TaxTMI Updates e-Newsletter
Jul 31,2026

Challenged to the GST adjudication proceedings - No signatures on Form GST DRC-01 and the attachment and summary of the order in Form GST DRC-07 - HELD THAT:- The writ petition was disposed of on the petitioner's request for liberty to pursue the statutory appeal, without any adjudication on the merits. The petitioner was permitted to file an appeal with the statutory pre-deposit and an application for condonation of delay; the appellate authority may consider delay and, if satisfied, decide the appeal on merits in accordance with law.

Claim for the differential GST amount - HELD THAT:- The petition was disposed of on agreed terms, directing verification of the claim for GST at the enhanced rate and a reasoned decision within one month.

Writ jurisdiction despite statutory appellate remedy - Statutory pre-deposit under GST appellate remedy - Principles of Natural Justice

Writ jurisdiction despite statutory appellate remedy - Opportunity of hearing in cancellation of GST registration - HELD THAT: - The record disclosed that a show-cause notice had been issued, an opportunity to file a reply had been granted, and personal hearing had also been offered but not availed. Whether the opportunity so afforded was sufficient involved a factual question more appropriately examinable by the statutory Appellate Authority. [Paras 5]

The petitioner was relegated to the statutory appellate remedy.

Statutory pre-deposit under GST appellate remedy - HELD THAT: - The Act contains no provision enabling exemption from the statutory requirement of pre-deposit. [Paras 6]

The request for exemption from pre-deposit was not accepted.

Final Conclusion: The writ petition was disposed of with liberty to the petitioner to avail the statutory remedy of appeal, subject to the prescribed pre-deposit requirement.

Personal hearing in GST adjudication - Violation of principles of natural justice - Validity of the GST demand order where no date for personal hearing was fixed in the show-cause notice or afforded before adjudication. - HELD THAT: - Section 75(4) mandatorily required an opportunity of personal hearing. As no hearing date was fixed in the show-cause notice and no hearing was provided at any stage before the order was passed, the adjudication stood vitiated for breach of principles of natural justice. The delay objection to the writ petition was consequently overruled. [Paras 4, 5, 6]

The demand order was quashed, with liberty to pass a fresh order after affording the petitioner-firm an opportunity of hearing in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned GST adjudication order for denial of the mandatory opportunity of personal hearing, while permitting fresh adjudication in accordance with law.

Alternative statutory remedy and writ jurisdiction - Disputed questions of fact concerning service of GST notices - Maintainability of the writ petition challenging an ex parte GST adjudication order on the ground of non-service of the show cause notice and hearing notices, despite the statutory appellate remedy. - HELD THAT: - Availability of an appellate remedy does not absolutely bar writ jurisdiction, but departure from that remedy is confined to genuine exceptional circumstances. The alleged denial of natural justice depended upon disputed factual questions as to service by Speed Post at the registered address, uploading on the GST portal, and the effect of rejection of the cancellation application. Determination of whether service complied with the statutory requirements and whether any alternative mode was necessary required factual appreciation appropriately undertaken by the appellate authority. The decision in Seagull Maritime Agencies Pvt. Ltd. [2024 (3) TMI 1313 - DELHI HIGH COURT] was inapplicable without first resolving those disputed facts. [Paras 7, 9, 10, 11, 12]

No recognised exception to the rule of alternative remedy was established; the petitioner was left to pursue the statutory appeal, with exclusion of the pendency of the writ petition for limitation purposes.

Final Conclusion: The writ petition was disposed of without adjudicating the disputed service issue, leaving the petitioner to avail the statutory appeal. The appellate authority was directed to consider any appeal independently and in accordance with law.

Extraordinary writ jurisdiction - statutory appellate remedy - barred by limitation - rectification application - HELD THAT:- Having considered the rival submissions and on perusal of the documents filed on record, it is found that a show-cause notice was issued to the petitioner on 09.08.2024, whereas, the petitioner submitted the reply in physical format on 14.08.2024, as he lacked portal knowledge, which his CA was handling earlier, whereas, the final order was passed on 12.09.2024, confirming the demand, also observing that no reply has been submitted by the petitioner. Subsequently, the petitioner also filed a rectification application under Section 161 of The Goods and Services (GST) Act, 2017, ('the GST Act') which is still pending, however, it appears that it is also barred by limitation, whereas, the remedy of appeal is also available to the petitioner under Section 107 of the GST Act, which has already become barred by limitation.

The writ petition was dismissed, the Court holding that lapse of the limitation for the statutory appeal did not warrant exercise of extraordinary jurisdiction under Article 226.

Violation of principles of natural justice in appellate proceedings - Cryptic and unreasoned appellate order - Validity of rejection of the GST appeal without affording a hearing and by a one-line order recording incorrect declaration of the order-issuing authority. - HELD THAT: - The appellate order was passed without hearing the petitioner and merely recorded the reason for rejection without disclosing any supporting reasons. Such a cryptic disposal was contrary to the principles of natural justice and could not be sustained. [Paras 13]

The impugned appellate order was quashed and the appeal was remanded for de novo hearing and a reasoned decision on merits; the merits of the rival contentions were left open.

Final Conclusion: The petition was disposed of by setting aside the rejection of the GST appeal and remanding it for fresh consideration after notice and hearing.

Input tax credit for delayed return filing - Retrospective benefit under Section 16(5) of the CGST Act - Entitlement to input tax credit for March 2019 where the return was furnished after the time stipulated under Section 16(4) but before the cut-off date under Section 16(5) of the CGST Act. - HELD THAT: - Section 16(5) permits the claim where the return is furnished before 30.11.2021. Since the return for March 2019 was furnished on 13.12.2019, denial of input tax credit solely for breach of Section 16(4) could not be sustained.

The assessment order and demand notice were quashed to the extent of such denial, and the Assessing Officer was directed to reconsider and grant input tax credit under Section 16(5), if the petitioner is otherwise entitled.

Final Conclusion: The writ petition was disposed of by setting aside the denial of input tax credit for March 2019 and directing reconsideration in accordance with Section 16(5) of the CGST Act.

GST refund claim - pending investigation into genuineness of suppliers and transactions - actual suppliers and movement of goods remained unverified during an ongoing supply-chain investigation - HELD THAT: - The authorities stated that the legitimacy of the supply chain, the suppliers and the transactions required further investigation, particularly as the actual supplier was unknown and unverified. In the peculiar circumstances, the Court did not examine the refund claim on merits and considered that it required fresh decision after completion of the investigation. [Paras 5]

The refund rejection and appellate disposition were remitted for fresh decision after the investigation is concluded and the genuineness of the suppliers and transactions is examined; all rights and contentions were left open.

Final Conclusion: The writ petition was disposed of by remanding the refund claim for fresh adjudication after completion of the investigation, without any determination on merits.

Consistency in treatment of export of services - Refund of unutilised input tax credit for zero-rated supplies - Intermediary services - Principle of Consistency - Entitlement to refund of unutilised input tax credit on zero-rated export services where the department classified identical services as export services for preceding and succeeding periods but treated them as intermediary services for the period in dispute. - HELD THAT: - The decision of a co-ordinate bench of this court in M/s. Corning Technologies India Pvt. Ltd. [2026 (5) TMI 1817 - PUNJAB AND HARYANA HIGH COURT], wherein, in identical circumstances, it was held that where the same entity is treated differently as an exporter and intermediary, and when no reasons are forthcoming to distinguish the rendering of services, then such an approach would be held to be discriminatory.

The department had granted refund for the same services in periods both before and after the period in dispute, and the orders granting such refunds had not been challenged. In the absence of material demonstrating that the services rendered during the disputed period were distinct so as to bring the petitioner within the definition of an intermediary, differential treatment was arbitrary and contrary to consistency. The rejection of refund on the basis of intermediary classification was therefore unsustainable. [Paras 5, 6]

The rejection of the refund claim was set aside, and refund with applicable interest was directed to be released.

Final Conclusion: The petition was allowed. The impugned appellate order was quashed and release of the claimed refund with applicable interest was directed.

Input tax credit-extended time-limit for filing returns - Entitlement to input tax credit for the relevant months where the returns were filed before the cut-off date prescribed under Section 16(5) of the CGST Act - HELD THAT: - The returns for all the relevant months had been filed between 24.05.2018 and 27.10.2019, i.e., before 30.11.2021, the cut-off date contemplated by Section 16(5). The denial of input tax credit solely on the ground of non-compliance with the time-limit under Section 16(4) could not therefore be sustained. [Paras 2]

The order denying input tax credit was quashed and the matter was directed to be reconsidered for grant of the benefit under Section 16(5), if the petitioner was otherwise entitled.

Final Conclusion: The writ petition was disposed of by quashing the denial of input tax credit and directing reconsideration in accordance with Section 16(5) of the CGST Act.

Opportunity of hearing before adverse GST determination - Consideration of assessee's reply and principles of natural justice - HELD THAT: - The taxpayer's reply to the show-cause notice was not denied, but was admittedly not considered by the assessing authority. Further, Section 75(4) mandates an opportunity of hearing where an adverse decision is contemplated, even absent a written request. The failure to consider the reply and to afford the mandatory hearing vitiated the determination for breach of natural justice and statutory requirements. [Paras 6, 8, 9]

The demand proceedings and consequential actions, including the appellate rejection founded on that determination, were held unsustainable and were set aside; the assessing authority was left free to issue an appropriate notice and proceed in accordance with law.

Final Conclusion: The writ petition was allowed and the impugned GST determination and consequential appellate action were set aside for non-consideration of the taxpayer's reply and failure to afford the mandatory opportunity of hearing.

