TaxTMI Updates e-Newsletter
Aug 01,2026

Maintainability of writ petition against input tax credit penalty order - The High Court in M/S SHIVVIDIT MERCHANT PRIVATE [2026 (5) TMI 1836 - RAJASTHAN HIGH COURT] held that the challenge to the penalty order was relegated to the statutory appellate remedy, with protection regarding exclusion of the time spent in the writ proceedings for limitation purposes. - HELD THAT:- The special leave petition was dismissed.

Condonation of delay in filing GST appeal - Maintainability of an appeal against the GST demand order despite expiry of the limitation period - HELD THAT: - Though the petitioner had not availed the statutory appellate remedy within limitation, the Court permitted filing of the appeal subject to deposit of fifty per cent of the demand. The deposit was directed to remain subject to the final outcome of the appeal. [Paras 6, 7]

The appellate authority was directed to entertain and decide the appeal on merits without rejecting it as time-barred.

Final Conclusion: The petition was disposed of by permitting the petitioner to pursue the statutory appeal on the stipulated pre-deposit, with a direction for its expeditious decision on merits.

Statutory pre-deposit for GST appeal - Opportunity to cure procedural defects - Principles of natural justice - Dismissal of a GST appeal for shortfall in statutory pre-deposit despite the shortfall having been made good before the appellate order - HELD THAT: - This Court in the case of Delphi World Money Ltd. [2024 (11) TMI 781 - BOMBAY HIGH COURT], G. Khanna & Company [2025 (9) TMI 1689 - BOMBAY HIGH COURT], wherein, under somewhat similar circumstances, this Court had set aside the Order-in-Appeal and restored the Appeal preferred by the Petitioner before the Commissioner of Appeal by granting reasonable time to the Appellant to rectify the defect/deficiency.

The requirement of proof of statutory pre-deposit is procedural, and an appeal cannot be rejected for non-compliance without affording an opportunity to rectify the defect. Since the petitioner had completed the pre-deposit before the appellate authority passed the impugned order, the appeal ought to have been heard on merits. [Paras 6, 7, 8]

The appellate order was set aside and the appeal restored for fresh disposal on merits after notice and adequate opportunity of hearing.

Final Conclusion: The writ petition was allowed to the extent of restoring the GST appeal for adjudication on merits, the statutory pre-deposit shortfall having been cured before its dismissal.

Challenged the GST demand on ground of absence of fraud or suppression allegation - Alternative statutory remedy of appeal - HELD THAT: - The contention that the demand was without jurisdiction for want of allegations attracting the extended demand provision was not accepted, since the show cause notice specifically alleged receipt of inward supplies of goods and services from bogus taxpayers. An efficacious statutory appeal against the demand order was available. [Paras 4, 5]

The writ petition was disposed of with liberty to pursue the statutory appeal; if filed within the stipulated period, it was directed to be considered on merits without objection as to delay.

Final Conclusion: The petitioner was relegated to the statutory appellate remedy, with protection against an objection of delay if the appeal was filed within the period permitted by the Court.

Scope of contractual interpretation requiring reimbursement of GST paid on gas-transmission charges - interference under Section 34 -Reliance on inadmissible evidence in arbitral proceedings - Waiver and estoppel in contractual reimbursement claims - Recurring cause of action under invoice-based claims - Plausible Interpretation of Contract - Patent Illegality - Principles of Natural Justice - Burden of Proof - levy or collection of GST on the sale of gas and the transactions is taxable under AP VAT Act

Reimbursement of GST paid on transmission charges under the Gas Sale Agreement - HELD THAT: - The tribunal, though not decided the issue of exigibility of GST on the transmission of gas but relied upon Notification No. 11/2017-Central Tax (rate) issued on 28.06.2017 wherein the rate of tax on transportation of natural gas was stipulated.

The tribunal's interpretation that the contractual tax-paid component was reimbursable by the buyer was a plausible construction of the Gas Sale Agreement, including the provision transferring title in gas at the delivery point. The Court held that interpretation of contractual terms ordinarily lies within the arbitral tribunal's domain and cannot be substituted merely because another view is possible, unless the construction is one no reasonable person could adopt or disregards the contract. [Paras 11, 12]

The tribunal's construction of the contractual reimbursement obligation did not by itself warrant interference.

Proof of GST deposit - Admissibility of documentary evidence in arbitration - Natural justice in arbitral proceedings - HELD THAT: - The division bench of Bombay High Court in Bi-Water Penstocks Ltd [2010 (11) TMI 1148 - BOMBAY HIGH COURT] held that the admission of documents without having been proved is not only a procedural defect but also a violation of the principles of natural justice.

The tribunal had deferred the petitioner's objection to the admissibility of the tax-deposit receipts but never determined it. It nevertheless treated those receipts as establishing deposit of GST, although no GST returns, purchase or sale records, supporting documents, or books of account were produced to connect the alleged deposits with gas transmitted to the petitioner. Non-cross-examination on documents whose admissibility remained undecided could not cure the respondent's failure to prove the deposit. Reliance upon unproved documents despite objection constituted a procedural error offending natural justice, and the finding of deposit was perverse. [Paras 16, 17, 18, 19, 20]

The finding that the respondent had deposited GST on the transmission charges was unsustainable for want of admissible evidence.

Waiver of contractual rights - Estoppel by representation - Recurring cause of action for invoice claims - Whether payment of earlier invoices barred the petitioner from disputing reimbursement of GST under the contractual invoice-dispute clause. - HELD THAT: - It is trite law that waiver and estoppel cannot be used interchangeably.

In Hindustan Construction Co. Ltd. [2025 (11) TMI 2042 - SUPREME COURT], it was held: “68. Though waiver, acquiescence, and estoppel are often discussed together in arbitral jurisprudence, they occupy distinct conceptual spaces. Waiver is the intentional relinquishment of a known right; acquiescence arises from passive acceptance or delay; and estoppel precludes a party from resiling from a representation on which the other has relied. The Act, however, incorporates only the doctrine of waiver — presuming parties to be conscious of their conduct and its consequences. The Act elevates silence to waiver by importing an element of intent, thereby preventing parties from approbating and reprobating. A party who has actively participated or consented to continuation of the proceedings cannot later challenge the same process merely because the result is adverse. The legislative design thus discourages tactical objections and multiplicity of proceedings.”

Waiver requires proof that a party, with full knowledge of its right, intentionally relinquished it; estoppel requires an unequivocal representation, reliance by the other party and alteration of position. The respondent produced no evidence satisfying the requirements of waiver, and its statutory liability to deposit GST did not arise from or depend upon any representation by the petitioner. Further, the invoice clause required payment before a claim could be lodged and therefore supported the contention that payment was necessary to preserve uninterrupted gas supply. Each invoice claiming reimbursement gave rise to a recurring cause of action; payment of earlier invoices, including where later invoices were issued after objections were raised, could not alone bar the claim. [Paras 26, 27, 29, 30, 31]

The findings of waiver and estoppel, and the rejection of the entire claim for failure to object to earlier invoices, were patently illegal.

Final Conclusion: The arbitral award was set aside because its findings on deposit of GST, waiver and estoppel rested on inadmissible or insufficient evidence and erroneous application of the governing legal principles. The petition was allowed.

Writ jurisdiction-alternative efficacious statutory remedy - Exclusion of time spent in bona fide writ proceedings for limitation

Maintainability of the writ petition challenging the service-tax adjudication order despite the statutory appellate remedy - HELD THAT: - The Court found no jurisdictional error warranting exercise of writ jurisdiction. The petitioner had not availed the opportunity to reply to the show-cause notice within the stipulated time and, despite being granted a personal hearing, sought accommodation; the subsequent reply was filed after the adjudication order. In view of the efficacious appeal available under the Finance Act, 1994, the legality of the adjudication order was not examined in writ jurisdiction. [Paras 5, 6, 7, 8]

The writ petition was not entertained on merits, leaving the petitioner to pursue the statutory appeal.

Exclusion of time spent in bona fide writ proceedings for limitation - HELD THAT: - As the writ petition had been instituted within the appeal limitation period and remained pending while the petitioner bona fide pursued the writ remedy, the Court directed exclusion of the pendency period in computing limitation. It further allowed a limited period to file the appeal and directed that, if filed within that period, it be decided on merits without insistence on limitation. [Paras 9]

The period during which the writ petition remained pending was directed to be excluded, and the petitioner was permitted to file the statutory appeal within 30 days.

Final Conclusion: The writ petition was disposed of without examining the validity of the adjudication order. The petitioner was relegated to the statutory appellate remedy, with exclusion of the period spent in the writ proceedings for limitation and temporary continuation of interim protection.

Appellate dismissal for non-appearance - Opportunity of hearing - Dismissal of the GST appeal for non-appearance despite the appellant's assertion of bona fide reasons, unavoidable circumstances and sufficient cause. - HELD THAT: - The appellate authority had dismissed the appeal on account of non-appearance while also recording findings on merits. In view of the appellant's specific assertion that it could not appear for bona fide reasons, unavoidable circumstances and sufficient cause, and that it would contest the proceedings if afforded an opportunity, the order warranted reconsideration. [Paras 5]

The appellate order was set aside and the appeal remitted for fresh reconsideration in accordance with law, with liberty to file additional pleadings and documents.

