TaxTMI Updates e-Newsletter
Aug 04,2026

Vicarious liability for offences by companies under the CGST Act - Arraignment of company as accused - director prosecuted for fraudulent availment of input tax credit under the Central Goods and Services Tax Act, 2017 without arraigning the company

Maintainability of prosecution of a Director for fraudulent availment of input tax credit by the company without arraigning the company as an accused - HELD THAT: - Penal statues require strict construction. Analysis of Section 141 of NI Act 1881, by the Apex Court in various binding precedents discussed hereinabove, would squarely apply to interpretation of Section 137 of the CGST Act, 2017, which is pari-materia. See SHARAD KUMAR SANGHI VERSUS SANGITA RANE [2015 (2) TMI 1117 - SUPREME COURT], HIMANSHU VERSUS B. SHIVAMURTHY & ANR. [2019 (3) TMI 294 - SUPREME COURT], ANIL GUPTA VERSUS STAR INDIA PVT. LTD. & ANOTHER [2014 (7) TMI 545 - SUPREME COURT] and ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT]

Section 141 NI Act and Section 137 CGST Act 2017, both use the term ‘person’ and refer it to a Company. That company is a juristic person and cannot claim immunity from criminal prosecution is well settled by now and this very principle is embodied in Section 141 of the Negotiable Instruments Act and Section 137 of CGST Act, 2017.

As per Section 16 of CGST Act 2017, only a registered person shall be entitled to take credit of input tax charged on any supply of good or services or both to him

Applying the settled rule of strict construction of penal statutes, commission of the offence by the company and its prosecution are conditions precedent for fastening vicarious liability upon its Director. As the admitted fraudulent availment of input tax credit was by the registered company and it was not arraigned as an accused, the Director could not be prosecuted in his personal capacity. [Paras 19, 21, 22]

The complaint and consequential proceedings against the Director alone were quashed, without prejudice to proceedings against the company and other persons in accordance with law.

Final Conclusion: The petition was allowed and the criminal complaint against the Director, instituted without arraigning the company alleged to have fraudulently availed input tax credit, together with consequential proceedings, was quashed. The authorities were left at liberty to proceed in accordance with law.

Limitation for GST demand order - Reasoned order and opportunity of hearing in GST adjudication

Limitation for GST demand order - Validity of the GST demand order for Financial Year 2018-19 passed after expiry of the statutory limitation period. - HELD THAT: - The limitation for passing an order under Section 73(9) of the State Act for Financial Year 2018-19 ended on 31.12.2023. As Assam had not issued a pari materia notification extending that period for the relevant financial year, the order passed thereafter was contrary to Section 73 of the State Act. [Paras 6, 7, 8]

The impugned demand order was held time-barred and unsustainable in law.

Reasoned order and opportunity of hearing in GST adjudication - Compliance of the GST demand order with the requirements of a reasoned order and opportunity of hearing. - HELD THAT: - The impugned order was not drawn up in accordance with Section 75(6) of the State Act and had been passed without affording the petitioner the opportunity of hearing mandated by Section 75(4). [Paras 9]

The order was held to be in violation of Section 75 of the State Act.

Final Conclusion: The writ petition was disposed of by setting aside and quashing the GST demand order for Financial Year 2018-19 as barred by limitation and passed in breach of the statutory requirements governing adjudication.

Regular bail in alleged fraudulent input tax credit cases - fraudulent availment and passing of input tax credit through fictitious firms - Presumption of Innocence - HELD THAT: - In Ratnambar Kaushik [2022 (12) TMI 263 - SUPREME COURT], the Apex Court, while considering the fact that investigation was complete and charge sheet was filed; that offence under Section 132(1) of the Central Goods and Services Tax Act, 2017 was punishable with imprisonment upto 05 years and fine; that accused had already undergone incarceration of 04 months; that completion of trial was likely to take time, directed release of the petitioner on bail.

The prosecution case rested predominantly on electronic and documentary evidence, most of which had been appended to the complaint. The proposed witnesses were government officers, making the possibility of evidence tampering or witness influence negligible. The allegations required examination at trial; the offences carried a maximum sentence of five years, the petitioners had remained in custody for a substantial period, had no criminal antecedents and had roots in society. [Paras 10]

Regular bail was granted, subject to adequate bail and surety bonds and conditions intended to secure the petitioners' presence and prevent interference with the trial.

Final Conclusion: The petitions were allowed and the petitioners were released on regular bail on conditions safeguarding the trial and preventing misuse of liberty.

Service of GST show-cause notice and adjudication order through Common Portal - Limitation for appeal against electronically uploaded GST order - Uploading a show-cause notice or order-in-original only in the 'View Additional Notices and Orders' tab of the GST Common Portal does not constitute sufficient service unless the assessee acknowledges its receipt or responds to the notice. - HELD THAT: - The Court followed Luxmi Traders [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] as clarified in The Amar Cooperative LC Society Ltd [2026 (8) TMI 75 - PUNJAB AND HARYANA HIGH COURT]. The retrospective amendment concerning functions capable of being performed on the Common Portal did not alter the position, since the GST Rules do not provide for service of a show-cause notice or adjudication order through the Common Portal. Where the notice is not replied to and an ex parte order results, the proceedings are to be restored to the stage of notice; where an order is passed after contest but uploaded only on the portal, limitation for appeal is not triggered. [Paras 3, 6, 7]

The writ petition was disposed of on the same terms as the binding decisions in Luxmi Traders and The Amar Cooperative LC Society Ltd.

Final Conclusion: The writ petition was disposed of in terms of the earlier decisions holding that exclusive uploading of the notice or order on the GST Common Portal is not valid service in the stated circumstances.

Permission to pursue the statutory appellate remedy against the order-in-original - HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal with pre-deposit and an application for condonation of delay; no coercive steps were directed for the period allowed for filing the appeal.

GST portal service of notices and orders - Ex parte GST assessment-bona fide non-receipt of portal communications

GST portal service of notices and orders - Ex parte GST assessment-bona fide non-receipt of portal communications - Validity of an ex parte GST assessment where the pre-show-cause notice, show-cause notice and order were made available only under the "Additional Notices/Orders" tab of the taxpayer portal rather than the prescribed "Notices/Orders" tab. - HELD THAT: - The Revenue admitted that its notices and orders were available under the "Additional Notices/Orders" tab on the taxpayer interface, while the GST website manual and FAQs specified the "Notices/Orders" tab for such communications. As the petitioner had bona fide believed that no notice or assessment order had been issued, the petitioner could not be held liable for the ex parte assessment.

