TaxTMI Updates e-Newsletter
Jul 29,2026

Revocation of cancellation of GST registration for non-filing of returns - Consideration of an application for revocation of GST registration cancelled for non-filing of returns for a consecutive period of six months - HELD THAT: - In view of the cancellation having been made for non-filing of returns for a consecutive period of six months, the petitioner was granted liberty to approach the competent authority with an application for revocation of cancellation. The authority was directed to entertain the application, including in physical form if online submission was not accepted for technical reasons, and decide it in accordance with law. [Paras 5]

The writ petition was disposed of with liberty to apply for revocation and a direction for consideration of that application within the stipulated period.

Final Conclusion: The petitioner was permitted to seek revocation of the cancelled GST registration, and the competent authority was directed to entertain and decide the application in accordance with law.

Opportunity of hearing in GST assessment - Assessment despite communicated inability to participate - Validity of the GST assessment made without allowing the registered dealer to participate after the proper officer had been informed that the dealer could not do so because of an accident. - HELD THAT: - The Court found that the dealer's inability to respond to the show-cause notice or attend the hearing owing to an accident had been communicated to the proper officer, a fact fairly confirmed by the Government Pleader. In those circumstances, the proper officer ought not to have proceeded with the assessment without affording the dealer an effective opportunity of participation. [Paras 5, 6, 7]

The assessment order was set aside and the matter remanded for a fresh notice, consideration of objections, and hearing; the recovered amount was made subject to the outcome of the fresh assessment.

Final Conclusion: The writ petition was allowed and the assessment was remanded for fresh adjudication after affording the dealer an opportunity of being heard.

Opportunity to contest GST assessment - Disclosure of material relied upon in assessment - GST assessment based on data received from the GST Monitoring Committee without furnishing that material to the registered dealer for submitting objections. - HELD THAT: - Although the statutory procedure had been followed and the dealer had not availed the personal hearings, medical certificates supported the explanation for the delay in challenging the assessment. To afford an adequate opportunity while balancing the interests of revenue, the material, including the data collected from the GST Monitoring Committee, was required to be furnished to enable objections to be filed. [Paras 5, 6, 8]

The assessment order was set aside and remanded for fresh orders after furnishing the relevant information and granting due opportunity, subject to deposit of 20% of the disputed tax within six weeks; all objections were left open.

Final Conclusion: The writ petition was allowed conditionally, and the GST assessment was remanded for fresh consideration after disclosure of the relevant material and opportunity to the dealer.

Cancellation of the GST registration of the petitioner firm on the ground that it had failed to file the returns within prescribed period - HELD THAT:- The writ petition was disposed of on the same terms M/S. ANSHUL ENTERPRISES THROUGH ITS PROPRIETOR [2025 (2) TMI 1260 - UTTARAKHAND HIGH COURT] permitting an application for revocation of cancellation of GST registration subject to furnishing pending returns and depositing unpaid tax, interest and penalty.

Cancellation of GST registration for filing NIL returns - Cancellation of GST registration on the ground of filing NIL returns for several months. - HELD THAT: - Filing NIL returns is not a circumstance contemplated by sub-section (2) of section 29 for cancellation of registration. The Court agreed with the view in Kali Shanker Enterprises [2024 (1) TMI 430 - ANDHRA PRADESH HIGH COURT], that registration could not be cancelled on that ground. [Paras 4]

The show-cause notice and the order cancelling registration were quashed.

Final Conclusion: The writ petition was allowed, and the notice and registration-cancellation order founded solely on filing NIL returns were quashed.

Release of Bank Guarantee - Surety in Lieu of Bank Guarantee - Pending Statutory Appeal - HELD THAT:- The bank guarantee furnished for release of the seized conveyance was directed to be released on furnishing surety of like amount, subject to the final outcome of the pending appeal.

Mandatory time-limit for penalty order following detention or seizure of goods in transit - Strict compliance with procedure governing coercive tax action - Validity of a penalty order in respect of goods transported without proper documents, passed after expiry of seven days from service of the notice proposing penalty under Section 129(3) of the J&K Goods and Services Tax Act, 2017. - HELD THAT: - The High Court of Gujarat in Allcargo Logistics Limited. [2025 (12) TMI 1732 - GUJARAT HIGH COURT] and couple of other judgements, has held the provisions of Section 129(3) mandatory and held that failure to adhere to the timelines prescribed therein would vitiate order of detention.

The use of "shall" in Section 129(3), the coercive nature of detention and seizure, and the object of preventing arbitrary or prolonged detention establish that the stipulated timelines are mandatory. Absence of an express consequence for breach does not render the requirement directory; legislative intent, the statutory object and the rights affected govern that determination. Even intervening circumstances and a delay of one day could not excuse non-compliance with the prescribed period. [Paras 16, 17, 18, 19, 21]

The penalty notice/order issued beyond seven days from service of the show-cause notice was quashed, without prejudice to proceedings permissible under other provisions of the Act of 2017.

Final Conclusion: The writ petition was allowed and the penalty notice/order was quashed for breach of the mandatory time-limit under Section 129(3) of the Act of 2017.

Opportunity of personal hearing before adverse GST adjudication - Principles of natural justice - Validity of GST adjudication orders where the show-cause notices did not specify the date, time and venue for personal hearing. - HELD THAT: - Section 75(4) requires an opportunity of hearing where an adverse decision is contemplated. Since the show-cause notices did not provide the date, time or venue of personal hearing, the adjudication orders could not be sustained. [Paras 5]

The adjudication orders were set aside and the proceedings were restored for response to the show-cause notices and fresh disposal after affording a hearing; all other contentions were left open.

Final Conclusion: The writ petition was disposed of by setting aside the GST adjudication orders for denial of personal hearing. The consequential attachment order was also quashed, subject to the fresh decision of the proper officer.

Statutory appellate remedy - Principles of Natural Justice - Condonation of Delay - Statutory Pre-deposit - HELD THAT:- The petitioner was granted liberty to file a statutory appeal with a delay-condonation application; no coercive steps were to be taken pursuant to the garnishee notice during the stipulated period for filing the appeal.

Statutory pre-deposit for maintainability of GST appeal - HELD THAT: - The appeal had been dismissed solely for non-payment of the mandated pre-deposit, without consideration on merits. In the circumstances, liberty was granted to make the required pre-deposit so that the appeal could be considered on merits in accordance with law. [Paras 6, 7]

The order dismissing the appeal was set aside, subject to deposit of the mandated amount within two weeks; upon such compliance, the appellate authority shall hear the appeal on merits.

Final Conclusion: The writ petition was disposed of by restoring the appellate remedy subject to timely compliance with the statutory pre-deposit requirement.

