TaxTMI Updates e-Newsletter
Jul 27,2026

Service of GST notices and orders through Common Portal - Electronic service by e-mail - Defect in service of notice acted upon by assessee - Ex Parte Adjudication - Principles of Natural Justice - Actual Knowledge and Waiver of Defective Service - Statutory Procedure Must Be Strictly Followed

Service of GST notices and orders through Common Portal - HELD THAT: - Undisputedly, though multiple modes of service of order are available with the Department, but the impugned order-in-original is served upon the petitioner only by way of uploading it on the tab ‘View Additional Notices and Orders’ on the Common Portal.

Law is well-settled that when a statute prescribes a thing to be done in a particular manner then it has to be done in that manner alone, and not in any other manner.

The Common Portal could be used for service only if notified for that purpose under the statutory scheme. The notifications issued under the provision creating the Common Portal notified www.gst.gov.in for specified functions, but not for service of notices or orders; nor did the Rules prescribe such uploading as a mode of service. Further, the portal interface did not provide reasonable or prominent disclosure of statutory communications. Consequently, uploading in the additional-notices tab was not authorised service and could not trigger limitation for an appeal. [Paras 45, 48, 49, 56, 60]

Ex parte adjudications founded on notices uploaded alone were restored to the show-cause notice stage for reply and hearing; where an order passed after contest had been uploaded alone, the assessee was permitted to appeal within four weeks, and time-barred appeals were restored for decision on merits.

Electronic service by e-mail - HELD THAT: - Service by e-mail requires the notice or order itself to be sent to the registered e-mail address. An intimation without the statutory communication or its contents could not be treated as service through e-mail. [Paras 30, 45]

The Revenue could not rely on the e-mail intimation as a valid mode of service.

Defect in service of notice acted upon by assessee - A defect in portal-based service could not invalidate proceedings where the assessee had responded to the show-cause notice and contested the matter. - HELD THAT: - Where the assessee had acted upon the show-cause notice by filing a reply and the order-in-original was passed after contest, the defect in service could not subsequently be invoked to challenge the order merely because the notice or order had been uploaded on the Common Portal. [Paras 59]

Cases in which the show-cause notice had been contested were excluded from relief founded solely on defective service.

Final Conclusion: The writ petitions were disposed of by holding that mere uploading of statutory communications in the 'View Additional Notices and Orders' tab was not valid service. Consequential relief was granted according to whether the proceedings had been ex parte, the order had been contested, or the appeal had been dismissed as time-barred.

Personal hearing in cancellation of GST registration - Retrospective validation of DIN-less GST communications - Violation of principles of natural justice - HELD THAT: - The cancellation order was passed without the personal hearing mandated by Section 75(4), for which at least three dates were required to be fixed. The revocation proceedings also suffered from non-application of mind, since the returns and late fees had already been uploaded before issuance of the notice, but were not considered. The notice rejecting revocation did not disclose the issuing authority's name or designation and, when DIN was mandatory, bore no DIN. The subsequent circular dispensing with DIN for portal-generated communications could not retrospectively validate that notice. [Paras 15, 18]

The cancellation and revocation-rejection orders were set aside and the registration was directed to be restored forthwith.

Final Conclusion: The writ application was allowed. The consequential appellate orders rejecting the challenge on limitation were also set aside, costs were awarded, and restoration of registration was directed.

Opportunity of personal hearing before adverse GST adjudication - Exclusion of writ-pendency period in appellate limitation - Refund of tax recovered during statutory appeal period

Opportunity of personal hearing before adverse GST adjudication - HELD THAT: - On a conjoint reading of the provisions governing determination pursuant to a show-cause notice and the general provision for hearing, the Court held that a personal hearing is required once the assessing authority contemplates an adverse decision after considering the taxpayer's representation. Three hearing opportunities having been granted and the authorised representative having made the written defence the final submission, the statutory requirement stood complied with. A further hearing was not required merely because the adjudication order was passed later; the interpretation urged from Tata Projects Limited [2025 (2) TMI 383 - PATNA HIGH COURT] was not accepted. [Paras 8, 9]

The challenge founded on denial of personal hearing stood rejected and was not left open for reconsideration in appeal.

Exclusion of writ-pendency period in appellate limitation - HELD THAT: - The Court permitted recourse to the statutory appeal, subject to an application for condonation of delay, and directed that the period during which the writ petition remained pending be excluded while computing limitation and the further condonable period. All contentions other than the issue already decided by the Court were kept open for the appellate authority. [Paras 7]

Liberty was granted to file an appeal within thirty days, with exclusion of the writ-pendency period for limitation purposes.

Refund of tax recovered during statutory appeal period - HELD THAT: - The Court declined to direct refund because the writ petition itself had been instituted after expiry of the statutory three-month period available for filing the appeal. [Paras 9]

No refund direction was issued.

Final Conclusion: The writ petition was disposed of with liberty to pursue the statutory appeal, excluding the period of pendency of the writ proceedings for limitation. The previously decided hearing issue remained closed, and refund of the recovered amount was declined.

Composite assessment for multiple tax periods - Separate tax-period assessment - Cross-examination of witnesses whose statements are relied upon - Proof of privately maintained documents - Principles of Natural Justice - Right to Cross-Examination - Reliance on Witness Statements - Evidentiary Value of Documents

Validity of a composite adjudication under section 74, for the separate assessment years 2017-18, 2018-19 and 2019-20 - HELD THAT: - In M/s. Lakshmi Mobile Accessories [2025 (2) TMI 666 - KERALA HIGH COURT] and Tharayil Medicals [2025 (4) TMI 1152 - KERALA HIGH COURT] where, it was observed that, a composite notice for multiple assessment years while completing the assessment under Section 74 of the CGST Act is not legally sustainable.

The statutory scheme contemplates assessment with reference to a particular tax period. A composite notice and adjudication under section 74 for multiple assessment years as a block assessment is legally unsustainable. [Paras 8]

The composite adjudication was set aside, with directions to initiate fresh proceedings by issuing separate notices for separate assessment years.

Entitlement to cross-examine non-co-noticee witnesses whose statements were relied on for adjudicating GST liability and confiscation - HELD THAT: - Where witness statements form the basis of the adjudicating authority's conclusion, a request to cross-examine them cannot be rejected because the witnesses did not retract their statements, because their statements are said to be corroborated, or on a prior assumption that cross-examination would be biased. Cross-examination enables the noticee to test and discredit the veracity of relied-on statements; its denial requires sound and justifiable reasons. However, the noticee cannot claim cross-examination of co-noticees penalised for aiding or abetting, since that would require them to depose against themselves. [Paras 11, 13, 14, 15]

The request for examination or cross-examination of witnesses other than co-noticees shall be considered afresh and shall not be rejected on the reasons stated in the impugned order.

Proof of pocket diaries relied upon in adjudication - Evidentiary reliance on pocket diaries purportedly maintained by goldsmiths without recording the statements of their authors or custodians. - HELD THAT: - A document may be accepted as relevant evidence only when produced or proved by its author or by a person responsible for maintaining it. Since the adjudication did not establish these foundational facts and the statements of the persons said to have maintained the pocket diaries were not recorded, the petitioners may seek to summon those persons. [Paras 16]

The issue is left for consideration in the fresh adjudication, with liberty to the petitioners to seek appropriate relief concerning the persons maintaining the documents.

Final Conclusion: The impugned composite adjudication was quashed. Fresh separate proceedings for each assessment year shall be completed after affording a proper hearing and considering the request for examination or cross-examination in accordance with the observations made.

Validity of faceless assessment order u/s 144B - completion of assessment in accordance with procedure laid in Section 144B

HELD THAT:- Glance at the documents enclosed with the writ petition marked as Annexure-8, it is apparent that between 21st March 2026 (the petitioner could not have access to VC link due to technical glitch) and 25th March, 2026 (the date on which the assessment order was passed), no opportunity of personal hearing was given. This Court is of the prima facie view that there was non-adherence to the procedure provided under clause (vii) and clause (viii) of sub-section (6) of Section 144B of the I.T. Act.

Revenue requested for grant of accommodation to obtain instruction with regard to the fact whether the additions made to the income in the assessment order are beyond the proposed additions of income reflected in the show cause notice and the opportunity of hearing as sought for by the petitioner has been extended during 21.03.2026 to 25.03.2026 by providing the assessee link and password facilitating it to participate in the proceeding through video conference.

Granting an opportunity to the learned Junior Standing Counsel to examine the points set out by Sri Rudra Prasad Kar, learned Senior Advocate, and place on record instructions, list this matter on 30th July, 2026.

Condonation of delay in filing audit report for charitable exemption - Genuine hardship u/s 119(2)(b) - Sufficient Cause for delay

HELD THAT: - The petitioner is the managing trustee of an educational trust. Exemptions have been claimed in the returns of income for the relevant assessment years. The right to avail of such exemptions is contingent on filing a income accompanied by the audit report in Form 10B. The audit each relevant assessment year, was filed a few days after filing the income. The petitioner was about 70 years old at the relevant time. The petitioner, however, cannot entirely be absolved of responsibility.

Section 119(2)(b) does not itself prescribe a period within which an application for condonation must be made and enables condonation to avoid genuine hardship. While the income-tax authorities are bound by the CBDT circular prescribing a time limit, the petitioner's medical condition, age and the fact that the audit reports were filed only a few days after the returns constituted sufficient cause, although the petitioner could not be wholly absolved of responsibility. [Paras 4, 5, 6]

The delay in filing Form 10B was condoned subject to payment of costs, and the assessment proceedings were directed to proceed on that basis.

Final Conclusion: The writ petitions were disposed of by condoning the delay in filing Form 10B, subject to payment of costs.

Reassessment for unexplained investment in immovable property - Disclosure in wealth-tax return and income-tax reassessment - Sanction for reassessment notice

Validity of reopening of assessment on the basis of unexplained cash investment in purchase of immovable property, notwithstanding disclosure of the purchase in the wealth-tax return - HELD THAT: - Where the return had only been processed and the material indicated an investment in immovable property disproportionate to the income disclosed, including unexplained cash payment, Explanation 2(b) to section 147 applied. Disclosure of the purchase transaction in the wealth-tax return did not absolve the assessee of the obligation to disclose in the income-tax return material facts concerning the source of funds and the true nature of the transaction.

AO was not deemed to have noticed facts disclosed in the wealth-tax return. The approval for issuance of the reassessment notice was held to satisfy section 151, since the approving authority had recorded satisfaction on the reasons furnished by the AO. [Paras 12, 13, 14]

The reassessment notice and the order rejecting objections were sustained; the writ petition was rejected.

Final Conclusion: The reopening for AY 2012-13 was held valid, the statutory conditions for reassessment and sanction having been satisfied. The writ petition was rejected.

Deduction for profits of co-operative credit society - Unreasoned disallowance of statutory deduction - Accrued audit-fee liability - Leave-encashment payment condition - Fresh examination of co-operative society deposits and KYC compliance

Unreasoned disallowance of statutory deduction - Disallowance of deduction claimed by the agricultural credit co-operative society without any discussion in the assessment or appellate order - HELD THAT: - Neither the assessment order nor the appellate order recorded reasons for treating the deduction claim as wrongly made, and the revisionary order had not raised that issue. The addition was therefore wrongly made. [Paras 10]

The disallowance was deleted.

Deduction for profits of co-operative credit society - Interest income attributable to credit facilities - Eligibility of interest income of a co-operative society providing credit facilities to its members for deduction as business profits attributable to that activity - HELD THAT: - Where the society carries on an activity covered by section 80P(2)(a)(i), the profits and gains attributable to providing credit facilities to members are deductible in full. The AO had not recorded any finding explaining why the interest income was assessable as income from other sources; decisions concerning income so assessable were held inapplicable to the assessee's business-income claim. [Paras 12]

The denial of deduction on the interest income was deleted; the alternative claim for deduction u/s 80P(2)(d) became infructuous.

Residual deduction of co-operative society - Deduction available to the co-operative society u/s 80P(2)(c) after allowance of deduction u/s 80P - HELD THAT: - The assessment order contained no discussion supporting denial of the residual deduction. It was directed to be allowed if income remained after granting the deduction under section 80P. [Paras 14]

AO was directed to allow the deduction, if otherwise available and if residual income remained.

Accrued audit-fee liability - Contingent liability - Allowability of a provision for audit fees where the liability was claimed to have accrued for audit work to be performed - HELD THAT: - A deduction can be denied only where the liability is contingent. A provision for audit work could not be disallowed outright; its allowability depended on supporting evidence and, where applicable, a requirement under an RBI circular or guideline. [Paras 15]

The matter was restored to the AO for verification and allowance if the accrued liability was substantiated; it could be disallowed if found contingent and unsupported.

Leave-encashment payment condition - Allowability of the provision for employees' leave encashment upon proof of payment before the due date for filing the return - HELD THAT: - As the claim was governed by section 43B, its allowability depended on evidence that the amount had actually been paid to employees within the prescribed time. No such documentary evidence had been furnished. [Paras 16]

The Assessing Officer was directed to verify payment and delete the addition if payment within the prescribed time was established.

Denial of deduction to an agricultural credit co-operative society and additions for deposits received from members and interest paid - Fresh examination of co-operative society deduction - Member deposits and KYC compliance - HELD THAT: - The lower authorities had not properly examined the nature of the society's activities, its claim that credit facilities were confined to members, or the details furnished for member deposits. The society could not be expected to maintain PANs of members who did not possess them; however, it was required to maintain such KYC particulars as were mandated by the Co-operative Societies Act and applicable RBI guidelines. Where compliant KYC details were maintained, the additions could not have been made merely on that basis. [Paras 24, 25, 26]

The matter was remanded without adjudication on merits for fresh examination of eligibility for deduction and compliance of member deposits with the applicable requirements.

Final Conclusion: For assessment year 2015-16, the appeal was partly allowed, with specified deductions allowed and the remaining claims remitted for verification. For assessment year 2020-21, the matter was remanded to the Assessing Officer for fresh adjudication in accordance with law.

Rejection of the application for regular registration - Non issuing a show-cause notice and providing a fair opportunity of hearing was sustainable.