Deemed withdrawal of best judgment assessment on filing of returns with late fee - non-filing of returns after filing of Form GSTR 3B with the prescribed late fee - HELD THAT: - Section 62(2) provides that an assessment order passed under Section 62 is deemed withdrawn upon filing of the necessary returns within the stipulated period; where there is delay, the registered person is required to pay late fee. As the petitioner had filed the return for the relevant period and paid the necessary late fee, the assessment order was required to be treated as deemed withdrawn. The Court extended the benefit consistently with the judgment of the High Court of Madras and its earlier order in M/s. Brothers Engineering and Errectors Limited[2025 (8) TMI 1763 - ANDHRA PRADESH HIGH COURT]. [Paras 4, 5, 7]

The assessment order was deemed withdrawn and consequential bank attachments, if any, were set aside.

Final Conclusion: The writ petition was allowed. The assessment for April-2023 stood deemed withdrawn upon filing of Form GSTR 3B with late fee, and consequential bank attachments were set aside.

Input tax credit-returns filed within extended statutory cut-off - Entitlement to input tax credit for November 2018 to March 2019 where the returns were filed before the cut-off prescribed by section 16(5) of the CGST Act - HELD THAT: - The returns for the relevant months had been filed before November 30, 2021. Consequently, denial of input tax credit solely on the basis of the earlier cut-off under section 16(4) could not be sustained, since section 16(5) governed the claim; eligibility on other applicable grounds remained to be verified.

The assessment order was quashed to the extent of denial of input tax credit for the relevant months, and the claim was directed to be reconsidered under section 16(5), subject to the petitioner's otherwise eligibility.

Final Conclusion: The writ petition was disposed of by setting aside the denial of input tax credit for the relevant months and directing reconsideration in accordance with section 16(5) of the CGST Act.

Revocation of GST registration cancellation - Revocation of cancellation of GST registration where the matter was agreed to be covered by the earlier decision of the Court. - HELD THAT: - The Court accepted the parties' agreement that the controversy was covered by Tvl. Suguna Cutpiece Center [2022 (2) TMI 933 - MADRAS HIGH COURT], and applied the conditions prescribed therein. Revival of registration was made conditional upon filing the pending returns and payment of the tax dues, interest, penalty, fine and fee in the manner directed; input tax credit could be utilised only upon scrutiny and approval by the competent authority. [Paras 4]

The cancellation order was set aside and the writ petition was allowed on the terms governing revival of registration in the earlier decision.

Final Conclusion: The writ petition was allowed by setting aside the cancellation order, subject to compliance with the conditions for revival of GST registration laid down in the earlier decision.

Prior approval under Section 153D - Approval not to be mechanical - application of mind - CBDT Circular and Manual of Office Procedure binding on department - Requirement of mentioning approval in assessment order - Rules of natural justice in administrative orders entailing civil consequences

HELD THAT:- We find that in case of the very same respondent in [2023 (11) TMI 1254 - SC ORDER] this Court dismissed the Special Leave Petition.

Having regard to the facts and circumstances of the case, following the said order, we dismiss this Special Leave Petition also on merits as well as on delay. HC order confirmed.[2023 (3) TMI 785 - ORISSA HIGH COURT]

Profit on sale of investments - Assessee carrying on a general insurance business -disallowance under Section 40(a)(i) for non-deduction of tax - depreciation rate on UPS as integral part of computer - applicability of minimum alternate tax / Section 115JB to insurance companies - rule of consistency in departmental assessments

HELD THAT:- Delay was condoned and the Special Leave Petition was dismissed without interference with the impugned order [2025 (6) TMI 1488 - MADRAS HIGH COURT].

Electronic furnishing of audit report for in-house research and development deduction - time requirement under Rule 6(7A)(c) for issuance of Form 3CL for the relevant assessment years - Delay in issuance of Form 3CL

Non Compliance with the requirement for furnishing the audit report in Form 3CLA for claiming deduction in respect of an approved in-house research and development facility - HELD THAT: - Rule 6(7A)(c) requires the company to furnish Form 3CLA electronically to the Department of Scientific and Industrial Research by the due date for filing its return of income.

A plain reading of Rule 6(7A)(c) makes it clear that the obligation of an assessee under Section 35(2AB) of the Income Tax Act, 1961 read with the Rule 6(7A)(c) is to maintain a separate account for each approved facility, which shall be audited annually and a report of audit in Form No. 3CLA shall be furnished electronically with Respondent No. 1 on or before the due date of filing of the Return of Income as specified in Explanation-2 to sub Section (1) of Section 139 of the Act.

Since the Department had registered as an external agency on the income-tax e-filing website and accepted that electronically filed Form 3CLA could be accessed and viewed by it, uploading the form to the assessee's e-filing account within that due date fulfilled the statutory requirement. [Paras 10, 11]

The assessee had duly complied with Rule 6(7A)(c) for A.Y. 2018-19 and A.Y. 2020-21; its applications could not be treated as delayed.

Final Conclusion: The rejection of the applications for issuance of Form 3CL for A.Y. 2018-19 and A.Y. 2020-21 solely on the ground of delay was set aside. The applications were directed to be decided on merits and the eligible expenditure computed in accordance with law.

Scrutiny assessment notice - disclosure of selection reasons - CBDT scrutiny - selection guidelines - inter-departmental character

Validity of a notice initiating scrutiny assessment without disclosing the reasons for selection or the nature of scrutiny - HELD THAT: - A notice under section 143(2) merely intimates the assessee that the case has been selected for scrutiny. The CBDT and departmental circulars governing selection of cases and the nature of scrutiny operate as inter-departmental guidelines and do not confer a right upon an assessee to demand reasons for selection. Such selection may be questioned only upon demonstration of arbitrariness or vendetta. The AO is required, during assessment proceedings, to issue a specific notice calling for relevant information and documents. [Paras 5, 7, 8, 9]

The challenge to the scrutiny notice was rejected, as the subsequent specific notice calling for information and documents fulfilled the requirement of assessment proceedings.

Final Conclusion: The writ petition challenging the notice initiating scrutiny assessment was dismissed.

Cash on-money paid towards purchase of a flat - Cross-examination of third-party statements relied on for unexplained investment addition denied - Deduction for interest on savings account deposits

Unexplained investment in flat purchase - Cross-examination of third-party statements denied - Addition for alleged cash on-money paid towards purchase of a flat, founded on statements of the builder's partners. - HELD THAT: - The addition rested primarily on third-party statements alleging receipt of cash from flat purchasers. The assessee had specifically denied making any payment beyond the declared sale consideration and had sought copies of those statements and an opportunity to cross-examine their makers. As adverse material relied upon for an addition must be confronted to the assessee, denial of both the statements and cross-examination rendered the addition unsustainable. [Paras 5, 6]

The addition under section 69 was deleted.

Deduction for interest on savings account deposits - Claim of deduction under section 80TTA in respect of interest income - HELD THAT: - The claim required factual verification of the assessee's eligibility under the relevant statutory provision. [Paras 7]

The Assessing Officer was directed to verify the claim and allow the deduction if the assessee is found eligible in accordance with law.

Final Conclusion: The appeal was partly allowed: the addition for alleged cash payment in the flat purchase was deleted, while the deduction claim for interest income was restored for verification.

Overriding contractual obligation and accrual of real income - Taxability of compulsory-acquisition compensation attributable to development rights - Double taxation of the same receipt

Overriding contractual obligation and accrual of real income - Taxability of compulsory-acquisition compensation attributable to development rights - Taxability in the hands of a land-holding company of compensation attributable to development rights transferred to the developer under a pre-existing Development Agreement - HELD THAT: - Tax liability had to be determined on the real substance of the commercial arrangement and not solely from legal title to the land. The Development Agreement, whose genuineness was not questioned, conferred exclusive development rights and the corresponding commercial interest upon the developer, which had funded acquisition of the land and undertaken the commercial risks and obligations of its development. The amount attributable to those rights was transferred under an overriding contractual obligation; it was not an application of income after accrual. The Revenue could not selectively disregard the arrangement merely because compulsory acquisition resulted in profit, particularly when the developer would have borne the commercial consequences of a loss. [Paras 10, 11, 12, 13, 14]

The amount attributable to development rights did not accrue as income of the assessee and its disallowance was unsustainable.

Double taxation of the same receipt - Consistency in tax treatment of identical commercial arrangements - Sustainability of the addition where the developer had offered the transferred compensation to tax and the Department had accepted that assessment - HELD THAT: - The recipient developer had offered the receipt to tax and the Department had accepted its assessment. Sustaining the addition in the assessee's hands would consequently result in impermissible double taxation of the same income without statutory authority. Further, under identical development agreements and the same business model, other group land-holding companies had been assessed without such addition; in the absence of distinguishing facts, inconsistent treatment could not be sustained. The Tribunal followed Chrysilla Builders & Developers Pvt. Ltd.[2025 (5) TMI 705 - ITAT DELHI], which had treated an identical arrangement as revenue-neutral, and referred to CIT v. Excel Industries Ltd.[2013 (10) TMI 324 - SUPREME COURT (LB)] [Paras 15, 16, 17, 18]

The addition was deleted.

Final Conclusion: The appeal was allowed and the addition in respect of compensation transferred to the developer under the Development Agreement was deleted.

Penalty u/s 271(1)(c) - estimated addition on accommodation entriesassessed at an ad hoc rate - HELD THAT: - The underlying addition in respect of accommodation entries had been sustained only to the extent of an ad hoc rate. Having regard to the balance sheet, audit report, Form 26AS, bank statements and stock register submitted before the lower authorities, and the application of the ad hoc rate, the Tribunal held that the penalty could not be sustained.

As decided in M/S. MUN GEMS [2024 (1) TMI 209 - ITAT MUMBAI]once, the source of payment of purchases have been made through books of accounts and through account payee cheques and there is corresponding sales, then merely because some adhoc GP rate has been applied on such alleged bogus purchases to factor in suppression of alleged gross profit, no penalty can be levied for furnishing of inaccurate particulars of income or concealing particulars of income, which Id. AO has held in his penalty order that penalty is being levied under both the limbs, which itself shows his satisfaction is vague.[Paras 6 and 7]

The penalty under section 271(1)(c) was held illegal and set aside.