Final Conclusion: The petition was allowed and the GST appeal was restored to the appellate authority for fresh consideration in accordance with law.

Unsigned GST assessment order - Principles of natural justice - Validity of the GST assessment order where the summary of assessment did not bear the assessing officer's signature - HELD THAT: - This Court had considered this issue earlier in the case of M/s. Cluster Enterprises [2024 (7) TMI 1512 - ANDHRA PRADESH HIGH COURT] and in the case of Sai Manikanta Electrical Contractors [2024 (6) TMI 1158 - ANDHRA PRADESH HIGH COURT] and had held that, the absence of a DIN number would be sufficient to invalidate the said order.

An assessment order suffering from the inherent defect of absence of the assessing officer's signature is invalid. In view of the patent irregularity and the practical hardship arising under the online GST regime, the delayed writ petition was entertained subject to a deposit of a stipulated part of the disputed tax. [Paras 12, 13, 14]

The assessment order was set aside and remanded to the Assessing Officer for fresh orders after affording an opportunity of hearing, subject to the petitioner depositing 30% of the disputed tax within the stipulated period.

Final Conclusion: The unsigned assessment order was invalidated and remanded for fresh adjudication, subject to deposit of 30% of the disputed tax.

Writ jurisdiction - alternative statutory remedy of appeal - Maintainability of a writ petition challenging a GST demand for wrongful availment and utilisation of input tax credit when an appellate remedy was available - HELD THAT: - Since a statutory appeal lay against the impugned adjudication order and the petitioner remained within the period available for pursuing that remedy, including the condonable period, the writ petition was not liable to be entertained directly without exhaustion of the alternate statutory remedy. [Paras 5, 6]

The writ petition was dismissed with liberty to raise all legal and factual grounds before the Appellate Authority; the time spent before the Court was directed to be excluded in computing limitation if the appeal was filed within 30 days.

Final Conclusion: The petitioner was relegated to the statutory appellate remedy against the GST demand, subject to exclusion of the time spent in the writ proceedings for limitation purposes on filing the appeal within 30 days.

Condonation of delay in GST appeal under writ jurisdiction - Statutory right of appeal - Restoration of a GST appeal against an Input Tax Credit demand dismissed as time-barred, where the assessment order was not uploaded in the regular portal tab and the merits of the tax, interest and penalty demand remained unadjudicated. - HELD THAT: - A Division Bench of the Rajasthan High Court in the case of M.R. Traders [2026 (2) TMI 99 - RAJASTHAN HIGH COURT] considering as to whether the delay can be condoned by the appellate authority in proceedings under Section 107 of the Act, as also the exercise of power under Article 226 of Constitution of India, in such cases held as under: " Cancellation of GST registration or missed appellate deadlines should not permanently debar a taxpayer from the GST framework, especially where the taxpayer intends to comply by filing returns, paying taxes, interest, and penalties, and rectifying defaults. In such cases, denial of opportunity to an assessee undermines the inclusive and facilitative objective of the GST regime. Non-restoration of GST registration in such cases also directly impairs the assessee's ability to conduct business, earn a livelihood and leads economic paralysis, thus, violating Articles 14 and 21 of the Constitution by imposing disproportionate and unreasonable hardship.”

The appellate remedy is a valuable statutory right which ordinarily ought not to be denied. Although the appellate authority is bound by the statutory limitation, the High Court, in the peculiar facts, exercised writ jurisdiction to afford the petitioner an opportunity to prosecute the appeal, particularly when the assessment order was not uploaded in the regular portal tab, the appeal had not been considered on merits, and the pre-deposit had been made. [Paras 9, 10, 17]

The delay in filing the appeal was condoned, the dismissal order was set aside and the appeal was restored for adjudication on merits; the garnishee notice issued during pendency of the appeal was quashed.

Final Conclusion: The writ petition was partly allowed. The time-barred GST appeal was restored for decision on merits after condoning the delay, while all merits contentions were kept open.

Opportunity of hearing in GST demand adjudication - Writ jurisdiction notwithstanding alternative appellate remedy

Validity of the GST demand adjudication where the assessee had not replied to the show-cause notice or participated before the adjudicating and first appellate authorities - HELD THAT: - Having accepted the assessee's assertion that non-participation resulted from lack of proper information and instructions from the authorised representative/accountant, coupled with bona fide reasons and sufficient cause, the Court adopted a justice-oriented approach. A further opportunity to file a reply, place material and contest the demand on merits was necessary in accordance with principles of natural justice. The deposit made at the appellate stage could be retained subject to the fresh adjudication. [Paras 9, 10]

The adjudication, appellate and recovery orders were set aside and the matter was remanded to the adjudicating authority for fresh consideration after affording reasonable opportunity and a personal hearing.

Maintainability of the writ petition despite the alternative remedy of appeal before the GST Appellate Tribunal - HELD THAT: - The availability of an appellate remedy did not bar exercise of jurisdiction under Articles 226 and 227 where intervention was required to afford the assessee an opportunity to contest the GST proceedings on merits in conformity with principles of natural justice. [Paras 11]

The objection based on the alternative remedy was rejected.

Final Conclusion: The writ petition was allowed, with the GST demand proceedings remitted for fresh adjudication after granting the assessee an effective opportunity of hearing. The amount already deposited was directed to be retained subject to the outcome of the fresh proceedings.

Rectification application - HELD THAT:- The rectification application was directed to be considered and disposed of within six weeks from receipt of a copy of the order.

Condonation of delay in statutory appeal - Sufficient Cause - Justice-oriented approach for party appearing in person - appellant appeared in person without legal assistance - HELD THAT: - The appellate authority failed to appreciate that the appellant, appearing in person, could neither file an application for condonation nor urge proper grounds because of bona fide reasons, unavoidable circumstances and sufficient cause. A justice-oriented approach warranted condonation of the short delay and an opportunity to prosecute the appeal with legal assistance. [Paras 5, 6]

The appellate order was set aside; the delay was condoned and the appeal was remitted for fresh consideration on merits, with liberty to engage counsel and file additional grounds.

Final Conclusion: The writ petition was allowed and the statutory appeal was restored for fresh disposal on merits after condoning the delay.

Ex parte GST adjudication - opportunity to reply to show-cause notice - Validity of ex parte GST adjudication orders passed without the petitioner replying to the show-cause notices or being heard - HELD THAT: - The Court found that the petitioner had not responded to the show-cause notices and that the orders were consequently passed ex parte without a hearing. In view of the asserted bona fide reasons, unavoidable circumstances and sufficient cause for that omission, a justice-oriented approach warranted one further opportunity to submit replies and participate in fresh adjudication. [Paras 6]

The ex parte adjudication orders and consequential recovery proceedings were set aside, and the matters were remitted for fresh consideration from the stage of reply to the show-cause notices, subject to the stipulated deposit and opportunity of hearing.

Final Conclusion: The petition was allowed. The ex parte orders for the financial years 2022-23 and 2023-24, along with consequential proceedings, were set aside and the matters remitted for fresh adjudication subject to the conditions imposed.

Condonation of delay in GST appeal - Dismissal of GST appeal on limitation - HELD THAT: - Having regard to the Division Bench of this Court in the case of Yallappa Patil [2025 (9) TMI 1840 - KARNATAKA HIGH COURT] and co-ordinate Bench decisions in various cases, i.e., in the case of Jai Hind Enterprises [2025 (1) TMI 1848 - KARNATAKA HIGH COURT] as well as in the case of Bandigisab Maheboobsab Bijapur [2025 (11) TMI 2038 - KARNATAKA HIGH COURT] cited on similar facts, the Court held that the writ petition merited consideration despite the objection that there was no provision to condone the delay. [Paras 5]

The appellate order was set aside, the delay in filing the appeal was condoned, and the appeal was restored for adjudication on merits in accordance with law; all merits contentions were kept open.

Final Conclusion: The writ petition was allowed in part. The delayed GST appeal for the tax period 2018-19 was restored for decision on merits.

Authentication of electronically generated reassessment notice - Requirement of signature on notice under the Income-tax Act

HELD THAT:- The Special Leave Petition was dismissed, with no interference in the impugned High Court order [2026 (4) TMI 1900 - DELHI HIGH COURT] wherein held though a digital signature may be appropriate, the provision does not mandate it; the absence of such signature did not render the notice irregular or invalidate the reassessment proceedings.

Overriding effect of the MPID Act - Jurisdiction of the Special Court over seized assets - Protection of depositors through release of funds to escrow - Conflict between special statutes -Protection of depositors through release of funds to escrow - Lawful settlement

HELD THAT:- We do not find any reason to interfere with the impugned order[2026 (3) TMI 1573 - BOMBAY HIGH COURT]

The Special Leave Petition is hence dismissed.

Prior-period expenditure - crystallisation of liability - Allowability of prior-period expenses claimed on crystallisation of the liability during the relevant year - HELD THAT:- Additional Solicitor General appearing for the petitioner(s) has brought to the notice of this Court the synopsis filed in the instant case which would indicate that the High Court has relied upon the judgment of Indian Petrochemicals Corporation Ltd. [2016 (9) TMI 110 - GUJARAT HIGH COURT]The said order was in favour of the assessee(s) against which the Revenue had filed an appeal in SLP and this court by order dated [2017 (7) TMI 1490 - SC ORDER] which had issued the notice and ultimately dismissed the same vide order [2026 (1) TMI 1264 - SC ORDER] Connected matters have also been dismissed by order of even date.