HELD THAT: - The application was rejected because the assessee had commenced activities before the grant of provisional registration. The Tribunal found that no show-cause notice had preceded the rejection and that the assessee had not been afforded an opportunity to explain its activities. In the interest of substantial justice, the rejection could not be sustained without a fair opportunity of hearing. [Paras 6, 7]

The impugned order was set aside and the matter was restored to the CIT(E) for fresh decision in accordance with law after affording a fair opportunity of hearing to the assessee.

Final Conclusion: The appeal was allowed for statistical purposes. The rejection of the registration application was set aside and remanded for fresh adjudication after a fair hearing.

Depreciation on opening written down value of intangible assets - Consistency in allowance of depreciation - Revenue recognition for period-based subscription services - Interest on borrowings assumed under slump sale - Related-party expenditure u/s 40A(2)

Depreciation on opening written down value of intangible assets - Consistency in allowance of depreciation - Allowability of depreciation on the opening written down value of intangible digital platform assets acquired through slump sale - HELD THAT: - The depreciation claim related substantially to the opening written down value of the block, which had arisen after the assets and the claim of depreciation were examined and allowed in the preceding assessment year. The Revenue had brought no material showing any alteration, manipulation, reclassification, recharacterisation, or other change in facts or law during the relevant year. Once an asset forms part of a block, its written down value can be reduced only in the circumstances stipulated by law; in the absence of any such event, depreciation on the opening written down value could not be denied. The finding that the assets were used for providing services and earned taxable revenue also remained undisputed.

Assessee relied on the judgment of jurisdictional Tribunal in case of Bodal Chemicals Ltd. [2019 (10) TMI 914 - ITAT AHMEDABAD] which has dealt with the similar issue on claim of depreciation on opening WDV, wherein it allowed the claim of depreciation on the opening WDV by holding that the revenue once allowed the deduction for the depreciation claimed by the assessee, then it is debarred to reject the claim of the assessee in the subsequent year on the WDV carried forward from the earlier assessment year. [Paras 9]

The deletion of the disallowance of depreciation on intangible assets was upheld and the Revenue's ground was dismissed.

Revenue recognition for period-based subscription services - Advance receipts and accrual of income - Taxability of advance subscription receipts relating to period-based digital and bundled voucher services - HELD THAT: - The assessee consistently recognised subscription revenue over the service period, and the advance receipts of the preceding year were offered to tax in the relevant year upon rendering of services. The finding of the first appellate authority, based on the financial-statement disclosures and the explained accounting treatment, that the opening balance of advance revenue had been recognised during the year was not rebutted by contrary material. A further addition of that amount would therefore result in double taxation. [Paras 14, 15]

The deletion of the addition for revenue received in advance was upheld and the Revenue's ground was dismissed.

Interest on borrowings assumed under slump sale - Related-party expenditure u/s 40A(2) - Consistency in allowance of interest deduction - Allowability of interest on borrowings assumed as liabilities of a business undertaking acquired on a going-concern slump sale - HELD THAT: - The borrowings and the corresponding interest deduction had been examined and accepted in the year in which the slump-sale transaction originated. The liability in the relevant year was merely a continuation of the accepted borrowing, with no fresh borrowing, independent transaction, or change in facts or law. Borrowings assumed on acquisition of the undertaking as a going concern became borrowings of the acquiring company and were inherently connected with its business operations. Further, section 40A(2) could not be invoked automatically without a finding identifying the extent to which the interest expenditure was excessive or unreasonable. No disallowance u/s 36(1)(iii) is called for and thus, the order of CIT(A) is set aside on this issue.[Paras 21]

No disallowance of the interest expenditure was warranted; the order sustaining the disallowance was set aside and the assessee's appeal was allowed on this issue.

Final Conclusion: The Revenue's appeal was dismissed. The assessee's appeal was allowed, and the disallowance of interest on borrowings assumed under the slump-sale undertaking was deleted.

TP Adjustment - Arm's length price of intra-group services - Consistency in transfer pricing methodology - Verification of employee's ESI contribution - Set-off of brought-forward losses

Arm's length price of intra-group services - Consistency in transfer pricing - Transfer pricing adjustment for intra-group services, including mark-up on third-party information technology support services costs - HELD THAT: - The Tribunal found that the issue stood decided in the assessee's favour in its own earlier assessment years [2025 (12) TMI 1704 - ITAT KOLKATA] . In the absence of any distinguishing facts, the consistently accepted arm's length character of the charges paid to the associated enterprise was required to be maintained. [Paras 4]

The transfer pricing adjustment was directed to be deleted.

Selection of most appropriate method for marketing support services - Transactional Net Margin Method - Consistency in transfer pricing methodology - Transfer pricing adjustment for marketing support services benchmarked by the assessee under the Transactional Net Margin Method as against the Comparable Uncontrolled Price method adopted by the Transfer Pricing Officer - HELD THAT: - The Tribunal followed the earlier orders in the assessee's case [2025 (12) TMI 1704 - ITAT KOLKATA] noting that the Transactional Net Margin Method had consistently been accepted for benchmarking the marketing support services and that there was no change in facts. The comparable agreements relied upon for the Comparable Uncontrolled Price method did not satisfy the requisite product, market and functional comparability. [Paras 7]

The transfer pricing adjustment for marketing support services was directed to be deleted.

Late deposit of employee’s contribution to ESI - HELD THAT: - The Tribunal noted that the disallowance had been made on the basis of a typographical mistake despite the details having been furnished. The matter required verification of the challans and adjudication accordingly. [Paras 9]

The issue was remanded to the Assessing Officer for verification and decision.

Set-off of brought-forward losses - non-granting of set-off of brought forward losses against the assessed income computed - HELD THAT: - As the Dispute Resolution Panel had restored the matter for decision in accordance with law, the Tribunal directed examination of the relevant facts and fresh adjudication. [Paras 11]

The issue was restored to the Assessing Officer for decision in accordance with law.

Final Conclusion: The transfer pricing adjustments for intra-group information technology support services and marketing support services were deleted. The issues concerning employee's ESI contribution and set-off of brought-forward losses were remanded to the Assessing Officer for verification and fresh decision.

Reassessment beyond recorded reasons - Jurisdiction to assess other escaped income

Validity of reassessment where no addition was made for the alleged suppression of variable professional fees forming the sole recorded reason for reopening, but interest expenditure was disallowed on an unrelated issue - HELD THAT: - The Tribunal held that an AO may examine and assess other escaped income only if an addition is first made on the issue forming the basis of reopening. Where the recorded reason does not survive and no addition is made thereon, reassessment cannot be sustained merely on the basis of additions on different issues.

Respectfully following the dictum laid down in Anand Cine Services (P.) Ltd [2024 (8) TMI 1369 - MADRAS HIGH COURT] we hold that where no addition is ultimately made on the issue forming the basis of reopening, the reassessment cannot be sustained merely for making additions on other issues that came to the notice of the AO during the reassessment proceedings.

In the present case, admittedly no addition has been made in respect of the alleged suppression of professional fees, which constituted the sole reason for reopening the assessment. Therefore, the Assessing Officer lacked the jurisdiction to make a disallowance of interest expenditure, which was entirely unconnected with the recorded reasons for reopening. [Paras 12, 14, 15]

As no addition was made on the alleged suppression of professional fees, the Assessing Officer lacked jurisdiction to disallow unrelated interest expenditure; the reassessment order was quashed.

Final Conclusion: The reassessment for Assessment Year 2018-19 was quashed because the addition made was unrelated to the sole recorded reason for reopening, on which no addition was ultimately made. The merits of the interest disallowance were left open.

Revision u/s 263 treating the penalty order passed u/s 270A as erroneous and prejudicial to the interest of the Revenue -Doctrine of merger in penalty proceedings

HELD THAT: - The appellate authority had held that the addition representing the premium expenditure was explained and directed its deletion. While deciding the penalty appeal, it took cognizance of that quantum finding and allowed the assessee's substantive grounds. The penalty order consequently merged with the appellate order; therefore, it could not be revised under section 263 as an erroneous and prejudicial order. [Paras 4]

The revision order under section 263 was held unjustified and was set aside.

Final Conclusion: The assessee's appeal was allowed and the revision of the penalty order under section 263 was set aside.

Deduction for CSR donations u/s 80G - Distinction between CSR expenditure and business expenditure u/s 37 - Eligibility of donations made towards corporate social responsibility obligations for deduction u/s 80G - HELD THAT: - In the case of DCIT v. Adani Logistics Ltd [2026 (2) TMI 708 - ITAT AHMEDABAD] while considering an identical issue, observed that CSR expenditure and business expenditure u/s 37 operate in different fields and that there is no bar on claiming deduction u/s 80G in respect of CSR contributions, provided the donation is otherwise eligible for deduction u/s 80G of the Act. Also further observed that the restrictions specifically provided u/s 80G in respect of donations made to the Swachh Bharat Kosh and Clean Ganga Fund could not be extended to other eligible donations in the absence of any express statutory prohibition.

CSR expenditure and business expenditure under section 37 operate in distinct fields. Explanation 2 to section 37(1), which disallows CSR expenditure as business expenditure, cannot be extended to deny deduction under section 80G for donations otherwise made to eligible institutions.

The express restrictions concerning donations to the Swachh Bharat Kosh and Clean Ganga Fund could not be enlarged to cover other eligible donations merely because they also discharged the assessee's CSR obligation. [Paras 9]

The eligible donations qualified for deduction under section 80G, subject to the statutory ceiling, notwithstanding their treatment as CSR expenditure.

Final Conclusion: Both appeals were allowed. The assessee's claim for deduction under section 80G in respect of eligible CSR-related donations was upheld, subject to the statutory ceiling.

Penalty u/s 271B for belated furnishing of tax audit report - Reasonable cause for failure to comply with tax audit requirement

HELD THAT: - Penalty u/s 271B is not automatic. Section 273B overrides the penalty provision where the assessee establishes reasonable cause; the authority must judicially consider the explanation and determine whether the failure was without such cause. The assessee had maintained accounts, obtained audit, and furnished the audit report before conclusion of assessment.

The belated filing resulted from the previous auditor's negligence and the consequent change of auditor. Tribunal held that this constituted reasonable cause and that the lapse was a technical and venial breach, without deliberate or wilful default or loss to the revenue. [Paras 9]

The penalty under section 271B was cancelled and the Assessing Officer was directed to delete it.

Final Conclusion: The appeal was allowed. The penalty for belated furnishing of the tax audit report was deleted upon the assessee establishing reasonable cause and absence of any absolute or wilful default.

Transfer of capital asset under a joint development agreement -transfer u/s 2(47)(v) - Permissive possession for development

Taxability of capital gains on execution of a joint development agreement where the developer received possession solely for development and construction while ownership remained with the co-owners - HELD THAT: - The Hon'ble Supreme Court in the case of CIT v. Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] and Seshasayee Steels (P.) Ltd.[2019 (12) TMI 702 - SUPREME COURT] has held that where the developer is given possession only for the purpose of development, such possession does not amount to possession under section 53A of the Transfer of Property Act. Consequently, section 2(47)(v) of the Act is not attracted.

The agreement expressly preserved the owners' status as owners and provided that the developer would hold possession only as their representative.

Possession granted exclusively to undertake development work was not possession in part performance of a contract of sale under section 53A of the Transfer of Property Act. Accordingly, section 2(47)(v) was not attracted and no transfer of the capital asset occurred in the relevant previous year. [Paras 8]

The deletion of the long-term capital-gains addition was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The joint development agreement did not effect a transfer giving rise to capital gains in Assessment Year 2014-15, since the developer's possession was merely permissive and for development. The Revenue's appeal was dismissed.

Validity of reopening of assessment - Limitation for reassessment notice where escaped income exceeds statutory threshold - Unexplained investment in immovable property - source from personal bank savings - House rent allowance exemption - computation under prescribed limits

Limitation for reassessment notice where escaped income exceeds statutory threshold - Prior approval for reassessment notice - Validity of reassessment notice for the assessment year 2015-16 where unreported salary income and acquisition of immovable property indicated income chargeable to tax escaping assessment exceeding the statutory threshold - HELD THAT: - The subsequent assessment of total income below the statutory threshold could not determine limitation where the information available during the proceedings indicated that unreported transactions, including acquisition of immovable property, involved escaped income exceeding that threshold. AO was consequently entitled to issue notice beyond three years but within ten years. The notice had also been issued after prior approval of the competent authority in accordance with the applicable approval requirement. [Paras 8]

The challenge to the reassessment proceedings and notice on limitation and approval grounds was rejected.

Unexplained investment in immovable property - source from personal bank savings - Addition for unexplained investment representing the portion of the purchase consideration of immovable property not funded through the housing loan - HELD THAT: - The housing loan component had been accepted by the Revenue. On verification of the bank statements and payment particulars produced in appeal, the Tribunal found that the remaining consideration was paid from the assessee's personal savings held in bank accounts. The source of the investment was thus satisfactorily established. [Paras 12]

The addition sustained towards unexplained investment in the immovable property was deleted.

House rent allowance exemption - computation under prescribed limits - Eligibility for house rent allowance exemption where the assessee produced employer records, rent evidence and a computation based on rent actually paid - HELD THAT: - Under the prescribed computation, the exempt amount is the least of the actual allowance received, rent paid in excess of the stipulated percentage of salary, and the applicable percentage of salary based on the location of the accommodation. The employer's Form 16, salary records, lessor's declaration and computation established that the exemption claimed represented the least of those amounts and was in accordance with the statutory provision and Rule 2A. [Paras 15, 17]

The disallowance of the claimed house rent allowance exemption was deleted.

Final Conclusion: The appeal was partly allowed. The reassessment challenge was rejected, while the additions for unexplained investment and disallowance of house rent allowance exemption were deleted.

Deduction of expenditure incurred wholly and exclusively in connection with transfer of capital asset - Success fee for advisory services facilitating sale of shares

Allowability of success fee paid for advisory services as a deduction in computing capital gains from the sale of shares u/s 48 - HELD THAT: - The substance of the engagement was divestment of the company's shares. Though the engagement letter was executed by the assessee in his capacity as Chairman and Director, the consultant raised the invoice upon the assessee, who paid the fee personally, and confirmed that the fee related to advisory services for the successful sale of his shareholding.