The assessment and appellate orders were set aside; the Revenue was permitted to issue a fresh notice for adjudication, with limitation commencing from the fresh notice.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte assessment and the appellate order, while preserving the Revenue's liberty to commence fresh adjudication by issuing a fresh notice.

Jurisdiction of the CGST Authorities to examine transitional CENVAT credit - Transition of Krishi Kalyan Cess credit - Transitional VAT credit on stock-in-trade

Jurisdiction to examine transitional CENVAT credit - Closing balance carried forward under transitional provisions - CGST authorities' jurisdiction to deny transitional CENVAT credit reflected in returns under the erstwhile service tax law on the ground that its original availment was inadmissible - HELD THAT: - The disputed credit was the closing balance disclosed in returns under the erstwhile laws and had never been challenged thereunder. The saving provisions preserve institution or continuation of proceedings under the erstwhile laws; they do not empower CGST authorities to reassess the correctness of CENVAT credit availed under those laws through proceedings under the CGST Act. The proviso governing transition excludes credit not admissible under the GST law, but does not authorise a fresh examination of eligibility under the repealed regime. Further, a closing credit balance, being derived from opening balance, availment and utilisation, cannot be correlated with particular invoices for this purpose.

Recovery proceedings related to inadmissible credit under erstwhile laws can be initiated only under the provisions of the erstwhile laws, even after enactment of the CGST Act.

Further, the above provisions do not empower the Respondents to initiate proceedings pertaining to the erstwhile period under the provisions of the CGST Act. As per Section 142 of the CGST Act read with Section 174 thereof, the relevant authority should have initiated proceedings for adjudicating correctness of credits availed by the Appellant, only if any there is a case of wrong availment of CENVAT credit in terms of Rule 14 of erstwhile Cenvat Credit Rules, 2004

Our above finding is supported by the judgement of Usha Martin Limited [2022 (11) TMI 1266 - JHARKHAND HIGH COURT] which says repeal of the existing laws upon coming of the G.S.T. law regime did not leave a vacuum as to past transactions which were not closed. The repeal and saving clause (e) under section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed. Petitioners also admit that proceedings for availing CENVAT Credit which were allegedly inadmissible under the C.E.A., Finance Act, read with C.C.R., 2004 could have been initiated under the existing laws. The initiation of proceedings by respondent no. 1 under section 73 (1) of the C.G.S.T. Act, 2017 for alleged contravention of the C.E.A. and Finance Act, read with C.C.R. against the petitioner by filing TRAN 1 in terms of Section 140 of the C.G.S.T. Act for transition of CENVET Credit as being inadmissible under the existing law was beyond his jurisdiction. Also see Steel Authority of India Limited vs State of Jharkhand [2025 (2) TMI 133 - JHARKHAND HIGH COURT] [Paras 5]

Denial of the transitioned CENVAT credit by invoking the CGST Act was held beyond jurisdiction.

Transition of Krishi Kalyan Cess credit - Eligibility of Krishi Kalyan Cess credit transitioned through Form GST TRAN-1 - HELD THAT: - The amendment concerning Explanation 3 to the transitional-credit provision could not be implemented in the absence of operationalisation of Explanations 1 and 2. The Board's clarification that the linked amendment would not be notified supported this construction. The jurisdictional High Court ruling in Godrej & Boyce[2021 (11) TMI 157 - BOMBAY HIGH COURT] on the point was applicable, and the pendency of a special leave petition against it, without any stay, did not warrant withholding its application. [Paras 5]

The transition of Krishi Kalyan Cess credit was held to be in order.

Transitioned ITC under Section 140(6) - Denial of VAT credit on stock-in-trade transitioned under the transitional-credit provision - HELD THAT: - The assessee had furnished the requisite particulars for the VAT credit on stock-in-trade, and the lower authorities recorded no specific adverse finding or material to justify its denial. Treating it merely as part of the other disputed credits could not sustain the rejection.

Invocation of penalty under Section 74 of the CGST Act and the consequent imposition of 100% penalty on the Appellant is wholly unjustified, inasmuch as the entire basis for initiation of the present proceedings arises from disclosures made by the Appellant by filing Form GST TRAN-1 and by furnishing detailed submissions from time to time before the authorities.

ITC transitioned by the Appellant is in accordance with law. We accordingly hold the same to be eligible. Hence, the impugned order being not sustainable, is set aside.[Paras 5]

The denial of transitioned VAT credit on stock-in-trade was held unsustainable.

Final Conclusion: The appeal was allowed with consequential reliefs. The impugned order denying the transitioned credits, interest and penalty was set aside.

Anti-profiteering proceedings -Passing on of additional input tax credit in real-estate project - Prospective operation of notification discontinuing acceptance of fresh anti-profiteering requests - Pendency of constitutional challenge without stay

Passing on of additional input tax credit in real-estate project - Commensurate reduction in flat prices - developer failed to pass on the additional input tax credit benefit through commensurate reduction in flat prices, and the quantum of profiteering -HELD THAT: - Section 171(1) requires a supplier to transmit the benefit of additional input tax credit to recipients through a commensurate reduction in price. The revised investigation, based on the Respondent's own records, established that no eligible pre-GST credit was available whereas additional GST input tax credit became available post-GST at 10.63% of purchase value. The resulting saving was apportioned on the saleable area basis. As the Respondent neither disputed the underlying data and computation nor proved that the benefit had actually been passed on to homebuyers, the revised computation was upheld. [Paras 20, 21, 22, 23, 24]

The Respondent was held to have contravened Section 171(1) by retaining the additional input tax credit benefit instead of passing it on to eligible homebuyers.

