit at 4.35%, 4.09%, 3.50% and 3.60%, respectively, for AYs 2017-18 to 2020-21.

Final Conclusion: The appeals were partly allowed by restricting the additions for alleged bogus purchases to the net-profit rates determined for the respective assessment years.

Penalty for incomplete tax audit report - particulars in column 40 of Form 3CD were inadvertently left unfilled - meaning of “sufficient cause” - definition of “reasonable cause” as envisaged u/s 273B

HELD THAT: - The omission to fill column 40 was explained as inadvertent and caused by a software error, without any mala fide intention. On the totality of the circumstances, the case fell within the scope of reasonable cause u/s 273B; consequently, the incomplete audit report could not sustain the penalty. [Paras 4]

The penalty was held unsustainable and was deleted.

Final Conclusion: The appeal was allowed and the penalty for the incomplete tax audit report was deleted on the ground of reasonable cause.

TP Adjustment - comparability under TNMM - Working capital adjustment - Applicability of advance pricing agreement to non-covered period

Functional comparability of aseptic carton packaging manufacturer - Different financial year of comparable - Working capital adjustment - Transfer pricing comparables for the domestic manufacturing and distribution of aseptic carton packaging segment, including inclusion of a company with a different financial year and grant of working capital adjustment - HELD THAT: - Companies engaged in holograms, paper, kraft paper, specialty polyester films, BOPET films, or decorative automotive and consumer-product components were functionally dissimilar to an assessee manufacturing aseptic carton packages. Broad comparability could not overcome differences in products, use of recycled or waste paper, significant intangibles, export orientation, and absence of segmental data. A listed comparable rejected solely because it followed a different financial year was required to be included where corresponding-period data could be extrapolated. Since working capital adjustment had been granted for the Hub Services segment and had also been allowed in the assessee's earlier case, the claim required examination and allowance. [Paras 57, 61, 62, 65, 67]

The specified functionally dissimilar companies were directed to be excluded; Huhtamaki PPL Ltd. was directed to be included after extrapolation of corresponding-period data, and the working capital adjustment issue was restored to the Assessing Officer/Transfer Pricing Officer.

ITES comparability - Related-party transaction filter - Additional comparables in transfer pricing proceedings - Transfer pricing comparables for the Hub Services segment providing information technology enabled services - HELD THAT: - Medical transcription falls within information technology enabled services; hence the medical transcription segment of Bhilwara Infotechnology Limited, which satisfied the export filter, was to be considered. The related-party transaction ratio of Ideavate Solutions Pvt. Ltd. required verification against the filter applied by the Transfer Pricing Officer. An assessee is not precluded from seeking inclusion of additional companies omitted from its transfer-pricing study if they satisfy the functional, asset and risk test. [Paras 70, 71, 74]

Bhilwara Infotechnology Limited was directed to be allowed as a comparable; verification was directed for Ideavate Solutions Pvt. Ltd. and the two additional proposed comparables, for inclusion where the prescribed tests were met.

Arm's length price determination for non-covered transactions -Advance pricing agreement confined to covered period - Use of the profit margin agreed under a bilateral advance pricing agreement for determining the arm's length price of the Export Packmat segment for a year outside the agreement period - HELD THAT: - An advance pricing agreement operates only for its specified period and cannot be extrapolated to determine the arm's length price for a non-covered year. The arm's length price of transactions outside that period must be determined under the Act and Rules. As the original benchmarking proposed in the first show-cause notice had not been considered, fresh adjudication was necessary. [Paras 78]

Application of the bilateral advance pricing agreement margin to the year under consideration was held impermissible, and the arm's length price of the Export Packmat segment was restored for fresh determination in accordance with law.

Final Conclusion: The appeal was partly allowed. The domestic and Hub Services transfer-pricing comparability issues were decided or restored as directed, while the Export Packmat segment was remanded for fresh arm's length price determination without applying the bilateral advance pricing agreement to the non-covered year.

Remission or cessation of trading liability u/s 41(1) - Genuineness of sundry creditors

Remission or cessation of trading liability - Addition in respect of outstanding foreign trade creditors as deemed income on alleged cessation of liability - HELD THAT: - Section 41(1) requires that the assessee must have obtained a benefit by remission or cessation of a trading liability. The liabilities had neither been written back nor ceased to be shown as payable in the books; suspension of the creditors' operations or the assessee's business did not by itself establish a remission or cessation or any benefit to the assessee.

The principle in CIT vs. Sugauli Sugar Works (P.) Ltd. [1999 (2) TMI 5 - SUPREME COURT], CIT vs. Kesaria Ta Co. Ltd. [2002 (3) TMI 1 - SUPREME COURT] and PCIT vs. Soorjamull Nagarmull [2022 (11) TMI 1215 - CALCUTTA HIGH COURT] was applied wherein it has held that the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this section. The mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the Department to say that section 41(1) would apply “mere making of an entry in the books of the debtor unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end”. [Paras 5]

The addition under section 41(1) in respect of the foreign trade creditors was deleted.

Genuineness of sundry creditors - Non-compliance with summons or enquiry notices - Addition of domestic sundry creditors as bogus solely because the creditors did not comply with summons or enquiry notices. - HELD THAT: - Non-response to summons or enquiry letters cannot, by itself, render outstanding creditors bogus where the assessee has furnished supporting evidence and the authorities have neither undertaken further enquiry nor identified defects in that evidence. The liabilities continued to be recognised as subsisting, and documentary material showed that two creditors were fully paid and the third was partly paid in subsequent years.

Tribunal applied CIT vs. Orissa Corporation (P.) Ltd. [1986 (3) TMI 3 - SUPREME COURT] wherein held that where the assessee has furnished all details and evidences before the AO and ld. CIT(A), the authorities below without having carried out any enquiry or investigation or failing to pin-point any defects into the evidences furnished by assessee then addition cannot be made u/s 68 of the Act merely on the ground that summons u/s 131 of the Act or enquiry letter issued u/s 133(6) of the Act were not complied with. [Paras 9]

The addition in respect of the domestic sundry creditors was deleted.

Final Conclusion: The appellate order was set aside and both additions relating to the outstanding foreign and domestic creditors were deleted. The assessee's appeal was allowed.

Penalty for abetment of attempted export of prohibited red sanders-Intentional aid or wilful omission as an element of abetment-Customs House Agent's duty to verify sealed container contents - Wilful Omission - Custom House Agent Obligations - Burden of Proof

Penalty on an employee of a Customs House Agent for alleged abetment of attempted export of red sanders, founded on his failure to produce the intermediary before the investigating agency - HELD THAT: - In terms of clause 13 of the custom house agent licensing regulation 2004 the obligation of customs house agent are described and sub clause (l) reads as; ensure that all documents, such as Bills of entry and shipping bills delivered in the Custom station by him show the name of the importer or exporter, as the case may be and the name of the Custom House agent, prominently at the top of such documents. Sub-clause (o) reads as; Verify antecedent, correctness of Importer Exporter Code (IEC) Number, identity of his client and functioning of his client at the declared address by using reliable independent authentic documents data or information.