Assessee(s) has also brought to the notice of this court the judgment of this court rendered in Kerala State Electricity Board[2022 (10) TMI 363 - SC ORDER] and the Special Leave Petition filed by the assessee(s) came to be dismissed as indicated in paragraph No. 7 of said judgment. In that view of the matter, the present Special Leave Petitions also stand dismissed as the issue being no more res integra.

Consequential order of penalty- penalty under Section 271(1)(c) in relation to deleted additions - HELD THAT:- In view of the order passed today [ supra] the present Special Leave Petitions would not survive as it is the consequential order of penalty levied which has been challenged. Accordingly, these Special Leave Petitions also stand dismissed.

Validity of reopening of assessement -mandation to get approval/sanction of the competent authority as contemplated u/s 151 - notice issued within a period of four years - Extended Period of Limitation as per IT Act read with TOLA - HELD THAT:- We are not inclined to entertain the Special Leave Petition.

The same is accordingly dismissed. HC [2025 (11) TMI 46 - BOMBAY HIGH COURT] reasoning confirmed.

Prompt refund under Direct Tax Vivad Se Vishwas Scheme - Administrative delay despite exclusion of refund interest

Delay in release of refund determined in Form No. 4 under the Direct Tax Vivad Se Vishwas Scheme, 2024, notwithstanding exclusion of statutory interest on such refund - HELD THAT: - The exclusion of interest u/s 244A in respect of refunds under the Scheme does not permit revenue officials to keep the determined refund pending for months. The explanations concerning the non-availability of the processing module and other statutory work were found unsatisfactory; the Court noted that such refund delays were recurrent and directed examination of the stated system deficiency and measures for prompt credit of refunds after issuance of Form No. 4.

On perusal of the affidavit, we find that the Assessing Officer has either taken the lame excuses or there is something seriously amiss in the system and working of the Income Tax Department. It is not a one-of case. Every week, we come across 3-4 such cases, where the assessee has to approach High Court for refunds.

Maybe Section 94 of the Income Tax Act, 1961 excludes the applicability of provisions of Section 244A of the 1961, so far as excess payment or amount refundable to an assessee under the Direct Tax Vivad Se Vishwas Scheme, 2024 is concerned, but the same cannot give the revenue officials a reason to relax or sleep over the matter for months together.

Form No.4 in petitioner’s case was issued on 14.10.2025 and hence, the requisite refund ought to have been made on or before 15.01.2026.

It is noteworthy that the Assessing Officer has stated that on 06.07.2026, he had processed the refund. And even as of today, the amount of Rs. 1,78,00,000/- has not been credited in petitioners’ account. The affidavit does not show anything about the status subsequent to 06.07.2026 though affidavit was filed on 24.07.2026.

On the request of Mr. Bhatia, learned Senior Standing counsel, a weeks’ time is further granted. List this case on 06.08.2026. [Paras 5, 6, 7, 8, 11]

Final Conclusion: The writ petition was kept pending. Directions were issued for verification of the claimed system constraints and for ensuring prompt processing of refunds under the Scheme.

Validity of assessment order passed u/s 144C(3) r/w Section 143(3) -Objections to draft assessment order before Dispute Resolution Panel and AO - Alternative statutory remedy in income-tax matters

Mandatory filing of objections before Dispute Resolution Panel and Assessing Officer - Final assessment on draft assessment order in absence of Dispute Resolution Panel objections - Validity of completion of assessment on the draft assessment order where objections were filed before the AO but not before the Dispute Resolution Panel - HELD THAT: - Section 144C(2)(b) mandates filing of objections before both the Dispute Resolution Panel and the Assessing Officer; the expression "and" requires compliance with both conditions. In the absence of objections before the Panel, the Assessing Officer was empowered under Section 144C(3) to complete the assessment on the basis of the draft assessment order. No procedural infirmity was, prima facie, established. [Paras 9, 11]

The assessment order was not interfered with on the asserted procedural ground.

Writ jurisdiction where efficacious statutory appeal is available - Maintainability of the writ petition challenging the assessment order despite the statutory appellate remedy - HELD THAT: - Where the statutory conditions for the Dispute Resolution Panel procedure were not fulfilled, an appeal under Section 246A was available before the Commissioner of Income Tax (Appeals). Applying the principle in Commissioner of Income Tax and others v. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] the Court held that an assessee should ordinarily pursue the complete statutory remedial mechanism under the taxing enactment rather than invoke extraordinary writ jurisdiction. [Paras 10, 11, 12]

The writ petition was dismissed, leaving the petitioner free to raise all available grounds before the appellate authority.

Final Conclusion: The writ petition was dismissed for availability of an efficacious statutory appeal. The merits of the assessment were left open for consideration by the appellate authority.

Ex parte assessment without effective opportunity of hearing - Validity of the ex parte assessment and consequential penalty orders where statutory notices were sent to the email addresses of the assessee's former statutory auditors and remained unanswered

HELD THAT: - The Court found that the assessee had not replied to the notices issued during assessment proceedings, which resulted in the ex parte assessment. In order to afford a further and reasonable opportunity to submit a reply and contest the proceedings, the Court adopted a justice-oriented approach. [Paras 5, 6]

The assessment order and consequential penalty orders were set aside, and the matter was remitted for fresh consideration from the stage of reply to the notice issued u/s 143(2), after providing sufficient and reasonable opportunity of hearing.

Final Conclusion: The writ petition was allowed. The ex parte assessment and consequential penalty orders were set aside and the matter remitted for fresh assessment after affording the assessee an opportunity to reply and be heard.

Validity of reopening of assessment - Failure to consider replies to reassessment show-cause notices and contentions to the notices issued u/s 148A(b) - HELD THAT: - The impugned orders under Section 148A(d) did not consider the contentions raised in the petitioners' replies. The Court therefore set aside those orders and the consequential proceedings, restoring the matter to the stage of the Section 148A(b) notices so that the petitioners may submit further pleadings and documents for fresh consideration in accordance with law. [Paras 6]

The reassessment orders and consequential notices were set aside, and the matter was remitted for fresh consideration from the stage of the Section 148A(b) notices.

Final Conclusion: The petition was allowed. The impugned reassessment orders and consequential proceedings were set aside and remitted for reconsideration after affording the petitioners an opportunity to place additional material.

Penalty proceedings consequential to assessment orders - Remand for consideration of undecided legal issues

Tribunal setting aside impugned penalty order is solely on the ground that the assessment orders are quashed by the Tribunal - HELD THAT: - The Tribunal had dismissed the Revenue's appeal only on the premise that it had quashed the assessment orders. Since the High Court [2019 (8) TMI 301 - KARNATAKA HIGH COURT] had subsequently set aside the Tribunal's orders quashing those assessments, that sole basis did not survive. As the Tribunal had not examined the merits of the penalty proceedings or the other legal issues, those matters required fresh consideration. [Paras 7, 8]

The Tribunal's order was set aside and the penalty appeal was remitted for reconsideration on merits and on legal issues, with all contentions left open.

Final Conclusion: The Revenue's appeal was disposed of by setting aside the Tribunal's order and remanding the matter for fresh adjudication. The substantial questions of law were left unanswered.

Reassessment notice based on Shah Commission Report - Reconsideration in light of subsequent judicial developments

HELD THAT: - The Court noted that the asserted judicial developments concerning the Shah Commission Report, including the affirmation of the view taken by the Bombay and Allahabad High Courts, were not controverted and bore upon the challenge to reassessment proceedings for the same assessee and years. The earlier finding that adjudication was premature therefore required reconsideration. The question whether the recorded reasons relied solely on the Shah Commission Report or also upon other material was expressly left open. [Paras 9, 10, 12]

The common order dismissing the writ petitions was set aside and the challenges to the reassessment notices were remitted for fresh hearing with the pending challenges to the reassessment orders, with all contentions kept open.

Final Conclusion: The writ appeals were disposed of by setting aside the order dismissing the challenges to the reassessment notices and remitting the matter for fresh consideration together with the pending challenges to the reassessment orders.

Interim release of cash to the Income Tax Department pending determination of its source, tax liability and title - Trial Court has directed release of the amount in favour of Income Tax Department and directed the Income Tax Department to execute a bond and direction is to deposit the amount in Fixed Deposit in any nationalised Bank with auto renewal mandate - HELD THAT: - The release was expressly an interim arrangement, subject to the final outcome of the proceedings, and was safeguarded by an indemnity bond and deposit of the cash in a nationalised bank under an auto-renewal mandate. Since the source of the cash, possible tax liability and title remained to be determined, the arrangement did not adversely affect the petitioner so as to warrant interference under Articles 226 and 227. [Paras 14, 15]

The challenge to the interim arrangement was dismissed, with all contentions left open for determination in the appropriate proceedings.

Final Conclusion: The criminal petition was dismissed without any adverse finding against the petitioner. The income-tax proceedings were directed to be concluded expeditiously, and the petitioner was left at liberty to seek appropriate relief before the Trial Court thereafter.