Prospective operation of notification discontinuing acceptance of fresh anti-profiteering requests - Continuation of pending anti-profiteering proceedings - Maintainability of pending anti-profiteering proceedings after the notified date for discontinuance of acceptance of fresh requests for examination - HELD THAT: - Notification No. 19/2024-Central Tax prospectively bars acceptance of fresh requests for examination from the notified date; it neither provides for abatement of pending investigations and adjudications nor terminates proceedings already instituted. Absence of an express saving clause could not justify importing an automatic-termination consequence absent from the notification. Proceedings, having originated from an earlier complaint and investigation, were not fresh requests within the notification. [Paras 27, 28, 29, 30]

The objection to maintainability was rejected and the pending proceedings were held to continue unaffected.

Pendency of constitutional challenge without stay - Duty to apply prevailing law - Whether pendency before the Supreme Court of a challenge concerning anti-profiteering provisions required the present adjudication to be kept in abeyance? - HELD THAT: - Mere pendency of a challenge to a statutory provision or to a governing judgment before a higher forum does not operate as a stay. In the absence of an order staying the statutory provision, the investigation, or the present proceedings, the Tribunal remained bound to adjudicate under the prevailing law. The Respondent had not produced any such stay order. [Paras 33, 34, 35, 36]

The request to keep the proceedings in abeyance was rejected.

Final Conclusion: The anti-profiteering proceedings were held maintainable, and the finding that the Respondent failed to pass on the additional input tax credit benefit to eligible homebuyers was affirmed. The Respondent was directed to pass on the quantified benefit with applicable interest; no penalty was held leviable as the period of contravention preceded the commencement of the penalty provision.

Validity of penalty 271(1)(c) - notice for concealment or furnishing inaccurate particulars - Ambiguous show-cause notice as foundation for penalty - Defective notice

HELD THAT:- We find no grounds to interfere with the impugned judgment and order of the High Court [2025 (11) TMI 2043 - BOMBAY HIGH COURT]. Hence, the present Special Leave Petition stands dismissed. Question of law, if any, is kept open.

Reassessment jurisdiction notwithstanding pending appeal against return processing adjustments - parallel proceedings - Judicial review of reassessment notice at threshold

Reassessment jurisdiction notwithstanding pending appeal against return-processing adjustments - Parallel proceedings - Validity of reassessment proceedings founded on information regarding interest income while an appeal against adjustments made on return processing was pending - HELD THAT: - Pendency of an appeal arising from return-processing adjustments and rectification proceedings did not establish an inherent lack of jurisdiction to issue a reassessment notice. The return-processing proceedings were confined to adjustments in processing the return, whereas reassessment was initiated on information received under the statutory information scheme. The material did not demonstrate that the issues or amounts in the two proceedings were identical; incidental relation to the same return did not render them parallel proceedings in law. [Paras 14, 17]

The reassessment notice was not without jurisdiction merely because the appeal concerning return-processing adjustments was pending.

Judicial review of reassessment notice at threshold - Adequacy of information for reassessment - Maintainability of the writ challenge to the reassessment notice on the correctness of the information, alleged non-compliance with the statutory information scheme, and validity of sanction - HELD THAT: - The adequacy or correctness of the information underlying reassessment, and objections concerning compliance with the statutory information scheme, were matters for consideration in reassessment and the statutory appellate process. At the notice stage, writ interference is warranted only where the notice discloses patent want of jurisdiction, is barred by law, violates natural justice, or is vitiated by mala fides. No such exceptional circumstance was established, and no infirmity was found in the sanction. [Paras 15, 16, 17, 18]

The writ court declined to interdict the reassessment proceedings at the threshold.

Final Conclusion: The writ petition was dismissed, leaving the assessee to pursue objections in the reassessment proceedings and available statutory remedies.

TP Adjustment - Internal CUP for captive power transfers - Section 14A disallowance and MAT computation - Revenue expenditure on expansion of existing business - Arm's length pricing of intra-group technical services - Section 80-IA deduction for captive rail infrastructure - Allocation of common head-office expenditure - CENVAT credit in eligible-unit profits - Capital incentives and book profit - Investment allowance on capital work-in-progress - Additional depreciation for assets used for less than 180 days - Bad debts written off

Internal CUP for captive power transfers - Tested party selection - Arm's length price of electricity transferred from captive power plants to cement-manufacturing units - HELD THAT: - The price paid by the same consuming units to State distribution companies constituted a direct internal comparable, since the commodity, consuming units, geographical market and period of supply were substantially the same. It was more reliable than the regulated rate between generating and distribution companies, which operated at a different level of the supply chain. In the absence of any distinguishing feature from the assessee's earlier years, consistency required acceptance of the internal CUP and the consuming units as tested parties. [Paras 40, 41, 42]

The deletion of transfer-pricing adjustments for inter-unit power transfers was upheld.

Disallowance of expenditure relating to exempt income u/s 14A - MAT adjustment for exempt-income expenditure - Disallowance relating to exempt dividend income under the normal provisions and its treatment in computing book profit - HELD THAT: - Where interest-free own funds substantially exceeded investments and no nexus of borrowings with investments was established, investments were presumed to be from own funds. Under Rule 8D(2)(iii), only investments that actually yielded exempt income during the relevant year could be considered. The Finance Act, 2022 Explanation to section 14A did not affect this quantification dispute where exempt income had in fact been earned. Further, the Rule 8D computation could not mechanically be imported into book profit; expenditure relatable to exempt income for MAT purposes had to be independently determined from the profit and loss account. For 2015-16, the additional disallowance was deleted because the assessee's voluntary disallowance already exceeded the administrative expenditure computed with reference to dividend-yielding investments, and a further disallowance would duplicate the same expenditure. [Paras 93, 94, 104, 105, 106]

The Revenue's challenges to the restricted disallowance and deletion of MAT adjustments were dismissed; the assessee's cross-objection for 2015-16 was allowed to the extent that no further disallowance beyond its voluntary disallowance survived.

Nature of expenditure - expansion of existing business - Accounting treatment and tax deductibility - Allowability of pre-operative expenditure incurred for expansion, modernisation and setting up of units in the existing cement business - HELD THAT: - Deductibility depends on the true nature and purpose of expenditure, not its accounting classification. Operating expenses such as employee costs, travelling, maintenance, stores, power and professional charges do not become capital merely because they were incurred during expansion or were capitalised in the books; unless directly attributable to acquisition or installation of a capital asset, they remain revenue expenditure. [Paras 112, 113, 114, 115, 116]

The allowance of the claimed pre-operative expenditure as revenue expenditure was upheld.