Parallel CGST and SGST proceedings for irregular availment of input tax credit - Remand for reconsideration of overlapping input tax credit demand - discrepancy between the supplier's GSTR-1 and the petitioner's GSTR-3B - HELD THAT: - As per the twofold test laid down by the Apex Court in M/s. Armour Security (India) Ltd. [2025 (8) TMI 991 - SUPREME COURT], the charges for disallowance of ITC in both the proceedings appear to be for irregular availment of ITC on account of discrepancy between GSTR-1 of the supplier and GSTR-3B of the petitioner. The demand appears to be different on account of the larger tax period covered under the CGST proceedings.

Since the petitioner asserted that the parallel proceedings had been brought to the notice of the SGST authority and the assessment had been made without considering its reply and documents, the matter required reconsideration. The Court left the merits open, directing the SGST authority to determine whether the credit-disallowance charge was the same as that in the CGST proceedings; if so satisfied, that charge could be dropped, while the independent audit-based charge of underreporting of tax liability could be adjudicated in accordance with law. [Paras 12, 13, 14, 15, 16]

The assessment order was set aside and remanded for fresh adjudication after affording opportunity to the petitioner and considering its reply and documents.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order and remanding the matter for fresh adjudication, without any expression on the merits of either charge.

Statutory appellate remedy - Delay Condonation - Statutory Pre-deposit - Challenged the order-in-original passed mechanically without application of mind and in violation of principles of natural justice - HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal, with a delay-condonation application and statutory pre-deposit; the appellate authority was left to consider delay and, if satisfied, decide the appeal on merits.

Reasonable apprehension of bias in quasi-judicial adjudication - Separation of investigative and adjudicatory functions - Validity of penalty adjudication where the quasi-judicial authority had also approved the investigation report leading to initiation of prosecution proceedings on the same facts. - HELD THAT: - A quasi-judicial authority must function independently and fairly. Where the officer who countersigned and approved the investigation report for initiation of prosecution subsequently adjudicated the same matter, the arrangement gave rise to a reasonable apprehension of bias and undermined the foundation of quasi-judicial decision-making. Proof of actual bias or partiality was unnecessary; the matter was remanded solely because investigative approval and quasi-judicial adjudication had been performed by the same individual. [Paras 12, 13, 14]

The penalty order and the appellate order were quashed, and the matter was remanded for fresh decision by a competent authority ensuring that the roles of investigator, approving authority and quasi-judicial officer are not performed by the same individual.

Final Conclusion: The orders imposing and affirming penalties were quashed for breach of the requirement of an independent quasi-judicial adjudication. The matter was remanded for fresh adjudication, with all other issues left open.

Arrest for cess-evasion offences punishable up to five years - Statutory safeguards in arrest and detention - Validity of the arrest, remand and detention for alleged clandestine manufacture of tobacco and pan masala products through undeclared packing machines and evasion of cess. - HELD THAT: - It is clear from the record that apart from the taxes being leveled against the businessmen / business concerns, this is an additional cess imposed for meeting the expenditure on National Security and Public Health. In the Act there is nothing about informing the factory owners / manufacturers of the country about application of the Act to their factory / business concerns from any particular date.

Since the corpus has been implicated under Section 19(5) of the Act, which provides that the offences specified under sub-section (1) shall be cognizable and non-bailable. However, the maximum punishment prescribed under Section 19(1) is imprisonment for a term which may extend to five years, or with fine, or with both.

The provision regarding the arrest under the B.N.S.S shall apply to the present case provided under Section 35 to Section 62 of B.N.S.S. Section 35 of B.N.S.S provides that police can arrest individuals without order of Magistrate for cognizable offences carrying punishment about 7 years. For offences carrying under 7 years of imprisonment, the police is required to record reasons justified why the arrest is absolutely necessary to prevent tampering with the evidence or for ensuring appearance in court.

The offence alleged carried a maximum imprisonment of five years. For an offence punishable below seven years, arrest must be justified by recorded reasons establishing its necessity. Though grounds of arrest were supplied to the arrestee, the record showed that the arrest authorisation was issued after the actual arrest; the arrest time was inconsistently recorded; no family member or nominee was shown to have been informed; and the arrest memo did not record communication of the right to legal assistance. The alleged evasion had also not been founded upon an audit and assessment under the Act. Applying Satender Kumar Antil [2026 (2) TMI 466 - SUPREME COURT], the Court held that the arrest was not justified and did not conform to law. [Paras 24, 25, 26, 27, 28]

The arrest, remand and detention were set aside, and the petitioner was directed to be released forthwith.

Final Conclusion: The habeas corpus petition was allowed. The arrest, remand and detention were held not to be in accordance with law, and the petitioner was directed to be released forthwith.

Exercise of discretionary writ jurisdiction in GST demand proceedings - Bona fides of challenge to ex parte GST demand - Service of Notice - Principles of Natural Justice - Clean Hands Doctrine - Bona Fide Conduct - HELD THAT: - The petitioner did not specifically deny receipt of the notice on its registered email, although the demand order recorded that the final reminder had been sent by registered email. Nor did it disclose the actual input tax credit accrued in GSTR-2A or answer the allegations of excess input tax credit and suppression of turnover contained in FORM GST DRC-01. Having furnished an undertaking and post-dated cheques for payment following attachment of its bank account, obtained removal of the hold on the account, and raised no contemporaneous protest of duress or compulsion, the petitioner could not subsequently advance such a plea in writ proceedings. The Court held that the challenge was an afterthought and lacked bona fides, disentitling the petitioner to extraordinary discretionary relief. [Paras 28, 31, 32, 33, 34]

The writ petition challenging the show-cause notice and ex parte demand was dismissed with costs.

Final Conclusion: The writ application was dismissed as lacking bona fides, with costs payable to the Patna High Court Legal Services Committee.

Reassessment proceedings initiated by non-jurisdictional assessing officer - Pecuniary jurisdiction of Assessing Officer - Validity of jurisdictional notice - non-curability of jurisdictional defect in notice

HELD THAT:- We find that coordinate Bench in the case of Vipul Mittal [2025 (1) TMI 1284 - ITAT DELHI] has decided the issue in favour of the assessee and relied on the case of Ashok Devichand Jain v. Union of India [2022 (3) TMI 1466 - BOMBAY HIGH COURT] wherein as held notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law.

Thus, the reassessment proceedings in the present case are to be treated as being initiated by non-jurisdictional assessing officer and, therefore, the reassessment proceedings and consequent assessment order both needs be quashed. In this regard, we rely on the decisions of YKM Holdings Pvt. Ltd. [2024 (5) TMI 92 - ITAT DELHI] wherein as held 'that the assessment framed under section 143(3) of the Act deserves to be quashed in the instant case as the initial scrutiny notice issued u/s 143(3) of the Act dated 12.04.2016 by ITO was without jurisdiction as he did not possess jurisdiction over the assessee for the A.Y. 2015-16'. [Para 6, 7 and 8]

Final Conclusion: The notice issued u/s 148 was invalid for want of jurisdiction of the issuing officer; the notice set aside allowing assessee's appeal.