Estimation of profit element in purchases from unverified suppliers - Low-margin ferrous and non-ferrous metal trade

Rate of profit addition in respect of purchases from an unverified supplier where the corresponding sales and stock movement were accepted - HELD THAT: - Where the assessee could not conclusively establish procurement from the named supplier, the possibility of purchases from another source could not be excluded; consequently, the embedded profit or saving was liable to tax. However, acceptance of the corresponding sales, quantitative stock records and outward movement precluded a fixed or uniform profit rate. The appropriate estimate had to depend on the nature of business, disclosed margins, evidence on record and the facts of the relevant year. The earlier year's estimated addition could not mechanically govern the year under consideration absent identity of material facts. Having regard to the low-margin ferrous and non-ferrous metal trade, the disclosed net profit rate, banking-channel payments, and coordinate-bench decisions concerning similar trade, estimation at 2 per cent of the disputed purchases was held fair and reasonable. [Paras 29, 30, 31, 32, 33]

The addition was restricted to 2 per cent of the disputed purchases and the balance addition was deleted.

Final Conclusion: The assessee's appeal was partly allowed by restricting the profit addition on the disputed purchases to 2 per cent.

Disallowing the application of income u/s 11 - Delayed furnishing of Form 10B for charitable-trust exemption - Form 10B was furnished after the due date but before processing of the return

HELD THAT: - We find that Hon’ble Apex Court in CIT vs G.M. Knitting Industries (P) Ltd. & Others [2015 (11) TMI 397 - SC ORDER] wherein the claim was related with deduction under section 80IB (which is related to Chapter VI-A) the Hon’ble Court held that even though necessary certificate in Form 10CCB along with return of income had not been filed but same was filed before final order of the assessment was made, the assessee was entitled to claim such deduction. M/S WIPRO LIMITED [2022 (7) TMI 560 - SUPREME COURT] is distinguishable.

The audit report was available when the return was processed, and there was no other ground for disallowing application of income. The requirement of furnishing Form 10B stood satisfied in those circumstances. The decision concerning withdrawal from the exemption under section 10B was distinguishable, since the declaration there had an immediate bearing on assessment of the return; the applicable principle was that an audit report furnished before completion of assessment permits the claim to be considered. [Paras 6, 7, 8, 9, 10]

The direction to verify and allow the exemption for application of income under section 11 was affirmed, and the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal was dismissed. The cross-objection was dismissed as infructuous, its grounds having become academic.

Profit estimation in bogus purchases - Contract receipts received as advances

Profit estimation in bogus purchases - Addition for alleged bogus purchases where the assessee's turnover remained undisputed - HELD THAT: - Where the sales turnover was not disturbed and there was no proof that no purchases had in fact been made or that the recorded sales lacked nexus with the material purchased, the whole of the alleged bogus purchases could not be taxed. Only the income or profit embedded in such transactions was liable to estimation. [Paras 11]

The restriction of the addition to 12.5% of the alleged bogus purchases was sustained.

Contract receipts received as advances - Addition for difference between contract turnover reflected in Form 26AS and turnover disclosed in the profit and loss account - HELD THAT: - The difference in turnover was attributable to advances received from a contractual party, which were offered to tax in the ensuing year. Such receipt could not constitute income for the year under consideration merely because it appeared in Form 26AS. [Paras 10]

Deletion of the addition for the turnover difference was upheld.

Final Conclusion: The Revenue's appeal was dismissed. The estimated addition for alleged bogus purchases and the deletion of the addition for turnover difference were sustained.

Charitable exemption for accumulated income - Belated furnishing of Form No. 10

Claim of exemption for income accumulated by a charitable trust under section 11(2) where Form No. 10 was furnished after the prescribed due date but before processing of the return - HELD THAT: - The requirement of furnishing Form No. 10 is satisfied where the information necessary for considering the accumulation claim was available to the Assessing Officer before completion of the assessment. Delay in filing the form cannot, by itself, be the sole ground to deny the exemption. The Assessing Officer was required to adopt a justice-oriented approach and examine the allowability of the claim on its merits. See NAGPUR HOTEL OWNERS ASSOCIATION [2000 (12) TMI 99 - SUPREME COURT], BOMBAY PRATHANA SAMAJ [2026 (4) TMI 1406 - BOMBAY HIGH COURT], MAYUR FOUNDATION. [2004 (12) TMI 48 - GUJARAT HIGH COURT] and SARVODAYA CHARITABLE TRUST[2021 (1) TMI 214 - GUJARAT HIGH COURT] [Paras 10]

The disallowance was set aside and the matter was remanded to the Assessing Officer for fresh adjudication of the exemption claim under section 11(2), after considering the Form No. 10 already available on record.

Final Conclusion: The appeal was allowed for statistical purposes. The claim for exemption of accumulated income was restored to the Assessing Officer for decision on merits without rejecting it solely because Form No. 10 had been filed belatedly.

Reach Stacker as motor vehicle - Special vehicle adapted for use only in enclosed premises - Public place under the Motor Vehicles Act - A Reach Stacker used for handling containers within an Inland Container Depot is not a motor vehicle within the meaning of the Motor Vehicles Act, 1988. - HELD THAT: - Bose Abraham [2001 (2) TMI 890 - SUPREME COURT], a co-ordinate Bench held that merely because there is a specific use of a vehicle within enclosed premises, it does not render the same to be ‘a different kind of vehicle’. The distinction that is sought to be drawn is that road rollers and reach stackers are different when considered from the point of view of use by nature. The latter, by its very nature, is intended to be used within enclosed premises, therefore, would not be a motor vehicle within this Act. We agree with the distinction so drawn.

Govt. of A.P. v. Road Rollers Owners Welfare Assn [2004 (4) TMI 602 - SUPREME COURT], holds that a road-roller, since specifically built for use on the road, necessarily has to be a motor vehicle. The distinction according to the appellant in this case, is rather simple that the vehicle in this case cannot ply on roads and, therefore, they are fundamentally different.

Rajasthan SRTC v. Santosh [2013 (5) TMI 965 - SUPREME COURT], concerned the question whether ‘motorised cart’ generally called jugaad is a motor vehicle within the meaning of Section 2 (28) MVA. It was held that the only factor that needs to be considered is whether the vehicle in question is adapted for the road or not. According to the learned judges in this case, the use of the words ‘only’ in the second part dictates that the exception applies only to those vehicles that can exclusively be used within factory or closed premises, that is to say, a vehicle that has not been adapted is to be excluded. The appellant uses the same logic as they contend in Roadroller supra.

The roads within the customs-bonded Inland Container Depot were not a public place, since entry was confined to duly authorised persons and the public had no right of access. The Reach Stacker, though mechanically propelled and wheeled, exceeded notified permissible weight, was transported after dismantling, lacked ordinary road-safety features, and was used for specialised container-handling operations on specially reinforced internal roads. Its dominant utility was confined to such enclosed premises; it consequently fell within the statutory exclusion for a special type of vehicle adapted for use only in a factory or other enclosed premises. Non-registration did not itself exclude an otherwise registrable vehicle from the Act, but followed here from the competent authority's position that the Reach Stacker was not a motor vehicle requiring registration. [Paras 11, 13, 15]

The High Court's contrary determination was set aside and the Tribunal's dismissal of the compensation claim was restored; any amount already paid to the claimant was directed not to be recovered.

Final Conclusion: The appeal was allowed. The Reach Stacker, being a specialised vehicle for use only within the restricted Inland Container Depot, was held outside the statutory definition of a motor vehicle.

Appellate jurisdiction over customs valuation disputes - Maintainability of an appeal to the High Court from a Tribunal order concerning under-valuation and misdeclaration of imported cold rolled stainless steel - HELD THAT: - An appeal under section 130 does not lie to the High Court where the Tribunal order relates to determination of a question having a relation to the value of goods for assessment. Such appeal lies to the Supreme Court under section 130E of the Customs Act, 1962. [Paras 6]

The departmental appeal was held to be required to be preferred before the Supreme Court and was dismissed.

Final Conclusion: The appeal and connected application were dismissed for want of appellate jurisdiction, with liberty implicit in the statutory remedy before the Supreme Court.

Variation of rights of preference shareholders - Interim relief in aid of final relief - Res judicata-issues expressly kept open - High Court [2026 (3) TMI 1740 - CALCUTTA HIGH COURT] held that the confirmation of the interim order was invalid because the class-rights variation was duly approved and the interlocutory protection sought was disconnected from the substantive suit relief. - HELD THAT:- The Special Leave Petitions were dismissed, the Court declining to interfere with the impugned judgment and order.

Disclosure of investigation orders during ongoing SFIO investigation - Enforceable right to investigation material at preliminary stage - Entitlement of an entity called upon to provide information under the Companies Act to obtain copies of the orders directing an SFIO investigation and the underlying material while the investigation remains at a preliminary stage - HELD THAT: - The notice disclosed the nature and purpose of the information sought, namely the entity's financial transactions with the companies under investigation, as well as the categories of records required. The entity had not furnished the requested information despite notice and reminder, and the subsequent summons was issued in that context. Since the investigation extended to several entities and disclosure of the directing orders and underlying material could prejudice the continuing investigation and connected proceedings, no enforceable right to such disclosure arose at that stage. [Paras 13, 14, 15, 16, 17]

The claim for disclosure was rejected, without prejudice to the entity's right to pursue remedies available in law if any prejudicial action is subsequently taken.