Arm's length pricing of intra-group technical services - Prescribed transfer-pricing methods - TP adjustment for technical and business-support services received from an associated enterprise - HELD THAT: - The determination of a positive arm's length price itself proceeded on the basis that services had been rendered. Having rejected TNMM, the TPO could not substitute it with an unsupported estimate of man-hours and hourly rates, without a comparable uncontrolled transaction or application of a prescribed method. In the absence of a material change from the earlier years, the earlier acceptance of the assessee's benchmarking governed the issue. [Paras 132, 133, 134, 135, 136]

The deletion of the transfer-pricing adjustment was upheld.

Section 80IA deduction for captive rail infrastructure - Captive use of infrastructure facility - Eligibility of integrated rail systems at cement units for deduction as infrastructure facilities and computation of their eligible profits - HELD THAT: - A rail system comprising sidings, tracks, signalling and related loading, unloading and operating facilities does not cease to be an infrastructure facility merely because it is used captively for transport of the assessee's goods. The agreements with the Railway Administration and the integrated facilities established that the assessee developed, operated and maintained the rail systems. Savings in road freight and handling costs were the accepted basis for computing the eligible income. Common expenses were to be dealt with under the separate allocation directions. [Paras 156, 157, 158, 159, 160]

Deduction under section 80IA for the rail systems was upheld, subject to computation in accordance with the directions on common expenses and CENVAT credit.

Allocation of common head-office expenditure - Eligible undertaking profits - Apportionment of indirect head-office expenditure in computing deductions for eligible power plants, rail systems and other eligible undertakings - HELD THAT: - The statutory fiction requires eligible undertakings to be treated as stand-alone businesses; therefore, centrally incurred expenditure having a direct or proximate connection with an eligible undertaking cannot be ignored. However, turnover is not a reasonable allocation basis because its relationship with indirect expenditure is not necessarily linear. Allocation must be based on unit expenditure vis-a -vis overall expenditure, and expenses specifically attributable to non-eligible cement operations cannot be allocated. In the assessee's cross-objection for 2015-16, no nexus was established for the allocation sustained against captive power plants and rail systems. [Paras 184, 185, 186, 407, 408]

The Revenue's challenge to allocation on the expenditure basis was dismissed; for 2015-16, the allocation challenged in the assessee's cross-objection was directed to be deleted for want of nexus.

CENVAT credit in eligible-unit profits - Standalone computation under section 80IA - Whether CENVAT credit availed by other manufacturing units had to be added to the cost of captive power plants for computing deduction under section 80-IA? - HELD THAT: - The standalone fiction cannot be applied only to increase the eligible unit's expenditure by the duty component while ignoring the corresponding credit or reimbursement attributable to that unit. Where expenditure is debited net of CENVAT credit and the credit is fully availed by the other units, the net accounting treatment produces the same economic result and does not inflate eligible profits. [Paras 201, 202, 203, 204, 205]

The deletion of CENVAT-related adjustments was upheld.

Capital subsidy purpose test - Royalty refund under industrial incentive scheme - Excise-duty exemption for substantial expansion - Character of sales-tax incentives, royalty refunds and excise-duty exemption received under industrial incentive schemes - HELD THAT: - The character of an incentive depends on the purpose of the scheme, not the timing, source, form or mechanism of disbursement. The incentives were linked to capital investment, establishment, expansion or modernisation of units in specified areas, with ceilings tied to fixed-capital investment; quantification by reference to sales tax, VAT, royalty or excise duty did not convert them into operational subsidies. The excise-duty exemption for substantially expanded units in specified backward areas was likewise a capital receipt: its post-production availability and absence of a particular end-use restriction were not determinative. The subsequent statutory inclusion of specified Government assistance from 2016-17 did not govern 2014-15 or 2015-16. [Paras 343, 344, 346, 347, 348]

Sales-tax incentives, royalty refunds and the excise-duty exemption in question were held to be capital receipts not chargeable under the normal provisions.

Capital receipts in book profit - MAT computation - Exclusion of sales-tax incentives, excise-duty exemption and royalty refunds from book profit - HELD THAT: - The receipts retained their capital character under the industrial incentive schemes and did not constitute income or profit merely because they were credited to the statement of profit and loss. The restriction on recasting accounts under the MAT provisions did not answer the anterior question whether such non-income capital receipts could form part of book profit. In the absence of changed facts or law, the earlier decision in the assessee's case was followed. [Paras 281, 282, 283, 284, 285]

The direction to exclude the capital incentives and royalty refunds from book profit was upheld.

Investment allowance on capital work-in-progress - Purposive interpretation of acquired and installed - Eligibility for investment allowance on components forming opening capital work-in-progress but comprised in plant and machinery installed and capitalised during the qualifying years - HELD THAT: - For an integrated manufacturing plant, purchase of individual components does not necessarily amount to acquisition of the completed plant or machinery. Such components assume the character of the intended plant only when assembled, integrated and installed. Since the Assessing Officer did not find that the integrated plant had been installed, capitalised or made operational before the qualifying period, the mere existence of opening capital work-in-progress could not defeat the investment incentive. Between divergent coordinate-bench views, the purposive construction advancing the object of encouraging investment was adopted. [Paras 262, 263, 264, 265, 266]

Deduction u/s 32AC was allowed for the relevant plant and machinery capitalised and installed during 2014-15 and 2015-16.

Section 80-IA deduction on transferred undertaking - Change in ownership of eligible undertaking - Deduction for the TG-3 power plant acquired as a running undertaking - HELD THAT: - Acquisition of an entire running undertaking differs from formation of a new undertaking through transfer of individual used assets. A mere change of ownership neither amounts to reconstruction nor destroys the identity of the eligible undertaking; the tax holiday attaches to the undertaking, and its successor may claim the deduction for the balance eligible period, subject to the statutory conditions. The plant was not repurchased by the assessee, and the previous owner's failure to claim the deduction did not establish ineligibility. [Paras 298, 299, 300, 301, 302]

The allowance of deduction for the TG-3 power plant was upheld.