Transfer of the assessee's income-tax jurisdiction u/s 127 - Reasonable opportunity of hearing in transfer of income-tax cases

Validity of transfer of the assessee's income-tax cases from one city to another where the request for adjournment to submit a detailed representation was not considered - HELD THAT: - Section 127 requires that, wherever possible, the assessee be afforded a reasonable opportunity of being heard before transfer of a case between jurisdictions. The assessee had sought adjournment beyond the specified date to enable filing of a detailed representation, but the transfer order was passed before that date without considering the request. The statutory requirement of reasonable opportunity was therefore not fulfilled. [Paras 9, 10]

The transfer order was held legally unsustainable and was set aside; the authorities were directed to pass a fresh order after granting reasonable opportunity of hearing, without any adjudication on the merits of the proposed transfer.

Final Conclusion: The writ petition was allowed on the ground of denial of reasonable opportunity of hearing. A fresh decision on transfer of jurisdiction was directed after hearing the assessee.

Character of expenditure - redemption of Foreign Currency Convertible Bonds (‘FCCBs’) - capital expenditure or revenue expenditure -Apportionment of redemption premium over the maturity period of debentures

Character of expenditure - redemption of Foreign Currency Convertible Bonds (hereinafter, ‘FCCBs’) - capital expenditure or revenue expenditure - Whether Premium payable on redemption of foreign currency convertible bonds issued for raising business funds constituted revenue expenditure? - HELD THAT: - As held in Madras Industrial Investment Corporation Ltd.[1997 (4) TMI 5 - SUPREME COURT] the moment the debentures are issued, and the funds raised therefrom are utilised by the assessee for the purposes of its business, the said expenditure is to be regarded as revenue expenditure.

Expenditure incurred in connection with the issue of debentures or obtaining a loan is revenue expenditure. On issuance of the foreign currency convertible bonds, the liability to pay the redemption premium was incurred for raising and using funds in the business; it was not expenditure for acquisition of a capital asset or an enduring advantage. [Paras 9]

The claim for deduction of the redemption premium as revenue expenditure did not give rise to a substantial question of law.

Apportionment of redemption premium over the maturity period of debentures - claim that the redemption premium on foreign currency convertible bonds could not be allowed in the first year but had to be spread over their five-year life - HELD THAT: - In the decision of Jagatjit Industries [2006 (5) TMI 72 - DELHI HIGH COURT] a Coordinate Bench of this Court, while placing reliance on the decisions in Madras Industrial Investment Corporation Ltd.[1997 (4) TMI 5 - SUPREME COURT] and Hindustan Aluminium Corporation Ltd. [1982 (4) TMI 12 - CALCUTTA HIGH COURT] held that the liability to pay premium arises in the year in which the debentures were issued. The Court further clarified that the same could be proportionately spread over the period prescribed for the maturity of such debentures. It was further held by the Coordinate Bench of this Court that it is immaterial whether the debentures were redeemable at will or only upon maturity.

The liability to pay the premium arises in the year of issue of the debentures and may be proportionately spread over their prescribed maturity period; whether redemption is at will or only on maturity is immaterial. As this contention had not been raised before the appellate authorities or the Tribunal, and the legal position was settled, no fresh adjudication was required. [Paras 10, 11, 12]

No substantial question of law arose on the timing of deduction of the redemption premium.

Final Conclusion: The appeals were dismissed, as expenditure relating to the redemption premium on the foreign currency convertible bonds was revenue in nature and no substantial question of law arose.

Exercise of writ jurisdiction despite alternative appellate remedy - Penalty for misreporting of income - survival of assessment basis - Finalisation of penalty proceedings pending appeal

Exercise of writ jurisdiction despite alternative appellate remedy - Maintainability of the writ petition against a penalty order despite the statutory appellate remedy - HELD THAT: - Though an appeal lay to the Commissioner of Income Tax (Appeals), writ jurisdiction was warranted because the AO acted arbitrarily in finalising the penalty notwithstanding that the assessment order and the fee for technical services adjustment had already been set aside by the Tribunal. [Paras 9, 10]

The alternative remedy did not preclude interference with the penalty order.

Penalty for misreporting of income - survival of assessment basis - Finalisation of penalty proceedings pending appeal - Validity of penalty for alleged misreporting of income after the assessment order and the fee for technical services adjustment forming its basis had been set aside in appeal - HELD THAT: - The appellate findings, being binding on the Assessing Officer, extinguished the basis of the demand and, consequently, the foundation for alleging misrepresentation or misreporting of income. The Court further held that Section 275(1A) required the Assessing Officer not to finalise penalty proceedings while the appeal was pending and, upon the appeal being allowed, to give effect to the appellate order by dropping the proceedings. [Paras 10, 11]

The penalty order and consequential demand notice were set aside, without prejudice to fresh proceedings in accordance with law if the Department's appeal succeeds.

Final Conclusion: The writ petition was allowed and the penalty for alleged misreporting, founded on an assessment already set aside by the Tribunal, was quashed along with the consequential demand.

Enhancement of disallowance in appellate proceedings -Commissioner (Appeals) power to enhance the disallowance without issuing prior notice to the assessee - Reasonable opportunity before enhancement

HELD THAT: - Section 251(2) makes it obligatory for the appellate authority to issue notice and afford the assessee a reasonable opportunity to show cause against a proposed enhancement.

Mere discussion on the merit of the disallowance or detailed directions in this regard for scrutiny of the ledger of the assessee does not conform to the requirement of issuance of notice and providing an opportunity. Issuance of notice means the intention to take an action in explicit terms. Unless an assessee is put to notice about the proposed action, he cannot be expected to defend his cause. In the absence of such a notice having been served upon the assessee, not only his statutory rights but also fundamental rights guaranteed under Article 14 of the Constitution have been violated. [Paras 7, 8]

The question was answered in favour of the assessee; the enhancement and the Tribunal's affirmance thereof were set aside, and the matter was restored to the Commissioner (Appeals) for fresh decision after issuing notice.

Final Conclusion: The appeal was partly allowed on the question of enhancement without notice. The separate question concerning proportionate allowance of advertisement expenditure was not decided in this order.

Revenue failure to produce original seized documents on the basis of which the veracity of the contentions raised by the appellant can be examined

HELD THAT:- The appeal was dismissed as the Revenue failed to produce the original seized document and no perversity was found in the concurrent findings of fact; liberty was reserved to seek revival upon production of the original documents.