Final Conclusion: The writ petition seeking disclosure of the orders directing the SFIO investigation and the underlying material was dismissed as premature during the preliminary and continuing stage of investigation.

Classification of Remittances made for staging the cricket tournament in South Africa - Current account transaction for overseas tournament services - borrowing or lending - Post-tournament remittance from the EEFC account- Repatriation of foreign exchange receipts - ticket-sale proceeds - non-repatriation of pouring-rights -Authorised Dealer due diligence - Vicarious liability for FEMA contraventions - Principles of Natural Justice

The BCCI, a registered society, held the first IPL in 2008. Due to India's general elections and security concerns, the 2009 IPL was shifted to South Africa under an agreement with Cricket South Africa. The Enforcement Directorate penalized the appellants for remitting foreign currency for this tournament without prior RBI approval, alleging violations of FEMA, 1999 rules.

Classification of remittances to Cricket South Africa for organising IPL in South Africa during the agreement period as current account transactions or capital account transactions - HELD THAT: - The Capital Account Transaction covers the transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions referred to in sub-section (3) of section 6. The Current Account Transaction may be other than the Capital Account Transaction and would include both the categories of payments. It may be payments in connection with foreign trade, other current business, services, and short-term banking and credit facilities in the ordinary course of business.

In the case of M/s J.P. Builders & Anr. [2010 (11) TMI 858 - SUPREME COURT] where the issue was similar to what has been raised in this case. The agreement/contract therein was for contingent liability or not has been decided. The finding was recorded by the Apex Court while referring to Chapter III of the Indian Contract Act, 1872 which deals with Contingent Contracts

The transaction does not qualify as a "Capital Account Transaction" because it never altered BCCI’s assets or liabilities, including contingent liabilities. The agreement between BCCI and Cricket South Africa (CSA) was strictly a contract for services rendered. Because BCCI remitted funds to CSA to pay for these services, it remains a current account transaction. Failing to budget or making staggered expense payments over time does not legally transform these service payments into an alteration of a contingent liability. [Paras 151, 152, 156, 157, 165].

Dedicated foreign currency account for tournament expenses - Exemption for foreign exchange acquired from services - HELD THAT: - The dedicated account was used to meet expenses incurred by Cricket South Africa for services rendered in conducting the tournament. The authority had not established how opening such an account for accounting and payment purposes contravened FEMA or the applicable regulations, and had ignored the statutory exemption concerning foreign exchange acquired from services and the character of the payments as current account transactions. [Paras 164, 165]

The finding and penalty concerning the dedicated foreign account were set aside.

Borrowing or lending in foreign exchange - Reimbursement of service-provider expenses - HELD THAT: - Cricket South Africa, as service provider, had initially incurred expenses for smooth conduct of the tournament, which were reimbursed by BCCI. There was no loan agreement, promise of repayment as a loan, or interest component. Reimbursement of such expenses could not be characterised as borrowing or lending. [Paras 166]

The finding of contravention for borrowing or lending in foreign exchange was set aside.

EEFC account remittance exceeding recorded liability - Validity of the remittance from BCCI's EEFC account after the agreement period to the extent it exceeded the amount recorded as payable to Cricket South Africa. - HELD THAT: - The Regulations 3 to 6 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000. Rule 3 prohibits on drawl of foreign exchange for certain purpose specified therein. Rule 4 requires prior approval of Govt. of India for drawl of the foreign exchange for a transaction included in Schedule-II. It is, however, subject to proviso if the payment is made by the remitter from Resident Foreign Currency (RFC) account. Rule 6 of the Rules, 2000 which eliminate the condition of Rules 4 and 5, if drawl is made out of the exchange under Exchange Earners’ Foreign Currency (EEFC) Account. However, it should be other than the entry specified at No. 10 and 11 of Schedule-II and entry 3,4,11 and 16 of Schedule-III.

It is not in dispute that the subsequent remittances were made from the EEFC account of the BCCI, which is permissible as per Rules 6 of the Rules of 2000 without approval of the RBI and even the Govt. of India in view of the fact that the BCCI comes under entry 9 to Schedule-II as it is an international/state level sports body. Schedule-II has been quoted earlier.

Drawal from an EEFC account was generally exempt from prior approval under the Current Account Transactions Rules, and BCCI, as an international or state-level sports body, fell within the relevant Schedule II entry. However, the remittance had to conform to the parties' agreement and the liability recorded in the books. The amount remitted exceeded the recorded amount payable to Cricket South Africa, and that excess constituted contravention. [Paras 168, 169, 170]

The penalty on BCCI for the excess remittance was sustained, as were the penalties on the Secretary and Treasurer, who were found in charge of BCCI's business; no penalty was sustained against the IPL Chairman for this remittance.

Delayed repatriation of ticket-sale proceeds - Vicarious liability of persons in charge - Failure to repatriate ticket-sale proceeds within the stipulated period and liability of BCCI office-bearers for that delay. - HELD THAT: - Although ticket-sale proceeds were eventually repatriated, the explanation that the funds were mingled with other accounts and awaited settlement with Cricket South Africa did not justify a delay exceeding a year after expiry of the agreement. Contravention of the obligation to realise and repatriate foreign exchange was therefore established. The IPL Chairman could not be penalised in the absence of material showing that he was in charge of the affairs, whereas the Secretary and Treasurer were responsible for BCCI's affairs. [Paras 173, 174, 175, 176]

The contravention was upheld, but the penalty on BCCI and the Secretary and Treasurer was reduced; the penalty on the IPL Chairman was set aside.

Repatriation of pouring-rights revenue - Failure to realise and repatriate revenue claimed as pouring rights from stadium owners in South Africa. - HELD THAT: - The agreement did not confer on BCCI a right to receive pouring-rights revenue. BCCI had sought recovery despite the established convention favouring stadium owners, but the authority had not determined whether the amount was due or receivable by BCCI before alleging contravention. [Paras 177, 178]

The finding of contravention and the related penalty were set aside.

Permissible credit to EEFC account - Credit to BCCI's EEFC account of ticket-sale revenue and VAT refund received from Cricket South Africa. - HELD THAT: - The authority conflated BCCI's remittance for final IPL expenses with the separate receipt from Cricket South Africa comprising ticket-sale revenue and VAT refund. The latter receipt was due to BCCI under the agreement and represented a bona fide foreign exchange credit; the descriptions of the final expense payment were not contradictory. [Paras 179, 180]

The finding of impermissible EEFC credit and the related penalty were set aside.

Authorised Dealer due diligence - Foreign exchange remittance on Form A-2 and Chartered Accountant certificate - Liability of the authorised dealer bank and its Chief Manager for processing the foreign remittances. - HELD THAT: - The remittances were current account transactions for which RBI approval was not required. The authorised dealer had processed them after execution of the agreement on the basis of Form A-2 and a Chartered Accountant certificate, and no remittance had been made before the agreement. The bank was thus entitled to the statutory safeguards available to an authorised dealer acting on the prescribed information. [Paras 181]

The finding and penalties under the show cause notice against the authorised dealer bank and its Chief Manager were set aside.

Reasonable opportunity of hearing - Cross-examination in FEMA adjudication - Alleged denial of hearing, documents and cross-examination in the FEMA adjudication proceedings. - HELD THAT: - The challenge was not pressed orally and was raised in written submissions. The record showed multiple opportunities of hearing, cross-examination of relevant witnesses, and that the final hearing was fixed pursuant to directions of the Bombay High Court in the case Shashank Manohar [2013 (8) TMI 435 - BOMBAY HIGH COURT]. The complaint of denial of reasonable opportunity was therefore not established. [Paras 182]

The objection based on violation of natural justice was rejected.

Final Conclusion: The appeals were partly allowed. The findings and penalties in respect of most show cause notices were set aside, while the penalty for the excess EEFC-account remittance was maintained and the penalty for delayed repatriation of ticket-sale proceeds was substantially reduced.

Bail under the Prevention of Money Laundering Act - Prolonged custody and delay in pre-charge evidence - Right to Speedy Trial - appellant remained in custody and pre-charge evidence had not commenced - HELD THAT: - The appellant had remained in custody for about one year and two months, while recording of pre-charge evidence had yet to begin. Though no wilful attempt by the respondent to delay the recording was found, substantial efforts to conclude it were required from the respondent. These circumstances warranted interference with the refusal of bail. [Paras 6, 7, 8]

The impugned order [2025 (10) TMI 1444 - BOMBAY HIGH COURT] refusing bail was set aside and bail was granted on terms and conditions to be fixed by the Trial Court; the Trial Court was directed to comply with the earlier direction for recording pre-charge evidence within four weeks.

Final Conclusion: The appeal was allowed and the appellant was granted bail, subject to conditions imposed by the Trial Court.

Review petition - failed to cure the defects - Quashing of money-laundering proceedings at pre-trial stage - HELD THAT:- Having perused the order [2026 (2) TMI 1454 - SC ORDER] under review and the grounds urged in support of the prayer made, no case for review has been made out.