Employee perquisite tax and book profit - Addition of tax borne by the employer on non-monetary employee perquisites in computing book profit - HELD THAT: - Tax borne on non-monetary perquisites is an employee-benefit cost and not income-tax paid or payable on the assessee's income for the MAT adjustment. Its disallowance under the normal provisions did not authorise its automatic addition to book profit. [Paras 308, 309, 310, 311, 312]

The deletion of the MAT adjustment was upheld.

Balance additional depreciation - Assets used for less than 180 days - Allowance in 2016-17 of the balance additional depreciation on assets put to use for less than 180 days in 2015-16 - HELD THAT: - The third proviso to section 32(1), effective from 2016-17, mandates allowance in the immediately succeeding year of the balance additional depreciation that was restricted to 50 per cent in the initial year because the asset was used for less than 180 days. Construing the amendment to apply only to assets acquired in the relevant year would postpone its operation contrary to its stated effective date. The claim was confined to the unallowed balance, so total additional depreciation remained restricted to the prescribed percentage. [Paras 368, 369, 370, 371, 372]

The balance additional depreciation claimed for 2016-17 was allowed.

Bad debts written off - Conditions for bad-debt deduction - Deduction for trade debts written off in 2018-19 - HELD THAT: - After the statutory amendment, actual irrecoverability need not be proved once the debt is written off, but the debt must also satisfy the condition that it was taken into account in computing income. The assessee's provision had been added back when created; deduction was claimed only on actual write-off of identified trade receivables. Party-wise details, ledgers and invoices established that the debts arose from sales already offered to tax, and the continued existence of debtors was immaterial. AO did not identify any defect in that evidence. [Paras 398, 399, 400, 401, 402]

The deletion of the bad-debt disallowance was upheld.

Leave encashment provision - Actual-payment condition - Deductibility of provision for leave encashment determined by actuarial valuation - HELD THAT: - Even an actuarially ascertained leave-encashment liability is subject to the overriding actual-payment condition. The accrual principle cannot override the express statutory requirement, and deduction for actual payments had already been allowed. [Paras 414, 415, 416, 417]

The assessee's claim for deduction of the unpaid leave-encashment provision was rejected.

Capital gains and book profit - Indexed cost of acquisition - Exclusion of profit on sale of investments and loss on sale of fixed assets from book profit - HELD THAT: - A profit arising on transfer of a capital asset is not outside the ambit of income merely because the underlying asset is capital. The MAT computation begins with audited net profit and permits only specified adjustments; no exclusion is available merely because an item is non-operational or connected with a capital asset. The assessee-specific earlier decision required recomputation after allowing indexed cost of acquisition. [Paras 430, 431, 432, 433, 434]

The claimed exclusion was rejected, subject to giving full effect to indexed cost of acquisition.

Interest on income-tax and book profit - Addition of provision for interest on income-tax in computing book profit - HELD THAT: - The MAT adjustment expressly covers income-tax paid or payable and provisions therefor, while the statutory definition includes interest charged under the Act. Whether the provision was prudently made or represented an ascertained liability was therefore immaterial. [Paras 438, 439, 440, 441, 442]

The addition of the provision for interest on income-tax to book profit was upheld.

Final Conclusion: The Revenue's appeals for 2014-15, 2015-16, 2016-17 and 2018-19 were dismissed subject to the stated computational directions. The assessee's cross-objection for 2015-16 was partly allowed, while its cross-objection for 2018-19 was dismissed as not pressed.

Head office expenditure of non-resident bank - Expenditure relating to exempt income - Computation of adjusted total income for head office expenditure deduction - Refund of tax deducted at source by deductor - Interest paid by Indian branch to overseas branch

Head office expenditure of non-resident bank - Data-processing costs incurred outside India - NRI desk expenditure - Allowability of overseas-branch expenditure incurred for Indian operations and its coverage by the limitation applicable to head office expenditure - HELD THAT: - The Supreme Court decision in M/s. American Express Bank Ltd. [2025 (12) TMI 980 - SUPREME COURT] requires that an expense can be treated as head office expenditure only if it is incurred outside India, is in the nature of executive and general administration, and falls within a specified category in the statutory definition. As the nature and character of the data-processing expenditure had not been factually examined under this test, the issue required fresh adjudication. The disallowance of NRI desk expenditure was, however, sustained in conformity with the order in the assessee's own case. [Paras 9, 18]

The data-processing expenditure issue was restored for fresh adjudication, while the disallowance of NRI desk expenditure was sustained; the same remand applied to the corresponding overseas-branch expenditure for assessment year 2001-02.

Expenditure relating to exempt incomeu/s. 10(15) and 10(23G) - Presumption regarding investment from interest-free funds - HELD THAT: - Where the assessee's own and other non-interest-bearing funds exceeded the investments in tax-free securities, the investments were presumed to have been made from those funds. Since the finding that sufficient funds were available was not displaced by the Revenue, no disallowance of interest expenditure was warranted. [Paras 10]

The deletion of the disallowance and allowance of the claimed exemption were upheld.

Computation of adjusted total income for head office expenditure deduction - Deduction for provision for bad and doubtful debts - Order of computing deduction for provision for bad and doubtful debts and deduction for head office expenditure - HELD THAT: - The definition of adjusted total income for computing the deduction for head office expenditure excludes only the deductions expressly specified therein. As deduction under section 36(1)(viia) is not so excluded, its effect must be given before computing the deduction under section 44C. [Paras 11]

The direction to compute deduction under section 36(1)(viia) before deduction under section 44C was upheld.

Refund of tax deducted at source by deductor - Interest paid to overseas branches - Entitlement of the Indian branch, as deductor, to claim credit or refund of tax deducted on interest paid to its head office or overseas branches - HELD THAT: - We find that the assessee has deducted TDS on certain income pertains to its head office or overseas branches which are claimed as expenditure by the assessee in its P & L account, since such income in terms of findings of M/s Sumitomo Mitsui Banking Corporation [2012 (4) TMI 80 - ITAT MUMBAI] are not taxable income in India, therefore, no TDS was required.