Final Conclusion: The appeal was allowed and the penalty imposed under section 271(1)(c) was deleted. The remaining grounds were left open as academic.

Exemption u/s 54F - Exemption for capital gains invested in an allotted residential flat - Allotment letter as acquisition of residential house for capital-gains exemption

Entitlement to exemption u/s 54F in respect of capital gains arising from surrender of rights in immovable property, where the sale consideration was adjusted towards a residential flat allotted under a construction project - HELD THAT: - The allotment letter recorded adjustment of the consideration received by the assessee against the purchase consideration of the new residential house, and the Revenue neither disputed the allotment nor alleged breach of any condition for the exemption. CBDT Circular No. 471 clarifies that allotment of a flat under a construction scheme is the relevant date for acquisition. Since the allotment was not cancelled and the conveyance agreement was subsequently executed, delayed execution of the conveyance deed could not establish that the assessee had failed to acquire the residential house. [Paras 5]

The exemption claim was held allowable, and the Assessing Officer was directed to compute the deduction in accordance with law.

Final Conclusion: The appeal was partly allowed. The assessee's claim for exemption under section 54F was accepted and the deduction was directed to be computed in accordance with law.

Condonation of delay for bona fide pursuit of alternate remedy - Penalty for concealment following quashing of quantum assessment

Condonation of delay for bona fide pursuit of alternate remedy - Condonation of delay in filing the appeal against penalty where the assessee had bona fide pursued resolution under the VSVS, 2024 scheme - HELD THAT: - Where substantial justice is pitted against technicalities, delay may be condoned absent malice or gross negligence. The assessee's pursuit of the alternate remedy under the scheme disclosed no malice or gross negligence, and no advantage could be gained by belated filing. [Paras 2]

The delay in filing the appeal was condoned.

Penalty u/s 271(1)(c) for concealment following quashing of quantum assessment - HELD THAT: - The penalty levied under section 271(1)(c) rested upon the quantum assessment. Once the Tribunal quashed that assessment and the corresponding appellate order, the penalty order and the appellate order affirming its consequence could not survive. [Paras 5]

The penalty order and the appellate order relating to the penalty were quashed.

Final Conclusion: The appeal was allowed. The delay was condoned and the penalty consequential to the quashed quantum assessment was deleted.

Jurisdictional validity of reassessment based on incorrect assessee particulars - Reassessment based on third-party search material

Reassessment notice founded on another assessee's transaction - Extended reassessment limitation for escaped income - Validity of reassessment initiated on the basis of a transaction and return particulars pertaining to a different assessee - HELD THAT: - The notice under section 148 proceeded on an erroneous factual basis by attributing another entity's loan transaction and return particulars to the assessee. Further, the alleged escaped income was below the statutory threshold applicable where reassessment is initiated beyond three years, and the notice did not state that such income was represented in the form of an asset as required. The initiation therefore suffered from non-application of mind and non-compliance with the statutory conditions for reassessment. [Paras 7]

The reassessment proceedings were held void ab initio and quashed.

Reassessment notice based on third-party search material - Statutory approval for reassessment following third-party search - HELD THAT: - Where third-party search material was relied upon for reassessment after the statutory amendments, the prescribed procedure for issuance of notice and prior approval was required to be followed. The failure to comply with those legal requirements, which remained uncontroverted, rendered the reassessment unsustainable. [Paras 10]

The reassessment proceedings were quashed.

Final Conclusion: The reassessments for Assessment Years 2018-19 and 2017-18 were quashed for jurisdictional and statutory non-compliance. Consequently, the Department's connected appeals were dismissed.

Disallowance for failure to deduct tax at source from salary payments - TDS u/s 192 - Salary payments treated as commission payments -

HELD THAT: - The payments to five persons, though claimed as commission, were admitted by the assessee and reflected in the bank book as salary payments. Since the salary paid to each person exceeded the basic exemption limit, the assessee was obliged to deduct tax at source under section 192. The first year of business did not preclude the consequent disallowance under section 40(a)(ia). [Paras 6]

The disallowance under section 40(a)(ia) was upheld.

Final Conclusion: The appeal was dismissed and the disallowance for non-deduction of tax at source from salary payments was sustained.

Unexplained money - accounted cash sale proceeds - Acceptance of recorded sales and stock - invocation of section 69A

Addition as unexplained money in respect of cash found in employees' lockers, claimed to represent recorded proceeds from sale of leftover construction material - HELD THAT: - The cash sales were supported by invoices, ledger accounts, cash-book entries, GST returns, buyer confirmations and reduction in inventory. The sales and resulting profits had been recorded in the books and accepted by the Revenue without disturbing the stock, books or trading results. In the absence of contrary material rebutting this documented source, the cash could not be treated as unexplained money under section 69A merely because it was kept in employees' lockers or because the Assessing Officer doubted the supporting invoices. Case followed of AKSHIT KUMAR [2020 (11) TMI 873 - DELHI HIGH COURT]. [Paras 8, 9, 10]

Deletion of the addition under section 69A was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal confirmed the deletion of the addition for unexplained money, holding that the seized cash stood explained by recorded and accepted sales of leftover construction material. The Revenue's appeal was dismissed.

Authentication of assessment orders issued in paper form - Revenue or capital character of repairs and maintenance expenditure - Deductibility of consumables issued to shop floor - Business-purpose requirement for deduction of relief fund contribution - Write-off of trade advances as business loss

Authentication of assessment orders issued in paper form - Validity of an assessment order manually signed although the proceedings were conducted through the e-proceedings framework - HELD THAT: - Section 282A recognises issuance in paper form, requiring signature, as distinct from electronic communication in the prescribed manner. The assessment order bore the signing authority's name and designation, signature, date and Document Identification Number and was therefore duly authenticated. The Coordinate Bench decisions relied upon by the assessee Outotec Singapore Pte. Ltd [2025 (12) TMI 1209 - ITAT DELHI], Navyug Technologies Private Limited [2026 (4) TMI 1246 - ITAT DELHI] and UCWEB Mobile Private Limited [2026 (4) TMI 1186 - ITAT DELHI] had not considered the governing statutory provision and could not bind the Tribunal; in any event, any procedural defect stood protected by section 292B. [Paras 13, 14, 15, 16, 18]

The challenge to the validity of the assessment order on account of manual signature was rejected.

Characterization of expenditure on slotted angles, racks, heavy-duty racks, add-on modules and similar items claimed as repairs and maintenance - capital v/s revenue expenses - HELD THAT: - The expenditure represented replacement parts used in the existing plant and machinery and was claimed under repairs. The Revenue had treated it as capital on surmises, without factual material establishing acquisition of a new asset or an enduring benefit. It was consequently revenue expenditure. [Paras 24]

The capital disallowance was deleted; depreciation allowed on the expenditure, if any, was directed to be withdrawn.

Deductibility of consumables issued to shop floor - Allowability of consumables issued to the shop floor for cleaning and related purposes, debited under housekeeping and other expenses. - HELD THAT: - The assessee furnished software-generated journal entries, third-party purchase invoices, item-wise and quantity-wise particulars, and details of subsequent issue to departments. Materials were initially debited to the purchase account and charged to profit and loss only on consumption. The claim could not be rejected merely as unsupported internal entries. [Paras 26]

The disallowance of consumables issued to the shop floor was deleted.

Business-purpose requirement for deduction of relief fund contribution - Allowability as business expenditure of contribution to the Uttarakhand Relief Fund - HELD THAT: - Proof of payment, genuineness and book entry does not by itself establish deduction under section 37(1). The assessee did not substantiate that the contribution was incurred wholly and exclusively for business purposes. [Paras 31]

The disallowance of the contribution as business expenditure was sustained.

Write-off of vendor advances as business loss - Allowability of old advances made to vendors for materials not supplied and written off as non-recoverable - HELD THAT: - The record showed that the advances were made to vendors for materials, the supplies were not received, and the Revenue did not contend that the advances related to capital items or lacked business nexus. Their write-off therefore constituted a business loss allowable under section 28. [Paras 35]

The disallowance of old vendor advances written off was deleted.

Final Conclusion: The appeal was partly allowed. The challenges to authentication of the assessment order and disallowance of the relief fund contribution failed, while the disallowances relating to repairs, shop-floor consumables and vendor advances written off were deleted.

Assessee in default for non-deduction of TDS on LTC/LFC reimbursements - Binding effect of interim judicial directions on statutory TDS obligation - Liability of the employer-bank to be treated as an assessee in default and charged interest for non-deduction of tax on LTC/LFC reimbursements made while the Madras High Court's interim directions operated - HELD THAT: - Following the decision of the Kerala High Court in the assessee's own case on similar facts [2025 (11) TMI 1773 - KERALA HIGH COURT], the Tribunal held that the interim direction expressly treated the reimbursements as not constituting income for enabling deduction of tax at source and required the employees to bear tax if the writ petition ultimately failed. Since the direction governed the payments when made, the bank could not be regarded as having failed in a subsisting obligation to deduct tax; consequently, the provisions deeming it an assessee in default and levying consequential interest were inapplicable. [Paras 10]

The orders treating the assessee as an assessee in default and levying tax and interest under sections 201(1) and 201(1A) were quashed.

Final Conclusion: All the assessee's appeals were allowed. The demands for tax and interest arising from non-deduction of TDS on the impugned LTC/LFC reimbursements were annulled.

Addition for alleged on-money receipts in real-estate sales - Deemed rental income on unsold vacant units held as stock-in-trade

Addition for alleged on-money receipts in real-estate sales - Corroboration of seized loose papers - Addition for alleged on-money receipts from sale of units in the Privilon and Paarijat Eclate projects on the basis of seized loose sheets, Excel files, broker files and WhatsApp chats - HELD THAT: - The seized material reflected offer rates and internal projections, but did not establish that the stated rates represented concluded sale transactions or that cash had been received over the registered consideration. No corroborative material, cash trail, buyer confirmation, or evidence rebutting the buyers' affidavits was brought on record.