The review petition was dismissed as defective and on merits, no case for review having been made out.

Maintainability of writ petition challenging initiation of money-laundering proceedings - Interim relief against freezing of bank accounts under the Prevention of Money-Laundering Act - Alternative Remedy - Extraordinary Writ Jurisdiction - Reason to Believe - Proceeds of Crime - Prima Facie Case - Balance of Convenience

Maintainability of the writ petition filed through an authorised representative and notwithstanding the statutory remedies under the Prevention of Money-Laundering Act - HELD THAT: - The National Working Committee was the highest executive authority under the party constitution and its member had authorised the representative to institute the petition. Further, the availability of an alternative remedy does not constitute an absolute bar to a writ petition where the challenge is to the initiation of proceedings as arbitrary and without justification; that challenge required adjudication after exchange of affidavits. [Paras 35, 36]

The writ petition was held maintainable.

Per incuriam - Debit-freezing of bank accounts during investigation - Whether the coordinate Bench's order concerning debit-freezing of the bank accounts was per incuriam for not considering the power of seizure under criminal procedure. - HELD THAT: - The Court noted that the Kerala High Court decision in the case of Headstar Global Pvt. Limited [2025 (6) TMI 2084 - KERALA HIGH COURT], had considered the relevant precedent and distinguished seizure, intended to secure evidence during investigation, from attachment, which requires a Magistrate's order to secure proceeds of crime. Since the challenge to that decision before the Supreme Court in Tapas D. Neogy [1999 (9) TMI 960 - SUPREME COURT] had been dismissed, the coordinate Bench's order could not be regarded as per incuriam. [Paras 34]

The objection that the coordinate Bench's order was per incuriam was rejected.

Entitlement to interim stay of the money-laundering proceedings and the freezing order concerning the political party's bank accounts - HELD THAT: - The freezing order disclosed that the investigating officer had analysed the accounts and found substantial transfers to various entities. The legality of those transfers could not be adjudged at the interim stage; the petitioners could raise their defence before the Adjudicating Authority upon notice, or the challenge could be considered after affidavits were exchanged. The Court also noted that other accounts of the petitioner remained unfrozen and found no prima facie case or balance of convenience in its favour. [Paras 30, 37, 38]

Interim stay of the proceedings and freezing order was refused.

Final Conclusion: The writ petition was held maintainable, but interim protection against the money-laundering proceedings and the freezing order was refused. The respondents were directed to file their affidavits for adjudication of the challenge on merits.

Modification of bail conditions - Inherent jurisdiction of High Court - Onerous monetary conditions for bail

Modification of a condition imposed by the High Court while granting bail is not barred by Section 362 Cr.P.C. - HELD THAT: - Section 362 applies only to a judgment or final order disposing of a case. An order granting bail is interlocutory and does not finally determine the criminal case; consequently, alteration of a bail condition does not amount to a prohibited review. The contrary coordinate-Bench view, having overlooked the statutory meaning of judgment and binding decisions treating bail orders as interlocutory, was held per incuriam. Changed circumstances may also warrant exercise of inherent jurisdiction to vary a bail condition for securing the ends of justice. [Paras 33, 34, 41, 46]

The preliminary objection to the maintainability of the application for modification of the bail condition was rejected.

Onerous monetary conditions for bail - Bail not a recovery mechanism - Changed circumstances -HELD THAT: - A monetary deposit condition, imposed without prima facie satisfaction regarding guilt, was unreasonably onerous; bail jurisdiction cannot be used to realise disputed dues before trial. The condition was to endure only until conclusion of trial, but the prosecution sanction concerning co-accused had been quashed, the proceedings had been closed and consigned, and there was no prospect of an early trial. Its continued operation, particularly in view of the applicant's advanced age, was held to cause failure of justice and justified exercise of inherent powers. [Paras 39, 42, 49]

The fixed-deposit condition was revoked, and the deposited amount with accrued interest was directed to be released to the applicant.

Final Conclusion: The application was allowed. The condition requiring the fixed deposit was revoked and release of the deposit with accrued interest was directed.

Taxability of venture capital investment profits as fund management service - Copyright exclusion from intellectual property service - CENVAT credit-procedural deficiencies in invoices - Extended limitation-disclosures in audited financial records - Copyright Exclusion from Intellectual Property Service - Substantive Cenvat Credit - Procedural Lapse - Taxability Determined by Substance of Transaction

Taxability of venture capital investment profits as fund management service - Accounting nomenclature and service tax liability - profit received by a unit-holder from investment in units of a venture capital fund under Banking and Financial Services - HELD THAT: - The appellant was a unit-holder receiving profit from its investment in the venture capital fund and had not managed the fund in relation to that receipt. The clubbing of investment profit and management fees under a common accounting head could not determine taxability. As the Revenue produced no supporting evidence to establish that the investment profit was consideration for a taxable service, the differential figure between the books of account and ST-3 returns could not be treated as taxable service income. [Paras 8, 9, 10]

The demand on the profit from investment was dropped.

Copyright exclusion from intellectual property service - Royalty for use of copyrighted software - royalty received for permitting use of the copyright in the PRP Concept and PRP-SRS under Intellectual Property Service - HELD THAT: - The agreements showed that the royalty was payable for use of the copyright transferred to the appellant. Since copyright was expressly excluded from the statutory definition of intellectual property right, royalty attributable to permission to use that copyright could not be taxed as Intellectual Property Service. [Paras 11, 12]

The demand on royalty received by the appellant was set aside.

CENVAT credit-procedural deficiencies in invoices - Substantive entitlement to input service credit - HELD THAT: - Receipt and use of the input services for provision of output services, and payment of service tax by the service providers, were undisputed. In those circumstances, CENVAT credit could not be denied merely on technical grounds relating to non-submission, mismatch, or invoice names. [Paras 13, 14]

The denial of CENVAT credit was held unsustainable.

Extended limitation-disclosures in audited financial records - Penalty consequential to unsustainable service tax demand - HELD THAT: - The relevant invoices had been reflected in the books of account and financial statements for 2007-2008, whereas the show-cause notice was issued only thereafter beyond the permissible period. The demand was therefore barred by limitation. Further, once the service tax demand itself was unsustainable, the penalties imposed under Sections 77 and 78 could not survive. [Paras 15, 16]

The extended period was held inapplicable and the penalties were set aside.

Final Conclusion: The service tax demands on investment profit and copyright royalty, as well as the denial of CENVAT credit, were held unsustainable. The appeal was allowed with consequential relief, and the penalties were set aside.

SEZ exemption for services used in authorised operations - Procedural Form A-2 requirement - Statutory ceiling on late fee for delayed ST-3 returns - Overriding effect of special enactment

Exemption for taxable services rendered to an SEZ unit for authorised operations could not be denied solely for non-production or non-renewal of Form A-2 - HELD THAT: - The sole basis for confirming the demand is absence of Form A-2 for the year 2016-17. Such reasoning is directly contrary to the law declared by the Hon’ble Andhra Pradesh High Court in the case of GMR Aerospace Engineering Ltd [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT], considered identical notifications issued under section 93 of the Finance Act, 1994 and attained finality after being affirmed by the Hon’ble Supreme Court [2019 (7) TMI 1975 - SC ORDER]. Once it is established that services were rendered to an eligible SEZ unit for authorized operations, denial of exemption merely on account of non-production or non-renewal of Form A-2 is not sustainable in law. The Commissioner (Appeals), therefore, committed an error in treating the procedural requirement of Form A-2 as mandatory substantive condition for grant of exemption.

Section 26 of the SEZ Act confers a substantive exemption, and procedural requirements prescribed through notifications under the Finance Act cannot curtail that exemption. As the provision of services to the SEZ unit and their use for authorised operations were undisputed, Form A-2 was not a mandatory substantive condition for eligibility. [Paras 8, 11]

The service tax demand, with consequential interest and penalty, was set aside.

Statutory ceiling on late fee for delayed ST-3 returns - HELD THAT: - Late fee exceeding the maximum prescribed under section 70 of the Finance Act, 1994 cannot be sustained. The amount payable required re-quantification by reference to the statutory ceiling applicable during the relevant period. [Paras 12, 14, 15]

The matter was remanded solely for re-quantification of the late fee within the legally permissible limit.

Final Conclusion: The appeal was allowed to the extent of setting aside the service tax demand, interest and penalty. It was remanded only for re-quantification of late fee within the statutory limit.

Service tax on notice pay recovered from outgoing employees - Declared service of tolerating an act - Taxability of notice pay recovered by an employer from employees who leave without serving the contractually stipulated notice period as consideration for a declared service - HELD THAT: - The Tribunal held that activities within the scope of the declared service of agreeing to refrain from an act, tolerate an act or situation, or do an act must arise from an independent contractual arrangement specifically contemplating that activity and a consideration having nexus with it. Notice pay forfeited or recovered in lieu of the notice period is in the nature of an amount arising from breach of the employment terms and is not consideration for any declared service. The Tribunal followed the decisions cited in GE T&D India Ltd. [2020 (1) TMI 1096 - MADRAS HIGH COURT]; Shriram Pistons & Rings Ltd [2020 (3) TMI 844 - CESTAT ALLAHABAD] and M/s Instakart Services Pvt Ltd. [2024 (3) TMI 1350 - CESTAT BANGALORE]by the appellant and the clarifications contained in the CBIC circulars. [Paras 7, 8, 9]

The service-tax demand on notice-pay receipts, with consequential interest and penalty, was set aside and the appeal was allowed with consequential relief.