In the decision of Sri Ram [1974 (11) TMI 100 - SUPREME COURT], which relates to appeal against order of conviction for commission of murder the question arose for consideration whether the abatement against one of the accused to facilitate the murder of the victim was established. It was observed by the Hon’ble Supreme Court that section 107 of the Penal Code which defines abatement provides to that extent material that ‘a person abates the doing of a thing who intentionally aids by any act or illegal omission, the doing of that thing.” Explanation 2 to the section says that “whoever either prior to or at the time of the commission of an act does anything in order to facilitate the commission of that act, and thereby facilitates the commission thereof, is said to aid the doing of that act.’ Thus in order to constitute abatement, the abettor must be shown to have intentionally aided the commission of the crime. Mere proof that the crime charged could not have been committed without the interposition of the alleged abettor is not enough compliance with the requirements of section 107.

The material showed only that the appellant had introduced the intermediary in the ordinary course of export-forwarding business, provided the contact details available to him, and participated in the inquiry. His inability to secure the intermediary's appearance did not establish intentional assistance in the smuggling conspiracy, and the show-cause notice disclosed no other role connecting him with it. [Paras 9, 10, 11, 12]

The finding that the appellant had actively participated in the smuggling racket was unsupported by material; the penalty for abetment was unsustainable.

Customs House Agent's duty to verify sealed container contents - HELD THAT: - In the decision of Ramesh Chandra Meheta [1968 (10) TMI 50 - SUPREME COURT],it was held that at the stage of a Section 108 inquiry the deponent is not an accused in the technical sense rendering the shield of Article 20(3) unavailable. So there was no intentional delay or avoidance on the part of the appellant to comply whenever directed in the process of enquiry and lastly nowhere his involvement with the conspiracy could be found. The Balmer Lawrie being CHA any one of the employee of the concern including the appellant could not have actively participated in any smuggling racket since they had no scope to verify the contents of the containers sealed by the Indian Custom Authorities. The seized goods were imported in containers sealed in presence of the Royal Bhutan Customs and Indian Customs authorities and had been opened by the customs at Haldia port during examination .

The applicable obligations of a Customs House Agent did not require inspection of goods within containers. As the containers had been examined and sealed by customs authorities, the appellant's role was confined to arranging containers in the regular course of business and he had no scope to verify their contents. [Paras 9, 10]

No liability for the misdeclared and prohibited goods could be imposed upon the appellant merely from his role in arranging containers.

Final Conclusion: The appeal was allowed and the penalty imposed on the appellant was set aside. The substantial question of law was answered in favour of the appellant.

Customs exemption for EOU inputs used in manufacture - Clearance of manufacturing waste and scrap on payment of duty - Availability of exemption under Notification No. 52/2003-Cus. for imported brass scrap used by a 100% Export Oriented Unit where waste exceeded prescribed norms but was cleared with permission on payment of applicable duty. - HELD THAT: - Clause (3) of the notification, notwithstanding its other provisions, extends the exemption to imported goods used in manufacture, including waste and scrap arising during production or manufacture. The controlling requirement is use of the imported goods for manufacture of finished goods; excess wastage does not defeat the exemption where there is no removal without permission and the waste is cleared on payment of applicable duty. The Tribunal's view accorded with Commissioner of Customs (Preventive) v. Monarch Overseas [2019 (1) TMI 1513 - GUJARAT HIGH COURT]. [Paras 8, 10]

No legal infirmity was found in allowing the exemption and deleting the customs-duty demand founded on excess wastage.

Final Conclusion: The tax appeal was dismissed, as no substantial question of law arose from the Tribunal's order allowing the exemption for imported inputs used in manufacture and treating the duly cleared manufacturing waste as covered by the notification.

Amendment of bill of entry after provisional assessment - Clearance for home consumption - Distinction between “removal” and “clearance” - Entitlement to amendment of the bill of entry for Di-Ammonium Phosphate lost during discharge, where the loss was documented before final assessment and clearance for home consumption. - HELD THAT: - It is clear that the amendment can be allowed subject to the provision of Sections 30 and 41 by the proper officer in his discretion, provided that the imported goods have not been cleared for home consumption or deposited in a warehouse or the export goods have been exported, except on the basis of a documentary evidence which was in existence at the time the goods were cleared.

Section 149 permits amendment on the basis of documentary evidence existing when the goods are cleared for home consumption. Although the goods had been removed on provisional assessment, they were not cleared for home consumption until final assessment. The police report concerning the sinking of the cargo was available before final assessment; consequently, the statutory condition for amendment was satisfied. The distinction between removal and clearance was correctly applied from the decision of the Zuari Agro Chemicals [1995 (7) TMI 221 - CEGAT, NEW DELHI]. [Paras 13, 14, 15, 16]

The respondent was entitled to amendment of the bill of entry under Section 149, and the consequential refund allowed by the Tribunal was upheld.

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

Provisional release of imported goods - Bank guarantee for non-IPR-infringing readymade garments - Security requirement for provisional release of imported readymade garments not involving intellectual property rights contravention - HELD THAT: - The Tribunal noted that, if the claimed concessional duty benefit were considered, the duty on the declared value was substantially lower than the security demanded, and that the request concerned garments not bearing reputed brands or involving intellectual property rights contravention. Since the fourfold enhancement of value by Revenue might not be correct, and having regard to Prakash Shah [2019 (8) TMI 1541 - CESTAT KOLKATA], the security condition required modification. [Paras 7, 9, 10]

The goods not involved in intellectual property rights contravention litigation were directed to be released on provisional assessment upon furnishing a Bank Guarantee of Rs.20 lakhs and a bond for the stipulated full amount.

Final Conclusion: The appeal was disposed of by reducing the security for provisional release of the non-IPR-affected imported garments, subject to execution of the required bond.

Provisional release of imported goods - Security for provisional release - Security requirement for provisional release of imported readymade garments not involved in intellectual property rights contravention litigation. - HELD THAT: - The Tribunal noted that, if the claimed concessional duty benefit were considered, the duty on the declared value was substantially lower than the security demanded, and that the request concerned garments not bearing reputed brands or involving intellectual property rights contravention. Since the fourfold enhancement of value by Revenue might not be correct, and having regard to Prakash Shah [2019 (8) TMI 1541 - CESTAT KOLKATA], the security condition required modification. [Paras 7, 9, 10]

The Bank Guarantee requirement was reduced, subject to execution of a bond for the full amount stipulated by Revenue; upon compliance, the identified goods were directed to be released on provisional assessment basis.

Final Conclusion: The appeal was disposed of by reducing the Bank Guarantee required for provisional release of the non-IPR-affected garments, while requiring a bond for the full amount stipulated by Revenue.

Provisional release of imported goods - Security for provisional assessment - Security requirement for provisional release of imported readymade garments not involved in intellectual property rights contravention litigation. - HELD THAT: - The declared-value duty liability, if the claimed concessional benefit applied, was substantially lower than the security initially required.

The Tribunal found that the request concerned only garments not involving IPR contravention and that the Revenue's fourfold enhancement of value might or might not be correct. Having regard to the duty on the declared value and the approach adopted in Prakash Shah [2019 (8) TMI 1541 - CESTAT KOLKATA], the security demanded was considered excessive. [Paras 7, 9]

The bank guarantee requirement was reduced, subject to execution of a bond for the full stipulated amount; upon compliance, the goods were directed to be released on provisional assessment basis.