The consultant acted as an adviser and not as a middleman or broker; consequently, the purchaser's statement that no agent or intermediary was engaged did not displace the direct nexus between the advisory services and the share transfer. The expenditure was therefore incurred wholly and exclusively in connection with the transfer and was deductible in computing capital gains.

Section 48(i) of the Income-tax Act provides that capital gains shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of a capital asset, the expenditure incurred wholly and exclusively in connection with such transfer. In the present case, the assessee incurred the expenditure wholly and exclusively in connection with the sale of shares of Team Concepts Private Limited to Varroc Polymers Private Limited. Accordingly, the assessee is entitled to deduction of the said expenditure while computing capital gains u/s 48. [Paras 15, 16]

The success fee was allowable as a deduction under section 48 while computing capital gains from the sale of the shares.

Final Conclusion: The appeal was allowed and the Assessing Officer was directed to allow deduction of the success fee in computing the capital gains arising from the share sale.

Bogus long-term capital gains on listed share transactions - Unexplained cash credit based on alleged penny stock transactions - Burden of proof - Evidentiary nexus - doctrine of binding precedent and judicial consistency

HELD THAT: - The purchase and sale transactions were effected through banking channels on the BSE, with payment of securities transaction tax and delivery through the demat account. The statement relied upon did not establish any association of its maker with the company, and no material established a live link between the company and the alleged entry providers.

Nor was any adverse order of BSE or SEBI against the company or its promoters produced. In these circumstances, and consistently with co-ordinate Bench decisions concerning the same scrip like Pratibha S. Mhatre[2021 (6) TMI 660 - ITAT MUMBAI], Pavankumar Bachrajchandan [2025 (2) TMI 818 - ITAT MUMBAI], Rashmiben P. Kanungo [2022 (2) TMI 1342 - ITAT AHMEDABAD], Smt. Veena Chaturvedi [2023 (9) TMI 1566 - ITAT MUMBAI] and Suresh M. Jain HUF [2022 (9) TMI 1657 - ITAT MUMBAI] the adverse inference that the transactions were bogus could not be sustained. [Paras 6, 7, 9]

The exemption claim was allowed and the addition was directed to be deleted keeping in view the doctrine of binding precedent and judicial consistency.

Final Conclusion: The appeal was allowed on merits. The orders sustaining the denial of the long-term capital gains exemption and the consequential addition were set aside.

Interest on delayed refund of investigation deposit - Binding precedent of jurisdictional High Court - HELD THAT: - The decision of the Hon’ble Calcutta High Court in the case of Rajendra Kumar Jain [2024 (5) TMI 743 - CALCUTTA HIGH COURT], High Court has set aside the order of this Tribunal granting interest @6% and has categorically held that interest @12% is payable on delayed refund of the amount deposited during the course of Investigation.

In the absence of a statutory provision fixing interest on refund of an amount deposited during investigation, the jurisdictional High Court had held that interest at 12% was payable. That decision was binding upon the Tribunal within its territorial jurisdiction, notwithstanding differing views of other High Courts. [Paras 5, 6]

Interest at 12% was held payable on the delayed refund; the order allowing interest at 6% was set aside.

Final Conclusion: The appeal was allowed and the appellant was held entitled to interest at 12% on delayed refund of the amount deposited during investigation.

Preferential tariff benefit on Certificates of Origin - Extended limitation for wilful suppression - overseas supplier's non-cooperation in a general verification exercise and departmental communication

Denial of preferential basic customs duty on imports of cold rolled stainless steel coils under the ASEAN-India Free Trade Area on the basis of the overseas supplier's non-cooperation in an origin-verification exercise - HELD THAT: - Non-cooperation by an overseas supplier in a verification exercise does not, by itself, authorise wholesale invalidation of all Certificates of Origin issued by that supplier. Each Certificate of Origin is an independent statutory document relating to a distinct import transaction and must be examined under the prescribed verification procedure. An inter-departmental communication recommending denial of preferential treatment is not an adjudicatory determination nullifying Certificates of Origin issued by the designated authority of the exporting country. In the absence of transaction-specific verification or a finding that the Certificates produced for the imports were forged, cancelled, fraudulently obtained or otherwise invalid, the preferential benefit could not be denied merely on subsequent departmental correspondence. [Paras 11, 12, 13]

The appellant was entitled to the preferential rate of basic customs duty; the consequential duty demand, interest, confiscation, redemption fine and penalties were unsustainable.

Extended limitation for wilful suppression - recovery of differential customs duty where the importer claimed preferential tariff benefit on Certificates of Origin accepted at assessment. - HELD THAT: - It is trite law that the extended period of limitation can only be invoked upon the Revenue establishing, by cogent and convincing evidence, the existence of fraud, collusion, wilful misstatement or suppression of material facts with an intention to evade payment of duty. The burden to establish these jurisdictional facts rests squarely upon the Revenue. Mere reproduction of the language employed in Section 28(4) of the Customs Act, 1962 or a mechanical allegation of suppression in the Show Cause Notice cannot, by itself, justify invocation of the extended period unless the foundational ingredients contemplated under the statute stand independently established. Equally well settled is the principle that a mere difference in interpretation, a bona fide claim founded upon documents accepted by the Department, or an alleged omission unaccompanied by a conscious intent to deceive, cannot be elevated to the level of wilful suppression so as to attract the rigours of the extended limitation.

The extended period requires cogent evidence of fraud, collusion, wilful misstatement or suppression of material facts with intent to evade duty, and the burden to establish those jurisdictional facts lies on the Revenue. The importer openly produced the Certificates of Origin, claimed exemption in the Bills of Entry and obtained clearance after assessment. As no evidence showed that it knowingly produced false documents, participated in any irregularity, or suppressed material facts, the overseas supplier's subsequent alleged non-cooperation could not establish wilful suppression by the importer. [Paras 14]

The demand founded on the extended period was barred by limitation, with all consequential liabilities failing.

Final Conclusion: The appeal was allowed on merits and limitation. The denial of preferential tariff benefit and all consequential demands, confiscation and penalties were set aside.

Confiscation of gold lacking foreign markings - Redemption of restricted gold - Confiscation of currency as sale proceeds of smuggled goods - Denial of cross-examination - Penalty for alleged customs contravention - Reasonable Belief - Preponderance of Probabilities - Sale Proceeds of Smuggled Goods - Principles of Natural Justice - Right to Cross-Examination - Proportionality of Penalty

Monetary limits for departmental appeals in confiscation matters - HELD THAT: - The monetary-limit circulars primarily concern appeals involving duty, tax, interest or penalty. A challenge to the setting aside of absolute confiscation involves customs enforcement against smuggling and cannot be rejected by mechanical application of a revenue threshold. In any event, the aggregate value of the seized goods and currency exceeded the prescribed threshold. [Paras 16, 17, 18, 19, 20]

The preliminary objection was rejected and the Departmental appeal was held maintainable.

Confiscation of gold lacking foreign markings - Foundational requirement for burden of proof - HELD THAT: - Section 123 of the Customs Act applies when goods are notified and reasonable belief of smuggling exists.

Purity of gold alone does not establish its foreign origin or smuggled character. The Department had not produced independent corroborative material establishing foreign origin or a foundational fact giving rise to a reasonable belief of smuggling; consequently, the statutory burden could not be shifted merely on suspicion. [Paras 34, 35, 36]

The unconditional release of the unmarked gold was upheld.

Redemption of restricted gold - Foreign markings and proof of smuggling - HELD THAT: - It is now well settled that foreign markings by themselves do not establish that the goods are smuggled. Gold is a commodity which circulates widely in the domestic market and may bear foreign inscriptions even when legally acquired. In Ratan Kumar Saha [2020 (9) TMI 177 - CESTAT KOLKATA], it was held that mere foreign markings cannot lead to the conclusion that the gold is smuggled in the absence of any corroborative evidence. Similarly, in Gian Chand [1961 (11) TMI 1 - SUPREME COURT] the Hon’ble Supreme Court held that suspicion, however, strong cannot take the place of proof.

Although the markings established prima facie foreign origin and attracted the burden under section 123, foreign markings by themselves did not prove smuggling. The respondent's explanation and purchase material could not be treated as wholly false, while the Department established no tangible link between the gold recovered from the jewellery shop and any act of smuggling. Gold being restricted rather than prohibited, redemption ought ordinarily to be allowed absent exceptional circumstances. [Paras 37, 38, 39, 40]

The appellate authority's exercise of discretion to permit redemption of the marked gold was sustained.

Confiscation of currency as sale proceeds of smuggled goods - Nexus between currency and smuggled goods - HELD THAT: - In the case of Shri Kishore Kumar Gilds [2026 (5) TMI 590 - CESTAT HYDERABAD], it was held that the burden is entirely upon the Department to prove that there was a sale and the sale was smuggled gold and the money represents such sale proceeds. Tribunal Kolkata in the case of Bijoy Kumar, Agrawala and others [2024 (5) TMI 529 - CESTAT KOLKATA], where in, it was held that in the absence of clear nexus between cash and smuggled goods, confiscation of currency is not sustainable.

The finding that confiscation of the foreign currency was unsustainable was upheld.

Denial of cross-examination - Admissibility of statements in customs adjudication - HELD THAT: - In Basudev Garg [2013 (5) TMI 350 - DELHI HIGH COURT] held that when the Department relies upon the statement of a person to establish allegations against the notice, the notice must ordinarily be afforded an opportunity to cross-examine that person. Denial of such opportunity amount to violation of the principles of natural justice. Statement recorded under Section 108 of the Customs Act cannot automatically be treated as substantive evidence. Before relying upon such statements in adjudication, the Adjudicating Authority must comply with the requirements of Section 138B of the Customs Act, 1962.

Where statements are relied upon to establish the allegations, denial of an opportunity to cross-examine their makers violates principles of natural justice. Statements recorded under section 108 cannot automatically be treated as substantive evidence without compliance with the statutory requirements for their use in adjudication. [Paras 44, 45]

The proceedings were held to suffer from breach of natural justice.

Penalty for alleged customs contravention - HELD THAT: - The Supreme Court in Hindustan Ltd.[1969 (8) TMI 31 - SUPREME COURT], held that penalty is not automatic and requires proof of the requisite knowledge, intent or active involvement. In the absence of conclusive proof, the penalty must remain proportionate. [Paras 46, 47, 48]

No ground was found to interfere with the appellate authority's reduction of penalty.

Final Conclusion: The Departmental appeal, though maintainable, was dismissed. The appellate order releasing the unmarked gold, allowing redemption of the marked gold and foreign currency, and reducing penalty was sustained.

Classification of interactive flat-panel display assemblies with an in-built operating system, CPU, memory, connectivity and touch functionality - Prospective operation of customs classification clarification - classifiable as automatic data processing machines under CTH 8471 41 90 or as monitors under CTH 8528 59 00 - General Rules for Interpretation - Chapter Notes Prevail Over General Interpretative Rules - Prospective Operation of Clarifications - Principles of Natural Justice

Classification of interactive flat panels as automatic data processing machines - Prospective operation of customs classification clarification - HELD THAT: - The classification of the product in question is determinable as provided in Rule 1 of the Rules of Interpretation of the Central Excise Tariff i.e. in terms of the relevant headings of the tariff and the relevant Section of Chapter Notes, hence, the other Rules of Interpretation do come into play.

The goods could store and execute programmes, be freely programmed by the user, perform computations and execute processing programmes without human intervention, thereby satisfying all conditions of Chapter Note 5(A) to Chapter 84. Their in-built operating system, CPU, memory, connectivity, touch operation, speakers and OPS slot enabling installation of other operating systems established that they functioned independently and were not mere monitors receiving and displaying signals from another device. Classification had to be determined under the relevant heading and Chapter Notes; the general interpretative rules did not arise. [Paras 6, 7, 8, 9, 10]

The goods were classifiable as automatic data processing machines under CTH 8471 41 90 and not as monitors under CTH 8528 59 00.

Prospective operation of customs classification clarification - Reliance on the Finance Bill, 2025 proposals and the classification clarification dated 07.04.2025 for past imports. - HELD THAT: - The clarification was issued by a Technical Officer of TRU and could not be treated as a circular of the Central Board of Indirect Taxes and Customs under section 151A of the Customs Act. The proposed changes and clarification could operate only prospectively; their application to past imports was therefore unsustainable. [Paras 11]

The reliance placed in the impugned order on the Finance Bill proposals and the clarification dated 07.04.2025 was held unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed. Consequently, the allegations of misdeclaration, differential duty demand, confiscation and penalty did not survive.

Penalty for deliberate undervaluation of imported goods - Independent personal liability of partner for customs misdeclaration

Penalty for deliberate undervaluation of imported furniture - Effect of post-detection payment of differential duty - HELD THAT: - The Supreme Court in the case of Suresh Kumar and Co. Impex Pvt Ltd.[2025 (9) TMI 76 - SUPREME COURT], has reiterated that where undervaluation is established on the basis of reliable documentary and electronic evidence duly corroborated by the material available on record, such evidence constitutes a valid foundation for adjudication under the Customs Act, 1962. Likewise, Hon’ble Gujarat High Court in the case of Kishan Manjibhai Gadhesariya [2022 (4) TMI 316 - GUJARAT HIGH COURT], has recognised that deliberate mis-declaration or undervaluation justifies confiscation of the goods and the consequential imposition of redemption fine and penalty in accordance with the provisions of the Customs Act.

Reliable documentary and electronic evidence, corroborated by the Managing Partner's statement, established intentional misdeclaration of value. Payment of differential duty after detection does not efface the completed contravention or extinguish penalty liability; it may only constitute a mitigating circumstance in determining quantum. [Paras 16, 17, 18, 21, 22]

The penalties imposed for deliberate undervaluation were held legally sustainable, and complete waiver was declined.

Independent personal liability of partner for customs misdeclaration - Separate penalty on the Managing Partner where penalty was also imposed on the partnership firm for undervaluation of imported furniture. - HELD THAT: - Section 112(a) imposes personal liability upon any person whose acts or omissions render goods liable to confiscation. A partner's liability is independent, and not merely vicarious, where evidence establishes active involvement in the import transactions and misdeclaration. [Paras 19, 20, 21]

The separate penalty on the Managing Partner was upheld.

Final Conclusion: The appeals were dismissed. The penalties on the importer and its Managing Partner for deliberate undervaluation of imported furniture were sustained.