Final Conclusion: Notice pay recovered from outgoing employees in lieu of the stipulated notice period was held not to be consideration for a declared service. The impugned order was set aside and the appeal was allowed with consequential relief.

Service tax exemption for construction of irrigation works - Works contract services relating to canals - Eligibility of soil work on a canal, construction of a culvert on a nala and soil work at a minor irrigation channel for exemption as services provided to the Government in relation to irrigation works - HELD THAT: - The certificates issued by the Executive Engineers and Form 26AS established that the services in dispute comprised soil work on canal kurugul rajwaha, construction of a culvert on a nala in a village, and soil work at sarayeegarh minor. Such services were held to be covered by Serial No. 12(d) of Mega Exemption Notification No. 25/2012-ST, which exempts specified services provided to the Government by way of construction and other works relating to canals, dams or other irrigation works. [Paras 8, 9]

The service tax demand and the penalties imposed for non-payment of tax on the exempt irrigation-work services were set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The impugned order was set aside insofar as it sustained service tax and penalties on the works executed for the Irrigation Department. The services were held exempt under Mega Exemption Notification No. 25/2012-ST.

Service tax on interconnection usage charges - Service tax on surcharge for delayed telephone-bill payments - Exemption for local calls from public telephones

Service tax on interconnection usage charges - charges collected by a telegraph authority before the introduction of telecommunication service - HELD THAT: - Interconnection usage service was not taxable under the then existing category of telephone service, since it was not provided directly to a subscriber. Interconnection usage charges became taxable only upon the subsequent statutory inclusion of such service within telecommunication service; therefore, the Board clarification governed the pre-2007 period. [Paras 10]

The demand of service tax on interconnection usage charges was set aside.

Service tax on surcharge for delayed telephone-bill payments - HELD THAT: - The surcharge collected for delayed payment did not alter the value of the taxable telephone service. The applicable Board clarification consequently excluded such surcharge from service tax. [Paras 11]

The demand of service tax on delayed-payment surcharge was set aside.

Exemption for local calls from public telephones - HELD THAT: - Telephone services rendered through the public telephones in question, for which no bills were raised, fell within the specific exemption under Notification No.03/94-ST. [Paras 12]

The demand of service tax on local calls from the public telephones was set aside.

Final Conclusion: As none of the three service tax demands was sustainable, the consequential interest and penalty were also set aside. The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Revenue neutrality - Interest liability under Section 11AB - Duty determination under Section 11A - Valuation of clearances to job workers - The High Court [2025 (12) TMI 1307 - CALCUTTA HIGH COURT] dismissed the appeal, refusing to interfere with the Tribunal's determination that (a) interest under Section 11AB need not be levied in the revenue-neutral circumstances of the case, and (b) the assessee was not entitled to a refund in view of the finality of the order-in-original; no substantial question of law arises - HELD THAT:- The special leave petition was dismissed in the peculiar facts and circumstances of the case, with any question of law kept open.

Appellate jurisdiction over service taxability determinations - Maintainability before the High Court of an appeal against a Tribunal determination on the taxability of a particular service - HELD THAT: - It is evident that the Division Bench of this Court in JMD Limited [2024 (12) TMI 1456 - DELHI HIGH COURT]has held that where the CESTAT determines the taxability of a particular service, an appeal against such determination would lie before the Hon'ble Supreme Court under Section 35L of the Central Excise Act, 1944, and not before the High Court. In arriving at the said conclusion, reliance has been placed upon M/s Spicejet Ltd. [2024 (12) TMI 1408 - DELHI HIGH COURT]

The decision in NKG Infrastructure Ltd.[2016 (11) TMI 492 - ALLAHABAD HIGH COURT] did not address the maintainability of an appeal before the High Court and could not warrant a contrary view. [Paras 5, 6, 7, 8]

The appeal was held not maintainable before the High Court, with liberty to avail the statutory remedy before the Supreme Court.

Final Conclusion: The appeal was disposed of as not maintainable before the High Court. The appellant was relegated to the statutory remedy before the Supreme Court.

Notice of hearing following disruption of Tribunal proceedings - Opportunity of hearing in ex parte appellate disposal - Right to a fair hearing - Principles of natural justice - Validity of ex parte disposal of an appeal where the two-Member Bench did not sit on the previously notified hearing date and no fresh notice of the rescheduled date was given - HELD THAT: - The dispensation of adjournment notices under the public notice operated where an order fixing the adjourned date was uploaded. Since no two-Member Bench sat on the notified date, no judicial order was passed or uploaded fixing the later date; nor could the non-sitting be treated as an adjournment under Rule 24. Rule 18 therefore required fresh notification of the next date and place of hearing. Requiring the appellant to discover the listing from weekly cause lists had no basis in any enabling rule or practice. [Paras 16, 17, 18]

The ex parte order was passed without due opportunity of hearing and could not be sustained; the matter was remitted for a fresh order.

Final Conclusion: The appeal was allowed, the impugned ex parte order was set aside, and the matter was remitted for fresh disposal after due notice. The merits were left unconsidered.

Entitlement to bail - economic offences punishable up to seven years - Personal liberty and the triple test for bail - clandestine manufacture of tobacco products through undeclared packing machines and consequential evasion of central excise duty and cess - HELD THAT: - The Hon'ble Supreme Court in Arnesh Kumar [2014 (7) TMI 1143 - SUPREME COURT], while dealing with offences punishable up to seven years, has held that arrest is not to be made routinely and deprivation of liberty must be justified by compelling reasons.

The principles governing arrest and bail in offences punishable up to seven years have thereafter been comprehensively reiterated by the Hon'ble Supreme Court in Satender Kumar Antil [2022 (8) TMI 152 - SUPREME COURT], wherein emphasis has been laid upon preservation of personal liberty, particularly where investigation can proceed without continued incarceration.

Economic offences and deliberate tax evasion are serious and affect public interest, but that consideration does not mandate refusal of bail irrespective of the individual facts. In offences punishable up to seven years, arrest and continued deprivation of liberty require compelling justification; the Court must assess whether continued custody is genuinely necessary. As the complaint had been filed, charges framed, the co-accused was on bail, and the witnesses were official witnesses with no likelihood of being influenced, continued incarceration was not warranted. [Paras 17, 18, 19, 20, 21]

The second bail application was allowed, subject to the stipulated bond and conditions.

Final Conclusion: The applicant was granted bail, subject to compliance with the conditions imposed by the Court.

Extended limitation-disclosure of classification in excise returns - Classification of Nicotine Sulphate as vegetable alkaloid - Related-party valuation-common management without supporting evidence - Harmonized System of Nomenclature Explanatory Notes - Reliability of Test Reports

Extended limitation-disclosure of classification in excise returns - Recovery of duty on Nicotine Sulphate for June-2015 to June-2017 by invoking the extended period of limitation - HELD THAT: - The manufacturer had intimated the Department of manufacture and classification of Nicotine Sulphate under Chapter 2939 and had consistently disclosed its manufacture and clearance under CTH 29399900 in monthly ER-1 returns. In the absence of suppression or misstatement, invocation of the extended period was unavailable. [Paras 5]

The demand for the disputed period was held barred by limitation and liable to be dropped.

Classification of Nicotine Sulphate as vegetable alkaloid - Reliability of delayed test report - Chemical examiner's opinion on classification - Classification of Nicotine Sulphate manufactured from tobacco extraction-whether under CTH 24039990 as a tobacco product or under CTH 29399900 as a vegetable alkaloid. - HELD THAT: - The HSN notes recognise alkaloids and their derivatives as an exception to the requirement that Chapter 29 products must be separate chemically defined compounds. The manufacturing process showed that the product was a vegetable alkaloid. The Department's contrary classification rested on a test report of a sample drawn from a third-party premises without the manufacturer's representative and tested after more than a year, contrary to the prescribed sampling standard; that report was unreliable. Further, a chemical examiner's role is confined to supplying analytical data and not determining classification. Factory samples tested subsequently described the product as an aqueous solution of Nicotine Sulphate, an organic chemical. [Paras 5]

Nicotine Sulphate was held correctly classifiable under CTH 29399900; the differential-duty demand, interest and penalty founded on classification under CTH 24039990 were set aside.

Related-party valuation-common management without supporting evidence - Differential duty on Nicotine Sulphate sold to BGP Healthcare Pvt. Ltd. on the footing that the purchaser was a related party - HELD THAT: - The demand proceeded only on the assertion that a partner of the manufacturer was also Managing Director of the purchaser. The order confirming the demand did not explain how the entities satisfied the statutory test of related parties, and the allegation was unsupported by evidence. [Paras 5]

The related-party allegation and the consequential differential duty, interest and penalty were held unsustainable.

Final Conclusion: The appeal was allowed. The demands based on extended limitation, reclassification of Nicotine Sulphate, and alleged related-party valuation, with consequential interest and penalties, were set aside.