Final Conclusion: The appeal was disposed of by modifying the security for provisional release of the specified non-IPR-contested imported garments and directing release upon compliance with the revised conditions.

Interest waiver for customs-system inability - Compliance with prescribed time limit for payment of duty - Refund of interest paid on customs duty after technical glitches in the ICEGATE system, where duty was not paid within three days of removal of the system inability - HELD THAT: - For an importer not registered on ICEGATE, the date of removal of system inability was the date of registration and receipt of login credentials; duty and interest had to be paid within three days thereof to qualify for subsequent refund of interest. Having registered on 09.08.2023 but paid duty only on 09.11.2023, the appellant failed to comply with the prescribed condition and was ineligible for interest waiver. [Paras 6]

The rejection of the interest-refund claim was upheld.

Final Conclusion: The appeal was dismissed, as the appellant did not make payment within the stipulated period for availing waiver and refund of interest.

Classification of blood glucose monitoring system - Specific heading for instruments for chemical analysis - classifiable under CTH 9027 8090 rather than CTH 9018 9099 - General Rules for Interpretation and the HSN Explanatory Notes -HELD THAT: - The classification dispute stood concluded by the Tribunal's earlier decisions in M/S ABBOTT HEALTHCARE [2025 (6) TMI 1102 - CESTAT MUMBAI]. A blood glucose monitoring system is an instrument for chemical analysis under heading 90.27, which is more specific than the general heading 90.18 for medical and surgical instruments. The explanatory notes to heading 90.18 also do not support classification thereunder, since glucose meters are principally used by individuals and not only in professional practice. [Paras 3, 4]

The reclassification under CTH 9018 9099 and the consequential demand were set aside; the goods were held classifiable under CTH 9027 8090.

Final Conclusion: The appeal was allowed and the impugned order was set aside. The complete blood glucose monitoring system was held classifiable under CTH 9027 8090.

Amendment of company petition to incorporate subsequent events and consequential reliefs - Limitation objection to amended pleadings - Permissibility of amendments seeking rectification of the register of members and challenging subsequent alterations to the Articles of Association, while leaving limitation for final adjudication. - HELD THAT: - The law is well settled if subsequent developments and proceedings have arisen during the pendency of the matter, necessitating the consequential pleadings, the amendments can be brought on record. If the necessary factual foundation in the amended claim was already present in the plaint and the amendments merely add an alternative legal basis for relief, it may be allowed. Further it is also settled preposition the amendment generally be disallowed only if it changes the nature of the suit, is mala fide or divest the other side of valid defence or accruing right and that delay always is not a ground for refusal for the prayer for amendment.

No reason to say that the placing of amendments on record would be illegal exercise of power especially when the issue of limitation is kept open and there being precedents for such course of action per Jer Rutton Kavasmaneek [1999 (11) TMI 804 - HIGH COURT OF BOMBAY] and Ragu Thilak D John [2001 (1) TMI 992 - SUPREME COURT].

The Tribunal held that the NCLT had not adjudicated the merits of the proposed amendments and had expressly left limitation open for determination with the company petition. The subsequent EOGMs and resolutions were events arising during the pendency of the petition, and the rectification relief was connected with the pleaded challenge to the transfer of shares and the meetings in question. An arguable limitation plea does not warrant refusal of an amendment at the threshold where the amendment is necessary for determining the real controversy and does not finally determine the limitation defence. [Paras 14, 15, 16, 17, 21]

The order allowing the amendments was upheld, with all limitation objections and the merits of the amended pleadings left for decision at the final hearing of the company petition.

Final Conclusion: The appeal was dismissed. The amendments remain on record, while the NCLT shall independently decide limitation objections and the merits of the amended pleadings when finally determining the company petition.

Subsidiary company-statutory test of control - Control over composition of Board of directors - Meaning of ‘holding Company’ and ‘subsidiary’ - Whether ESSPL is a subsidiary of Educomp? - HELD THAT: - The statutory conditions for a holding-subsidiary relationship are exhaustive and require strict construction. Educomp held no shares in ESSPL; ESSPL was not a step-down subsidiary; and no material established that Educomp had the statutory power, exercisable at its discretion without another person's consent or concurrence, to appoint or remove all or a majority of ESSPL's directors. Provision of capital, business and corporate guarantees, and the shareholders' status as former employees, were attending circumstances extraneous to that statutory requirement. The definition of control introduced under the Companies Act, 2013 was irrelevant to the period in question. [Paras 17, 18, 19, 20, 21]

ESSPL was not a subsidiary of Educomp; the finding to the contrary was set aside qua the appellants.

Final Conclusion: The appeal was allowed and the impugned order was set aside qua the appellants. In view of the finding that ESSPL was not Educomp's subsidiary, the related-party transaction allegations required no consideration.

Supervisory jurisdiction under Article 227 despite statutory appellate remedy - Maintainability of a petition under Article 227 challenging ex-parte and consequential recovery orders of the NCLT when the Insolvency and Bankruptcy Code provides an appellate remedy - HELD THAT: - Section 63 of the Insolvency and Bankruptcy Code (IBC) specifically bars the jurisdiction of the Civil Code to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under the Code. Section 231 of the Code says that no civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority or the Board is empowered by or under the Code to pass any order and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority or the Board under the Code.

The contention of the counsel for the respondent is that Rule 49 cannot be applied in such cases and Section 61 will have to be applied. It is contended that when there is a specific provision for an appeal, the petitioner cannot have recourse to a petition under Article 227 of the Constitution of India.

In view of the dictum laid down by the Hon’ble Supreme Court in Raghvendra Nath Srivastava & Ors.[2026 (5) TMI 1834 - SUPREME COURT], this Court is not expected to function as an appellate forum over orders which are passed by a statutory authority created under a specific legislation. The power of judicial review has to be exercised sparingly, cautiously and cannot be as a routine exercise, which is unwarranted since the special statute provides for the manner of exercise of powers by a particular authority. It cannot be disputed that appellate powers are available with the NCLAT, against orders passed by the NCLT.

Supervisory jurisdiction is not an appellate jurisdiction and is to be exercised sparingly to correct abuse of power, dereliction of duty, grave injustice, or jurisdictional transgression. Where the special statute provides an appellate remedy against NCLT orders, a party which failed to pursue that remedy within the prescribed period cannot invoke the extraordinary discretionary jurisdiction under Article 227 merely because it is a local self-government institution. [Paras 8, 9]

No interference with the NCLT proceedings was warranted; the petition was dismissed, subject to exclusion of the time spent before the High Court if statutory remedies are pursued.

Final Conclusion: The petition challenging the NCLT orders and consequential proceedings was dismissed for failure to pursue the statutory appellate remedy. Time spent in the High Court may be excluded for limitation purposes if statutory remedies are availed.

Discretionary confiscation of security for FEMA contravention - Judicial exercise of discretion under FEMA penalty provisions - Confiscation of shares transferred to foreign investors without Reserve Bank permission, in addition to penalties imposed for contravention of FEMA provisions governing transfer of securities - HELD THAT: - On reading of Section 13(1) & (2) of FEMA, it is obvious that besides the penalty which can be imposed for contravention of any provision of FEMA or any Rule, Regulation, Notification, Direction or Order issued in exercise of the Powers under this Act, or for contravention of any condition subject to which an authorization is issued by the Reserve Bank, the Ld. Adjudicating Authority may, if he things fit in addition to any penalty which he may impose for such contravention direct that any currency or security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government.