Refund of investigation deposit - Verification of departmental payment record - Refund of a deposit made during investigation towards differential customs duty, where the original challan was unavailable but the departmental treasury records evidenced the deposit and the underlying duty demand was set aside. - HELD THAT: - The legal provision of Section 27 ibid provide for claim of refund of duties of customs paid by a person applying for refund; while the provision of Sections 129E, 129EE ibid provide for deposit of certain percentage of duty demanded before filing of an appeal and interest if any, payable on refund of pre-deposit consequent to the order of the Appellate Authority.

A demand draft tendered towards the customs account and accounted for in the departmental C.B.R. Sheet established credit of the amount to the Government account. The absence of the original challan, which had been deposited by the investigating agency, could not justify rejection when the department's own records verified the payment. As the deposit was neither proposed nor ordered to be appropriated and the duty demand against the appellant was subsequently set aside, the deposit became refundable under the statutory refund mechanism. [Paras 8, 9]

The rejection of the refund claim was unsustainable; the appellant was held entitled to refund of the investigation deposit.

Final Conclusion: The impugned order was set aside and the appeal was allowed, with directions to process and grant refund of the deposit in accordance with law.

Extended period of limitation for customs duty recovery - Bona fide classification dispute - Invocation of the extended limitation period for recovery of customs duty on Wireless Bluetooth Earphones/Earbuds/Headphones/Headsets, where their classification was subject to conflicting Tribunal views. - HELD THAT: - The provisions for invocation of extended period are contained in Section 28 of the Customs Act, 1962. On reading of both the subsections contained under Section 28 ibid, it would transpire that issuance of the show-cause notice within the normal period of two years is the ‘rule’ and invoking the extended period is an ‘exception’, for which the onus entirely lies with the Department to prove that there is involvement of the ingredients itemized in sub-section (4) viz., collusion, willful mis-statement, suppression of facts etc., with an intent to evade payment of customs duty.

The normal two-year period for a notice is the rule, while the extended period is an exception requiring the Department to establish collusion, wilful misstatement or suppression of facts with intent to evade duty. Divergent judicial views on whether the goods fell under tariff item 8517 6290 or tariff item 8518 3000/8518 3011 demonstrated that the classification issue was genuinely debatable. The appellants' claimed classification and consequential exemption were therefore bona fide, and the requisite ingredients for invoking the extended period were absent. [Paras 4, 5, 7]

Duty demands insofar as they were confirmed by invoking the extended period were set aside; the consequential redemption fine and penalties were also set aside. The classification issue was left open for consideration by the Larger Bench.

Final Conclusion: The appeals were allowed on limitation, with the extended-period duty demands, redemption fine and penalties set aside. The merits of classification were not decided and remain open for Larger Bench consideration.

Late filing fee on supplementary Bills of Entry for excess bulk cargo - Waiver of late filing charges for sufficient cause - Levy of late filing fee on Supplementary Bills of Entry filed for clearance of excess steam coal remaining after clearance under timely original Bills of Entry. - HELD THAT: - The issue has already been analysed by this Tribunal in the case of M/s. Kai International Private Limited [2026 (3) TMI 1545 - CESTAT KOLKATA], which has been followed in M/s. Agarwal Coal Corporation Ltd. [2026 (6) TMI 1019 - CESTAT KOLKATA], held that late fee could not be mechanically levied on the supplementary Bills of Entry in the facts of the case, as the delay was not attributable to the appellant and the statute permitted waiver in deserving cases.

The amended Import General Manifests placed on record established that the contrary finding in the impugned order was founded on an erroneous factual premise. Where the original Bills of Entry had been filed within time and the excess cargo formed part of the same imported consignment, delay in filing supplementary Bills of Entry was not attributable to any fault of the importer. Late filing charges under Section 46(3) are to be considered judiciously and not imposed mechanically; the proper officer may waive them where sufficient cause and the importer's bona fides are established. [Paras 8, 10]

The late filing fee was held unwarranted and legally unsustainable; the impugned order and the levy were set aside.

Final Conclusion: The appeals were allowed and the late filing fee imposed on the Supplementary Bills of Entry was dropped, with consequential relief in accordance with law.

Late filing fee for supplementary Bill of Entry - Sufficient cause for delayed presentation of Bill of Entry - Levy of late filing fee on a supplementary Bill of Entry filed for excess PCI Coal forming part of the original bulk import consignment. - HELD THAT: - Late filing charges under Section 46(3) arise only where the Bill of Entry is not presented within time without sufficient cause. The original Bill of Entry for the manifested cargo had been filed within the prescribed period, and the supplementary Bill of Entry was filed after the excess bulk cargo was detected and permission for its clearance was obtained. The marginal excess, attributable to the moisture-related weight variation inherent in bulk coal, remained part of the original consignment, as supported by the amended Import General Manifest.

The above issue has already been analysed by this Tribunal in the case of M/s. Kai International Private Limited [2026 (3) TMI 1545 - CESTAT KOLKATA] which has been followed in M/s. Agarwal Coal Corporation Ltd. [2026 (6) TMI 1019 - CESTAT KOLKATA], held that late fee could not be mechanically levied on the supplementary Bills of Entry in the facts of the case, as the delay was not attributable to the appellant and the statute permitted waiver in deserving cases.

In the absence of fault, mala fides or deliberate delay by the importer, late fee could not be imposed mechanically; the proper officer's power to levy such charge required a judicious consideration of sufficient cause. [Paras 8, 9, 11]

The late filing fee was held unsustainable; the impugned appellate order and the levy were set aside.

Final Conclusion: The appeal was allowed with consequential relief in accordance with law, and the late filing fee imposed on the supplementary Bill of Entry was set aside.

Customs valuation-contemporaneous import values - Undervaluation-reliance on statement without corroborative evidence - Compliance with remand directions - Contemporaneous Import Value - Lowest Transaction Value

Enhancement of the declared value of imported viscose filament yarn - HELD THAT: - The earlier remand required fresh consideration of the appellants' claims, including their reliance on contemporaneous import values. The adjudicating authority gave an evasive finding that contemporaneous-price verification was unnecessary merely because imports by the same importer were available, and did not address the appellants' request for contemporaneous data. Under the valuation rules, the lowest transaction value was required to be adopted. A value prevailing in July 2007 could not be adopted for imports made from April 2004, particularly where the imported quantities differed and contemporaneous data showed comparable imports at prices close to those declared. [Paras 11]

The adjudicating authority's valuation finding was contrary to the remand directions and Rule 5(3) of the Customs Valuation Rules, 2007; the demand founded on alleged undervaluation was unsustainable.

Confiscation and redemption fine consequent upon undervaluation - Penalty on partner for alleged undervaluation - HELD THAT: - Once the finding of undervaluation and the consequential differential-duty demand could not be sustained, the imported goods were not liable to confiscation. In the absence of any allegation independently sustaining liability of the co-noticees, the penalties imposed on them also could not stand. [Paras 12, 13]

The confiscation, redemption fine and penalties, including penalties on the partners as co-noticees, were set aside.

Final Conclusion: The impugned orders confirming differential duty, interest, confiscation, redemption fine and penalties for alleged undervaluation were set aside. The appeals were allowed with consequential relief in accordance with law.

Concessional customs duty on electrically operated vehicle knocked-down kits - Prospective operation of amended exemption notification - Eligibility of electric scooters imported in knocked-down condition without tyres, battery and charger for concessional basic customs duty under Serial No. 531A(1)(a) of Notification No. 50/2017-Cus. - HELD THAT: - The pre-amendment entry required a knocked-down kit containing all necessary components, parts or sub-assemblies for assembling a complete electrically operated motorcycle. Though the imported kit was classifiable under tariff heading 8711 by reason of its essential character, it did not contain all such components. The subsequent amendment materially altered the entry by extending the benefit to incomplete or unfinished vehicles containing necessary components and by omitting the requirement of import of all components. Its explanation permitting the absence of one or more components was therefore applicable only to imports made after the amendment took effect. [Paras 9, 10]

The claimed concessional duty benefit was rightly denied and the lower authorities' decisions were sustained.

Final Conclusion: The impugned order was upheld and the appeal was dismissed.

Classification of Bluetooth wireless headsets - Essential character and principal function - HELD THAT:- It is submitted that on the same issue involved in these Appeals, there are conflicting decisions by Delhi Bench in the case of G. Mobile Devices P. Ltd. [2026 (4) TMI 1850 - CESTAT NEW DELHI] and Chennai Bench in the case of Redington Ltd. [2026 (5) TMI 1611 - CESTAT CHENNAI].

The Registry was directed to place the appeals before the President for constitution of a Special Bench to decide the classification issue in view of conflicting decisions.

Exemption for manufacturing inputs - spare parts of capital goods used to manufacture printed circuit boards - Direct Nexus with Manufacture - precedential value of a decision -Eligibility of spare parts of capital goods used for manufacture of printed circuit boards to basic customs duty exemption under Sl. No. 39 of Notification No. 24/2005-Cus. - HELD THAT: -The Hon'ble Supreme Court in the matter of Bhavnagar University v. Palitana Sugar Mills Pvt. Ltd [2002 (12) TMI 563 - SUPREME COURT] has observed that "It is well settled that a difference in facts or additional facts may take a lot of difference in the precedential value of a decision".

It is a settled principle that an exemption notification must be interpreted on the basis of its language read as a whole, and no entry can be construed in a manner that renders other provisions of the same notification redundant or superfluous. A harmonious reading of the notification no. 24/2005-Cus indicates that SI. No. 39 is intended to cover goods having a direct nexus with the manufacture of the specified products, namely consumables, raw materials, components, and other inputs that are consumed in, or incorporated into, the final products covered under SI. Nos. 1 to 38.

It cannot be expanded to include capital goods, machinery, accessories or replacement spares used to maintain manufacturing equipment, particularly when separate entries address such goods and capital goods are covered under a distinct EPCG exemption scheme. The decisions relied on by the applicant were held inapplicable, having arisen under differently worded notifications or schemes expressly covering capital goods. [Paras 7, 8, 9, 10, 12]

The proposed import of spare parts for capital goods used in PCB manufacture is not eligible for exemption under Sl. No. 39 of Notification No. 24/2005-Cus.

Final Conclusion: The advance ruling denies the claimed exemption for spare parts of capital goods used in the manufacture of printed circuit boards under Sl. No. 39 of Notification No. 24/2005-Cus.

Classification of Display Closing Assembly - Benefit of Exemption under Serial Nos. 29 and 17 of Notification No. 24/2005-Customs - classifiable as a flat panel display module under heading 8524.91, a radio-broadcast reception apparatus under heading 8527.29, or as a motor-vehicle part under tariff item 8708 99 00 - Tariff Classification - General Rules for Interpretation - Essential Character - Specific Heading Prevails

Classification of automotive dashboard display sub-assembly - Parts and accessories of motor vehicles - HELD THAT: - The product satisfies the three-condition test set forth in the HSN Explanatory Notes. It is not excluded by Note 2, it is suitable for use solely with motor vehicles and it is not more specifically covered elsewhere in the Nomenclature. The argument that the presence of electronic components like PCBs or LCD screens mandates classification under Chapter 85 has been explicitly rejected by the Principal Bench of CESTAT in M/s Continental Automotive Brake Systems India Private Limited [2024 (3) TMI 1145 - CESTAT NEW DELHI], which held that such components do not transform an automotive part into an independent apparatus. In M/s Mitsubishi Electric Automotive India Pvt. Ltd [2024 (9) TMI 1956 - CESTAT NEW DELHI] the Tribunal held that the mere presence of electronic components or a printed circuit board does not transform an automotive part into an independent "instrument" or "apparatus" falling outside Section XVII.

Condition (b) is satisfied as the assembly is exclusively intended for use in vehicle dashboards and has no other commercial application, a fact supported by the applicant's own project declarations. Regarding Condition (a), the tribunal's consistent interpretation confirms that the electronic nature of a part does not attract the exclusionary provisions of Section Note 2. as the assembly remains a functional sub-assembly devoid of independent utility outside the vehicle environment. Condition (c) is likewise met because the assembly is a specialized automotive part rather than a general-purpose flat panel display (CTH 8524) or a radio-broadcasting reception apparatus (CTH 8527), leaving the residual entry 8708 99 00 as the correct legal classification.

The assembly was not a general-purpose flat panel display module under Heading 8524, since its specialized connectors, structural frame and mounting configuration established its dedicated automotive character. It also lacked independent radio-frequency reception and signal-processing capability required of reception apparatus under Heading 8527. Applying Rule 1, read with the Section XVII Notes, and Rule 3(a), the assembly satisfied the three conditions for classification as a motor-vehicle part: it was not excluded by Section Note 2, was solely suitable for vehicle use, and was not more specifically covered elsewhere. The presence of LCD and PCB components did not alter its character as an automotive sub-assembly. [Paras 5]

The Display Closing Assembly is classifiable under CTI 8708 99 00 as other parts and accessories of motor vehicles, and not under CTH 8524.91 or CTH 8527.29.

Exemption for liquid crystal devices - Eligibility of the Display Closing Assembly for exemption under Serial No. 29 read with Serial No. 17 of Notification No. 24/2005-Customs. - HELD THAT: - The claimed exemption depended upon classification of the goods as a liquid crystal device under Heading 8524 and their use in goods covered by the notification. Since the assembly was classified as a specialized motor-vehicle part under Heading 8708, it neither fulfilled the description at Serial No. 29 nor the conditions linked to Serial No. 17. [Paras 5]

The claimed exemption is not available.

Final Conclusion: The proposed Display Closing Assembly was held classifiable as an automotive part under CTI 8708 99 00. The exemption claimed under Notification No. 24/2005-Customs was consequently denied.

Transfer of shares without statutory transfer instrument - Transfer of immovable property without registered conveyance - Oppression and mismanagement through manipulation of corporate records - Valid Transfer of Shares - Mandatory Statutory Compliance - Registered Conveyance - Oppression and Mismanagement - Void Ab Initio Transaction - Presumption of Correctness of Statutory Records

Transfer of shares without statutory transfer instrument - Validity of the alleged transfer of the entire shareholding in the company to the incoming directors on the basis of the memorandum of understanding and revised statutory filings. - HELD THAT: - The memorandum contemplated further finalisation of consideration and a subsequent share transfer; it did not evidence a completed transfer. No duly executed share transfer deed was produced, the original share certificates remained with the existing shareholders without any endorsement, and the statutory procedure for transfer of shares was not followed. Contemporaneous annual returns continued to record the respondents as the shareholders, whereas the later retrospective revision of filings could not establish title. [Paras 17, 18, 19, 21, 23]

The alleged transfer of the shareholding was non-est, and the respondents continued to be the 100% shareholders of the company.