Though interest paid by the Indian branch to its head office or overseas branches was not chargeable to tax in India and no deduction of tax was required, tax once deducted and deposited could be claimed by way of credit or refund only by the deductee. In the absence of a statutory provision permitting refund to the deductor, the assessee's claim could not be accepted. [Paras 13]

The claim for credit or refund of tax deducted at source by the assessee as deductor was rejected.

Interest paid by Indian branch to overseas branch - Disallowance for non-deduction of tax at source - Disallowance of interest payable by the Indian branch to its Singapore branch for alleged non-deduction of tax at source - HELD THAT: - Following M/s Sumitomo Mitsui Banking Corporation [2012 (4) TMI 80 - ITAT MUMBAI] interest paid by an Indian branch to the head office or overseas branch of the same bank is not chargeable to tax in India; consequently, the withholding provision is not attracted and disallowance for non-deduction of tax cannot survive. [Paras 19]

The disallowance of interest payable to the Singapore branch was deleted.

Revaluation loss on securities - Deductibility of loss on revaluation of securities - HELD THAT: - The additional ground was allowed by applying the Tribunal's decision on the corresponding issue in the connected appeals. [Paras 14]

The assessee's claim for revaluation loss on securities was allowed.

Final Conclusion: The Revenue's challenges to the exemption and computation of deductions failed, while the overseas data-processing expenditure was remanded for examination under the statutory test for head office expenditure and the NRI desk disallowance was sustained. The assessee's claim for refund of tax deducted at source as deductor was rejected, but the disallowance of interest payable to its Singapore branch was deleted.

Deduction u/s 80P(2)(a)(i) - Deduction of interest income from investments with co-operative banks - Alternative claim of deduction

Deduction for interest earned by a co-operative credit society on investments with other co-operative banks, claimed alternatively under section 80P(2)(d) instead of section 80P(2)(a)(i) - HELD THAT: - The assessee could raise an alternative claim under section 80P(2)(d), particularly as deduction on identical interest income had been allowed in its earlier years.

Following the jurisdictional Tribunal's co-ordinate Bench decisions like Annapurna Nagari Sahkari Pathsanstha Maryadit [2025 (3) TMI 1224 - ITAT PUNE] N Sai Multi State Coopeartive Credit Society Ltd [2024 (9) TMI 1960 - ITAT PUNE], Swa Ashokrao Bankar Nagari Sahakaro Patsantha [2024 (5) TMI 1554 - ITAT PUNE], Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd [2024 (6) TMI 791 - ITAT PUNE], Rena Sahakari Sakhar Karkhana Ltd [2022 (1) TMI 419 - ITAT PUNE] the Tribunal held that interest derived by a co-operative society from investments with co-operative banks qualifies for deduction under section 80P(2)(d). The exclusion of co-operative banks from deduction by section 80P(4) does not displace the entitlement of an investing co-operative society where the recipient bank remains a co-operative society; where non-jurisdictional High Court views conflict, the view favourable to the assessee was preferred.

Regarding the reliance placed by Ld. DR on the judgement passed by Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT], we find that in the case of N. Sai Multi State Cooperative Credit Society Ltd. [2024 (9) TMI 1960 - ITAT PUNE] the above judgement of Hon’ble Karnataka High Court has already been considered and deduction u/s 80P(2)(d) of the IT Act was allowed with regard to interest income earned from other cooperative banks. [Paras 8, 9, 10, 11, 13]

The disallowance was deleted and deduction under section 80P(2)(d) was allowed for both assessment years.

Final Conclusion: Both appeals were allowed. The assessee was held entitled to deduction under section 80P(2)(d) in respect of interest earned on investments with other co-operative banks.

Charitable exemption u/s 11 - rental income from trust property - Excessive remuneration - absence of comparable evidence - Reconciliation of foreign contributions and tied-up grants

Charitable exemption denied in respect of rental income earned from leasing trust property -HELD THAT: - The decisive test is the dominant object of the institution, not the source of its income. Although leasing or renting property was not an object of the trust and the appellate authority's contrary reasoning was erroneous, the rental income was only an incidental means of augmenting resources and was applied towards the trust's charitable objects. The Revenue produced no material showing diversion for a non-charitable purpose or loss of the trust's charitable character. [Paras 8]

The exemption could not be denied merely because the trust earned rental income.

Excessive remuneration - absence of comparable evidence - Unexplained charitable contribution - Disallowance of remuneration paid to the Chief Executive Officer and treatment of a charitable contribution made by a foreign foundation as unexplained income - HELD THAT: - An allegation that remuneration is excessive cannot rest on subjective perception and must be supported by cogent comparable evidence. No material showed that the Chief Executive Officer's remuneration was excessive, unreasonable, a diversion for private benefit, or disproportionate to the services rendered. Nor did the Revenue establish that the contribution in question was applied otherwise than for the trust's charitable objects or resulted in a statutory violation. [Paras 8]

The challenge to the remuneration and the addition relating to the charitable contribution were rejected.

Reconciliation of foreign contributions and tied-up grants - Denial of charitable exemption on alleged discrepancies between foreign-contribution returns, books of account and financial statements - HELD THAT: - The alleged discrepancies stood reconciled in remand proceedings, and the Assessing Officer accepted the reconciliation of foreign contributions and miscellaneous receipts. The recognised accounting treatment of earmarked grants, under which unutilised balances were carried as liabilities and recognised as income upon application for specified purposes, was not shown to be legally impermissible or to have caused suppression of income. No foreign contribution was shown to be unaccounted for, misutilised or diverted to non-charitable purposes. [Paras 8]

The finding that the objections concerning foreign contributions and grant accounting did not survive was upheld.

Final Conclusion: The Revenue's appeal was dismissed. The charitable exemption and consequential relief allowed to the assessee were sustained.

Validity of reassessment proceedings - Limitation for reassessment notice for AY 2015-16 under TOLA - Validity of reassessment initiated by notice issued after 1-4-2021

Validity of reassessment for AY 2015-16 initiated by notices under section 148 issued after 1-4-2021 - HELD THAT: - The Revenue's concession recorded in Union of India Vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] was that all notices issued on or after 1-4-2021 for AY 2015-16 must be dropped, as they would not fall for completion within the period prescribed under TOLA. Following that decision and the subsequent decisions holding such notices barred by limitation, the Tribunal held that both the original notice and the consequential notice issued pursuant to Ashish Agarwal were time-barred; consequently, the reassessment was without jurisdiction. [Paras 7]

The reassessment order was held bad in law and quashed.