The provision neither mandates confiscation nor prescribes a compulsory maximum penalty. That discretion must be exercised judiciously on the facts and evidence; the appellant did not establish that the Adjudicating Authority had failed to apply its mind or that non-confiscation resulted in a miscarriage of justice. The Tribunal referred to Bharat Heavy Electricals [1997 (8) TMI 252 - SUPREME COURT] as recognising that a prescribed maximum penalty does not eliminate the authority's discretion. [Paras 8, 9, 10, 11]

The refusal to confiscate the shares was upheld, and no interference with the penalty order was warranted.

Final Conclusion: The appeal seeking confiscation of the shares in addition to the penalties imposed was dismissed.

Inquiry into accused's unsoundness of mind or incapacity - Video-conference appearance of accused - The High Court [2025 (9) TMI 1833 - MADRAS HIGH COURT] granted the permission to attend through video conferencing from the accused's residence was impermissible; he must attend through video conferencing from the City Civil Court, Chennai. The issue was decided in favour of the petitioner - HELD THAT:- The special leave petition was dismissed as no further orders were required in view of the trial Court's order declaring the petitioner a person of unsound mind.

Scope of Double jeopardy and independent offence of money-laundering - Distinct offences under the PMLA and predicate law - Continuation of prosecution for money-laundering after conviction for the predicate offence - HELD THAT: - Once the petitioners stand convicted in the predicate offence, there exists no legal impediment for continuation of the proceedings under the PMLA. Whether the assets or money in question ultimately answer the description of “proceeds of crime” is a matter that lies squarely within the province of the special Court. It is an issue to be tested upon evidence in a full-blown proceedings and not the one that can prematurely be foreclosed in these proceedings under Section 482 of the Cr.P.C.

The Division Bench of the High Court of Madras after an exhaustive survey of the law declared by the Apex Court in VIJAY MADAN LAL CHOUDHARY [2022 (7) TMI 1316 - SUPREME COURT (LB)] emphatically holds that ingredients constituting an offence under Section 3 of the PMLA are wholly distinct from those constituting the scheduled offences. The two offences, though factually interconnected, are legally distinct and one cannot be subsumed within the other. The plea of double jeopardy was therefore, rejected by the High Court of Madras.

The Division Bench of the High Court of Madhya Pradesh in the case of HARI SHANKAR GURJAR [2023 (4) TMI 411 - MADHYA PRADESH HIGH COURT] echoes the very same principle. It has held that prosecution under PMLA is neither dependent upon nor eclipsed by the prosecution for the scheduled offence. The offence under the PMLA derives its existence from the laundering of proceeds of crime. Though emanating from the commission of predicate offence, when an accused is convicted for the scheduled offence/predicate offence, the subsequent prosecution under PMLA does not amount to a second trial for the same offence.

The bar under Section 300 of the Cr.P.C. operates against successive trials for the same offence, or an offence founded on identical facts where a second trial is legally prohibited. The offence of money-laundering concerns involvement in processes or activities connected with proceeds of crime and has ingredients separate and independent from those of the predicate offence. Although the offences may be factually interconnected, prosecution under the PMLA is for a distinct statutory offence; whether the assets constitute proceeds of crime is a matter for trial before the Special Court and cannot be foreclosed in proceedings under Section 482 of the Cr.P.C. [Paras 7, 8, 10, 13]

The plea of double jeopardy was rejected; the prosecution under the PMLA was permitted to continue.

Final Conclusion: The petitions were dismissed and the interim stay of the PMLA proceedings stood dissolved.

Reasoned adjudication of provisional attachment - Failure to consider material submissions - Confirmation of provisional attachment without findings on the appellant's material objections regarding the nexus of her property with the alleged proceeds of crime. - HELD THAT: - Although the Adjudicating Authority had passed a detailed order, it did not furnish reasons on each material contention raised by the appellant. In particular, it did not address the assertion that there was no money trail showing receipt of proceeds of crime by the appellant's late husband or establishing the connection of the attached property with the alleged crime. Such non-consideration rendered the order non-speaking. [Paras 14, 15]

The confirmation order was set aside and the matter was remanded to the Adjudicating Authority for fresh adjudication after dealing with every issue raised by the appellant; the merits of the attachment controversy were left open.

Final Conclusion: The appeal was disposed of by setting aside the impugned confirmation of attachment and remanding the matter for a reasoned fresh order.

Reasoned adjudication on retention of allegedly tainted assets - Failure to consider material submissions on cryptocurrency exchange assets - Principles of Natural Justice - Nexus with Proceeds of Crime - Validity of the order permitting retention of seized devices and continuation of freezing of bank funds and crypto assets without addressing the material issues raised by the cryptocurrency exchange platforms. - HELD THAT: - The appellant was summoned to find out the details of the entities with complete whereabouts so as to reach to them but the appellant has initially did not respond to the summons sent by the respondent and later on he submitted the details but according to the respondent, complete details of 16 entities and individuals has not been given in regard to the transactions and siphoning of or laundered the proceeds of crime. The case of the appellant company is, however, is that to the extent that they were having the information, it was provided, because prior to year 2021 no such information was kept in record.

The appellant has consistently maintained that it operates merely as a cryptocurrency exchange platform facilitating transactions between users and that the funds deposited by M/s Yellow Tune Technologies Pvt. Ltd. were utilized for purchase of USDT, which was thereafter transferred to external wallets. According to the appellant, the crypto assets lying in the pool wallets belong to various customers and not to the appellant itself. I find that the aforesaid issues require a detailed examination on facts as well as law.

The Adjudicating Authority had not dealt with the appellants' submissions or recorded specific findings on the nature of the platforms' role, their control over the transactions and assets, the ownership of crypto assets in pool wallets, the alleged nexus of the frozen assets with proceeds of crime, or the appellants' knowledge of allegedly tainted transactions. A reasoned determination of these questions on the available evidence was required; the Tribunal declined to decide them conclusively for the first time in appeal. [Paras 35, 39, 40, 41, 42]

The impugned order was set aside and the matters were remanded to the Adjudicating Authority for fresh consideration of the parties' material and submissions by a speaking order.

Final Conclusion: The appeals were disposed of by setting aside the order allowing retention and continuation of freezing, and remitting the matters for fresh, reasoned adjudication without any conclusive determination on the merits.

Provisional Attachment -proceeds of crime - Unexplained receipt claimed as salary or loan - Whether the attached property could be treated as representing proceeds of crime where the appellant claimed that the amount received from an entity implicated in the Khichdi supply contract was salary or a loan ? - HELD THAT: - The Tribunal found that the appellant received funds through banking channels from an entity involved in the alleged wrongful gain from supplying Khichdi packets of lesser quantity than contracted. The claim of salary was unsupported by any appointment order, and the claim of loan was unsupported by loan documentation or evidence of repayment. The receipt was therefore not established as either salary or loan and was treated as proceeds of crime. [Paras 16, 17, 18, 19]

The confirmation of provisional attachment was upheld.