Characterization of receipts - Capital receipts v/s revenue receipts - receipts from trial runs of a broadband project and sale of scrap before installation -Initial assessment year for infrastructure undertaking deduction

Receipts during pre-commencement project installation - Taxability of income from trial runs of a broadband project and sale of scrap generated before installation of the project - HELD THAT: - As decided in the case of Bokaro Steel [1998 (12) TMI 4 - SUPREME COURT] any income generated before the commencement of the business, which is inextricably connected with the setting up of a capital asset, is capital in nature and serves to reduce the cost of construction and the same cannot constitute taxable income.

Income generated before commencement of business, where inextricably connected with setting up a capital asset, is capital in nature and reduces the cost of construction rather than constituting taxable income. The Tribunal's factual finding that the trial-run income and scrap-sale proceeds arose during the installation phase and were inextricably linked to the broadband project therefore admitted of no substantial question of law. [Paras 7]

The receipts were rightly treated as capital work-in-progress and were not taxable.

Deduction u/s 80-IA - Initial assessment year for infrastructure undertaking deduction - Computation of deduction for a power-generation undertaking where the assessee opted for a later initial assessment year within the statutory period - AO set off the brought forward unabsorbed depreciation against the income of the said unit -HELD THAT: - Under the applicable clarification, an eligible assessee may choose the first year for claiming deduction within the prescribed period, and the deduction is available for the consecutive years commencing from that opted year, subject to fulfilment of statutory conditions. The Tribunal therefore rightly allowed the deduction from the initial assessment year selected by the assessee, without setting off depreciation relating to years preceding that chosen year. See HERCULES HOISTS LTD. [2017 (6) TMI 1125 - BOMBAY HIGH COURT]. [Paras 13]

No substantial question of law arose on the deduction under Section 80-IA.

Final Conclusion: The appeal was dismissed as the Tribunal's treatment of the pre-commencement receipts as capital receipts and its allowance of the Section 80-IA deduction from the assessee's opted initial assessment year raised no substantial question of law.

Prosecution for failure to furnish income tax return - statutory exception where tax payable after TDS does not exceed prescribed threshold

Maintainability of prosecution for failure to furnish the return for the assessment year where the accepted return showed entitlement to refund after giving credit for tax deducted at source - HELD THAT: - The proviso to section 276CC precludes prosecution where the tax payable on regular assessment, after reduction of advance tax and tax deducted at source, does not exceed the prescribed threshold. The accepted return established that the petitioner was entitled to a refund and that there was no loss to the revenue.

Applying Guru Nanak Enterprises [2004 (11) TMI 15 - SUPREME COURT] court held that the statutory exception applied; the sanctioning authority had also failed to consider the tax deducted at source. [Paras 9, 10, 11, 13, 14]

The criminal prosecution was held wholly unwarranted and an abuse of process of law, and was quashed to secure the ends of justice.

Final Conclusion: The writ petition was allowed and the complaint for the offence under section 276CC was quashed.

Jurisdiction of High Court under income-tax appellate proceedings - Maintainability of an income-tax appeal before the Karnataka High Court when the assessee's registered office is within its territorial jurisdiction but the assessment order and the appellate order were passed at Hyderabad - HELD THAT: - Jurisdiction to entertain the appeal lies with the High Court within whose territorial jurisdiction the assessment order was passed. Since both the assessment order and the appellate order arose at Hyderabad, the location of the respondent's registered office at Bangalore did not confer jurisdiction on this Court.

Hon'ble Apex Court in a case ABL PAPERS [2022 (8) TMI 863 - SUPREME COURT] has held that the jurisdiction of High Court would be High Court where the assessment order is passed. In the instant case, the assessment order as well as the order by the Income-Tax Appellate Tribunal is of the Hyderabad.[Paras 3]

The appeal was held not maintainable, with liberty to the Revenue to file it before the appropriate jurisdictional High Court.

Final Conclusion: The appeal was dismissed as not maintainable before the Karnataka High Court, with liberty to file it before the appropriate jurisdictional High Court.

Depreciation on commissioned windmill - Perversity for ignoring material evidence

Entitlement to depreciation at the higher rate on a windmill claimed to have been commissioned on 30.09.2004 - HELD THAT: - The Tribunal treated the absence of transport and insurance documents as conclusive against commissioning before 30.09.2004, while disregarding the undisputed commissioning certificate, evidence of interconnection with the grid, the electricity-generation report and the contemporaneous letter showing readiness for commissioning and injection of power.

The documentary evidence considered by the appellate authority established commissioning and export of electricity in September 2004; consequently, Tribunal's reliance on irrelevant factors while ignoring material evidence rendered its finding perverse. [Paras 7]

The assessee was entitled to depreciation at 80% on the windmill; the Tribunal's order was quashed and the appellate authority's order was restored.

Final Conclusion: The substantial questions of law were answered in favour of the assessee. The appeal was allowed and the order restoring the higher depreciation claim was reinstated.

Computation of business profits under Explanation (baa) to section 80HHC - Netting of job work charges and interest receipts in export deduction

Computation of deduction u/s 80HHC in respect of job work charges and interest receipts included in business profits - HELD THAT: - For purposes of Explanation (baa), the exclusion is confined to ninety per cent of the net receipt forming part of the profits of business, and not ninety per cent of the gross receipt irrespective of expenditure incurred in earning it.

Tribunal's direction to compute the deduction from job work charges and interest on that basis was held consistent with the settled position as decided in NIRMA LIMITED [2014 (10) TMI 396 - GUJARAT HIGH COURT] as relying on ACG Associated Capsules Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT]. [Paras 3, 8]

The substantial question was answered in favour of the assessee and against the Revenue.

Final Conclusion: The appeal was disposed of after answering the substantial question in favour of the assessee and against the Revenue.

Notional interest on outstanding advances - Accrual of interest income under mercantile system of accounting

Addition of notional interest on outstanding amounts due from two concerns notwithstanding the assessee's mercantile system of accounting - HELD THAT: - The evidence showed that no interest had been received from either concern for the preceding two years and that their financial condition had deteriorated. The cancellation of one concern's sales tax registration and application for cancellation of its excise registration established absence of business activity; the authorities had also ignored the material relating to the other concern. Mere relationship of the concerns with family members of the assessee's partners could not, by itself, justify imputing interest. The findings sustaining notional interest were therefore contrary to the record and perverse. [Paras 10, 11]

The addition of notional interest at 12% on the outstanding amounts was deleted.

Final Conclusion: The appeal was allowed and the question was answered in favour of the assessee. The notional-interest addition was deleted.