Final Conclusion: The appeal was allowed. The reassessment for AY 2015-16 was quashed as barred by limitation and without jurisdiction; the remaining grounds were left open.

Exemption u/s 11(2) - Accumulation of income for religious purposes - Specific purpose requirement for accumulation of charitable trust income

Accumulation of income for religious purposes - Specific purpose requirement for accumulation of charitable trust income - Entitlement of a charitable and religious trust to accumulate income for maintenance of priests, preachers and religious functionaries as a specified religious purpose - HELD THAT: - From the reading of Section 11(2) of the Act, accumulation of income u/s. 11(2) of the Act is not restricted only to accumulation for the purpose of capital expenditure or long-term projects but it can be accumulated even for Revenue purposes, however, such purpose should be specific and it should be as per the objects of the Trust. This principle is supported by the decision of Daulat Ram Education Society [2005 (8) TMI 88 - DELHI HIGH COURT] as held just because more than one purpose have been specified and just because details about the plans which the assessee has for spending on such purposes are not given may not be sufficient to deny the exemption admissible to it under Section 11. So long as one or more of the purposes specified by the assessee find place in the objects for which the society has been incorporated and so long as the said purpose are charitable in character, the benefit admissible under Section 11 must flow to the assessee.

Accumulation of income is not confined to capital expenditure or long-term projects; it may also be for revenue purposes, provided the purpose is specific and falls within the objects of the trust. The stated purpose of maintaining priests, preachers and religious functionaries was specific and was in accordance with the trust's religious objects. Its treatment as a general or routine salary expenditure was therefore unsustainable. [Paras 12, 13]

The accumulation claimed for maintenance of priests, preachers and religious functionaries was allowable.

Protective addition of accumulated charitable trust income - Validity of protective additions relating to earlier years' accumulation for maintenance of priests, preachers and religious functionaries - HELD THAT: - The protective additions rested on the same premise that accumulation for maintenance of religious functionaries was neither specific nor within the trust's objects. Once that premise was rejected and the current year's accumulation was held allowable, the protective additions relating to the earlier accumulations could not survive. [Paras 14]

The protective additions relating to the earlier years' accumulated income were directed to be deleted.

Final Conclusion: The appeal was allowed. Accumulation for maintenance of priests, preachers and religious functionaries and the consequential protective additions relating to earlier years were deleted.

Deduction of interest from co-operative banks under section 80P(2)(d) - Co-operative bank as co-operative society - Eligibility of a co-operative housing society for deduction u/s 80P(2)(d) in respect of interest on fixed deposits maintained with co-operative banks

HELD THAT: - Hon'ble High Court THE TOTAGARS CO-OPERATIVE SALE SOCIETY, [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] held that the word ‘cooperative society’ are the words of large extent and denotes a genus, whereas the word ‘cooperative bank’ is a word of limited extent, which merely de-markets and identifies a particular species of the genus ‘cooperative societies’. Thus, a cooperative bank is merely a variety of the cooperative societies which can be of a different nature and can be involved in different activities.

A co-operative bank remains a co-operative society for the purpose of section 80P(2)(d). The exclusion of co-operative banks from claiming deduction by section 80P(4) does not curtail a co-operative society's entitlement to deduction of interest or dividend received from investments with a co-operative bank. [Paras 12, 13]

The claimed deduction was allowable and the disallowance of interest income from deposits with co-operative banks was deleted.

Final Conclusion: The appeal was allowed. The delay in the first appeal was condoned and the deduction claimed under section 80P(2)(d) for interest earned from co-operative banks was allowed.

Validity of a caveat qualifying registration u/s 12AB and consequential benefits as subject to a proposed challenge before the Supreme Court - Binding precedent of jurisdictional High Court - Conditional registration under section 12AB

HELD THAT: - A judgment of the jurisdictional High Court remains binding on authorities within its territorial jurisdiction unless stayed, modified or reversed by a competent court. A contemplated appeal, proposed Special Leave Petition or pending challenge does not diminish that binding force.

Having granted registration in compliance with the High Court's ruling THE CHAMBER OF TAX CONSULTANTS [2026 (3) TMI 1124 - BOMBAY HIGH COURT] the authority could not render the statutory recognition tentative by appending a condition founded on a possible future challenge. No statutory provision authorised such conditional recognition, and its validity had to be determined on the law prevailing when it was granted. [Paras 7, 8, 11]

The caveat making registration and consequential benefits subject to the outcome of a proposed Supreme Court challenge was deleted; registration was to operate without qualification, restriction or conditional rider.

Final Conclusion: The appeal was allowed and the conditional observations attached to the section 12AB registration were directed to be deleted.

TP Adjustment - Arm's length price of commission for export marketing services - TNMM computation - exclusion of extraordinary write-offs from operating cost - Corporate guarantee compensation - reimbursement of bank charges - Interest on outstanding trade receivables - aggregation with principal international transaction

Commission paid to associated enterprises for export marketing services - Aggregation of closely linked transactions under TNMM - Arm's length price of commission paid to associated enterprises for procuring export orders and providing overseas marketing support - HELD THAT: - The contemporaneous correspondence, invoices, shipping and export-realisation documents established actual services by the associated enterprises in customer identification, negotiations, order procurement, supply coordination and post-sale support. The commission transaction was closely linked with sales and purchases and had been benchmarked on an aggregated basis under TNMM. Once the aggregated profitability was at arm's length, the Transfer Pricing Officer could not segregate the commission payment and determine its arm's length price at nil merely on an assessment of business necessity or commercial prudence. [Paras 34, 35, 36, 37, 38]

The commission payment was accepted as being at arm's length and the corresponding transfer pricing adjustment was deleted.