Extended period of limitation-departmental knowledge of disclosed self-credit - Invocation of the extended period for recovery of annual differential refund taken as self-credit after the jurisdictional authorities did not sanction the refund claims within the stipulated time - HELD THAT: - The self-credit was disclosed in the monthly duty-payment statements and was also intimated to the Department through letters for the respective financial years. The Revenue neither disputed the appellant's entitlement to the refund claims nor produced evidence of suppression, fraud or mala fide intent to evade duty. As all relevant facts were within departmental knowledge, the extended period could not be invoked. [Paras 11, 13]

The show-cause notice was held barred by limitation; consequently, the demand and consequential proceedings were unsustainable.

Final Conclusion: The appeal was allowed and the impugned order was set aside, as the demand was founded on a show-cause notice barred by limitation. The cross-objection was disposed of accordingly.

CENVAT credit on outward freight prior to 1-4-2008 - Input service-clearance of final products from the place of removal - Eligibility to CENVAT credit of service tax paid on outward freight for dispatch of final products from the factory to customers before 01.04.2008. - HELD THAT: - Under the pre-amendment definition of input service, outward transportation from the place of removal was covered. The assessee was not required to establish that the sale was completed at the customers' end where it had paid freight for dispatch from the factory, and Revenue did not dispute that the goods were dispatched from the factory. The Larger Bench decision in ABB Ltd. [2009 (5) TMI 48 - CESTAT, BANGALORE-LB], as upheld in CCE & ST, Bangalore vs. ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT], established that freight from the factory, being the place of removal, to the customers' premises was eligible input service prior to substitution of "from" by "upto" with effect from 01.04.2008. [Paras 6, 7]

The assessee was entitled to the disputed CENVAT credit on outward freight paid before 01.04.2008.

Final Conclusion: The appeal was allowed, holding that CENVAT credit of service tax on outward freight incurred for dispatch from the factory before 01.04.2008 was admissible. Consequential relief was granted in accordance with law.

Central excise valuation of supplies to an associated concern - Undervaluation-absence of evidence of flow-back or additional consideration - Valuation of MS pipes supplied to an associated concern-whether the supplies could be rejected as sales under the normal transaction-value provision and valued on a cost-construction basis. - HELD THAT: - In identical proceedings in MUKAT TANKS AND VESSELS LTD [2006 (6) TMI 544 - CESTAT MUMBAI] concerning the assessee's other manufacturing unit, it had been found that there was no evidence of flow-back or additional consideration and that the material did not establish that supplies to the associate concern were outside the ambit of sale under the normal valuation provision. Revenue's appeal against that order had been rejected by the Tribunal. The Tribunal held that a different interpretation could not be adopted for the identical undervaluation dispute concerning the present unit. [Paras 6]

The demand founded on cost-construction valuation was unsustainable; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the identical earlier determination on supplies to the associated concern governed the present valuation dispute.

Statutory appeal - Coercive recovery - HELD THAT:- The writ petition was disposed of without examining the merits, directing that no coercive action be taken against the petitioner on the recovery letter until the pending statutory appeal of the partnership firm is decided.

Penalty for attempted tax evasion at check-post - Bona fide classification dispute - Penalty for treating mobile-phone accessories as part of mobile phones in stock-transfer invoices, despite their separate taxability, in the absence of material establishing an intention to evade tax. - HELD THAT: - The Hon’ble Supreme Court has settled in Nokia India Pvt. Ltd. [2014 (12) TMI 836 - SUPREME COURT] that the accessory of a mobile phone would have to be taxed separately and cannot be treated as part of the mobile phone. That by itself would not lead to an inference of intent on part of the appellant to evade payment of tax.

The law declared by the Hon’ble Supreme Court in Nokia India Pvt. Ltd. (supra) would be treated to be the law on the subject from the very beginning but for the purposes of ascertaining the intention on part of the assessee to evade payment of tax, we can conveniently acknowledge that the proposition in that regard came to be settled much later.

Penalty at a check-post requires material and a specific finding of an attempt to avoid or evade tax; it cannot be imposed merely because a higher rate of tax is ultimately found applicable. Classification ordinarily falls within the assessing authority's jurisdiction, particularly where the legal position was unsettled. Although accessories were separately taxable, their express disclosure in the stock-transfer invoices negated concealment or any intention to suppress their presence, and no material supported an inference of attempted evasion. [Paras 17, 18, 19, 20]

The penalty was held unsustainable and was set aside.

Final Conclusion: The appeal was allowed and the penalty orders were set aside, as the disclosed inclusion of accessories in the stock transfer did not establish an intention to evade tax.

Effect of acquittal under the Negotiable Instruments Act on civil proceedings - Proof of execution of dishonoured cheque - Statutory presumptions upon proof of execution - Preponderance of Probabilities -

Effect of acquittal under the Negotiable Instruments Act on civil proceedings - Issue estoppel - HELD THAT: - Criminal and civil proceedings are independent and are governed by different standards of proof. An acquittal in a prosecution under Section 138, being founded on failure to prove guilt beyond reasonable doubt, neither binds the civil court nor operates as res judicata or issue estoppel; the civil court must independently assess the evidence on the preponderance of probabilities. [Paras 14, 15, 16, 17]

The acquittal did not bar the civil proceedings.

Proof of execution of dishonoured cheque - Distinction between signature and execution - Statutory presumptions upon proof of execution - HELD THAT: - Proof that the signature on a cheque belongs to the defendant is not, by itself, proof of execution. Where execution is specifically denied on the ground that the cheque was neither voluntarily delivered nor intended to operate as an instrument, the plaintiff must first establish voluntary execution and delivery before the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act can arise. The evidence, including the material inconsistencies in the witness account concerning payment, preparation and delivery of the cheque, proved at best the signature and not voluntary execution; the trial court's contrary conclusions rested on assumptions rather than evidence. [Paras 22, 23, 24, 25, 26]

Execution of the cheque and the pleaded transaction were not proved; consequently, the statutory presumptions were unavailable.

Final Conclusion: The appeal was allowed and the decree in the money suit was set aside, since the plaintiff failed to prove voluntary execution and delivery of the cheque or the pleaded transaction.

Dishonour of Cheque - Inherent Jurisdiction - Statutory Presumption - Quashing of cheque dishonour proceedings at summoning stage - Proprietorship firm and proprietor in cheque dishonour prosecution

Quashing of cheque dishonour proceedings at summoning stage - Presumption under section 139 - HELD THAT: - The questions whether the applicant was in custody, whether the statutory notice was served, and whether the subsequent presentation of the cheque was valid were matters requiring trial and could not be examined at the summoning stage. The statutory presumption under section 139 of the Negotiable Instruments Act operated, leaving the applicant to raise legal and factual defences in the trial. [Paras 9]

Interference with the summoning order and the cheque dishonour proceedings was declined.

Proprietorship firm and proprietor in cheque dishonour prosecution - HELD THAT: - A proprietorship concern is not a company; consequently, impleading the proprietorship firm or its proprietor makes no difference for the prosecution. The Court applied Dhanasingh Prabhu [2025 (7) TMI 918 - SUPREME COURT]. [Paras 11]

The objection to the arraignment of the proprietorship concern was rejected.

Final Conclusion: The application seeking quashing of the summoning order and the cheque dishonour proceedings was disposed of without interference. The applicant was left to raise all legal and factual defences at trial.

Dishonour of Cheque - legally enforceable debt or other liability -Complaint for cheque dishonour by deceased payee's legal heir - Payee or holder in due course as condition for cognizance - Quashing where statutory bar precludes prosecution - Abuse of Process - rebuttal presumption under Section 139

Maintainability of complaints for dishonour of cheques instituted by the spouse of the deceased named payee, without endorsement or judicial authority establishing entitlement to recover the cheque amount - HELD THAT: - A prima facie perusal of the order(s) would indicate that, the order(s) proceed on a completely incorrect premise that, the cheques were issued in favour of the complainant and it is only for want of funds that, the accused has failed to pay cheque amount to the complainant and therefore, a prima facie case against the accused for the offence punishable under Section 138 of N.I. Act has been made out. On the basis of the said reasons, the process has been issued.

A complaint for an offence of cheque dishonour may be instituted only by the payee or holder in due course. The statutory presumption operates in favour of a holder, namely, a person entitled in his own name to possess the cheque and recover the amount. The complainant was neither named as payee nor shown to be an endorsed holder in due course; nor did the complaints disclose any probate, letters of administration, succession certificate, or other judicial authority entitling her to issue demand and give a valid discharge. The Magistrate issued process on the erroneous premise that the cheques had been issued in her favour, without considering the statutory eligibility for cognizance. [Paras 17, 18, 19, 22, 23]

The complaints were not maintainable and could not validly be prosecuted by the complainant.

Quashing where statutory bar precludes prosecution - HELD THAT: - As the statutory bar prevented institution and continuance of the complaints by a person who was neither the payee nor holder in due course, the case fell within the category warranting exercise of inherent jurisdiction to prevent abuse of process and secure the ends of justice. [Paras 24, 26]

The orders issuing process and the consequential proceedings were quashed.

Final Conclusion: The petitions were allowed, and the orders issuing process in the cheque-dishonour complaints, together with the consequential proceedings, were quashed.