Sanction for reassessment beyond three years - Competent authority under section 151

Validity of reassessment proceedings for A.Y. 2017-18 where approval, after expiry of three years from the end of the relevant assessment year, was granted by the Principal Commissioner rather than the authority specified u/s 151 - HELD THAT: - The Court held that the Tribunal had correctly applied section 151. As the notice was issued beyond three years from the end of the relevant assessment year, approval by the Principal Commissioner was incompetent; sanction was required from the higher authority stipulated under that provision. The Tribunal's conclusion was also in conformity with the decision of the jurisdictional High Court in Communist Party of India (Marxist) vs. CIT (Ex) .[2025 (5) TMI 754 - DELHI HIGH COURT] [Paras 6, 7]

The reassessment approval was invalid and the Revenue's appeal was dismissed.

Final Conclusion: The appeal was dismissed, the Court finding no illegality or error in the Tribunal's conclusion that the reassessment approval was granted by an incompetent authority.

Deduction u/s 80IB reduced from business profits before computing deduction u/s 80HHC -Chapter VI-A deductions - restriction against double deduction of eligible business profits - effect of section 80-IA(9) - Computation of export-profit deduction under section 80-HHC where deduction under section 80-IB has also been claimed and allowed - HELD THAT: - Following Shital Fibres Limited [2025 (5) TMI 1599 - SUPREME COURT (LB)] the restriction u/s 80-IA(9) does not require deduction allowed under section 80-IB to be reduced from gross total income while computing deduction under section 80-HHC. It limits the deduction available under another provision in Chapter VI-A, Heading "C", to the extent necessary to ensure that aggregate deductions do not exceed the profits and gains of the eligible business. [Paras 4, 5]

The Tribunal's order was set aside and the matter was remanded to the Assessing Officer for recomputation of tax in accordance with the Supreme Court dictum; the alternative question was not answered.

Final Conclusion: The appeal was disposed of by setting aside the Tribunal's order and remanding the matter for recomputation of the assessee's tax liability in accordance with the governing principle on Chapter VI-A deductions.

Income deemed to accrue or arise in India - Executive search fees - fees for technical services or royalty - Management fees for managerial services -Reimbursement of actual expenses - fees for technical services - Interest on income-tax refund - treaty tax rate - Treaty tax-rate ceiling - surcharge and cess

Executive search fees - fees for technical services or royalty - India-Netherlands DTAA - HELD THAT: - The executive search services and the licensing arrangement constituted separate and distinct sources of income. The search fees were not ancillary or subsidiary to the licence agreement and did not make available technical knowledge, experience, skill, know-how or processes. Consistent decisions in the assessee's own case on identical facts held [2022 (12) TMI 1209 - ITAT MUMBAI] that such fees were neither fees for technical services nor royalty. [Paras 7, 8, 9]

The executive search fees were held not taxable as fees for technical services under Article 12(5)(a) or Article 12(5)(b) of the India-Netherlands DTAA, and the addition was deleted.

Taxability of management fee as FTS under Article 12(5) of the Treaty as also u/s 9(1)(vii) of the Act - Failure to examine shared-services agreement - HELD THAT: - Managerial services do not fall within Article 12(5) of the India-Netherlands DTAA. As the nature of the individual services under the Shared Services Agreement required examination and the earlier directions for such examination had not been followed, the claim required fresh consideration with reference to the material on record. [Paras 14, 15]

The issue was restored to the Assessing Officer for fresh examination of the assessee's claim, after granting a reasonable opportunity of hearing.

Reimbursement of actual expenses - fees for technical services - Taxability of reimbursement service charges as fees for technical services under the Act and the India-Netherlands DTAA. - HELD THAT: - Following the consistent view in the assessee's own case for earlier years [2022 (12) TMI 1209 - ITAT MUMBAI], reimbursements of actual expenses without a profit element did not constitute fees for technical services. [Paras 17, 18]

The addition in respect of reimbursement service charges was deleted.

Applicable tax rate on interest arising out of income tax refund - HELD THAT: - Interest on the income-tax refund was required to be taxed at the rate prescribed by Article 11(2) of the India-Netherlands DTAA. [Paras 20]

The Assessing Officer was directed to modify the assessment by applying the treaty rate.

Tax deducted at source credit - verification of entitlement - Grant of credit for tax deducted at source claimed by the assessee - HELD THAT: - The entitlement to credit depended upon verification of the relevant facts and material. [Paras 22]

The Assessing Officer was directed to verify the claim and grant tax deducted at source credit in accordance with law.

Treaty tax-rate ceiling - surcharge and cess - Levy of surcharge and cess where the applicable DTAA prescribes the rate of tax on taxable income - HELD THAT: - Tax computed on the taxable income cannot exceed the rate provided under the applicable treaty provisions. [Paras 24]

The Assessing Officer was directed to ensure that the tax liability does not exceed the applicable treaty rate.

Final Conclusion: The appeal was partly allowed. The additions relating to executive search fees and reimbursement service charges were deleted, while the management-fee issue and the tax deducted at source credit claim were remitted for verification or fresh examination; consequential directions were issued on refund interest and treaty-rate limits.

Demand of the Customs Department by extending the exemption under Notification No. 50/2017-Cus and Notification No. 1/2017-IGST (Rate) to orthopaedic implants - HELD THAT: - The appeal was admitted on the substantial questions of law concerning eligibility of orthopaedic implants for the exemption or concessional rate under the relevant customs and IGST notifications, interpretation of "goods for disabled", and the consequential demand, limitation, confiscation and penalty.

Customs House Agent licence revocation proceedings - delay under Regulation 22 - Validity of allowing the Customs House Agent's appeal solely on alleged delay in initiating and completing licence-revocation proceedings under Regulation 22 of the Customs House Agents Licensing Regulations, 2004. - HELD THAT: - The Tribunal overlooked the High Court's earlier direction requiring completion of the entire Regulation 22 process by the stipulated date. As the process was completed within that time, there was no delay; consequently, the Tribunal misdirected itself in allowing the appeal solely for want of justification for delay, without examining the merits. [Paras 4, 5]

The Tribunal's order was set aside and the appeal was remanded to the Tribunal for adjudication on merits in accordance with law.

Final Conclusion: The appeal was disposed of by setting aside the Tribunal's order and remanding the Customs House Agent's appeal for decision on merits.

Maintainability of statutory appeal against a sanction order - Failure to consider claim for interest on delayed payment of value of seized goods

Maintainability of statutory appeal against a sanction order - HELD THAT: - It is evident that the appellant did actually pray for interest before the authority in terms of the liberty granted by the Hon’ble Division Bench. The same has not been considered by the authority.