Transfer of immovable property without registered conveyance - Validity of the alleged transfer of the company's sole immovable property to the associated company through book entries against an asserted loan. - HELD THAT: - The alleged transferee was not a party to the memorandum relied upon for the transaction, and the amount advanced by it was reflected as an unsecured interest-free loan rather than consideration for acquisition of the property. A book entry could not effect transfer of immovable property in the absence of a registered conveyance as required by law; the contemporaneous records also showed rental income from the alleged transferee. [Paras 20, 21, 22, 23]

The purported transfer of the immovable property was invalid and could not confer title on the alleged transferee.

Oppression and mismanagement through manipulation of corporate records - Whether the unilateral retrospective alteration of statutory records and the purported transfer of the company's shareholding and sole asset constituted oppression and mismanagement. - HELD THAT: - The retrospective filings were made after the contemporaneous statutory records had consistently shown the respondents as shareholders and did not cure the absence of valid instruments for transfer of shares or property. The attempted usurpation of the entire shareholding and removal of the company's sole asset through a book entry, while rent continued to be received in respect of that asset, directly prejudiced the members and amounted to continuing oppression and mismanagement. [Paras 21, 23, 25, 26]

The appellate tribunal found no reason to interfere with the finding of oppression and mismanagement.

Final Conclusion: The appeal was dismissed. The declarations that the respondents remained the company's shareholders and that the purported transfers of shares and immovable property were invalid were upheld.

Execution and operation of the sentences imposed for contravention of securities-law requirements - HC [2026 (7) TMI 1606 - BOMBAY HIGH COURT] held that,execution and operation of the sentences were suspended pending the appeals, subject to furnishing bonds and depositing part of the fine. - HELD THAT:- The special leave petitions were dismissed; time for making the deposit was extended by one month, and the petitioners were not required to surrender until then.

Execution and operation of the sentences imposed for contravention of securities-law requirements - HELD THAT:- Though the sentence is that of fine only, yet, in the light of the fact that, prior to 2002, the offence punishable under Section 24(1) of the Act, 1992, entailed punishment which may extend to one year or fine or with both, deserves to be taken into account. Prima facie, the Court finds that, in the year 1998, when the alleged violation of the provisions contained in Section 11(3) of the Act, 1992 occurred, sub-section (2) of Section 24 prescribed greater punishment of imprisonment for three years or with fine, which shall not be less than Rs. 2,000/-, but which may extend to Rs. 10,000/- or with both. It is well recognized that the amount of fine where there is no maximum limit prescribed, cannot be exorbitant.

Execution and operation of the sentences were suspended pending the appeals, subject to furnishing bonds and depositing part of the fine.

Inherent jurisdiction despite revisional remedy - Availability of revision under Section 397 - Mandatory opportunity notice under FERA - failure to serve a meaningful opportunity notice under the proviso to Section 61(2) -Right to speedy trial - prolonged prosecution - Abuse of Process - violation of principle of natural justice - Audi Alteram Partem - Balancing Test

Maintainability of a petition invoking the inherent jurisdiction to quash criminal complaints and summoning orders where a revisional remedy is available - HELD THAT: - The law on the interplay between Section 397 and Section 482 of the CrPC, respectively, as laid down in the decisions discussed above, is well settled and admits of little ambiguity. The availability of an alternative remedy of revision under Section 397 of the CrPC does not, by itself, operate as a bar to the exercise of the inherent jurisdiction of the High Court under Section 482 of the CrPC. The two provisions operate in distinct spheres, and the mere existence of a revisional remedy cannot be treated as ousting the jurisdiction preserved under Section 482, which is available wherever there is an abuse of the process of the court or where the ends of justice so require, the only limitation upon its exercise being one of self-restraint. Nor is the nomenclature of a petition determinative, and a High Court, in order to do substantive justice, may treat a petition filed under Section 482 as one under Section 397, and vice versa, rather than non-suiting a party on a hyper-technical ground of maintainability.

A party cannot be non-suited merely because it invoked Section 482 rather than revision, and the High Court may, where appropriate, treat a petition under one provision as a petition under the other. [Paras 14, 15]

The High Court erred in treating the availability of revision as a threshold bar to the appellants' quashing petitions.

Validity of cognizance and summons for the alleged unauthorised foreign-exchange remittances without proof of service of the statutory opportunity notice - HELD THAT: - Service of an opportunity notice under the proviso to Section 61(2) of FERA is a mandatory and meaningful precondition for institution of a complaint under Sections 56 or 57. The prosecution must establish issuance and service of the notice in the prescribed manner, and the Magistrate must be satisfied of such compliance before taking cognizance. The complaints neither disclosed the date of the alleged notice nor contained a copy or proof of its service; the Magistrate nevertheless took cognizance without recording satisfaction regarding this mandatory requirement. [Paras 21, 22, 23]

Non-compliance with the mandatory opportunity-notice requirement rendered the cognizance and summoning order unsustainable.

Article 21 right to speedy trial - Prosecution-caused delay - Whether the prolonged pendency of the FERA prosecution at the summons stage violated the appellants' right to a speedy trial ? - HELD THAT: - The law on the right to a speedy trial under Article 21 of the Constitution was authoritatively laid down by a Constitution Bench of this Court in Abdul Rehman Antulay [1991 (12) TMI 274 - SUPREME COURT]. This Court held that although the Constitution does not expressly declare a right to speedy trial, yet such a right is implicit in the fair, just and reasonable procedure guaranteed under Article 21, and is a right of the accused, notwithstanding that it also serves the public and social interest in a prompt determination of guilt or innocence.

This is not a case where the delay can be laid at the doorstep of the appellants, nor is it a case of mere passive lapse of time, rather, the record discloses a chronicle of persistent and unexplained inaction on the part of the respondent - complainant itself, spanning virtually the entire life of these proceedings. The complaint came to be instituted on 30.05.2002 for a transaction said to have taken place as far back as in 1991-1992, unaccompanied by a single supporting document, and cognizance was taken and summons issued on that very date. Yet, remarkably, the summons so issued were not even collected by the respondent - complainant for service for almost 2 years thereafter, and it was only sometime in 2004 that the respondent - complainant first came forward to collect the summons.

The right to speedy trial extends to every stage of criminal proceedings. Its infringement requires a balancing assessment of the circumstances, with primary consideration to responsibility for delay; mere lapse of time is not conclusive. Here, the prolonged failure to collect and serve summons, pursue coercive process, or act despite time-bound directions was attributable to the complainant and reflected persistent unexplained inaction rather than systemic delay or conduct of the appellants.

It is pertinent to mention that 23-years have now elapsed since the institution of the complaint, and over three decades since the transaction it concerns, without the trial having progressed beyond the stage of service of summons. To permit the respondent-complainant to continue in such circumstances would be to allow the appellants to remain, in the words of this Court in Kailash Chandra Kapri [2026 (4) TMI 1898 - SUPREME COURT], in a state of suspended animation indefinitely.

The continuation of the prosecution would violate the appellants' right to speedy trial and was liable to be brought to an end.

Final Conclusion: The impugned High Court order was set aside. The FERA complaints and the summoning order were quashed as against the appellants.

Anticipatory bail despite proclamation proceedings - Service of PMLA summons on accused residing abroad - Twin conditions for bail under the Prevention of Money Laundering Act - Presumption of Innocence - Deemed Custody - Estoppel

Entitlement to anticipatory bail where the applicants had been declared Fugitive Economic Offenders after summons and warrants were issued at their Indian address despite the investigating agency's knowledge that they were residing in Australia - HELD THAT: - It has rightly been pointed out by the learned senior counsel appearing for the applicants that despite knowing the fact that both the applicants are residing in Australia, no steps have been taken by the Investigating Agency to get the applicants deported, as, the Investigating Agency was aware about the particulars of their passports. However, according to the learned senior counsel for the applicants, the ED, knowingly, has issued the notices, under Section 50 of the PMLA, against the applicants, on the address, as mentioned in the summons.

So far as the legal proposition, qua the fact that before granting the relief, as sought in the applications, it is incumbent upon the Court to record the findings, under Section 45 of the PMLA, is concerned, if the facts and circumstance of the present case, as discussed above, are seen in the light of the decision of the Hon’ble Supreme Court in Vijay Madanlal Choudhary’s case [2022 (7) TMI 1316 - SUPREME COURT (LB)], then, there is no legal hesitation for this Court to grant the relief, as claimed in the applications.

A proclamation does not create an absolute bar to consideration of anticipatory bail; the circumstances, nature of the offence and background of the proclamation require examination. The investigating agency knew that the applicants were residing abroad, yet repeatedly issued summons at their Indian address and did not take steps for service outside India under the applicable procedure. Such service could not amount to substantial compliance or give rise to a presumption of due service. The proceedings for proclamation, being intended to secure the applicants' appearance, could not by themselves defeat their undertaking to return and face the proceedings. [Paras 35, 39, 40, 44, 45]

The declaration as Fugitive Economic Offenders and the related proclamation proceedings did not disentitle the applicants to anticipatory bail.

Twin conditions for bail under the Prevention of Money Laundering Act - Custodial interrogation after filing of PMLA complaint - HELD THAT: - The relief, for which the applicants are otherwise entitled to, cannot be denied to them, in view of the decision of the Constitution Bench of the Hon’ble Supreme Court in Gurbaksh Singh Sibbia & Others [1980 (4) TMI 295 - SUPREME COURT],wherein, it has been held that a person, having the protection under Section 438 CrPC (482 of the BNSS) is deemed to have surrendered himself, if, a discovery is to be made; merely, the protection, not to take any coercive action, does not preclude the investigating agency to get the recovery effected from the applicant.

The statutory twin conditions restrict but do not absolutely prohibit bail; the Court is required to form a view on broad probabilities from the available material without conducting a detailed evaluation of guilt. On the allegations and circumstances, the Court found reasonable grounds to believe that the applicants satisfied those conditions and would not commit an offence while on bail. Further investigation could not alone justify refusal of relief. After filing of the complaint, the investigating agency could seek custody for further investigation only by applying to the Special Court, which must decide the need for custodial interrogation after hearing the accused. [Paras 47, 48, 51, 52, 53]

Anticipatory bail was granted subject to conditions requiring cooperation with investigation, non-departure from India without permission, non-interference with witnesses, regular appearance and periodic disclosure of involvement in any other case.

Final Conclusion: The anticipatory bail applications were allowed, subject to conditions designed to secure the applicants' cooperation with the investigation and attendance before the competent court. The observations were confined to disposal of the bail applications and were not expressions on the merits of the prosecution case.

Proceeds of crime-foundational nexus with scheduled offence - Regular bail under PMLA-prolonged pre-trial incarceration - Relevancy of Post-arrest statements recorded under Section 50 - Twin Conditions for Bail - Dominion and Control - Privilege Against Self-Incrimination - Prolonged Pre-trial Incarceration - Right to Personal Liberty

Proceeds of crime-property derived from accomplished scheduled offence - Dominion and control over proceeds of crime - HELD THAT: - Property can be treated as proceeds of crime only when it is derived or obtained as a result of an already accomplished scheduled offence. Dominion, control, possession or use becomes relevant only after that foundational requirement is established. The payments alleged to have been received as remuneration for training, largely before the association was declared unlawful and without a charge-sheet against either applicant in the predicate offence, were not prima facie shown to have been derived from an accomplished scheduled offence. Material suggesting that the training may have involved weapons training could require examination at trial, but did not establish that the remuneration represented proceeds of crime. [Paras 35, 36, 37, 38, 44]

The foundational link required to characterise the credited sums as proceeds of crime was prima facie absent.

Regular bail under PMLA-prolonged incarceration and delay in trial-Parity in grant of bail - Triple test for bail -HELD THAT: - The Supreme Court, in Prem Prakash [2024 (8) TMI 1412 - SUPREME COURT], has, in the same vein, cautioned that “keeping persons behind the bars for unlimited periods of time in the hope of speedy completion of trial would deprive the fundamental right of persons under Article 21 of the Constitution of India and that prolonged incarceration before being pronounced guilty ought not to be permitted to become the punishment without trial.”

Statutory restrictions on bail cannot justify indefinite pre-trial detention where trial is unlikely to conclude within a reasonable time. The applicants had remained in custody for over two years and three months; charges had not been framed against them, and the voluminous prosecution material and numerous witnesses made an early trial unlikely. The applicants were not shown to be flight risks, the documentary and digital material had been seized, and no substantive apprehension of witness influence was established. Their role was not prima facie graver than that of co-accused already enlarged on bail, warranting parity. [Paras 48, 49, 50, 51, 52]

The applicants were granted regular bail, subject to the conditions imposed.

Final Conclusion: The applicants were released on regular bail subject to conditions. The observations were held to be prima facie and not to influence the trial.

Money laundering-scope of prosecution based on scheduled offence and proceeds of crime - Discharge-prima facie case and prohibition on mini-trial - Appointment of expert-fresh valuation report at trial stage

Challenged to the money-laundering prosecution on alleged deficiencies in the investigation of the predicate offences - HELD THAT: - The inquiry under the Prevention of Money Laundering Act is confined to whether a scheduled offence exists and whether its commission generated proceeds of crime. An offence of money laundering requires criminal activity specified in the Schedule, generation of proceeds of crime from that activity, and projection of those proceeds as untainted; it also covers knowing assistance in processes connected with such proceeds. Grounds bearing upon discharge in the predicate offences cannot be adjudicated in the prosecution for money laundering. [Paras 15, 16]

The challenge founded on the legality and alleged investigative deficiencies of the predicate offences was rejected.