Final Conclusion: The appeal was dismissed, the Tribunal finding no merit in the appellant's unsupported explanation for the funds received and sustaining the attachment of the property as proceeds of crime.

Appellate adjudication in light of settled precedent - Avoidance of multiplicity of proceedings - Whether the appellate tribunal could remand the service-tax dispute concerning construction of residential quarters for Gujarat State Police Housing Corporation Limited without itself applying the settled precedent relied upon by the petitioner. - HELD THAT: - In the case of R.D. Contractor & Company [2023 (2) TMI 946 - CESTAT AHMEDABAD], holding that the construction services provided to Gujarat State Police Housing Corporation, which is 100% owned by Government of Gujarat under the Ministry of Home Affairs, can be held to be a government organization, excluding them from the purview of the provisions of the Service Tax (Finance Act, 1944).

The Court held that, once the relevant precedent concerning construction services provided to Gujarat State Police Housing Corporation Limited was brought to the tribunal's notice, the tribunal was required to determine whether the petitioner had undertaken such construction and decide the appeal accordingly. A remand to the adjudicating authority for examination of the facts and contractual terms, instead of such adjudication, would unnecessarily generate a further round of proceedings and defeat the obligation to avoid multiplicity of litigation. [Paras 5, 6]

The remand order was quashed insofar as it concerned the petitioner, and the appeal was restored to the appellate tribunal for fresh decision on merits by a speaking order.

Final Conclusion: The writ petition was allowed. The appellate tribunal must decide the restored appeal afresh on merits by a speaking order.

Service tax-commercial consideration for taxable service - Reimbursement of apprenticeship stipend - Valuation of taxable services-exclusion of reimbursed expenditure - Commercial consideration - Quid pro quo - Pure agent - Service taxability of the reimbursement by the Board of Apprenticeship Training of part of the stipend paid by the manufacturer to apprentices undergoing statutory technical training. - HELD THAT: - Indisputably the Show Cause Notice as well as the impugned order seeks to demand service tax on the amount which is stated to be 50% of the stipend paid to the apprentices by the appellant on providing technical training as required under the apprentices Act.

A taxable service under the Finance Act, 1994 requires a service-provider and service-recipient relationship founded upon commercial consideration. The reimbursement of fifty per cent of the stipend paid upfront by the appellant pursuant to its statutory obligation to engage and train apprentices was in the nature of a statutory welfare grant, and not a service charge or consideration paid for a service rendered to the Board. Further, the reimbursement without markup could at best place the appellant in the position of a conduit or pure agent. In any event, prior to the amendment effective from May 14, 2015, section 67 did not permit inclusion of expenditure or costs incurred in providing a service unless they constituted consideration charged for that service; Union of India v Intercontinental Consultants and Technocrats Pvt Ltd.[2018 (3) TMI 357 - SUPREME COURT], was applicable. [Paras 7, 8, 9]

The reimbursement of apprenticeship stipend was not liable to service tax for the disputed period, and the demand with consequential interest and penalty was set aside.

Final Conclusion: The appeal was allowed with consequential relief. The service tax demand on reimbursement of apprenticeship stipend, together with interest and penalty, was held unsustainable.

Service tax payment under wrong assessee code - Extended limitation for intent to evade service tax - Bona Fide Mistake - Service tax demand, interest and penalty where the partnership firm's tax liability was paid under the service tax registration of a partner's proprietorship concern and ST-3 returns - HELD THAT: -The Hon’ble Gujarat High Court has held in Devang Papers Pvt Ltd.[2016 (1) TMI 389 - GUJARAT HIGH COURT] that if due to oversight, the duty was paid under wrong Assessee Code then it could not be treated as non-payment of duty. This plea cannot be accepted that Accounting Division of Excise department would not reverse the amount and credit into the account of assessee. Hon’ble Gujarat High Court directed the department to credit the duty paid by assessee by making necessary accounting entries.

Payment of service tax under a wrong assessee code, where the tax had been deposited with and credited to the Government account, could not be treated as non-payment merely because the partnership firm and the proprietorship concern were separate entities. The erroneous use of the proprietorship registration number was a bona fide mistake and did not establish any intent to evade tax. Consequently, the conditions for invocation of the extended period under the proviso to section 73(1) of the Finance Act, 1994 were not satisfied. [Paras 4]

The demand, consequential interest and penalty were held unsustainable and were set aside.

Final Conclusion: The appeal was allowed. The orders sustaining the service tax demand, interest and penalty were set aside.

Co-owners of rented commercial property-association of persons - Individual assessment of rental income for service tax - Whether the co-owners could be assessed jointly as an association of persons. - HELD THAT: - Following the earlier decision of the Bench in Naresh Gopaldas Lund and Eight Others [2026 (1) TMI 1161 - CESTAT CHENNAI], the Tribunal held that co-ownership and joint letting of property do not, by themselves, establish an association of persons. Such status requires voluntary association, a common objective and joint management; where each co-owner has a distinct share and rental income accrues separately, each is liable to separate assessment and may claim the applicable exemption individually. [Paras 7]

The demand confirmed by treating the co-owners as an association of persons was held contrary to law and was set aside.

Final Conclusion: The appeal was allowed with consequential benefits in accordance with law, the service tax demand based on joint assessment of the co-owners as an association of persons having been set aside.

Extended limitation for non-payment of service tax on security agency services - Penalty for deliberate non-payment of service tax - Bona Fide Belief - Intent to Evade Tax

Extended limitation for non-payment of service tax on security agency services - HELD THAT: - The appellant had paid service tax on part of its receipts for security agency services during the same financial year while withholding tax on the balance receipts. This conduct disproved its asserted bona fide belief that, as a cooperative society, it was not liable to service tax. Its bye-laws also contemplated net profit; consequently, its cooperative character did not exclude its liability to tax on the gross amount received for taxable services. [Paras 5, 6]

The extended period was rightly invoked and the service-tax demand was sustained.

Penalty for deliberate non-payment of service tax - HELD THAT: - Having found that the appellant stopped paying tax on part of the taxable receipts with intent to evade payment, the Tribunal found no infirmity in the imposition of penalty. [Paras 6]

The penalty was upheld.

Final Conclusion: The order confirming service tax and penalty was upheld, and the appeal was dismissed.

Admissibility of CENVAT credit on input services - Procedural lapse in reporting CENVAT credit in ST-3 returns - Substantive right to credit - Cascading effect of taxes - Availment of CENVAT credit on input services where its adjustment against output service-tax liability - HELD THAT: - The Department did not dispute the nature of the input services or their nexus with the output services; the dispute concerned the absence of supporting material for the claimed credit adjustment. The Tribunal noted the principle that CENVAT credit is intended to avoid cascading of taxes and that, where receipt of input services and payment of service tax are not disputed, credit cannot be denied on hyper-technical grounds. The claim nevertheless required examination with reference to the documents to be produced by the appellant. [Paras 7]

The impugned order was set aside on the limited issue, and the matter was remanded for fresh decision on the appellant's CENVAT credit claim in the light of the cited decisions and supporting documents.

Final Conclusion: The appeal was allowed by way of remand for reconsideration of the claimed CENVAT credit on the basis of the appellant's documents and the applicable decisions.