Though captioned as an Order-in-Original, the order merely sanctioned payment of the value of the seized goods in compliance with the earlier judicial direction. The appellant did not dispute the value sanctioned; the surviving claim was confined to interest on delayed payment. The order could therefore not be treated as an appealable adjudication order. [Paras 18, 19, 20, 22]

The Single Judge's direction relegating the appellant to the statutory appellate forum was set aside.

Failure to consider claim for interest on delayed payment of value of seized goods - HELD THAT: - The Court found that the appellant had sought interest before the authority and that this claim had not been adjudicated by the authority or any judicial forum. The earlier Division Bench had left the appellant free to invoke remedies available in law for claiming interest. [Paras 21, 23, 24, 25, 26]

The authority was directed to decide the representation for interest in accordance with law and in the light of the Supreme Court decisions referred to, and to disburse any amount found payable or communicate reasons for rejection.

Final Conclusion: The appeal was disposed of by setting aside the order relegating the appellant to the statutory appellate remedy and directing the customs authority to adjudicate the pending claim for interest on delayed payment of the value of the seized goods.

Consideration of Customs Broker licence application following exoneration on identical allegations - HELD THAT: - Although proceedings under the Customs Broker Licensing Regulations are distinct from proceedings under the Customs Act, the allegations in both proceedings arose from the same export transaction. The appellate finding that there was no evidence of the petitioner's knowledge or involvement in the attempted illegal export had attained finality and was a relevant circumstance which the licensing authority could not wholly ignore. Refusal to consider the fresh licence application solely by reference to the earlier revocation order was therefore unsustainable. [Paras 11]

The licensing authority was directed to consider the application afresh, independently and on its own merits, after taking into account the appellate order exonerating the petitioner, without any opinion being expressed on the merits of the application.

Final Conclusion: The writ petition was disposed of with a direction for fresh consideration of the Customs Broker Licence application in the light of the final appellate exoneration on the identical allegations.

Penalty for alleged courier-based gold smuggling - findings beyond show cause notice - Voluntariness and evidentiary value of statements - HELD THAT: - The show cause notice confined the proceedings to the seized gold consignment while stating that verification of the earlier consignments was awaited. The adjudicating authority nevertheless relied on the earlier consignments, which had been X-ray screened, cleared and delivered, thereby travelling beyond the show cause notice. No investigation was undertaken to verify material particulars concerning the supplier, courier account, goods and related documents, and there was no basis for the finding of a collusive agreement between the appellants. The statements relied upon could not be treated as voluntary or admissible evidence of smuggling of the seized gold, having regard to the medical report and affidavit, and as they related to past imports. [Paras 21]

The penalties imposed on the appellants were held unsustainable and were set aside with consequential relief in accordance with law.

Final Conclusion: The appeals were allowed. The penalties for alleged courier-based smuggling of gold were set aside with consequential relief in accordance with law.

Natural justice in customs confiscation proceedings - Confiscation for unestablished import contravention - Liability of imported mobile handsets, sought to be re-exported, to confiscation and consequential redemption fine and penalty where the alleged import contravention was not specifically communicated or established. - HELD THAT: - The Commissioner (Appeals) had found that the departmental communication neither specified the contravention attracting confiscation nor afforded notice and personal hearing before imposing redemption fine and penalty. It also found no established improper import or mala fide conduct. The Tribunal found no reason to interfere with those findings and upheld the conclusion that the goods were not liable to confiscation. [Paras 13]

The setting aside of confiscation, redemption fine and penalty, and permission for re-export without those liabilities, were sustained.

Final Conclusion: The Revenue's appeal was dismissed. The order permitting re-export without confiscation, redemption fine or penalty was sustained.

Fraud classification of bank account - inconclusive forensic audit report - Principles of Natural Justice - Reasonable Opportunity of Hearing - Transparency in Adjudication - Validity of the show cause notice proposing classification and reporting of the borrower's account as fraud, founded on a forensic audit conducted without the borrower's complete financial records - HELD THAT: - The Court held that, upon commencement of liquidation, the Liquidator is the custodian of the company's books, financial records and operational documents, and formal requisitions for such records by the forensic auditor were required to be routed through the Liquidator. The audit report itself recorded that it was based on limited material, was subject to further findings upon production of complete records, and could not reveal all material issues. It was therefore not conclusive and could not sustain the impugned show cause notice. The general restraint against interference with a show cause notice was held inapplicable on these facts. [Paras 24, 25, 27, 28, 29]

The show cause notice was quashed, without precluding the bank from taking steps in accordance with law after obtaining the necessary records through the Liquidator or the investigating authority for a definitive forensic audit.

Final Conclusion: The writ petition was allowed and the impugned show cause notice was quashed, while preserving the bank's liberty to proceed afresh in accordance with law on a definitive forensic audit.

Prior approval for proceedings by liquidator - Post facto approval of arbitral invocation - Commencement of Arbitral Proceedings - Purposive Interpretation

Institution of arbitral proceedings by a liquidator on behalf of a corporate debtor in liquidation without prior approval of the Adjudicating Authority - HELD THAT: - From the judgments of the Hon’ble Supreme Court in Erach Boman [2013 (12) TMI 1673 - SUPREME COURT] and Bajaj Hindustan [2016 (3) TMI 1478 - SUPREME COURT], it is apparent that where the word “prior” is used in the statutory provision, the approval contemplated therein must be obtained before the proposed action is undertaken. Consequently, where the statute requires prior approval for initiating legal proceedings on behalf of the corporate debtor, such approval must necessarily precede the institution of those proceedings.

The proviso to Section 33(5) employs the expression "prior approval"; therefore, approval of the Adjudicating Authority is mandatory and must precede institution of legal proceedings. Since arbitral proceedings commence upon receipt of a request for reference under Section 21 of the Arbitration and Conciliation Act, issuance of the invocation notice constitutes commencement of such proceedings. [Paras 22, 23]

Prior approval of the Adjudicating Authority is mandatory before the liquidator invokes arbitration on behalf of the corporate debtor.

Effect of post facto approval under the proviso to Section 33(5) on an arbitration invocation notice issued by a liquidator without prior approval - HELD THAT: - Unlike Section 28(4), Section 33(5) does not expressly declare proceedings initiated without approval void. Applying a purposive construction, an invocation made without prior approval is not void ab initio but remains ineffective until approval is granted; it is treated as having commenced from the date of such approval. Any subsequent procedural steps must follow afresh from that effective date. [Paras 26, 27, 28, 29]

The invocation notice became effective from the date on which approval was granted; consequently, the application for appointment of an arbitrator was maintainable and a sole arbitrator was appointed.

Final Conclusion: Prior approval was mandatory, but the absence of such approval did not nullify the arbitration invocation. Upon post facto approval, the invocation took effect from the approval date and the Court appointed a sole arbitrator.