A uniform rate for all units was also unsustainable, since pricing varied with the unit's characteristics and timing of booking. Following the coordinate Bench decision on the same search material, the addition could not rest on assumptions and presumptions. [Paras 17, 18, 30, 41]

The entire addition for alleged on-money receipts was deleted for all the relevant assessment years, and the Revenue's connected grounds were dismissed.

Deemed rental income on unsold vacant units held as stock-in-trade - Estimation of annual value - Deemed rental income chargeable on vacant unsold units after expiry of the statutory period from obtaining building-use permission - HELD THAT: - The provision requiring deemed rent on unsold units after the stipulated period did not exclude projects whose construction had commenced before its introduction. In the absence of material showing efforts to let the vacant units, the estimate of deemed rent at 3% of their market value, with the statutory deduction as directed, was held justified. [Paras 43, 44, 49]

The restriction of deemed rental income to 3% of the value of unsold units was sustained, and both the assessee's and the Revenue's challenges were rejected.

Final Conclusion: The assessee's appeals were partly allowed by deletion of the additions for alleged on-money receipts, while the deemed-rent addition for the assessment year 2023-2024 was sustained at 3% of the value of unsold units. The Revenue's appeals for the assessment years 2019-2020 and 2020-2021 were dismissed; its appeal for the assessment year 2023-2024 was partly allowed.

Error Apparent on the Face of the Record - Review Jurisdiction - Requirement to satisfy the conditions for export of brown basmati rice laid down as per Sl. No. 57 of ITC (HS) – Schedule-2 – Export Policy for basmati Rice (De- husked brown) or also required to satisfy the condition laid down vide Notification dated 11.01.2023, issued by FSSAI - CESTAT [2025 (7) TMI 362 - CESTAT CHANDIGARH] held that 'It is opined that the revenue could not establish that the exported goods were mis- declared and therefore, liable for confiscation. When the department failed to establish that the goods are liable for confiscation, imposition of redemption fine, demand of duty and imposition of penalties cannot be sustained.' - HELD THAT:- Review petition dismissed as no error apparent on the face of the record was found in the order [2025 (10) TMI 1046 - SC ORDER].

Distinction between prohibited and restricted goods - Provisional release of seized imported tyres - Rectification of mistake - Classification by Condition at Import - End-use Not Determinative of Classification - Import Policy Restrictions

Provisional release of imported tyres declared as mining/off-road tyres, pending adjudication of their classification as freely importable mining tyres or restricted truck and bus radial tyres - HELD THAT: - The distinction between ‘prohibited’ goods and ‘restricted’ goods is evident and ‘prohibited’ goods are the one, which are covered under Chapter IV and and for which purpose, there is a Notification issued by the Central Government prohibiting the import or export of the goods, with the specification set out and this prohibition is necessary for the reasons stated in sub-section (2) of Section 11. On the contrary, as per the foreign trade policy, the export and import is free except, when it is regulated by prohibition or restriction.

The Customs circular withholding provisional release applies to goods established to be prohibited. The imported tyres bearing speed symbol 'D' were outside the scope of IS 15636 and the applicable quality-control regime; the material and IRMRA reports did not establish that the goods were prohibited. Goods which are importable subject to fulfilment of statutory conditions, such as a licence or BIS certification, are not thereby prohibited goods; the decision in Atul Automation Pvt. Ltd.[2019 (1) TMI 1324 - SUPREME COURT] recognised the fundamental distinction between restricted and prohibited goods. The quantitative-import embargo considered in Union of India Vs. Raj Grow Impex LLP [2021 (6) TMI 778 - SUPREME COURT] was distinguishable. The classification issue was left for adjudication pursuant to the show-cause notice. [Paras 46, 47, 48, 50, 53]

The Tribunal's direction for provisional release, subject to the stipulated conditions, was upheld and directed to be implemented.

Rectification of mistake - Rejection of the Revenue's application for rectification of the Tribunal's provisional-release order on the basis of IRMRA reports not placed before it at the original hearing. - HELD THAT: - The Tribunal was justified in refusing rectification because the relevant IRMRA material had not been made available when the appeals were decided, and no ground existed to review the provisional-release order through rectification. [Paras 52]

The challenge to the order rejecting rectification was dismissed.

Final Conclusion: The Customs Department's writ petition and appeals were dismissed, while the importers' writ petitions were allowed. The seized tyres were directed to be provisionally released on compliance with the conditions imposed by the Tribunal, without affecting the pending classification adjudication.

RoDTEP rebate on restricted-category sugar exports -Entitlement to RoDTEP duty credit for exports made during the subsequent period after sugar was placed in the restricted category subject to specific permission -HELD THAT: - The Court held that the controversy was squarely covered by M/s. Satyendra Packaging Limited [2023 (12) TMI 1114 - GUJARAT HIGH COURT], which held that RoDTEP rebate could not be denied where exports were made after fulfilment of the conditions prescribed by the Directorate of Sugar and the Central Government notifications. The respondents fairly admitted that the present issue was so covered. [Paras 5]

The petition was allowed and the respondents were directed to pass an appropriate order granting duty credit in terms of the claimed relief within twelve weeks.

Final Conclusion: The writ petition was allowed as the claim for RoDTEP duty credit stood covered by the earlier decision, and the respondents were directed to pass an appropriate credit order within twelve weeks.

Customs valuation - rejection of transaction value - Reassessment of finally assessed Bills of Entry - Non-statutory valuation guidelines - Rejection of the declared transaction value of imported aluminium scrap and reassessment of finally assessed Bills of Entry solely on Directorate of Valuation guidelines based on London Metal Exchange prices - HELD THAT: - Once the Bills of Entry had been finally assessed after scrutiny and the assessments had not been challenged, the declared transaction value could not subsequently be rejected merely on the basis of Directorate of Valuation guidelines. Such guidelines have no statutory force and cannot override the Valuation Rules; nor was there evidence establishing that the declared transaction value was incorrect. Following Niraj Silk Mills [2024 (11) TMI 1361 - DELHI HIGH COURT], reassessment requires objectively sustainable reasons for doubting the declared value and cannot rest solely upon external valuation data without cogent corroborative material. [Paras 7, 9, 10]

The impugned reassessment, consequential duty demand, interest and penalty were set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The appeal was allowed. The reassessment based solely on non-statutory valuation guidelines and LME-based data, without evidence discrediting the declared transaction value, was held unsustainable.

Penalty for misdeclaration of imported goods - evidentiary basis - Cross-examination of co-noticee statements - Penalty for false customs declaration - Principles of Natural Justice - Right to Cross-Examination

Penalty for misdeclaration of imported goods - evidentiary basis - Cross-examination of co-noticee statements - facilitating clearance of Paraquat declared as industrial washing liquid, based solely on an uncorroborated statement of a director of the importing firm - HELD THAT: - The appellant filed the bill of entry and clearance documents on the basis of documents supplied by the importer; any doubt regarding description or classification could have been addressed by drawing samples and proposing reclassification. The sole material against the appellant was the importing firm's director's statement, whose cross-examination was denied without reasonable cause. Such uncorroborated co-accused statement could not sustain penal action, particularly when there was no other evidence substantiating the appellant's alleged knowledge or involvement. [Paras 7]

Penalties under Section 112(a) and (b) of the Customs Act, 1962 were held unsustainable and set aside.

Penalty for false customs declaration - making or using false customs declarations in relation to an import transaction involving actual importation of goods - HELD THAT: - Section 114AA was held inapplicable because the transaction was not alleged to be a paper transaction without actual import or export, and no act satisfying the statutory ingredients of that provision was established against the appellant. The Tribunal relied on Jai Balaji Industries [2017 (11) TMI 1703 - TELANGANA AND ANDHRA PRADESH HIGH COURT] and Sameer Santosh Kr. Jaiswal [2018 (5) TMI 1149 - CESTAT MUMBAI]. [Paras 7]

The penalty under Section 114AA of the Customs Act, 1962 was held unsustainable and set aside.

Final Conclusion: The penalties imposed on the appellant under Sections 112(a), 112(b) and 114AA of the Customs Act, 1962 were set aside, and the appeal was allowed with consequential relief in accordance with law.

Classification of imported final gear kits, differential gears, pinions and related goods - Specific inclusion elsewhere in the nomenclature - classifiable under tariff item 84834000 or tariff item 87085000 - General Rules for Interpretation - Harmonized System Explanatory Notes - Specific Entry Prevails - Cumulative Conditions - Burden of Proof - HELD THAT: - It is pertinent to note that the Hon’ble Apex Court in Welkin Foods [2026 (1) TMI 348 - SUPREME COURT], has said that the explanatory notes to HSN can be considered as binding guidance so long as the relevant tariff heading is fully aligned with the corresponding HSN heading and when there does not exist any explicit statutory deviation or contrary legislative intent stipulated in the Tariff Act. The Apex Court had observed that since the First Schedule of the Act, 1975 was amended to be in accordance with the HSN, the Explanatory Notes, being the official, international interpretation, are the most authentic guide to understanding the scope of the headings.

As per Note 2 (e) of Section XVII of the Customs Tariff, the expressions “parts” and “parts and accessories” do not apply to articles of heading 8483, provided they constitute integral parts of engines or motors, whether or not they are identifiable as for the goods of this section. Note 3 further states that references in Chapter 86 to 88 to “parts” or “accessories” do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. Note 3 goes on to stipulate that a part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. Thus, articles of heading 8483 that constitute integral parts of engines or motors, and parts or accessories that are not suitable for use solely or principally with the articles of chapter 86 to 88, whether or not they are identifiable as for the goods of Section XVII, are not covered under the expression “parts” and “parts and accessories” as prevalent in Section XVII.