Limitation for statutory appeal - Proof of service by postal tracking report - Dismissal of the statutory appeal as time-barred where service of the adjudication order was established by the postal tracking report - HELD THAT: - The postal tracking report established that the dispatched adjudication order was delivered to the appellant on 11.01.2023. The decision in M/s Bridge & Rood Co. (India) Ltd. [2025 (1) TMI 144 - CESTAT NEW DELHI], was inapplicable because, unlike that case, proof of delivery had been produced by the Revenue. The limitation was consequently reckoned from the established delivery date. [Paras 6, 7]

The dismissal of the appeal as barred by limitation was upheld and the appeal was dismissed.

Final Conclusion: The appeal was dismissed, the postal tracking report having established service of the adjudication order within sufficient time for filing the statutory appeal.

Sale of water by State Government - Reverse-charge service tax on assignment of right to use natural resources - Consistency in Tax Administration - Liability to service tax under reverse charge on water drawn and consumed by a steel plant under an agreement with the State Government. - HELD THAT: - The consideration was paid for the water consumed by the respondent. The fact that the respondent drew the water from the river and conveyed it to its plant did not alter the character of the transaction as a sale of water. Following the consistent Tribunal view in identical matters in Sasan Power Limited [2024 (5) TMI 326 - CESTAT NEW DELHI], the arrangement could not be treated as assignment by the Government of a right to use a natural resource attracting service tax under reverse charge. [Paras 8, 9]

The dropping of the proposed demand was held correct and required no interference.

Final Conclusion: The Revenue's appeal was dismissed, the Tribunal holding that the arrangement concerned sale of water and did not constitute taxable assignment of a right to use a natural resource.

Works contract service exemption for Government irrigation and water-supply projects - Threshold exemption for taxable services rendered to private parties - Benefit of exemption under Sl. Nos. 12(d), 12(e) and 12(h) of Notification No. 25/2012-ST

Eligibility of works contract services undertaken pursuant to State Government proposals for exemption under Serial Nos. 12(d), 12(e) and 12(h) of Notification No. 25/2012-ST. - HELD THAT: - The original authority had declined the exemption for want of evidence of execution of the works. The Commissioner (Appeals), while considering a different exemption entry, rejected the claim on the footing that the recipient company was not Government, a local authority or a governmental authority. As the appellant had produced documents in the present appeal and the Revenue had not challenged the original authority's consideration of eligibility under Serial No. 12(d), the exemption claim required fresh examination on all the relevant entries and documents. [Paras 6]

The matter was remanded to the original authority to re-examine the appellant's eligibility for exemption under Serial Nos. 12(d), 12(e) and 12(h) of Notification No. 25/2012-ST and to redetermine the service tax liability after granting an opportunity of hearing.

Threshold exemption for taxable services rendered to private parties - HELD THAT: - Since the appellant admitted that the works were undertaken for private parties and did not possess supporting documents, the exemption claimed under Notification No. 25/2012-ST was unavailable. However, the tax liability had to be determined on the entire taxable value after extending the benefit of the applicable threshold exemption. [Paras 6]

The original authority was directed to redetermine the tax liability after allowing the threshold exemption, if applicable.

Final Conclusion: The appeal was allowed by way of remand. The original authority was directed to reconsider the exemption claims for Government-related works and to recompute the service tax liability, including the applicable threshold exemption for services rendered to private parties.

Foreign-remittance -Extended limitation for service tax demand based on disclosed financial records - Penalty for reverse-charge tax on overseas consultancy services - Revenue Neutrality - Bona Fide Belief - Reasonable Cause - non-payment of service tax on overseas consultancy or commission services​​​​​​​ - HELD THAT: - Disclosure of the relevant remittance in the balance sheet, without any further investigation establishing wilful suppression or misstatement with intent to evade tax, excluded invocation of the extended period. The tax liability having been paid, the transaction being revenue-neutral through availability of Cenvat credit, and the liability having arisen amidst interpretational uncertainty concerning reverse-charge taxation of services received from abroad, the assessee was entitled to the benefit of Section 80. Penalties under Rule 15 of the Cenvat Credit Rules and Sections 77 and 78 of the Finance Act, 1994 were consequently unwarranted. [Paras 11, 12, 13, 14, 15]

All penalties imposed under Rule 15 of the Cenvat Credit Rules and Sections 77 and 78 of the Finance Act, 1994 were set aside; no order was made on the sustainability of the tax demand, which had been paid and was not sought to be refunded.

Final Conclusion: The appeal was disposed of by setting aside all penalties. The paid service-tax demand was left undisturbed, subject to payment of any interest due.

Limitation for service tax demand based on Form 26AS - Extended period -suppression of facts - Communication of adjudication order and limitation for appeal - Eligibility for service-tax exemption - Street-light installation and LT-line works executed for Panchayats - Works Contract Service - Local Authority

Communication of adjudication order and limitation for appeal - HELD THAT: - The delayed dispatch of the order-in-original, the issue concerning the appellant's changed address, the recovery email and response, and the subsequent supply of a true copy, considered cumulatively, supported the appellant's assertion regarding communication of the order. The Revenue had not contested the old-address contention before the High Court, whose direction to examine the delay question was required to be honoured. [Paras 17, 20, 23, 25]

The dismissal of the first appeal as time-barred was held unsustainable, and the appeal was entertained on merits.

Service tax exemption for street-light installation for Panchayats - Street-light installation and commissioning undertaken for Panchayats constituted exempt services under Notification No. 25/2012-ST. - HELD THAT: - The work orders related to installation and commissioning of street lights and electrical lines for public use pursuant to orders of Panchayats, which fell within the definition of local authority. The exemption was not confined to construction: erection, commissioning and installation of original works meant otherwise than for commerce, industry or business were also covered. The adjudicating authority's view that exemption required construction alone was erroneous. [Paras 33, 34]

The services were held covered by the exemption notification.

Extended period-suppression of facts-Limitation for service tax demand based on Form 26AS - HELD THAT: - Invocation of the extended period required cogent material establishing fraud, collusion, wilful misstatement, suppression or intentional contravention. The demand was built entirely on Form 26AS data without verification of material that would have disclosed the nature of the works contract and its exemption. Mere allegation of suppression, without positive evidence, was insufficient. The appellant's bona fide belief in exemption for street-light works rendered to Panchayats, coupled with absence of evidence that service tax had been collected, negatived suppression. The demand for 2016-17 was also beyond the extended period reckoned under the statutory relevant-date provision applicable to an unregistered assessee; the residual period could not survive absent suppression. [Paras 39, 40, 41, 43, 45]

The entire confirmed demand was set aside as time-barred.

Final Conclusion: The appeal was allowed. The first appellate dismissal on limitation was held erroneous, and the confirmed service tax demand was set aside as barred by limitation, with consequential relief in accordance with law.