Reasoned order for fraud classification under the RBI Fraud Master Circular - Fraud classification of a former non-executive director without attribution of fraudulent transactions

Validity of the bank's order declaring the petitioner a fraudulent borrower without dealing with his defence to the show-cause notice - HELD THAT: - The Fraud Master Circular of 2024 mandates a reasoned order stating the relevant facts and circumstances, the submissions made against the show-cause notice, and the reasons for classification. The impugned order merely reproduced the forensic auditor's observations and recorded the opportunities afforded to the petitioner, but neither considered his defences nor disclosed reasons for rejecting them. Its substantial identity with the show-cause notice demonstrated non-application of mind. [Paras 12, 14]

The fraud-classification order was quashed as wholly unreasoned and unsustainable.

Fraud classification of a former non-executive director without attribution of fraudulent transactions - Whether the bank could recommence fraud-classification proceedings against the petitioner for the forensic audit review period. - HELD THAT: - Although a fresh proceeding could ordinarily follow the setting aside of an unreasoned order, the forensic audit report did not attribute any fraud to the petitioner during his tenure as Director. Further, no allegation of fraud against him was contained in that report, and no personal guarantee was produced to controvert his assertion that he had never executed one. In these peculiar circumstances, fraud proceedings against him for the review period could not be sustained. [Paras 17, 18]

The bank was declined liberty to reinitiate proceedings for declaring the petitioner as fraud for the forensic audit review period.

Final Conclusion: The writ petition was allowed. The fraud-classification order was set aside, and the bank was not permitted to recommence fraud proceedings against the petitioner for the review period.

Regular bail in money-laundering proceedings - Prolonged incarceration and delayed trial - Entitlement to regular bail in money-laundering proceedings arising from transactions of 2013-2014, where the accused had already undergone significant incarceration in connection with the predicate offences and charges had not been framed. - HELD THAT: - It is not in dispute that several FIRs were registered with the local police in relation to the chit fund cases. Vide order dated 9th May, 2014, this Court transferred the investigation in such matters to the CBI, which registered regular cases and arrested the petitioners. These cases were registered in relation to the transactions which took place in the State of Orissa. Eventually, after having undergone incarceration for a significant period of time, the petitioners were released on bail.

The High Courts of Jharkhand and Assam also directed transfer of similar FIRs registered in those respective States to the CBI. The petitioners were also arrested in the CBI case in Assam in which too, they have been reportedly granted bail. However, in the Jharkhand CBI case, till date, the petitioners have not been arrested.

The alleged transactions were substantially old, the petitioners had already suffered significant incarceration in connection with the predicate offences, and there was no likelihood of an early conclusion of trial, notwithstanding the filing of a prosecution complaint involving numerous witnesses and voluminous documents. [Paras 9]

The petitioners were directed to be released on bail on terms fixed by the trial Court, subject to deposit of passports, restriction on leaving the country without prior permission, and continued cooperation in the trial.

Final Conclusion: The special leave petition was disposed of by granting the petitioners regular bail, subject to conditions imposed by the trial Court.

Cancellation of bail for inherent perversity - Mandatory twin conditions for bail under the Prevention of Money Laundering Act - Statutory presumption from documentary proceeds-of-crime evidence - HELD THAT: - Our criminal jurisprudence draws a sharp, qualitative distinction between two independent and mutually exclusive judicial pathways for taking away an accused person's liberty after regular bail has been granted: firstly, the occurrence of supervening circumstances born post-release, and secondly, the presence of inherent perversity and foundational illegality in the order granting bail itself.

The first pathway, governing “supervening circumstances,” applies to situations where an order enlarging an accused on bail was legally unassailable and properly within jurisdiction at the time it was passed, but subsequent post-release developments demonstrate that the accused has abused his liberty. As established by the Supreme Court of India in landmark decisions such as Sanjay Gandhi [1978 (5) TMI 119 - SUPREME COURT], Dolat Ram [1994 (11) TMI 424 - SUPREME COURT], and reinforced down to Dharamraj [2023 (8) TMI 1728 - SUPREME COURT] this track requires the prosecution to prove definitive post-release misconduct. This includes actions such as active attempts to tamper with evidence, intimidation or coercion of prosecution witnesses, an immediate and demonstrable flight risk to evade trial, or the repetition of identical crimes.

However, our jurisprudence recognizes a second, entirely distinct pathway for cancellation that does not rely on post-release developments. As established by the Apex Court in Puran [2001 (5) TMI 971 - SUPREME COURT], Narendra K. Amin [2008 (4) TMI 779 - SUPREME COURT], and consistently applied and Deepak Yadav [2022 (10) TMI 574 - SUPREME COURT], if the underlying order granting bail is patently perverse, illegal, or operates in direct violation of mandatory statutory bars, the prosecution is not required to prove any post-bail misconduct or supervening circumstances. When a subordinate court grants bail by ignoring vital material on record or by bypassing absolute statutory limitations, the order is legally broken from its inception (ab initio void). In such instances, a superior court is constitutionally obligated to set aside the order immediately, as allowing an inherently flawed order to remain in force constitutes an independent and severe miscarriage of justice.

Cancellation of bail may rest independently on inherent perversity or foundational illegality in the grant of bail; post-release misconduct is not indispensable where the order itself ignores vital material or mandatory statutory restrictions. The Special Court wrongly treated the accused's status as an external land broker, the absence of direct depositor testimony, the status of the predicate investigation, and the period of custody as sufficient grounds for bail. The Court held that the offence of money laundering is independent of the predicate investigation; a person outside the formal corporate structure is within the scope of the offence if he knowingly facilitates the handling of proceeds of crime; and unaccounted cash ledgers and digital transaction records found in the accused's possession attracted the statutory presumption, which could not be displaced by demanding direct oral evidence. The mandatory twin conditions for bail had not been satisfied, and general liberty considerations could not override them. [Paras 37, 38, 39, 40, 41]

The bail order was held inherently and patently perverse and was quashed; the accused was directed to surrender.

Final Conclusion: The application for cancellation of bail was allowed. The bail order was quashed for inherent perversity and breach of the mandatory statutory requirements governing bail in a money-laundering prosecution.

Garnishee Proceedings - Recovery of indirect tax dues from legal heirs of deceased sole proprietor - Absence of machinery provisions for recovery against estate of deceased assessee - Validity of recovery proceedings against the legal representatives of a deceased sole proprietor for service-tax dues determined against the proprietorship concern. - HELD THAT: - As per pleadings made herein, which have not been disputed by the respondents, M/s Mahendran Rupesh Naidu was a proprietorship firm. The proprietor Mahendran Rupesh Naidu died on 03.05.2023, though Adjudicating Authority had passed order raising demand of Rs. 10,74,919/- along with penalty of equal sum against proprietorship firm on 12.10.2018. The appeal preferred against said order was dismissed vide order dated 03.02.2023. After death of Mahendran Rupesh Naidu, demand notice was issued against his legal representatives on 13.12.2024.