Discharge-prima facie case and prohibition on mini-trial - Discharge of a working partner from the money-laundering prosecution on the plea of non-involvement in the quarrying business and prior retirement from the partnership. - HELD THAT: - At the stage of discharge, the Court is required only to determine whether the prosecution material discloses a prima facie case; it cannot conduct a mini-trial. Strong suspicion regarding the accused's role is sufficient for framing charge. The material indicating that the petitioner held a share in the firm, was a working partner and had an interest in its affairs while illegal quarrying allegedly generated wrongful gain justified trial. His actual participation, retirement from the firm, and the source of the attached property are matters of evidence and defence at trial. [Paras 18, 19, 20]

The refusal to discharge the petitioner was upheld.

Appointment of expert-fresh valuation report at trial stage - Appointment of another expert to inspect granite waste and furnish a fresh report on the quantification of loss. - HELD THAT: - The valuation report had been prepared by authorised officials of the Geology and Mining Department. Any flaw in that report is a matter of evidence, and the prosecution must stand or fall on the report it relies upon; the trial court is not required to appoint another expert to obtain a fresh report. Further, quantification of loss principally concerns the predicate offence and is not the main focus of the money-laundering complaint. [Paras 21]

The request for appointment of an expert was rightly rejected.

Final Conclusion: The criminal revision petitions were dismissed, affirming the rejection of the applications for discharge and for appointment of an expert. The trial court was directed to complete the trial expeditiously.

Provisional attachment of proceeds of crime - Attachment of property of equivalent value - Statutory protection of pension, gratuity and provident fund - Compliance with principles of natural justice - Reasons to Believe - Burden of Proof - Audi Alteram Partem

Scheduled offence and proceeds of crime - TET-2014 recruitment irregularities - HELD THAT: - The Tribunal found that the first appellant was charge-sheeted, charges had been framed and his discharge application had been dismissed. The High Court judgment relied upon concerned cancellation of appointments made under the 2016 Recruitment Rules, whereas the present allegations concerned illegal selection in TET-2014; it did not exonerate the appellants. The existence of cognizance and framing of charge also negatived the plea that no predicate offence subsisted. [Paras 46, 55, 57, 67]

The challenge founded on absence of a scheduled offence and alleged exoneration was rejected.

Reasons to believe for provisional attachment - Burden to explain source of attached property - Layering of proceeds of crime through bank accounts - HELD THAT: - The Tribunal held that the case was not based merely on the existence of multiple bank accounts, but on material indicating cash deposits, routing and layering of funds through accounts, fixed deposits, shares and other investments. The appellants failed to disclose the source of cash deposits despite the statutory burden under the adjudication provisions. Material concerning the list of candidates and collection of money through intermediaries supported the finding that the accounts and investments represented proceeds of crime. [Paras 60, 62, 63, 65]

The provisional attachment of the accounts and investments was sustained, subject to the limited relief granted for protected retirement benefits.

Principles of natural justice in attachment adjudication - HELD THAT: - The Tribunal found that the relied-upon documents had been supplied and that the appellants had filed a detailed reply and effectively contested the notice. No violation of principles of natural justice was therefore established. [Paras 66]

The plea of denial of a meaningful opportunity was rejected.

Attachment of pension, gratuity and provident fund - Statutory exemption from attachment - The attachment of accounts containing pension, gratuity, provident fund, employee's provident fund, public provident fund, salary and legislative honorarium. - HELD THAT: - Although the Tribunal found that the accounts did not contain only retirement benefits and that substantial proceeds of crime were alleged, it directed release of amounts representing pension, gratuity and provident fund. It declined protection for legislative honorarium, salary and other amounts. The assertion that public provident fund deposits came from salary and pension withdrawals was unsupported by proof. [Paras 68, 69]

Attachment was modified only to require release of pension, gratuity and provident fund amounts; it was maintained for the remaining amounts.

Attachment of property of equivalent value - Pre-existing untainted property -HELD THAT: - The law on the issue has been settled by the Punjab and Haryana High Court in the case of Dilbag Singh @ Dilbag Sandhu [2024 (11) TMI 833 - PUNJAB AND HARYANA HIGH COURT]. The Tribunal held that the definition of proceeds of crime encompasses the value of property derived from criminal activity. Where the actual proceeds are unavailable, vanished or laundered, property of equivalent value may be attached, including property acquired before the crime. The attachment was also below the alleged value of proceeds of crime. [Paras 70]

The attachment of pre-existing property as property of equivalent value was upheld.

Proceeds of crime disguised as consultancy and online-class receipts - Attachment of proprietary business accounts - HELD THAT: - The Tribunal found that the investigation disclosed no effective consultancy services and no substantial online classes corresponding to the collections. The uniform payments by institutions and students under the regulatory influence of the Board, the absence of prior experience of the entities, and the evidence of coercive collection supported the conclusion that the entities were used to collect and project proceeds of crime as legitimate receipts. [Paras 72]

The attachment of the proprietary concerns' accounts was sustained.

Joint bank account holding proceeds of crime - HELD THAT: - The Tribunal found that the joint account, including one maintained with a deceased co-holder shown as being out of station, received substantial deposits which were used for fixed deposits and investments for family members. In the absence of any explanation or material establishing the source of the cash deposits, the amount was held to be proceeds of crime. [Paras 73]

The attachment of the joint-account funds was upheld.

Final Conclusion: The appeals were disposed of by sustaining the confirmation of provisional attachment in all respects except for release of amounts representing pension, gratuity and provident fund. The attachment of all other properties and amounts was maintained.

Attachment of property of equivalent value under the Prevention of Money Laundering Act - Burden of proof regarding source of property in money-laundering proceedings -HELD THAT: - The expression "proceeds of crime" encompasses not only tainted property derived from scheduled criminal activity but also property of equivalent value where the actual proceeds are not traceable or available. Consequently, property acquired before the crime period may be attached for equivalent value. The appellant, on whom the statutory burden rested, failed to substantiate the claimed lawful sources for the acquisition of the attached properties and for repayment of loans; the explanations regarding cash deposits, bank credits and transfers did not establish their source or utilisation. [Paras 37, 38, 39, 40, 41]

The confirmation of the provisional attachment was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal found no error in the confirmation of the provisional attachment, as the attached properties could be proceeded against for equivalent value and the appellant failed to discharge the burden of proving their legitimate source. The appeal was dismissed.

Service tax exemption for SEZ authorised operations - Overriding effect of the Special Economic Zones Act - Extended limitation for interpretational dispute - Delegated legislation cannot curtail statutory benefit - Authorised operations of Special Economic Zone unit

Cargo handling services physically performed outside a Special Economic Zone but received and utilised by an SEZ unit for authorised operations - Entitlement to exemption under Section 26(1) (e) of the Special Economic Zones Act, 2005 - HELD THAT: - Section 26(1) (e) of the Special Economic Zones Act grants exemption from Service Tax in respect of taxable services provided to a Developer or Unit for carrying on authorized operations. Rule 31 of the SEZ Rules, 2006 gives effect to the said statutory exemption. Significantly, neither Section 26 (1) (e) nor Rule 31 stipulates that the Service should necessarily be performed within the territorial boundary of the Special Economic Zone. The emphasis of the statute is upon the identity of the recipient and the purpose for which the service is utilized, namely, authorized operations.

Section 51 of the SEZ Act further declares that the provisions of the Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

The issue now stands concluded by the judgment of the Hon’ble Supreme Court in Arkay Logistics Ltd. [2024 (4) TMI 60 - SC ORDER]. The Hon’ble Supreme Court affirmed the decision of Tribunal Ahmadabad [2023 (4) TMI 213 - CESTAT AHMEDABAD] and held that exemption under Section 26 of the SEZ Act cannot be denied merely because the services were performed outside the physical limits of the SEZ, once it is established that such services were received and utilized by the SEZ unit for its authorized operations. The Hon’ble Supreme Court recognized the overriding effects of Section 51 of the SEZ Act and held that delegated notifications issued under the Finance Act cannot whittle down the statutory exemption confirmed by Parliament.

The cargo handling services were exempt, and the service tax demand was unsustainable.

Extended limitation for interpretational dispute - Suppression with intent to evade service tax - HELD THAT: - The dispute concerned the interplay between the SEZ Act and the Finance Act and was accepted as involving reasonable cause for deletion of penalty. Fraud, suppression or wilful misstatement could not simultaneously be alleged for invoking the extended period, particularly when the transactions were recorded in the appellant's books and came to light during audit; audit detection alone does not establish suppression with intent to evade tax. [Paras 15]

The demand was independently barred by limitation.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief. The service tax demand failed both on the substantive SEZ exemption and on limitation.

Employer-employee relationship of Managing Director and Whole-time Directors - Service tax exclusion for employment remuneration - Taxability under reverse charge of remuneration paid to the Managing Director and Whole-time Directors, claimed to be salary arising from employment - HELD THAT: - This Tribunal in Amara Raja Batteries Ltd. [2024 (6) TMI 1331 - CESTAT HYDERABAD] has categorically held that remuneration subjected to TDS under Section 192 represents salary and that a Managing Director or Whole-time Director may simultaneously be a promoter and yet continue to remain the employee of the company. The Tribunal further held that the ratio contained in the CBIC Circular issued under GST is equally applicable while deciding disputes under the Service Tax regime.

The Hon’ble Supreme Court in Ram Pershad [1972 (8) TMI 61 - SUPREME COURT], held that a director can simultaneously function an employee if the terms of appointment establish a relationship of master and servant. The articles of association, Board Resolutions and Statutory framework governing the appointment of the person Managing Director and Whole-time Directors satisfy these requirements.

Services rendered by an employee to an employer in the course of employment are excluded from the definition of service; consequently, reverse-charge liability does not arise once the employer-employee relationship is established. The appointments made under the Companies Act, remuneration as salary and employment benefits, deduction of tax under section 192, issuance of Form-16 and provident-fund contributions cumulatively established that the Managing Director and Whole-time Directors were employees. The separate treatment of remuneration paid to an Independent Director as professional remuneration further supported the distinction. A director may also be an employee where the terms of appointment establish a master-servant relationship; promoter or shareholder status does not displace that relationship. In the absence of contrary evidence, the indirect-tax authorities could not adopt a position inconsistent with the accepted treatment of the same remuneration as salary. [Paras 11, 12, 13, 14, 15]

The remuneration constituted salary paid in the course of employment and was outside the scope of taxable service; no service tax was payable under reverse charge.

Final Conclusion: The Revenue's appeal was dismissed. The order dropping the demand of service tax under reverse charge on remuneration paid to the Managing Director and Whole-time Directors was sustained.

Transfer of right to use goods as deemed sale - Supply of tangible goods for use - Lease rentals received for automated colour dispensing equipment leased to dealers/distributors were liable to service tax as supply of tangible goods for use. - HELD THAT: - The Co-ordinate Bench of this Tribunal has in case of Arval India Pvt. Ltd.[2020 (9) TMI 125 - CESTAT MUMBAI] had concluded in respect of similar operating lease agreement, that the said agreement was that of 'deemed sale'.

The lease agreement identified the equipment, provided for its delivery to the lessee, and conferred upon the lessee the legal right to use and retain possession and control of it during the stipulated lease period. The lessor could not transfer the same equipment to another person during that period; inspection, repair and restrictions on use did not detract from the lessee's effective control. As all the criteria for transfer of the right to use goods stood fulfilled, the transaction constituted a deemed sale taxable under VAT and could not be subjected to service tax as supply of tangible goods for use. [Paras 7, 8]

The confirmed service-tax demand for the post-negative-list period, with consequential interest and penalty, was held unsustainable and the impugned order was set aside to that extent.

Final Conclusion: The appeal was allowed. The lease of tinting equipment was held to be a deemed sale involving transfer of the right to use goods, and the post-negative-list service-tax demand, interest and penalty were set aside.

Despatch money as contractual incentive - Consideration for taxable service - Port services - Direct nexus between service and consideration - Independent service agreement - Privity of contract - Contractual incentive - Contractual price adjustment - Artificial vivisection of contract

Taxability of despatch money received under FOB export contracts for completion of cargo loading before expiry of the stipulated laytime - HELD THAT: - Merely because efficient performance leads to financial incentive, it cannot automatically be concluded that a taxable service has been rendered. Consideration under service tax law must be for a service rendered to another person.

The Larger Bench in the case of Bhayana Builders (P) Ltd. [2013 (9) TMI 294 - CESTAT NEW DELHI-LB], explained that only amounts having direct nexus with taxable service can form part of taxable value. Similarly, in the case of Kafila Hospitality & Travels Pvt Ltd.[2021 (3) TMI 773 - CESTAT NEW DELHI (LB)], it was held that incentives linked to overall performance cannot automatically be treated as taxable consideration.

Even this Bench in the case of M/s Rashtriya Ispat Nigam Ltd. [2026 (3) TMI 751 - CESTAT HYDERABAD], held that nature of demurrage, liquidity damages, etc., cannot be subjected to service tax as they are conditions of the contract and not a consideration for executing the contract.

Despatch money and demurrage arose reciprocally from the same contractual mechanism governing loading time. Loading operations were incidental to performance of the export sale contract, and no separate agreement or privity existed for provision of a quick-loading service to the vessel owner. The despatch amount was therefore a contractual incentive or commercial adjustment, not consideration for port services. [Paras 16, 18, 19, 20]

Despatch money was held not liable to service tax; consequently, the demands founded on its treatment as consideration for taxable service were unsustainable.

Consequential interest and penalties - HELD THAT: - As the principal demand failed on merits, the statutory interest and penalties imposed consequentially could not survive. [Paras 21, 22]

The interest and penalties were set aside.

Final Conclusion: The four appeals were allowed. The service-tax demands on despatch money, together with consequential interest and penalties, were set aside.

Taxability of liaison charges under Business Auxiliary Service - Validity of show cause notice issued without identifying the applicable limb of the definition of Business Auxiliary Service - service-tax demand - Burden of Proof

Validity of the show cause notice proposing service tax on liaison charges under Business Auxiliary Service without identifying the applicable statutory limb - HELD THAT: - In the case of Swapnil Asnodkar [2018 (1) TMI 266 - CESTAT MUMBAI], it was held that without satisfying exact business auxiliary service clause, demand is vague and unenforceable.