Classification of cleaning services vis-a -vis manpower supply service - Exemption for cleaning services provided to governmental authorities and educational institutions - Deposit of amounts collected as service tax notwithstanding exemption - Penalty for collection of service tax without depositing it - Unjust Enrichment

Classification of cleaning services vis-a -vis manpower supply service - Exemption for cleaning services provided to governmental authorities and educational institutions - HELD THAT: - The essential character and underlying object of the contracts was cleaning activity. Control and supervision over the personnel deployed for that activity remained with the assessee and did not pass to Nagar Nigam; the activity was therefore not manpower supply service. Cleaning services rendered to the governmental authority and the educational institution were covered by the applicable entries of Mega Exemption Notification No. 25/2012. [Paras 7, 8]

The dropping of the service-tax demand relating to the exempt cleaning services was upheld.

Deposit of amounts collected as service tax notwithstanding exemption - Amounts collected from service recipients as service tax in respect of exempt cleaning services were liable to be dealt with under Section 73A of the Finance Act, 1994. - HELD THAT: - Section 73A(2) applies where an amount not required to be collected is nevertheless collected as representing service tax, requiring its payment to the Central Government. Though the underlying services were exempt, the evidence established collection of amounts in the name of service tax; the assessee could not retain such amounts and thereby be unjustly enriched. [Paras 9, 10, 11]

The confirmed demands were modified, and the assessee was directed to deposit the amounts collected as service tax with the Government exchequer under Section 73A.

Penalty for collection of service tax without depositing it - Penalties on the company's Managing Director and authorised signatory for collecting service tax without depositing it were sustainable. - HELD THAT: - There is the sufficient evidence as discussed by the original adjudicating authority that the service tax was otherwise collected by the appellant. But simultaneously it has already been held that the appellant is not liable to pay service tax due to exemption available under Notification No. 25/2012.

The collection of service tax despite the absence of tax liability, coupled with non-deposit of the amount collected, evidenced an intention to secure unjust enrichment. [Paras 10, 11]

The penalties imposed were upheld.

Final Conclusion: The departmental appeal and the appeals of the company's Managing Director and authorised signatory were dismissed. The company's appeal was disposed of by sustaining the exemption and penalties while modifying the service-tax demands to require deposit of the amounts collected as service tax under Section 73A.

Jurisdiction to question statutory exemption certificate - Writ jurisdiction against show-cause notice lacking authority - Abuse of Power - Finality of Refund Orders - Validity of the show-cause notice seeking recovery of central excise duty refund on the allegation that the statutory certificates certifying establishment of a new industrial unit and investment in plant and machinery had been obtained by misrepresentation. - HELD THAT: - The legal precedent establishes that, the High Court should not routinely entertain writ petitions challenging the show-cause notices. Unless a notice is entirely void (non est) and there is abuse of authority and power, and there is an absolute lack of jurisdiction, the petitioner must be directed to respond to the notice and raise the grievances before the issuing authority. The established facts of the present case, and the subsequent orders passed in favour of the petitioner indicate that the respondent No. 3 has acted without authority of law, and has illegally invoked its jurisdiction in issuing the show-cause notice.

The exemption notification vested the High Powered Committee with statutory authority to certify that the unit was newly established within the prescribed period and to confirm the original investment in plant and machinery. The certificates were accepted by the departmental authorities, which verified the installation and processed refunds after scrutiny. Allegations that the certificates were procured by fraud or misrepresentation could be examined only by the Committee issuing them; the Commissioner had neither authority to question them nor taken steps to place the alleged misrepresentation before that Committee. The subsequent proceedings concerning education cess forming part of the refunds also contained no allegation of fraud or misrepresentation, reinforcing the infirmity in reopening the matter through the impugned notice. [Paras 23, 24, 25, 27, 28]

The show-cause notice was held arbitrary, without jurisdiction and an abuse of authority, and was quashed in exercise of writ jurisdiction.

Final Conclusion: The writ petition was allowed and the impugned show-cause notice was quashed as being without jurisdiction.

Suo motu re-credit of CENVAT credit - Account-entry reversal and refund procedure - Double Payment of Duty - Unjust Enrichment - Entitlement to re-credit CENVAT credit representing duty paid twice on the same clearance without resort to the refund procedure. - HELD THAT: - Where the excess duty payment and the corresponding re-credit were undisputed, and no discrepancy in the re-credit was shown, the re-credit was an adjustment of an account entry rather than a claim for refund involving outflow of funds. The refund procedure under section 11B was therefore inapplicable. The Court agreed with M/s. Krishnav Engineering Ltd [2015 (12) TMI 234 - ALLAHABAD HIGH COURT] that, in such circumstances, issuance of a show-cause notice merely because suo motu re-credit was taken was unsustainable. [Paras 5, 6]

The assessee was entitled to the re-credit, and the Tribunal rightly held the show-cause notice to be void and illegal.

Final Conclusion: No substantial question of law arose from the Tribunal's order. The appeal was dismissed.

Discharge in criminal prosecution for excise-duty evasion - Prima facie material for framing charge - Independent assessment of evidence in criminal proceedings - Evasion of central excise duty through galvanisation and marketing of pipes without payment of duty - HELD THAT: - At the stage of discharge, strong suspicion founded on material capable of translation into evidence is sufficient; the court cannot undertake a threadbare evaluation directed to conviction. However, the prosecution witnesses either lacked personal knowledge, merely proved departmental orders and show-cause notice, or gave no particulars of the alleged mode of evasion. The underlying records were not produced, and evidence derived from such unproduced records was inadmissible. Departmental adjudication orders and penalties could not, by themselves, establish criminal liability; the criminal court was required to independently determine whether evasion occurred and constituted an offence. [Paras 17, 22, 27, 28, 29]

The material did not disclose a prima facie case of excise-duty evasion; discharge was rightly ordered and the revision was dismissed.

Final Conclusion: The revision against the order discharging the accused was dismissed, as the prosecution evidence did not furnish material capable of establishing a prima facie case of excise-duty evasion.

Concession of excise duty demand and limitation - Rectification of mistake apparent on record - Whether the Tribunal's failure to record a finding on invocation of the extended limitation period, after the appellant conceded the CENVAT credit demand and confined its challenge to penalty, constituted a mistake apparent on the record ? - HELD THAT: - The Tribunal granted the only relief that remained live before it i.e. it quashed the penalty on the finding that the issue was highly debatable during the relevant period, which preceded both the amendment of Rule 2(k) and the Larger Bench decision in Vandana Global Ltd.[2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] and that no mala fides could be attributed to the appellant.

Limitation concerns the sustainability of the demand and cannot survive independently where the demand itself is unequivocally conceded. The concession before the Tribunal confined the live controversy to penalty; the limitation plea was consequently subsumed. Having set aside the penalty on the ground that the credit issue was highly debatable and mala fides could not be attributed, the Tribunal granted the only relief pressed before it. Its omission to decide limitation or the merits of the conceded demand was therefore not a mistake apparent on the record. [Paras 5, 6]

The rejection of the rectification application was upheld and the appeal was dismissed.

Final Conclusion: The appeal was dismissed, as the appellant had conceded the demand and the Tribunal was not required to adjudicate the subsumed limitation plea. No rectifiable error was established.

Extended period of limitation - suppression of facts - CENVAT credit on goods lost in industrial violence -HELD THAT: - It is evident that the occurrence of the industrial violence and the resultant damage/loss to goods both finished and unfinished as well as inputs/raw material and capital goods were contemporaneous facts well within the knowledge of the Department.