The Judgement of the Hon’ble Supreme Court in the case of CCE Delhi v. M/s. Uni Products India Ltd. [2020 (5) TMI 63 - SUPREME COURT], incidentally relied upon by both sides is more appropriate. The Hon’ble Apex Court in fact, considers the paragraph (C) of the HSN Explanatory Notes of Section XVII in relation to “ (III) Parts and Accessories” and, finding the goods in the subject case, namely, textile carpets, being excluded by virtue of being listed therein, and are to be classified under Chapter Heading 5703 90 90, has held that there is no necessity to import the “common parlance” test or any other similar deice of construction for identifying the position of these goods against the relevant tariff entries.

Classification had to be determined under Rule 1 by the terms of the headings and the relevant Section and Chapter Notes. Although the goods were suitable solely or principally for motor vehicles and were not internal parts of engines so as to attract the exclusion in Note 2(e) to Section XVII, classification under Heading 8708 required cumulative fulfilment of the three conditions in the General Explanatory Notes to Section XVII. The goods were specifically covered as gears and gearing under Heading 8483; consequently, the condition that they must not be more specifically included elsewhere in the nomenclature was not fulfilled. Supplier classification, personnel statements, unexamined trade-practice assertions and foreign rulings which had not considered Heading 8483 could not displace this result. [Paras 69, 70, 71, 72, 73]

The reclassification under tariff item 87085000 was set aside; the goods remained classifiable under tariff item 84834000, with the consequential duty demand, interest, confiscation, redemption fine and penalties unsustainable.

Final Conclusion: The assessee's appeals were allowed and the departmental appeal seeking penalty was dismissed. The impugned classification, consequential demand and all attendant confiscatory and penal consequences were set aside.

Appellate jurisdiction over baggage matters - Revision application against baggage confiscation - Maintainability of an appeal before the Tribunal against the appellate order concerning gold brought into India as baggage and confiscated by Customs. - HELD THAT: - The dispute concerned gold brought as baggage and seized at the airport. By virtue of the exclusion under the first proviso to section 129A of the Customs Act, 1962, the Tribunal lacked jurisdiction over the appeal; the appropriate remedy against the order of the Commissioner (Appeals) lay by revision before the Government of India. [Paras 4]

The appeals were disposed of as not maintainable before the Tribunal, with liberty to approach the Revisionary Authority of the Government of India; the delay occasioned by pursuing the remedy before the Tribunal was directed to be considered sympathetically.

Final Conclusion: The Tribunal held that the statutory revisionary remedy, and not an appeal before it, was available in respect of the baggage confiscation matter.

Appellate jurisdiction over baggage matters - Revision remedy against baggage confiscation orders - Maintainability of an appeal before the Tribunal against an order concerning confiscation of gold brought into India as baggage. - HELD THAT: - An order of the Commissioner (Appeals) relating to goods brought as baggage is excluded from the Tribunal's appellate jurisdiction under the proviso to section 129A of the Customs Act. The appropriate remedy lies by revision before the Revisionary Authority of the Government of India. [Paras 4]

The appeal was disposed of for want of jurisdiction, with liberty to pursue a revision application before the Revisionary Authority; the delay attributable to the bona fide pursuit of the appeal before the Tribunal was directed to be considered sympathetically.

Final Conclusion: The Tribunal held that it lacked jurisdiction over the baggage-related confiscation dispute and left the appellant to pursue the statutory revision remedy before the Government of India.

Penalty for dealing with confiscated foreign-brand cigarettes - Quantum of penalty under section 112(b)(i) of the Customs Act

Penalty for dealing with confiscated foreign-brand cigarettes - HELD THAT: - The appellant failed, despite the matter remaining pending for five years, to produce documents substantiating the asserted receipt of the cigarettes from the co-appellant and their subsequent return. The penalty was therefore sustainable under section 112(b)(i) of the Customs Act, 1962. [Paras 6]

The penalty imposed on the appellant was upheld.

Quantum of penalty under section 112(b)(i) of the Customs Act - HELD THAT: - Having regard to the value of the cigarettes confiscated, the Tribunal found the penalty imposed under section 112(b)(i) to be highly excessive. [Paras 7]

The penalty was reduced.

Final Conclusion: The penalty on the appellant who failed to substantiate the claimed movement of the cigarettes was sustained, while the penalty on the appellant from whose premises the cigarettes were recovered was reduced as excessive.

Extension of warehousing period - Principles of natural justice in denial of warehousing extension - Denial of extension of the warehousing period by communications which disclosed no reasons or justification - HELD THAT: - The Tribunal in the case of Anand Laminates Ltd. [1992 (4) TMI 150 - CEGAT, NEW DELHI], wherein it is held that "On going through the wordings of Section 61(1)(b) proviso (ii), we find that extension or rejection is subject to the 'sufficient cause' being shown. Since the power of extension was quasi-judicial and required judicial approach and on sufficient cause being shown refers to an opportunity of being heard must be given before passing an order, such an order cannot be considered to be an administrative act of the authority".

The Hon’ble Supreme Court in SUO MOTO WP [2022 (1) TMI 385 - SC ORDER] while taking cognizance of difficulties due to covid pandemic, has extended limitations under various general as well as special laws of the country.

The Tribunal held that denial of extension of the warehousing period requires adjudicatory proceedings and an appealable reasoned order. The impugned communications merely conveyed rejection without disclosing any finding or justification. The matter therefore required fresh consideration in conformity with the principles of natural justice, including communication of the reasons for proposed denial, opportunity to reply and personal hearing. [Paras 14, 15]

The impugned communications were held prima facie unsustainable and the matter was remanded for fresh adjudication; consequential proceedings initiated pursuant to them were directed to remain in abeyance.

Final Conclusion: The appeals were disposed of by remanding the denial of warehousing-period extension for fresh reasoned adjudication after affording due opportunity to the appellant. Consequential proceedings were directed to be kept in abeyance.

Quashing of FIR at threshold - Forgery and fabrication of loan-security documents - IBC immunity and parallel criminal prosecution - Disputed Questions of Fact - Mini Trial - Falsification of Accounts - Doctrine of Indoor Management

Quashing of the FIR alleging forged personal guarantees and hypothecation deed, falsification of accounts and fraudulent reliance on such documents in insolvency proceedings - HELD THAT: - In Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT], the Hon’ble Supreme Court held that the inherent jurisdiction of the High Court to quash criminal proceedings under Section 482 Cr.P.C. is extraordinary in nature and must be exercised sparingly, with great circumspection, and only to prevent abuse of the process of the Court or to secure the ends of justice. At the stage of quashing, the Court must proceed on the basis that the allegations in the FIR or complaint are true and examine only whether they prima facie disclose the commission of a cognizable offence. The Court cannot undertake an enquiry into the reliability, genuineness, or sufficiency of the allegations or evaluate the evidence. Unless the case falls within the well-recognized categories warranting interference, criminal proceedings should ordinarily be allowed to continue, and the investigation or trial should not be interdicted at the threshold.

The allegations concerning the genuineness of the personal guarantees, the hypothecation deed, the asset schedules and the accounting entries involved disputed questions of fact. At the quashing stage, the Court could not determine the authenticity or evidentiary value of the disputed documents, or accept the defence that the variations resulted from completion of documentation at the head office. The FIR contained specific allegations of forgery, fabrication and falsification which prima facie disclosed cognizable offences; investigation, including examination of the questioned documents, could not be interdicted at its inception. [Paras 18, 35, 36, 37, 38]

The prayer to quash the FIR was rejected.

IBC immunity and parallel criminal prosecution - Doctrine of indoor management - Whether pendency of insolvency proceedings, statutory immunity under the Insolvency and Bankruptcy Code, or the doctrine of indoor management barred investigation into the alleged forgery and fabrication. - HELD THAT: - In Manish Kumar [2021 (1) TMI 802 - SUPREME COURT], the Hon’ble Supreme Court held that while upholding the constitutional validity of Section 32A of the Insolvency and Bankruptcy Code, 2016, held that the immunity thereunder is a substantive, post-approval immunity available only to the corporate debtor as a juristic entity and its property contingent upon fulfilment of the conditions in Section 32A(1) and does not extinguish the criminal liability of the individual promoters, directors, or officers who committed the offence; such individuals remain liable to be prosecuted independent of and notwithstanding the pendency or conclusion of proceedings before the NCLT/NCLAT, as further borne out by the continuing obligation of cooperation with investigating authorities under Section 32A(3). Consequently, Section 32A cannot be read as a procedural bar on parallel criminal proceedings against individual accused persons during the pendency of NCLT proceedings.

Pendency of proceedings before the insolvency forum was not a bar to criminal prosecution. The statutory immunity invoked did not operate as a procedural bar to parallel criminal proceedings against individual accused persons. Nor could the doctrine of indoor management support quashing where the complaint alleged forgery, irregularity and collusion; the role of the accused and the material connecting them with the alleged offences were matters for investigation. [Paras 26, 27, 28]

The defences based on insolvency proceedings, statutory immunity and indoor management did not warrant quashing at the threshold.

Final Conclusion: Both criminal petitions were dismissed. The FIR was permitted to proceed, leaving the disputed factual questions and the authenticity of the documents to investigation.

Territorial jurisdiction in contract suits - Delivery to carrier as delivery to buyer - Effect of expiry of letters of credit on underlying contract - Counterclaim by unregistered partnership firm - Reimbursement of export expenses - Cause of Action - Part Performance of Contract - Breach of Contract - Independence of Letters of Credit - Bar of Non-registration of Partnership Firm - Set-off of Export Expenses

Territorial jurisdiction in contract suits - Part cause of action - Delivery to carrier as delivery to buyer - The Bhuj Court had territorial jurisdiction over the suit for the price of the second and third export consignments. - HELD THAT: - It is pertinent to note that merely opening Letters of Credit is not sufficient but thereafter action taken by the plaintiff by letter dated 18.11.1978 confirming the orders placed by the defendants, accepting the offer at Kandla, would be sufficient to confer jurisdiction upon the Civil Court at Kutch-Bhuj within whose territorial jurisdiction, part performance of the contract had taken place.