Business Auxiliary Service is structurally defined through separate taxable limbs and cannot be invoked generically. The notice merely reproduced the definition without stating whether the alleged activity involved promotion or marketing, service on behalf of a client, or an incidental or auxiliary activity relatable to a specified limb. Since a show cause notice is the foundation of adjudication, failure to communicate the precise statutory charge deprived the appellant of an effective opportunity to defend and rendered the notice incurably vague. [Paras 14, 15, 16, 17, 19]

The defective show cause notice could not sustain the adjudication or the demand.

Taxability of liaison charges - Burden of proving Business Auxiliary Service - HELD THAT: - Revenue produced no evidence that the appellant promoted a client's business or services, procured customers, provided customer care, acted as a commission agent, or performed any other taxable Business Auxiliary Service. Mere collection of liaison charges or reimbursement could not, without cogent evidence of a taxable activity, be presumed to constitute Business Auxiliary Service; the burden to establish such activity lay on Revenue. [Paras 18, 19]

The liaison charges were not established to be taxable as Business Auxiliary Service, and the demand of service tax, interest and penalties was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. The service tax demand, interest and penalties failed both because the show cause notice was vague and because the alleged taxable service was not proved.

Service tax on unproved non-monetary consideration - Adjustment of excess service tax paid - Taxability of discounts and bad debts recovered - Penalty in absence of fraud, suppression or wilful misstatement

Service tax on unproved non-monetary consideration in the form of vouchers, coupons, hotel stays and air tickets - HELD THAT: - During the relevant period, service tax was payable upon receipt of consideration. Revenue produced no evidence establishing that the assessee received any non-monetary consideration, while certificates of service recipients confirmed that no amount beyond the invoiced consideration had been paid. A demand founded on a notional valuation without proof of receipt was therefore unsustainable. [Paras 8, 10]

The demand on alleged non-monetary consideration was set aside.

Adjustment of excess service tax paid - difference between the balance-sheet figures and ST-3 returns for 2008-09 - HELD THAT: - The assessee had explained the discrepancy and had paid excess service tax during 2009-10. The excess payment was directed to be adjusted against the demand raised for the difference. [Paras 11]

The demand based on the balance-sheet and ST-3 return difference was set aside after adjustment of the excess tax paid.

Service tax on rental income - Taxability of discounts on advertising-space transactions - Service tax on bad debts recovered - HELD THAT: - Tax on the rental income had already been paid. Discounts received by the assessee in relation to taking advertising hoardings on rent did not constitute consideration for a service provided by it and were not taxable. The assessee conceded liability to service tax and interest on bad debts recovered. [Paras 11]

The rental-income demand stood paid, no service tax was payable on discounts received, and service tax with interest remained payable on bad debts recovered.

Penalty in absence of fraud, suppression or wilful misstatement - HELD THAT: - In the facts of the case, the Tribunal found that penalty was not imposable. [Paras 11]

No penalty was imposable on the assessee.

Final Conclusion: The assessee's appeal was partly allowed and Revenue's appeal was dismissed. The principal demand on alleged non-monetary consideration and the demand based on the return discrepancy were set aside, while the conceded liability on bad debts recovered remained payable with interest.

Service tax on mining rights granted by Government - Reverse charge liability on royalty payments - Consideration of mining lease agreements - HELD THAT: - The mining lease agreements, on which the claim that the grant of mining rights preceded 01.04.2016 rested, had not been produced before either the adjudicating or first appellate authority. Their examination was necessary to determine the applicability of the law governing services provided by Government before the amendment to the negative list. The Tribunal directed that the issue be decided after considering the lease agreements and in conformity with the Tribunal decisions cited by the appellant. [Paras 1, 3]

The impugned order confirming demand, interest and penalty was set aside and the matter was remanded to the adjudicating authority for fresh decision in accordance with law.

Final Conclusion: The appeal was allowed by way of remand. The adjudicating authority shall reconsider the reverse-charge demand on royalty after examining the mining lease agreements and applying the law laid down by the Tribunal.

Penalty on co-noticees after settlement under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT: - The Tribunal followed the coordinate Bench decision in the case of Geeta N. Savla [2025 (5) TMI 2314 - CESTAT MUMBAI] holding that settlement of the demand by the main noticee under the Scheme results in waiver of penalty not only for that noticee but also for co-noticees. The penalty proceedings against co-noticees therefore do not survive, notwithstanding that they had not themselves filed declarations under the Scheme. [Paras 6, 7, 8]

The penalties imposed on the appellants were unsustainable and the impugned appellate orders were set aside.

Final Conclusion: The appeals were allowed and the penalties on the co-noticees were set aside, as the main noticee had settled the underlying demand under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Maintainability of High Court appeal - Finality of finding on manufacture and excisability - Revenue neutrality and CENVAT credit on CVD debited through DEPB scrips - Extended limitation for suppression of excisable activity - Penalty and interest for evasion of central excise duty - Maintainability of High Court appeal - Burden of Proof

Maintainability of the Revenue's appeal where the assessee had not pursued its challenge to the finding on manufacture and excisability - HELD THAT: - The assessee had raised manufacture and excisability before the original authority but, before the Tribunal, confined its submissions to revenue neutrality. The finding on manufacture and excisability consequently attained finality, and revenue neutrality itself proceeded on the premise that the goods were excisable. The statutory bar concerning determination of rate of duty was therefore inapplicable. [Paras 10]

The appeal was maintainable.

Revenue neutrality and CENVAT credit on CVD debited through DEPB scrips - Burden to establish available CENVAT credit - HELD THAT: - Up to 31.08.2004, CENVAT credit was unavailable where duty was discharged merely by debit in DEPB scrips rather than in cash; the value represented by a used DEPB scrip stood extinguished. For the subsequent period, although the changed Foreign Trade Policy permitted credit adjustment, revenue neutrality could not be accepted without a factual determination of the quantum of credit available. The burden lay on the assessee, which asserted revenue neutrality, to establish through supporting material that the available credit equalled or exceeded the duty demand. [Paras 16, 19, 20, 21]

The Tribunal's finding of revenue neutrality was held perverse and was set aside.

Extended limitation for suppression of excisable activity - HELD THAT: - The Tribunal had treated the earlier demand as time-barred without furnishing reasons to displace the original authority's factual finding of deliberate suppression with intent to evade duty and absence of bona fide belief. In the absence of a justified basis to overturn those findings, invocation of the extended period under Section 11A was sustained. [Paras 22, 24]

The Tribunal's finding that the demand for the period prior to 31.08.2004 was barred by limitation was set aside.

Penalty and interest for evasion of central excise duty - HELD THAT: - The original authority's findings that the assessee's positive acts were directed to evasion of excise duty, and that the applicable Central Excise Rules had been contravened, were factual findings based on the material on record. No perversity in those findings was established. [Paras 25]

The penalty and interest imposed by the original authority called for no interference.

Final Conclusion: The appeal was allowed and the substantial questions of law were answered in favour of the Revenue. The Tribunal's conclusions on revenue neutrality and limitation were held unsustainable, while the original authority's findings on penalty and interest were not interfered with.

Penalty where duty and interest are paid before show cause notice-Revenue neutrality and reverse-charge service tax - Late filing of ST-3 returns as civil liability

Penalty where duty and interest are paid before show cause notice - HELD THAT: - Payment of the due central excise duty or service tax, with interest, before issuance of the show cause notice attracted the statutory consequence that no penalty was payable. The lower authorities' confirmation of penalties despite such pre-notice payment was contrary to the statutory provisions. [Paras 4]

The penalties imposed for short-paid central excise duty and service tax on legal consultancy service were set aside.

Revenue neutrality and reverse-charge service tax - Penalty for non-payment of service tax under reverse charge - HELD THAT: - Revenue neutrality does not extinguish a statutory tax liability; it restricts invocation of the extended period of limitation. Since the show cause notice was issued within the normal limitation period, the reverse-charge tax demand remained sustainable. However, where the tax paid under reverse charge was admissible as Cenvat credit, the revenue-neutral situation negatived an intention to evade payment, a necessary condition for penalty under section 78. [Paras 4]

The demand of service tax and interest on goods transport agency services was upheld, but the corresponding penalty under section 78 was set aside.

Late filing of ST-3 returns as civil liability - HELD THAT: - The levy for late filing or non-filing of returns is in the nature of a fee or civil liability; proof of mens rea is not required for such default. [Paras 4]

The penalties for delayed filing and non-filing of ST-3 returns were upheld.

Final Conclusion: The appeal was partly allowed. The penalties for short-paid central excise duty and reverse-charge service tax were set aside, while the tax demands, interest and penalties for ST-3 return defaults were sustained.

Trading as exempted service for reversal of common input service credit - Valuation of trading activity in exempted turnover - Extended period for short reversal of Cenvat credit - Penalty for failure to reverse common credit

Trading in bought-out goods and its value for computation of reversal of common input service credit under Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT: - The Hyderabad Bench in Blue Star Ltd. [2019 (8) TMI 429 - CESTAT HYDERABAD], examined an identical issue. The Tribunal categorically held that after insertion of the Explanation to Rule 2(e), the trading constitutes an exempted service for the purposes of Rule 6. It was further held that Explanation (3) to Rule 6 only clarifies already existing legal position and that proportionate reversal of common credit was mandatory.

The Madras High Court in M/s Ruchika Global Interlinks [2017 (6) TMI 635 - MADRAS HIGH COURT], examined the scope of amendment introducing trading within exempted services. The High Court held that the Explanation inserted the Rule 2(e) is clarifictory in nature. The Court further observed that even prior to the amendment, the legislative intention was to exclude common credit relatable to trading activities and the Explanations merely removed doubts. This authoritative pronouncement of the High Court fortifies the revenue’s contention that the amendment cannot be ignored while determining reversal under Rule 6.

The deeming fiction introduced in the definition of exempted service specifically includes trading for the limited purpose of Rule 6. Consequently, though no credit had been taken on the bought-out goods themselves, common input service credit attributable to the trading activity could not be retained. The value of that activity was required to be determined under the prescribed statutory formula and included in exempted turnover; the pre-amendment view that trading was not a service could not prevail over the amended Rules. [Paras 19, 20, 22, 23, 26]

The differential common credit was correctly held liable to reversal.

Extended period for short reversal of Cenvat credit - HELD THAT: - The omission to include trading value determined under the statutory formula resulted in short reversal of common credit. The extended period was therefore held to have been validly invoked. [Paras 24, 26]

The demand with applicable interest was sustained for the extended period.

Penalty for failure to reverse common credit - HELD THAT: - As the appellant failed to reverse the correct common credit despite the statutory provisions and the Board circular, penalty under the applicable provisions was held sustainable. The statutory benefit of reduced penalty, if already extended, remained available subject to fulfilment of the prescribed conditions. [Paras 25, 26]

The penalty was sustained, subject to the available statutory benefit of reduced penalty.

Final Conclusion: The appeal was dismissed. The demand for short reversal of common credit, interest, invocation of the extended period and penalty were affirmed.

Assessable value under FOR destination contracts - Place of removal based on transfer of ownership and risk - Extended limitation for suppression of material contractual terms - Penalty for undervaluation of excisable goods

FOR destination sale of PSCC poles - Inclusion of freight and insurance in assessable value - Place of removal at buyer's premises - HELD THAT: - The contract expressly provides that ownership remains with supplier till delivery at buyer’s premises in good condition. Thus, sale did not conclude at factory gate. Sale was completed only upon delivery at destination. Therefore, buyer’s premises constitute place of removal.

The issue is no longer res integra. In the case of Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT], the Hon’ble Supreme Court held that where delivery is on FOR destination basis and ownership remains with seller till destination, freight and insurance are includable in the assessable value. Similarly, in the case of Emco Ltd. [2015 (8) TMI 200 - SUPREME COURT], the Hon’ble Supreme Court emphasized that determination of place of removal depends on contractual terms regarding transfer of title in risk. The Larger Bench in the case of The Ramco Cements Ltd [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], reiterated the same principle. This Bench in the case of Schneider Electric India Pvt Ltd.[2025 (3) TMI 1484 - CESTAT HYDERABAD], has followed the Hon’ble Supreme Court and held that freight is includable when sale occurs at destination.

The sale, therefore, concluded at destination and not at the factory gate, making the buyer's premises the place of removal. Where the factory is not the place of removal, transportation cost from the factory to that place is not excludable; consequently, the destination-related charges formed part of the assessable value.

Freight, insurance, loading and unloading charges up to the buyer's premises were rightly included in the assessable value.

Extended limitation for non-disclosure of FOR destination terms - Penalty for suppression causing short payment of duty - HELD THAT: - A mere self-serving assertion of belief cannot defeat statutory liability. The decision in the case of Bhushan Steel & Strips Ltd.[2014 (6) TMI 889 - CESTAT MUMBAI], Suzlon Infrastructure [2012 (4) TMI 456 - CESTAT, MUMBAI] and Lakhan Singh & Co. [2013 (10) TMI 1440 - CESTAT NEW DELHI] support this principle.

The material contractual clauses concerning FOR destination pricing, retention of ownership and risk, and inclusion of freight were not specifically disclosed to the department, which could ascertain the undervaluation only upon detailed scrutiny of the purchase orders. The asserted bona fide belief was unsupported by evidence of reasonable diligence, legal advice or departmental clarification. Suppression resulting in short payment was thus established, and penalty followed upon such finding. [Paras 22, 23, 24, 25, 26]

The extended period was rightly invoked and the penalty was justified.

Final Conclusion: The order confirming excise duty, interest and penalty was upheld, and the appeal was dismissed.

CENVAT credit on employee-related business services - Input service-personal-use exclusion - staff health insurance, club membership, rent-a-cab and travel agent services -HELD THAT: - Under the unamended definition of input service, the disputed services, having been used for business activities and their expenditure having formed part of the assessable value of the final products, were covered by the expression relating to business. After the amendment, credit remained available where the services were not meant for the personal use of employees. Applying Sony Pictures Networks India Pvt. Ltd.[2024 (6) TMI 1109 - BOMBAY HIGH COURT], the Tribunal held that services incurred for employees in the course of business could not be denied as personal consumption in the absence of material establishing such use. [Paras 3, 4, 5]

The denial of CENVAT credit on the disputed services was unsustainable; the impugned order was set aside and the appeal allowed.

Final Conclusion: The appeal was allowed, with the Tribunal holding that CENVAT credit was admissible on the disputed employee-related services used for the appellant's manufacturing business.