The Honourable Supreme Court in B.V. Jewels[2004 (9) TMI 104 - SUPREME COURT], has observed that “If, in reality, the CEGAT found that the action taken by the departmental authorities was beyond the period of limitation, it could have disposed of the appeals before it only on that ground without examining the merits”. This decision of the Apex Court in B.V. Jewels ibid is noticed to have been followed in Rochem Separations (I) P Ltd. [2018 (9) TMI 1598 - BOMBAY HIGH COURT].

The occurrence of industrial violence, the resulting loss of finished goods, inputs and capital goods, and the relevant stock particulars were contemporaneously known to the Department and had formed the basis of the earlier show cause notice. The same or similar facts could not thereafter constitute suppression by the appellant for issuing the subsequent notice under the extended period. Since the demand was time-barred, examination of the merits was unnecessary; consequential interest and penalty could not survive. [Paras 11, 12, 15]

The demand, interest and penalty were set aside as barred by limitation.

Final Conclusion: The appeal was allowed and the impugned order was set aside, the demand being wholly barred by limitation. Consequential relief was made available in accordance with law.

Conclusion of proceedings upon pre-show-cause-notice payment of duty and interest - Central excise duty on unaccounted raw materials lying in factory - Recovery of Cenvat credit covered by settled audit objection - Levy on manufacture and clearance

Conclusion of proceedings upon pre-show-cause-notice payment of duty and interest - Penalty on Director for short-payment of central excise duty - Extended period where department had knowledge of short-payment - HELD THAT: - The proviso to section 11AC(1)(a) provides that where duty and interest are paid before issuance of the show cause notice, no penalty is payable and proceedings concerning that duty and interest stand concluded. Since the appellant had paid the duty and interest before the notice, no further interest or penalty could be recovered. The departmental letters also established that the facts concerning short-payment were already within departmental knowledge. The Director's penalty, imposed solely for the alleged short-payment, could not survive when the proceedings stood concluded; moreover, there was no case that he dealt with goods liable to confiscation as contemplated by Rule 26. [Paras 4]

The demand of further interest and penalty, including the penalty on the Director, was set aside.

Central excise duty on unaccounted raw materials lying in factory - HELD THAT: - Excise duty is levied upon manufacture and becomes payable on clearance of the final goods. As the unaccounted raw materials were found lying in the factory, duty could not be demanded on ingots merely alleged to be capable of manufacture from such materials. [Paras 4]

The demand of duty, interest and penalty on the alleged ingots was set aside.

Recovery of Cenvat credit covered by settled audit objection - HELD THAT: - The credit amount had been paid during audit and the relevant audit objection had been treated as settled. The subsequent confirmation of recovery, interest and penalty on that basis was therefore unsustainable. [Paras 4]

The demand of Cenvat credit, interest and penalty was set aside.

Final Conclusion: The impugned order was set aside and both appeals were allowed with consequential relief, no further central excise duty, interest or penalty being payable by the appellants.

Taxability of steel wire ropes drawn from iron wire rods - Single-point taxation of iron wire ropes drawn from taxed wire rods - Assessment of steel wire ropes at the higher rate notwithstanding that they were drawn from iron wire rods which had already suffered sales tax. - HELD THAT: - As per the version of the appellant, the learned Tribunal has not considered the judgments of the Hon’ble Apex Court in Telangana Steel Industries & Others [1994 (3) TMI 108 - SUPREME COURT] and Vora Wires [2005 (1) TMI 649 - MADHYA PRADESH HIGH COURT] and erroneously dismissed the appeal without assigning any reasons and without discussing the judgments relied upon by the petitioner. Learned Standing Counsel fairly conceded to apply the said principles.

In Telangana Steel Industries [1994 (3) TMI 108 - SUPREME COURT], Hon’ble Apex Court held that, iron wires cannot be taken as separate taxable commodity and if wire rods which were purchased by the appellants had suffered sales tax, the same could not be realised from the sale of wires.

Iron wires cannot be treated as a commodity separate from wire rods for levy of sales tax. Consequently, where the wire rods had suffered tax, tax could not again be realised on the sale of iron ropes drawn from them. The assessment of steel wire ropes at 12%, without applying this settled principle and without considering the dealer's contention, was contrary to law. [Paras 5, 7, 8]

The finding relating to assessment of tax on steel wire ropes was set aside.

Final Conclusion: The Tax Revision Case was allowed and the Tribunal's finding sustaining the assessment of tax on steel wire ropes was set aside.

Entitlement to a further opportunity or to concessional taxation for transactions unsupported by the remaining C Forms - Substantial questions of law - Mandatory Furnishing of C Form - Inter-State Sale - HELD THAT:- Section 6 of the CST Act is a charging provision creating charges on sale of goods on inter State sales. Sub-section (1) of Section 8 of the CST Act provides that every dealer who in the course of inter state trade or commerce, sells to a registered dealer goods of the description referred to in subsection (3) shall pay tax under the CST Act @ 2% of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the Sales Tax Law of that State, whichever is lower. Sub-section (4) of Section 8 provides that the provision of sub-section (1) shall not apply to any sale in course of inter-State trade or commerce unless the dealer selling the goods furnishes to prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Therefore, production of ‘C’ Form for availing reduced rate of 2% on inter-State sale is a mandatory pre-requisite.

The tax appeal was dismissed as the assessee remained unable to furnish the remaining statutory Form 'C' and no substantial question of law arose.

Priority of secured creditors over State tax dues - Statutory charge on auctioned secured asset - Crown debt priority - Auction purchaser rights - Priority between the secured creditor's charge over land sold in recovery proceedings under the RDB Act and the subsequent charge recorded by the VAT authorities. - HELD THAT: - Section 31B of the RDB Act, containing a non-obstante clause, accords priority to secured creditors in realising secured debts by sale of secured assets over all other debts and Government dues, including taxes. The petitioners, having purchased the land in a bank-conducted auction pursuant to a prior security interest, acquired priority over the subsequently recorded VAT charge; the earlier decision [2022 (4) TMI 1690 - GUJARAT HIGH COURT] concerning the same land also rendered the continuation of the charge unsustainable. [Paras 8, 9]

The VAT charge recorded in the revenue entries was directed to be removed.

Final Conclusion: The petition was allowed, and the statutory VAT charge recorded over the land purchased in the secured creditor's auction was directed to be removed.

Rebuttable deemed sale for failure to obtain transit pass - Verification of evidence of movement of goods outside the State - failure to obtain a transit pass, despite material indicating that the goods were transported outside the State - HELD THAT: - The legal fiction under Section 70(1)(c) that goods were sold within the State is rebuttable where the owner or person in charge establishes that the goods moved outside the State. If rebutted, tax and penalty cannot be levied with reference to the value of the goods, although penalty for failure to obtain the transit pass may still be leviable. The document produced by the petitioner prima facie indicated subsequent movement of the goods outside Tamil Nadu and required verification before a fresh order could be made. [Paras 4, 5, 6]

The impugned order was set aside and the matter remanded for reconsideration after affording reasonable opportunity to the petitioner; the evidence of movement of goods outside the State shall be verified before fresh orders are passed.

Final Conclusion: The writ petition was disposed of by remanding the matter for fresh consideration of the petitioner's evidence rebutting the deemed sale within the State.