The suit in respect of realisation and recovery of the price can always be filed at the place where the contract should have been performed or where its performance is completed. If the contract is to be performed at the place where it is made then the suit on the contract is required to be filed at the said place however, in a contract of sale of goods, the place where the goods have to be delivered, is also the place of performance and the Court of that place would have jurisdiction to entertain the suit in respect of the dispute of the contractual rights of the plaintiff.

In case of Patel Roadways ltd.[1991 (8) TMI 332 - SUPREME COURT] would also not be applicable to the facts of the case as it cannot be said that contract stipulated a specific place of delivery then that place determines the jurisdiction and not the place of initial handing over to a carrier. In the facts of the case, the place of shipment was changed from Kandla to Bombay and that would not divest the jurisdiction of the Court at Bhuj-Kutch when as part performance, the payment is also received by the State Bank of India at Kandla.

The contract was concluded upon acceptance of the defendants' orders at Kandla; the goods were dispatched from Kandla and payment under the letters of credit was stipulated to be received through the plaintiff's bank at Kandla. Delivery to the carrier at Kandla for transmission to the buyer was prima facie delivery to the buyer. The subsequent arrangement for airlifting the goods from Bombay did not efface the part performance, delivery and payment nexus at Kandla. [Paras 159, 160, 162, 167, 168]

The objection to territorial jurisdiction was rejected.

Breach of export contract - Expiry of letters of credit - The defendants, and not the plaintiff, committed breach in relation to the second and third consignments, notwithstanding expiry of the letters of credit. - HELD THAT: - Various documents were placed on record regarding the payment made by defendant no. 1 firm from Exh.420 to Exh.425. In the cross examination, it was admitted by the witness of defendant Nos. 1 to 4 that defendant no. 1 firm is not registered under the Partnership Act and only counter claim was filed on behalf of the firm and its partner. It was also admitted that defendant no. 1 firm is keeping the account books at Delhi office and is also paying the income tax. It is also admitted by the witness of defendants in the cross examination that at the time of export of 3rd consignment, free shipping bill was obtained and A.R.4 Form was not submitted. It was also admitted that defendant no. 1 firm had exported the goods for 3rd consignment at the cost of the plaintiff by obtaining the free shipping bill in the name of defendant no. 1 firm.

It was admitted by the witness that no amount was deducted by Yugoslavian buyers with regard to 2nd consignment and there is no outstanding payment to be made by Yugoslavian buyers regarding any goods which were exported for 2nd and 3rd consignment.

The defendants' clearing and forwarding agent retained the goods and, after export, prepared airway bills in the name of the first defendant, enabling it to obtain the buyers' payments instead of the plaintiff. The parties nevertheless proceeded with export after expiry of the letters of credit; their expiry did not terminate the underlying sale contract or absolve the defendants after they received the sale proceeds. [Paras 178, 201, 202, 203, 204]

The finding that defendants Nos. 1 to 4 breached the subsisting contract and were liable for the price of the exported goods was affirmed.

Counterclaim by unregistered partnership firm - Bar on enforcement of contractual rights - The counterclaim seeking contractual damages by the unregistered partnership firm was not maintainable. - HELD THAT: - Section 58 of the Partnership Act mandates as to how registration of a firm may be effect and the non-consequence of registration is traceable to section 69. The said provision is mandatory in character, and its effect is to render a suit in respect of a right under the Contract which he entered into a partner of a unregistered firm as being void. The Hon'ble Apex Court in the case of Loonkaran Sethia etc. versus Mr. Ivan E. John [1976 (10) TMI 160 - SUPREME COURT] has held that Section 69 is mandatory in character and its effect is to render a suit filed by the plaintiff in respect of a right vested in him or acquire by him under the contract which he entered into as a partner in a unregistered firm, whether existing or dissolved as void.

The Hon'ble Apex Court in the case of M/s. Umesh Goel [2016 (6) TMI 1488 - SUPREME COURT] concluded that the expression “other proceedings” occurring in section 69(3) of the Act does not having application to the ban imposed under said section, the proceedings initiated for arbitral proceedings as well as arbitration award.

The firm was admittedly not registered under the Partnership Act. The statutory bar applied to a counterclaim or other proceeding to enforce a contractual right intrinsically connected with a suit. Although the defendants could challenge the decree against them in appeal, they could not maintain the appeal insofar as it sought enforcement of the counterclaim. [Paras 214, 215, 216, 218, 219]

Rejection of the counterclaim was upheld.

Liability of clearing and forwarding agent and opening bank - The dismissal of the suit against the clearing and forwarding agent and the letter-of-credit opening bank was justified. - HELD THAT: - The bank's obligations were governed by the documents and terms of the letters of credit. The clearing and forwarding agent acted in connection with export for both the plaintiff and the first defendant, and no oral or documentary evidence established its liability for non-export or the plaintiff's claim. [Paras 222]

The plaintiff's claim against defendants Nos. 5 and 6 remained dismissed.

Reimbursement of export expenses - Modification of money decree - The decree for the price of the second and third consignments required reduction by the export-related expenses proved to have been incurred by the first defendant. - HELD THAT: - The trial court's determination of the amount payable for the consignments was not arbitrary. However, despite the counterclaim being barred, the evidence established that the first defendant had incurred specified airfreight, return-goods, spare-parts, demurrage and clearing and forwarding expenses on the plaintiff's behalf. Substantial justice required reimbursement of those proved expenses by reduction of the decretal amount. [Paras 226, 227, 228, 229, 230]

The decree was reduced, with proportionate interest, and the deposited amount was directed to be apportioned accordingly.

Final Conclusion: The defendants' appeal substantially failed and the plaintiff's cross-appeal against defendants Nos. 5 and 6 failed. The decree against defendants Nos. 1 to 4 was modified by allowing reimbursement of proved export expenses, with proportionate interest and apportionment of the deposited amount.

Necessary and proper parties in oppression and mismanagement proceedings - Appealability of deferred impleadment applications - Impleadment of independent entities alleged to have benefited from diversion of the company's funds and business, and maintainability of an appeal against deferral of the impleadment application - HELD THAT: - The principles governing impleadment require addition of a party only where its presence is necessary for effective adjudication. The proposed entities were independent businesses, not subsidiaries of the company, and the allegations of oppression and mismanagement were primarily directed against the conduct of the existing respondent. Their alleged status as beneficiaries did not, at that stage, render them necessary parties or justify their addition to support the petitioner's case. Since the impleadment application was not finally rejected but left open for consideration at the final hearing if necessity arose, the order neither determined the lis nor affected the petitioner's rights. [Paras 13, 14, 15, 16, 17]

The deferred consideration of impleadment was upheld, and the appeal was held not maintainable on account of absence of any final adverse determination.

Final Conclusion: The company appeal was dismissed. The question of impleading the proposed entities remains open for consideration by the Tribunal if required for effective adjudication of the company petition.

Insolvency Resolution Process against the Personal Guarantor who stood as guarantor in respect of loan availed by Corporate Debtor/Principal Borrower

Personal Guarantor, has filed this instant appeal under Section 61 of the I & B Code, 2016, being aggrieved against the impugned order [2024 (4) TMI 1422 - NATIONAL COMPANY LAW TRIBUNAL, KOCHI] by virtue of which the application filed by the Financial Creditor/Respondent No. 2 herein under Section 95 of the I & B Code, was allowed and Resolution Professional for the Personal Guarantor Appellant herein was directed to take further steps in PIRP as per the provisions of the I & B Code.

Appellant and the Corporate Guarantor approached the 1st Respondent Bank offering a One-Time Settlement (OTS) proposal offering to settle the case for Rs. 21.75 Crores, which was inclusive of Rs. 18.70 Crores already deposited pursuant to the order of the Hon'ble Apex Court [2024 (4) TMI 1421 - SC ORDER] and to establish his bona fide, he remitted a sum of Rs. 61,00,000/-, being 20% of the differential amount as proposed under the settlement.

HELD THAT:- Owing to the settlement that has been referred to in the memorandum filed by the Ld. Counsel for the Appellant on 10.07.2026 and the settlement certificate as issued on 09.07.2026, by the Respondent Bank, the Appellant has stated that the Respondent Bank has proposed withdrawal of the Personal Insolvency Resolution Process as communicated vide its correspondence of 04.07.2026, which has been accepted by Respondent Bank before this Appellate Tribunal. Further since, full and final payment of the amount as per the terms of the OTS has already been made on 03.07.2026 and a settlement certificate has been issued on 09.07.2026, nothing remains to be done in the PIRP proceedings initiated against the Appellant under Section 95 of the I & B Code.

Accordingly, the instant company appeal as agreed between the parties in terms of the settlement would stand allowed, since the IRP process has been agreed to be withdrawn, and the order [2024 (4) TMI 1422 - NATIONAL COMPANY LAW TRIBUNAL, KOCHI] would stand set aside. All pending interlocutory applications would stand closed.

Discretion in imposition of penalty under FEMA - Enhancement of penalty - Enhancement of penalty imposed on a company director for the company's contravention of foreign-exchange remittance requirements - HELD THAT: - Section 13(1) of FEMA prescribes only the maximum penalty and neither fixes a penalty nor stipulates a minimum. The quantum is consequently within the adjudicating authority's discretion, to be exercised judicially upon the facts and evidence. As the adjudicating authority had considered the record and passed a reasoned order, and the Directorate did not establish why the penalty was inadequate or why that discretion was improperly exercised, no interference for enhancement was warranted. This approach was supported by State of MP and Ors. Vs. Bharat Heavy Electricals [1997 (8) TMI 252 - SUPREME COURT]. [Paras 9, 10, 11, 12]

The penalty was not enhanced and the appeal seeking enhancement was dismissed.

Final Conclusion: The Tribunal upheld the adjudicating authority's exercise of discretion in fixing the penalty and dismissed the Directorate's appeal for enhancement.