CENVAT credit on export-related input services - Place of removal for export goods - Sales promotion through overseas commission agents - Banking and financial services as input services

CENVAT credit on export-related input services - Place of removal for export goods - HELD THAT: - The Tribunal followed its earlier order [2021 (8) TMI 1029 - CESTAT MUMBAI] in the appellant's case, which had considered the Board's clarification and the statutory concept of place of removal. In exports by a manufacturer-exporter, the place of removal extends to the port at which the goods are loaded for export; consequently, services received up to that point for export clearance, handling and terminal operations are covered by the definition of input service. [Paras 5, 6]

CENVAT credit on clearing charges, material-handling charges and terminal-handling charges was held admissible, and the contrary orders were set aside.

Sales promotion through overseas commission agents - HELD THAT: - The Tribunal followed its earlier decision [2021 (8) TMI 1029 - CESTAT MUMBAI] holding that commission paid to foreign agents for promoting export sales is a sales-promotion service falling within the definition of input service. [Paras 5, 6]

CENVAT credit of service tax paid on export-sales commission was held admissible.

Banking and financial services as input services - HELD THAT: - The Tribunal followed its earlier order [2021 (8) TMI 1029 - CESTAT MUMBAI], which treated financial services necessary for carrying on manufacturing activity as covered input services. Bank commission charges for the relevant transactions were therefore eligible for credit. [Paras 5, 6]

CENVAT credit of service tax paid on bank commission charges was held admissible.

Final Conclusion: Following the earlier decision in the appellant's case on identical services, the Tribunal held the disputed CENVAT credits admissible. The impugned orders were set aside and the appeals were allowed.

Classification of absorbent cotton wool and cotton bandages manufactured as surgical dressings - classifiable under CTH 5601 or CTH 3005 - generic allopathic medicines - Concessional duty exemption under Entry 37 of Notification No. 1/2011-C.E. for allopathic medicaments - Extended limitation for suppression and clandestine removal - Strict Construction of Exemption

Classification of absorbent cotton wool and surgical bandages - HELD THAT: - The products were admittedly manufactured in accordance with standards for surgical dressings, supplied for medical use and packed for retail sale. Heading 3005 covers wadding, gauze and bandages put up in retail packings for medical or surgical purposes, whether or not impregnated with pharmaceutical substances. The relevant Section and Chapter Notes exclude goods classifiable under Heading 3005 from textile headings; consequently, the specific classification was under CTH 3005. [Paras 6]

The duty demand on absorbent cotton wool and cotton bandages, with consequential interest and penalty, was sustained.

Concessional duty exemption for allopathic medicaments - Allopathic medicines manufactured and sold under their generic pharmacopoeial names were covered by the concessional-duty entry for medicaments under Notification No. 1/2011-CE, subject to fulfilment of its conditions. - HELD THAT: - The expression "medicaments", followed by the word "including" specified systems of medicine, was held to cover all kinds of medicaments and not merely those expressly enumerated. As the medicines were sold under the prescribed generic names and no Cenvat credit had been availed, and the Department produced no material to disprove compliance with the conditions, the appellant was entitled to the concessional rate. [Paras 7]

The demand raised by denying the benefit of Notification No. 16/2012-CE was set aside.

Extended limitation for suppression and clandestine removal - HELD THAT: - The appellant manufactured surgical dressings under a drug licence, printed batch particulars, expiry dates and retail prices on small packs, but did not disclose the activity to the Department. The undeclared manufacture and ready stock found during the raid, coupled with post-detection payment of duty and admission of clandestine removal, established suppression with intent to evade duty. [Paras 8]

Invocation of the extended period in all four show cause notices was upheld; the accepted liability on phenyl, mineral water and de-ionized water was also sustained.

Final Conclusion: The impugned orders were modified: the duty demand on surgical absorbent cotton wool and bandages, and invocation of extended limitation, were upheld, while the demand denying concessional duty on allopathic medicaments was set aside. The four appeals were partly allowed.

Enhancement of turnover without adverse material found in survey - Acceptance of disclosed turnover - Presumption Without Cogent Evidence - Enhancement of turnover of a trader dealing in Pan Masala and tobacco despite absence of adverse material found during survey - HELD THAT: - Though the books of account were not available at the time of survey, they were produced subsequently. As no adverse material was found during the survey, the authorities could reject the books of account but could not enhance the turnover. This position was held to be supported by M/s Fashion Point [2026 (7) TMI 1603 - ALLAHABAD HIGH COURT] and M/s Time Steels [2019 (1) TMI 308 - ALLAHABAD HIGH COURT] [Paras 6]

The enhancement of turnover was unsustainable; the disclosed turnover was accepted.

Final Conclusion: The impugned order was quashed and the revision allowed. The disclosed turnover was accepted, with refund of any amount deposited in accordance with law.

Best-judgment assessment-enhancement of disclosed turnover - Rejection of account books without adverse material - Enhancement of the disclosed turnover of a dealer in branded ready-made garments after rejection of books of account for non-production during survey, despite explained loose papers and purchases from registered dealers against tax invoices. - HELD THAT: - The case in hand is squarely covered by the judgement of this Court in M/s Sri Shanti Readymade [2023 (12) TMI 561 - ALLAHABAD HIGH COURT] as there is no material on record to show any cogent reason for enhancing the turnover.

The loose papers found during survey had been explained and were accepted by the appellate authority and the Tribunal, without any discrepancy being identified therefrom. The factual findings that the dealer purchased branded ready-made garments from registered dealers within the State against tax invoices remained in its favour, and no material established purchases from unregistered dealers. Though non-production of books at survey could warrant rejection of the books, it did not by itself justify enhancement of turnover in the absence of adverse material. Best-judgment assessment cannot rest on presumptions or surmises; enhancement must have a cogent evidentiary basis. [Paras 8, 10]

The disclosed taxable turnover was accepted and the Tribunal's order was modified accordingly.

Final Conclusion: The revision was partly allowed. In the absence of material supporting enhancement, the disclosed taxable turnover for the assessment year in question was accepted.

Opportunity to contest revision proceedings on merits - Restoration of the revision petition where the review petitioner was not shown to have been communicated the pendency of the proceedings and disputed the notifications relied upon in the earlier order. - HELD THAT: - Although notice had been issued, it was served beyond the period specified therein, and no material established that the pendency of the revision petition was subsequently communicated to the review petitioner. Relying on a decision of this Court in Power Max [2011 (10) TMI 563 - KARNATAKA HIGH COURT] has allowed the petition. Since the earlier revision order had relied on notifications whose applicability was disputed by the review petitioner, an opportunity to contest the revision on merits was warranted. [Paras 4, 5]

The delay in filing the review petition was condoned; the earlier order was set aside and the revision petition was restored for consideration on merits.

Final Conclusion: The review petition was allowed, the earlier revision order was set aside, and the revision petition was restored for adjudication on merits.

Stamp duty on mining leases - Anticipated royalty - Indeterminate value of subject-matter - Dead rent and royalty - Computation of stamp duty on a Government mining lease for limestone where the actual value of mineral extraction was indeterminate at execution - HELD THAT: - In H.R.S. Murthy [1964 (2) TMI 84 - SUPREME COURT],this Court observed that “royalty” normally connotes the payment made for the materials or minerals won from the land. The Stamp Act is a law by which the executing parties of any agreement are required to pay to the Government, sums as may be specified, relating to the subject matter of the agreement. Undoubtedly, it is a source of considerable revenue generation for the State. Since it pertains to the payment of money, it is a fiscal statute. Fiscal statutes, as is well settled, have to be interpreted strictly and mandatorily.

Dead rent is a fixed minimum return determined by the leased area, whereas royalty varies with the quantity of minerals extracted. The proviso to Section 26 specifically governs mining leases where royalty forms rent or part of rent and permits estimation of anticipated royalty by the Collector where the Government is lessor. It is consistent with the main provision because the actual value of the mining lease cannot be ascertained before operations commence. The notification did not prescribe dead rent as the exclusive basis; it required the highest applicable basis for calculating royalty. Further, the statutory Form K lease expressly adopted anticipated royalty as the yardstick for stamp duty. [Paras 6, 10, 11, 13, 14]

Stamp duty was correctly chargeable on anticipated royalty and not exclusively on dead rent; the challenge to the notification and reliance on the alternative lease-duty provision were rejected.

Final Conclusion: The appeal was dismissed. The demand of stamp duty computed with reference to anticipated royalty under the mining lease was sustained.

Arbitrability of contractual GST reimbursement disputes - Patent illegality in arbitral award - Severability of arbitral award - Fundamental Policy of Indian Law - Perversity - Doctrine of Severability - Judicial Review of Arbitral Awards

Arbitrability of contractual GST reimbursement disputes - HELD THAT: - An arbitral tribunal may decide private contractual obligations concerning inter se tax liability, reimbursement, tax sharing, indemnity, and the contractual effect of a changed tax regime. It cannot decide matters reserved for taxing authorities, including taxable character of a transaction, statutory classification, tax rate, exemption, or disputes between an assessee and the State. The present controversy concerned only whether GST reimbursement was to be calculated under the MoRTH SOP or the State Government Orders; it neither involved determination of statutory tax liability nor encroached upon the taxing authority's domain. [Paras 42, 45, 47, 48, 50]

The objection that the GST dispute was non-arbitrable was rejected.

Applicability of MoRTH GST SOP to item-rate contract - Patent illegality in arbitral award - HELD THAT: - The contractual incorporation of MoRTH specifications was confined to technical requirements for road construction and did not establish incorporation of its tax-related SOP. The SOP was directory, contemplated mutual agreement, and was framed for EPC contracts, whereas the contract was an item-rate contract. No contractual clause or cogent material justified applying the SOP in preference to the State Government Orders, which were binding executive instructions upon the department. The award also quantified GST shortfall and imposed statutory interest and penalty without clear findings regarding the tax actually due and paid, the relevant period, or loss attributable solely to the department; it left the award subject to final GST assessment. The tribunal thereby proceeded on conjecture, ignored material considerations including transitional GST provisions, and acted beyond the contractual basis of the dispute. [Paras 99, 100, 102, 103, 104]

The findings on the GST-calculation and consequential claims were set aside and remitted for fresh adjudication by an arbitral tribunal constituted in accordance with law.

Severability of arbitral award - The severable portions of the award concerning the consensually accepted item-rate nature of the contract and the department's share of the DRE fee could be preserved. - HELD THAT: - Modification of an award is permissible only where the invalid portion is legally and pragmatically severable from the valid portion. Since the GST-related awards formed the dominant but separable portion, while the finding that the contract was an item-rate contract was consensual and the DRE-fee award was independently sustainable, the latter portions could be retained without re-adjudication. [Paras 107, 108, 109, 110, 111]

The findings on issues concerning the item-rate contract and the DRE fee, with interest on the latter, were protected; the remaining impugned claims were remitted.

Final Conclusion: The appeal was partly allowed. The GST-related portions of the award were set aside and remitted for fresh adjudication, while the severable findings concerning the item-rate contract and the DRE fee were retained.

Insolvency moratorium and cheque dishonour prosecution - Vicarious criminal liability of company officers for dishonoured cheques - Continuation of prosecution for dishonour of company cheques against persons in charge of the company, notwithstanding subsequent corporate insolvency and liquidation proceedings. - HELD THAT: - The legal position is no longer res integra. The Hon'ble Supreme Court in P. Mohanraj and others v. Shah Brothers Ispat Private Limited [2021 (3) TMI 94 - SUPREME COURT], has held that while the moratorium under Section 14 of the IBC operates in favour of the corporate debtor, the statutory liability of the natural persons covered under Section 141 of the N.I. Act continues unaffected and proceedings against such persons can validly continue. The said principle has subsequently been reaffirmed in Ajay Kumar Radheshyam Goenka [2023 (3) TMI 686 - SUPREME COURT],wherein it has been held that discharge or resolution of the corporate debtor under the IBC does not absolve the Directors or persons in charge of the affairs of the company from their independent criminal liability under Sections 138 and 141 of the N.I. Act. The contention that after appointment of the Interim Resolution Professional and subsequently the Liquidator, the petitioners ceased to be in control of the affairs of the company and, therefore, cannot be prosecuted, is equally devoid of merit. The liability under Section 141 of the N.I. Act is to be examined with reference to the status of the accused at the time when the offence was committed, i.e., when the cheques were issued and dishonoured. The subsequent divesting of managerial powers by operation of the provisions of the IBC cannot erase the criminal liability which had already crystallized on the date of commission of the offence.

The offence had been completed before initiation of the corporate insolvency resolution process. The moratorium protects the corporate debtor and postpones civil debt enforcement; it does not extinguish or stall criminal prosecution of natural persons whose liability under the Negotiable Instruments Act is determined by their status when the cheques were issued and dishonoured. Subsequent suspension or cessation of their managerial powers upon appointment of an insolvency professional or liquidator cannot erase criminal liability already crystallised. The question whether the petitioners were in charge of, and responsible for, the company's business at the relevant time remains for trial on evidence. [Paras 9, 10, 11, 12]

No ground existed to quash the complaint or summoning order merely because insolvency proceedings concerning the same liability were subsequently initiated.

Final Conclusion: The petition for quashing was dismissed. The criminal complaint and summoning order were permitted to proceed, without any expression on the merits to be determined at trial.

Dishonour of cheques - Expert examination of disputed cheque writings - Credibility of complainant's evidence on cheque execution - Presumption of consideration - Right to fair opportunity to defend - Expert handwriting evidence - Credibility of witness testimony​​​​​​​ - HELD THAT: - Although the identity of the writer of cheque entries would ordinarily be immaterial once execution is established and the statutory presumption applies, it becomes relevant where the complainant's case specifically rests on the assertion that the accused personally made the entries. Proof that the writings were not those of the accused would bear directly upon the acceptability and credibility of the complainant's evidence concerning execution; the accused could therefore not be denied an opportunity to establish it. [Paras 7, 8]

The orders refusing expert examination were set aside, and the cheques were directed to be sent for handwriting analysis, subject to the accused supplying contemporary specimen writings and meeting the expenses.

Final Conclusion: The original petitions were allowed and the accused were permitted to obtain expert analysis of the disputed cheque writings. If they fail to provide the required specimen writings within a reasonable period, the trial court may proceed on the available evidence.