The Court applied Shabina Abraham [2015 (7) TMI 1036 - SUPREME COURT], holding that the recovery provision, being pari materia with the provision considered therein, does not provide machinery for proceeding against the legal heirs or estate of a deceased person. In the absence of such machinery provisions, the tax dues could not be treated as payable by the deceased proprietor's legal representatives. [Paras 6, 7]

The demand notice issued to the legal representatives was quashed and the petition was allowed.

Final Conclusion: The recovery notice issued against the legal representatives of the deceased sole proprietor was quashed, as the governing indirect-tax law contained no machinery provision authorising such recovery.

Services in relation to transmission and distribution of electricity - Exemption under Notification No. 45/2010-Service Tax - Direct and Close Nexus - Service Tax Exemption - Negative List - HELD THAT: - Following the ratio of the decision of this Tribunal in the matter of M/s. Perfect Electricals C/o MESCOM [2018 (6) TMI 481 - CESTAT BANGALORE], the activities undertaken by the appellants are to be held as falling under the ambit of 'in relation to transmission of electricity’ in terms of Notification No. 45/2010 dated 20.7.2010 as there is a clear nexus between the service rendered by the appellant and transmission and distribution of electricity. We hold that the said Notification is squarely applicable to the appellants.

The notification was therefore squarely applicable. The demands of service tax, interest and penalties on the impugned activities were held unsustainable and the impugned orders were set aside.

Final Conclusion: The appeals were allowed with consequential relief, the impugned demands, interest and penalties having been set aside.

Cross-examination of witnesses and principles of natural justice - Non-consideration of material submissions in excise-duty demand proceedings

Validity of the full remand of the excise-duty demand proceedings on account of denial of cross-examination of persons whose statements were relied upon - HELD THAT: - The Tribunal found that most statement-givers had neither been examined in accordance with Section 9D of the Central Excise Act, 1944 nor produced for cross-examination; cross-examination was wrongly denied for certain witnesses merely because their statements had not been retracted, and only two of the persons permitted to be cross-examined were actually examined. The adjudicating authority could not choose which witnesses could be cross-examined or decide that cross-examination was unnecessary. This approach violated principles of natural justice; the Tribunal correctly relied on Andaman Timber Industry [2015 (10) TMI 442 - SUPREME COURT]. [Paras 3, 5, 6, 7]

The Tribunal's direction for de novo adjudication on this ground was upheld, and no substantial question of law arose.

Non-consideration of material submissions in excise-duty demand proceedings - HELD THAT: - The demand founded on supplies by two laminate packing suppliers required consideration of the respondent's submission that eight other franchisees also manufactured goods under the same brand. The adjudicating authority had not dealt with that material submission. The Tribunal was therefore justified in ordering a full remand for fresh consideration. [Paras 4, 5, 6, 7]

The remand for de novo adjudication was sustained, and no substantial question of law arose.

Final Conclusion: The Revenue's appeal was dismissed, as the full remand for de novo adjudication rested on established breaches of natural justice and failure to consider material submissions, giving rise to no substantial question of law.

Restoration of appeal dismissed for default - Sufficient cause for non-appearance - Power of the Appellate Tribunal to restore an appeal dismissed for the appellant's default upon sufficient cause being shown for non-appearance - HELD THAT: - Admittedly, if an appellant fails to make the mandatory pre-deposit, the Appellate authority can dismiss the appeal and if the appellate authority is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. As per the version of the appellant, due to heavy floods at Kurnool from 28.09.2009 to 02.10.2009, his colour lab was completely submerged in the flood water. In the impugned order dated 20.10.2010, the Appellate Tribunal came to conclusion that it has no power to review its own order so as to restore the appeal.

The proviso to Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 expressly empowers the Tribunal to set aside dismissal for default and restore the appeal where the appellant subsequently establishes sufficient cause for non-appearance. The use of the word "shall" makes restoration obligatory once such cause is established; consequently, the Tribunal erred in treating the restoration application as an impermissible review of its order. [Paras 8, 9]

The impugned order was set aside and the restoration application was remitted to the Appellate Tribunal for fresh consideration and disposal in accordance with law.

Final Conclusion: The appeal was allowed, and the restoration application was directed to be considered afresh on merits in accordance with law.

Principles of natural justice - Non-application of mind in appellate adjudication - Dismissal of a tax appeal solely for non-appearance, without considering the written objections and grounds of appeal. - HELD THAT: - An authority passing an order prejudicial to a person must hear and consider that person's contentions. The appellate order disclosed that the appeal was dismissed solely because neither the petitioner nor its authorised representative appeared pursuant to the hearing notices, while none of the objections or grounds raised in appeal were considered. Such failure constituted non-application of mind and substantial violation of principles of natural justice. [Paras 5, 6, 7]

The appellate order was set aside and the appeal was remanded for fresh disposal after notice of hearing and consideration of all objections and grounds of appeal.

Final Conclusion: The writ petition was allowed. The appellate authority was directed to reconsider and dispose of the appeal afresh in accordance with principles of natural justice.

Interim measures for unperfected loan security - Debt Service Reserve obligation - Prima Facie Case - Balance of Convenience

Interim measures for unperfected loan security - Mortgage of financed project - HELD THAT: - Disputes are with regard to the mortgage that the respondent was required to create in terms of the Rupee Term Loan Agreement dated April 2, 2019 and the Amendatory and Supplementary Rupee Term Loan Agreement dated May 6, 2020.

The loan documentation envisaged mortgage of the financed project as security, but the mortgage remained uncreated. The lender's recall of the facility and pendency of insolvency proceedings did not preclude recourse to interim measures, since the arbitral tribunal had not been constituted and nothing showed that a moratorium affected the appeal. The unsecured position resulting from non-creation of mortgage established a prima facie case; the balance of convenience and likelihood of prejudice also favoured protection. [Paras 25, 26, 27, 28]

The lender was held entitled to interim protection.

Compliance with the borrower's obligation to create and maintain the Debt Service Reserve - HELD THAT: - Creation of the Debt Service Reserve under the loan agreement was an outstanding contractual obligation of the borrower. [Paras 29, 30]

The borrower was directed to create the Debt Service Reserve within a fortnight of the lender's requirement, with liberty to the lender to seek appropriate relief upon non-compliance.

Final Conclusion: The appeal was disposed of by granting interim protection and directing creation of the contractually stipulated Debt Service Reserve.