Entitlement to regular bail - Satisfaction of twin conditions for bail under Section 45 - Reasonable grounds to believe - HC [2026 (6) TMI 645 - DELHI HIGH COURT] held that the twin conditions under Section 45 of the Prevention of Money Laundering Act, 2002 were not satisfied and regular bail was declined. - HELD THAT:- The Special Leave Petition was disposed of with liberty to seek regular bail after framing of charges, to be considered by the trial court in accordance with law.

Pre-cognizance hearing under the Bharatiya Nagarik Suraksha Sanhita in PMLA complaints - Validity of cognizance without hearing the proposed accused - Cognizance of a prosecution complaint under the Prevention of Money Laundering Act, 2002, taken after the coming into force of the Bharatiya Nagarik Suraksha Sanhita, 2023, without affording the proposed accused an opportunity of hearing. - HELD THAT: - The provisions governing complaints and cognizance under the Bharatiya Nagarik Suraksha Sanhita apply to a complaint under the Prevention of Money Laundering Act, there being no inconsistent provision in that Act. The proviso to Section 223(1) places an embargo on taking cognizance without hearing the accused. Non-hearing at that stage is an illegality vitiating the cognizance order and is not a mere irregularity requiring proof of prejudice. Since it was undisputed that the petitioners were not heard, the cognizance order was unsustainable. [Paras 9, 13]

The cognizance order was quashed and the proceedings were restored to the Special Court at the cognizance stage, with a direction to afford the petitioners an opportunity of hearing.

Final Conclusion: The petition was partly allowed. The impugned cognizance order was set aside and the Special Court was directed to reconsider cognizance after hearing the petitioners.

Proceeds of crime - Money-laundering proceedings consequent upon discharge in scheduled offence - Continuation of money-laundering proceedings against persons alleged to have dealt with funds received from an entity discharged on the finding that the funds were not proceeds of crime. - HELD THAT: - Relying on the decision in the case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)]. The allegations against the petitioners arose solely from their transactions with the entity from which they were alleged to have received proceeds of crime. That entity had been discharged in the scheduled offence and in the connected money-laundering cases on a finding, which had attained finality, that the funds concerned were not proceeds of crime. Since the existence of proceeds of crime derived from criminal activity relating to a scheduled offence is foundational to an offence of money-laundering, the proceedings against the petitioners could not survive. [Paras 20, 24, 25]

The criminal proceedings, including the order issuing process and the order rejecting discharge, were quashed qua the petitioners.

Final Conclusion: The petition was allowed and the money-laundering proceedings against the petitioners were quashed, as the transaction alleged against them no longer involved proceeds of crime.

Consulting engineer service-licensing of pre-existing technical know-how and trademark - Reverse charge liability of service recipient prior to section 66A - Natural Justice - Ultra Vires Delegated Legislation - Transfer of Right to Use - word 'consulting'

Consulting engineer service-licensing of pre-existing technical know-how and trademark - Licensing of pre-existing technical documentation, know-how and trademark for manufacture of passenger cars did not constitute consulting engineer service. - HELD THAT: - The correct legal characterisation of such a transaction is either a license or transfer of the right to use intellectual property, specifically know-how and a trademark, as opposed to rendering of a service. In law, there is a well recognised and substantive difference between selling/ licensing a product/asset (including intangible property such as know-how) and rendering a service.

The word 'consulting' is crucial. Black's Law Dictionary defines 'consultant' as ‘a professional who provides specialized expertise or expert knowledge to another party in exchange for a fee’. The Oxford English Dictionary defines 'consulting' as ‘engaged in giving advice on a particular subject, often in a professional capacity’. The underlying concept is one of engagement. The consultant is engaged by the client to bring their expertise to bear upon the client's problem or project. Skoda Czech was never engaged by the Appellant as a consultant. The Appellant only asked for a license to use Skoda Czech's ready-made technology. There was no assignment of any engineering task to Skoda Czech by the Appellant, no problem was posed to Skoda Czech for solution, and no advice was sought on any specific engineering challenge.

The agreement was a licensing arrangement under which the assessee obtained a restricted right to use intellectual property independently developed by the foreign manufacturer. The foreign manufacturer was neither a professionally qualified engineer nor an engineering firm, and was not engaged to render engineering advice, solve a specific engineering problem or provide customised technical assistance. The engineering subject matter of the licensed documentation could not alter the legal character of the transaction from a licence of pre-existing intellectual property into consultancy. [Paras 12, 14, 15, 18, 19]

The demand under consulting engineer service was unsustainable.

Reverse charge liability of service recipient prior to section 66A - Adjudication beyond show cause notice - The Indian recipient could not be made liable for service tax on services received from a foreign provider for the period preceding the enactment of section 66A. - HELD THAT: - Section 66A, which expressly enabled levy on the recipient under reverse charge, came into force only after the disputed period. Reliance on Rule 2(d) was beyond the show cause notice. Further, Rule 6 could not apply absent material establishing that the assessee had been authorised to pay tax on behalf of the foreign provider, and in any event had ceased to operate during part of the disputed period. Indian National Shipowners' Association [2008 (12) TMI 41 - BOMBAY HIGH COURT] and Laghu Udyog Bharati [1999 (7) TMI 1 - SUPREME COURT] supported the principle that liability could not be shifted to a service recipient merely through rules without clear statutory authority. The Tribunal also followed Bajaj Auto Ltd. vs. Commr. of Central Excise & Customs, Aurangabad [2004 (10) TMI 11 - CESTAT (MUMBAI)]. [Paras 21, 24, 25, 26, 28]

The reverse-charge demand upon the assessee was legally unsustainable.

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

CENVAT credit on running account bills and reverse-charge service tax challans - Substantial compliance with prescribed credit documents -HELD THAT: - Rule 9 of the CCR, 2004 read with Rule 4A of the STR, 1994 requires documents containing the material particulars relating to the taxable service and service tax payment; the decisive consideration is satisfaction regarding those particulars, rather than the nomenclature or form of the document. Running account bills and payment orders containing the substantial prescribed particulars are to be treated at par with invoices.

The crux of the matter is that the authority needs to be satisfied about the relevant details/particular and not the form of the document. Such has been the observation of the Tribunal in the case of M/s Resident Engineer, Rajasthan Housing Board [2026 (5) TMI 1655 - CESTAT NEW DELHI] that once the substantial particulars as required under Rule 9(2) of CCR, 2004 read with Rule 4A of STR, 1994 were available the same should be treated on par with the invoices and once the payment is not in dispute, denial of credit cannot be sustained. In view of the settled principles of law, it was held that the credit availed by the appellant on such running account bills read with the payment orders is correct.

As receipt of input services and payment of service tax were not disputed, and the appellant had also paid service tax as a recipient under reverse charge on the basis of proper challans, denial of credit on technical objections to the documents was unsustainable. [Paras 7, 8, 9]

The CENVAT credit was held admissible; consequently, the demand, interest and penalty could not survive.

Final Conclusion: The impugned order was set aside and the appeals were allowed, as the claimed CENVAT credit was supported by substantially compliant documents and service-tax payment evidence.

Reverse charge liability on foreign bank charges - Recipient of banking and financial service - Place of provision outside taxable territory - Liability to service tax under reverse charge on charges and finance costs retained by the foreign bank of an overseas buyer in letter-of-credit transactions - HELD THAT: - In the appellants own case [2024 (11) TMI 287 - CESTAT NEW DELHI] for the earlier period, this Tribunal has held that no service has been provided within the taxable territory to the appellant. The foreign bank rendered services to the overseas buyer with whom it had the letter-of-credit arrangement, and not to the appellant. The appellant negotiated documents with its Indian bank and had no direct nexus with the foreign bank. As both the provider and recipient of the foreign bank's service were outside India, the service was provided outside the taxable territory and could not be taxed in India. [Paras 7, 8]

The appellant was not liable to pay service tax under the reverse charge mechanism on the foreign bank charges.

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

Sale of developed plots as transfer of immovable property - Extended limitation for service tax demand - Suppression of Facts - Intent to Evade Tax

Taxability of advances received on sale of developed plots, alleged to be consideration for Site Formation and Development Service - HELD THAT: - The sale of developed plots involved transfer of title in immovable property, which is excluded from the definition of service. The department produced no evidence to disprove that the plots had been developed before their sale or that flats were sold. After introduction of the negative-list regime, classification as Site Formation and Development Service was also untenable; development of the plots could not be treated as a service rendered to their purchasers. [Paras 6]

The advances were held to be receipts towards sale of developed plots and not consideration for a taxable service.

Extended limitation for service tax demand - Penalty for time-barred service tax demand - HELD THAT: - The Hon’ble Apex Court in the case of Commissioner of Service Tax vs M/s. Elegant Developers [2025 (11) TMI 518 - SUPREME COURT], while denying invocation of extended period for mere nonpayment of service tax or failure to file returns has also held that where a developer acquires land and transfers title, the activity constitutes trading in land and is not a taxable service.

The requisite information was available with the department from statutory records and the balance sheet, and no evidence established clandestine activity, deliberate suppression, or intent to evade tax. Mere non-payment of tax or delayed filing of returns, without fraud, collusion, wilful misstatement or suppression with intent to evade, could not justify the extended period. [Paras 6]

The show-cause notice was held time-barred; consequently, the demand and penalties on the company and its Director were set aside.

Final Conclusion: The impugned order was set aside and all five appeals were allowed, as the receipts related to sale of developed plots and the show-cause notice was barred by limitation.

Section 11D-amount collected as representing excise duty - Reimbursement of Cenvat credit reversal on exempted goods - Applicability of Section 11D to an amount recovered from the buyer as reimbursement of the reversal made under Rule 6(3)(a)(i) of the Cenvat Credit Rules, 2004, where exempted goods were invoiced under an "Excise duty" column. - HELD THAT: - It is equally undisputed that the appellant discharged its independent statutory obligation under Rule 6(3)(a)(i) by reversing an amount equal 6% of the value of exempted goods and reflected such reversal in its statutory records and ER-1 Returns.

The New Delhi Tribunal in Jindal Tubular (India) Ltd.[2022 (7) TMI 1240 - CESTAT NEW DELHI], considered an almost identical dispute and categorically held that reimbursement of the amount payable under Rule 6(3) does not become Excise duty merely because the invoice distributed it as such. The Tribunal held that Section 11D is not attracted where the amount recovered is in reality reimbursement of statutory reversal under Rule 6(3) of Cenvat Credit Rules, 2004.

Following the same, no excise duty was leviable on the exempted clearances, and the statutory reversal under Rule 6(3)(a)(i) had already been made and disclosed in the appellant's records and ER-1 returns. The agreement established that the buyer had undertaken to reimburse that reversal and not to pay excise duty. The legal character of the recovery was therefore not altered merely because the invoice format reflected it under the "Excise duty" column; in the absence of material showing that the amount was intended to represent excise duty, Section 11D was inapplicable. [Paras 18, 19, 20]

The recovery was held to be reimbursement of the Rule 6(3)(a)(i) reversal and not an amount collected as representing excise duty; the demand, interest and consequential penalties were set aside.

Final Conclusion: The appeal was allowed. The amount recovered from the buyer was held to be reimbursement of the statutory reversal and not a collection representing excise duty under Section 11D.

CENVAT credit on factory-setting-up services - Extended limitation for suppression of facts - Penalty for wrongly availed CENVAT credit

Eligibility of CENVAT credit on fabrication, erection of pipelines, welding, cutting and flange-fixing services used for setting up the factory before commercial production - HELD THAT: - The main part of the definition of input service covers services used, directly or indirectly, in or in relation to manufacture. Setting up a factory is directly related to manufacture, since manufacture cannot take place without a factory. Though setting-up services were removed from the inclusive part of the definition after April 1, 2011, they were not excluded; services covered by the main part remain eligible unless specifically excluded. The disputed services were not construction services excluded by the definition. [Paras 4]

The services qualified as input services and the CENVAT credit was rightly availed and utilised; the demand for recovery with interest was unsustainable.

Suppression of facts for extended limitation - Penalty for inadmissible CENVAT credit - HELD THAT: - The appellant was not legally required to disclose in monthly returns the nature of each service or the separate credit attributable to each service. Credit was reflected as part of the total credit in the returns. Non-furnishing of information not mandated by law could not constitute suppression or misstatement with intent to evade duty; further, the credit was admissible. [Paras 4]

The extended period was not invocable and no penalty was leviable.

Final Conclusion: The impugned order and the Order-in-Original were set aside. The appeal was allowed with the disputed CENVAT credit held admissible and the demand, extended limitation and penalty held unsustainable.

CENVAT credit on supplementary service-tax invoices - Penalty for wrongful availment of CENVAT credit

Eligibility to CENVAT credit on supplementary invoices issued for manpower-supply and construction services after detection of the service provider's non-payment of service tax - HELD THAT: - Rule 9(1)(bb) disentitles the recipient to credit on supplementary invoices where the additional tax became recoverable from the service provider because of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade tax. The service tax was paid only after detection of non-payment, and the Settlement Commission had granted only partial immunity by reducing the penalty. The Tribunal therefore held that the non-payment fell within the statutory exception and that credit on the supplementary invoices was unavailable. [Paras 13, 14]

The denial and recovery of CENVAT credit, with interest, were upheld.

Penalty for wrongful availment of CENVAT credit - Liability to penalty for availing CENVAT credit on the supplementary invoices. - HELD THAT: - Though the credit was inadmissible, the invoices relied upon by the appellant contained the particulars prescribed under the Rules, including details of duty payment and taxable value. The Tribunal found no omission by the appellant in claiming credit on such documents. [Paras 13, 14]

The penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with section 11AC of the Central Excise Act, 1944 was set aside.

Final Conclusion: The appeal was partly allowed. Denial of CENVAT credit and consequential interest was sustained, while the penalty was deleted.

Input tax credit on DEPB licences - Taxable goods specified in the First Schedule - Entitlement to input tax credit on tax paid for purchase of DEPB licences used for import of plastic granules - HELD THAT: - Though a DEPB licence is goods under the Act, that character alone does not establish entitlement to input tax credit. The entitlement under section 19(1) is confined to tax paid on purchase of taxable goods specified in the First Schedule; DEPB licences are not so specified and do not fall within the categories contemplated by section 19(2) to (4). The earlier Division Bench decision of this Court in Sha Kantilal Jayanthilal [2016 (4) TMI 968 - MADRAS HIGH COURT] correctly determined the scope of input tax credit in relation to DEPB licences and was not per incuriam. [Paras 19, 22]

The denial of input tax credit on purchase of DEPB licences was sustained.

Final Conclusion: The writ appeals were dismissed, sustaining the reassessment orders denying input tax credit on the purchase of DEPB licences.

Classification of food supplements as proprietary Ayurvedic medicines - Drug licence for sale of Ayurvedic medicines - Power to award costs in tax appeals - Common Parlance Test - Authoritative Test

Power to award costs in tax appeals - HELD THAT: - No provision in the Act barred the Tribunal from imposing costs. The power to award litigation expenses to compensate a successful litigant for vexatious litigation was held to be inbuilt, and the exercise of that discretion was not excessive.

Dismissal of the appeal with costs was legally permissible.

Classification of food supplements as proprietary Ayurvedic medicines - Common parlance and authoritative tests - The classification of the capsules and neem oil, purchased and sold as food supplements, as proprietary Ayurvedic medicines taxable under the entry for drugs. - HELD THAT: - Classification of a product claimed as an Ayurvedic medicine requires application of the common parlance and authoritative tests; common parlance alone is not decisive. The products had been purchased under the assessee's CST registration as food supplements and sold without any change. The manufacturer's drug licence did not establish that the products were medicines, particularly when the assessee lacked a licence to deal in drugs or medicines and there was no proof that the products were intended for diagnosis, treatment or cure of disease. A commodity purchased and sold as such cannot be assigned a different character solely for tariff purposes.

The products were rightly treated as food supplements falling under the residuary entry, and not as proprietary Ayurvedic medicines.

Drug licence for sale of Ayurvedic medicines - The contention that no licence was required for sale of proprietary Ayurvedic medicines in Puducherry. - HELD THAT: - The non-applicability of Chapter IV of the Drugs and Cosmetics Act to Ayurvedic, Siddha and Unani drugs did not dispense with the regulatory requirements under Chapter IV-A, which specifically governs those drugs and prohibits manufacture or sale in contravention of that Chapter.

The plea that no licence was necessary for sale of proprietary Ayurvedic medicines was rejected.

Final Conclusion: The tax revision was dismissed. The classification of the products as residuary food supplements and the Tribunal's award of costs were upheld.

Continuance of statutory concessional notification - Binding effect of Government-adopted classification of electronic goods - Entitlement of pre-recorded audio cassettes to the concessional rate under the Government Order adopting their classification as electronic goods, notwithstanding introduction of a separate First Schedule entry. - HELD THAT: - It is well settled that a notification issued in exercise of the statutory power under Section 9(1) of the Act operates independently and continues to remain effective until it is expressly withdrawn, superseded or rescinded. The mere amendment of an entry in the First Schedule cannot, by necessary implication, nullify a concession granted under a statutory notification. Admittedly, G.O.Ms.No.252, dt.19.05.1995, had not been rescinded during the relevant assessment year. Consequently, the introduction of Entry 10 in the First Schedule by G.O.Ms.No.910, dt.31.12.1999, did not have the effect of withdrawing the concessional rate granted to electronic goods, as was held by the learned STAT.

The Hon'ble Supreme Court in Concap Capacitors’ case [2007 (10) TMI 301 - SUPREME COURT], wherein it was held that once the Electronics Commission classifies a commodity as an electronic good and such classification is adopted by the Government for extending a statutory concession, the taxing authorities are bound by such classification and cannot assign a different classification for the purpose of denying the benefit of the notification. Thus, the ratio laid down therein squarely governs the facts of the present case.

More pertinently, the reliance placed by the learned STAT on the judgment of the Hon'ble Supreme Court in Dunlop India Limited's case is well founded. The Supreme Court reiterated that statutory exemption and concessional notifications issued in exercise of statutory power constitute a distinct source of law and continue to operate until and unless rescinded by a specific Government Order.

A notification issued under the statutory power to grant a concession operates independently and remains effective until expressly withdrawn, superseded or rescinded. Mere amendment of a First Schedule entry does not, by implication, nullify the concession. As the Government Order adopting the Electronics Commission's classification of pre-recorded audio cassettes as electronic goods remained in force during the relevant assessment year, the Revenue was bound by that classification and could not deny the concessional rate merely upon introduction of Entry 10. [Paras 16, 17, 18, 19, 20]

The assessee was entitled to the concessional rate of tax; the substantial questions were answered against the Revenue.

Final Conclusion: The Tax Revision Case was dismissed, sustaining the assessee's entitlement to the concessional rate under the unrescinded Government Order.

Recovery of company tax dues from Director - Director's burden to disprove negligence, misfeasance or breach of duty - Recovery of alleged tax dues of a company from a person claimed to be its Director, where he disputes both his directorship when the tax became due and his responsibility for non-recovery. - HELD THAT: - Section 39 requires that personal recovery from a Director be preceded by consideration of whether company assets are available, whether the person was a Director when the tax became due, and his defence that non-recovery was not attributable to negligence, misfeasance or breach of duty. The statutory burden of proving absence of such negligence, misfeasance or breach rests on the Director, and not on the Revenue. [Paras 7, 8]

The directions were modified to require a hearing and a reasoned order on these matters before recovery from the respondent's personal assets, while preserving the Revenue's liberty to proceed first against company assets and thereafter against Directors in accordance with the statutory scheme.

Final Conclusion: The appeal was partly allowed only to correct the allocation of the statutory burden. Personal recovery from the alleged Director can be undertaken only after the prescribed consideration and a reasoned order, with the burden to establish the statutory defence resting on him.