TNMM operating margin - extraordinary advances and bad debts written off - Non-operating expenses in transfer pricing benchmarking - Treatment of advances written off and bad debts written off in computing the assessee's operating margin for benchmarking sales to associated enterprises under TNMM - HELD THAT: - The write-offs were exceptional and non-recurring items attributable to pandemic-related business disruption and did not reflect ordinary operational performance. Although the DRP had recognised their non-operating character, it proceeded on the erroneous factual premise that the Transfer Pricing Officer had excluded them from operating costs. Their exclusion resulted in the assessee's margin exceeding that of the comparables; consequently, the sales transactions satisfied the arm's length standard. [Paras 66, 67, 68, 69, 70]

The write-offs were directed to be treated as non-operating items, and the transfer pricing adjustment relating to sales to associated enterprises was deleted.

Corporate guarantee through standby letters of credit - Arm's length compensation for guarantee arrangement - Whether reimbursement by associated enterprises of bank charges for standby letters of credit constituted arm's length compensation for the corporate guarantee arrangement? - HELD THAT: - The assessee's assertion that the amount treated by the Transfer Pricing Officer as the guarantee base was only reimbursement of bank charges required verification from supporting documents and accounting records. If the bank charges for issuance of standby letters of credit had been fully cross-charged to the beneficiary associated enterprises, that recovery required consideration as arm's length compensation for the guarantee arrangement. [Paras 85, 86, 87, 88, 89]

The issue was remanded to the Assessing Officer/Transfer Pricing Officer for verification and consequential recomputation in accordance with law.

Interest on outstanding trade receivables from associated enterprises - Aggregation of receivables with principal transaction under TNMM - Separate transfer pricing adjustment for notional interest on delayed trade receivables arising from sales to associated enterprises - HELD THAT: - The receivables arose directly from international transactions already benchmarked under TNMM and accepted as arm's length. The assessee consistently did not charge interest from associated enterprises as well as certain non-associated customers, supporting a uniform commercial policy. In these circumstances, the receivables were to be examined with the principal transaction, and the Transfer Pricing Officer's assumptions regarding the credit period, monthly allocation of year-end receivables and interest rate lacked adequate consideration of the business realities. [Paras 105, 106, 107, 108, 109]

No separate adjustment for notional interest on outstanding receivables was warranted, and the addition was deleted.

Final Conclusion: The transfer pricing adjustments concerning commission paid for overseas marketing services, sales to associated enterprises and notional interest on trade receivables were deleted. The corporate guarantee adjustment was restored for verification of the claimed reimbursement of bank charges; the appeal was partly allowed for statistical purposes.

Appellate power to set aside assessment - Best judgment assessment - Power of the Commissioner (Appeals) to set aside an assessment made under section 147 read with section 144B for fresh assessment - HELD THAT: - The proviso to section 251(1)(a), inserted with effect from 01/10/2024, restores the power to set aside an assessment and remit it for fresh assessment only where the assessment has been made under section 144. An assessment expressly framed under section 147 read with section 144B cannot be treated as a best judgment assessment under section 144 merely because the assessee's details were not available in legible form. [Paras 10, 11, 12]

The Commissioner (Appeals) exceeded jurisdiction in setting aside the assessment; the appellate order was set aside and the appeal was restored to the Commissioner (Appeals) for decision on the grounds raised on merits.

Final Conclusion: The Revenue's appeal was allowed for statistical purposes and the assessee's cross-objection was dismissed. The Commissioner (Appeals) shall re-decide the assessee's appeal on its specific grounds.

Validity of reassessment - no addition is made on recorded reasons - Validity of reassessment initiated on alleged unexplained cash withdrawals and cash deposits, where the reassessment made no addition in respect of those transactions and instead estimated business profit from milk trading

HELD THAT: - The basis for reopening was the alleged escapement represented by cash withdrawals and cash deposits. As no addition was ultimately made on either of those grounds, the foundation for the formation of belief that income had escaped assessment did not survive. The Assessing Officer could not sustain the reassessment by shifting the enquiry to estimation of net profit from the assessee's milk-selling business. [Paras 3]

The reassessment proceedings were quashed as void ab initio; the remaining grounds were left open as academic.

Final Conclusion: The reassessment for AY 2019-20 was quashed as void ab initio because no addition was made on the transactions forming the recorded basis for reopening. The assessee's appeal was partly allowed.

Penalty u/s 271(1)(c) - Defective penalty notice - mandation of communicating precise and Specific charge under penalty proceedings

Validity of penalty for concealment of income or furnishing inaccurate particulars where the charge in the penalty notice differed from that adopted in the penalty order - HELD THAT: - AO could not alter the basis indicated in the penalty notice from concealment of income to furnishing inaccurate particulars of income while imposing penalty. A penalty proceeding requires a specific and unambiguous charge; absence of a definite charge as to either limb renders the notice and the consequential penalty unsustainable. The Tribunal followed Dial net Communications Ltd. [2025 (9) TMI 1843 - ITAT DELHI], holding the facts to be identical. [Paras 7]

The penalty order was quashed and the assessee's appeal was allowed; the merits of the penalty did not require adjudication.

Final Conclusion: The penalty was held invalid because the penalty notice did not sustain a definite charge and the charge was altered in the penalty order. The appeal was allowed.

Addition for difference in closing work-in-progress - Reliance on audited financial statements over unaudited tally data

Addition towards the alleged difference in closing work-in-progress based on unaudited tally-generated financial statements - HELD THAT: - The audited financial statements showed opening work-in-progress brought forward from the preceding year and the correct closing work-in-progress for the relevant year. The difference in the unaudited tally-generated balance sheet arose because the opening work-in-progress was added to, instead of being excluded from, the closing work-in-progress. Since no discrepancy remained in the audited financial statements, the addition founded merely on the unaudited tally data could not be sustained. [Paras 13]

The addition towards difference in stock-in-trade was deleted.

Final Conclusion: The delay in filing the appeal was condoned on finding reasonable cause. The appeal was allowed and the addition for the alleged difference in closing work-in-progress was deleted.

Litigation Policy - Monetary Threshold for Departmental Appeals - CESTAT [2025 (10) TMI 1448 - CESTAT CHANDIGARH] held that the amount of duty involved in the each of the appeals is below of the threshold limit prescribed in circular F.No.390/Misc/30/2023-JC dated 02.11.2023 issued by the CBIC wherein it is provided that if the duty amount involved is less than Rs.50 lakhs, then no appeal shall be filed before the CESTAT, and if already filed, the same will be withdrawn by the department. In view of this, we dismiss all 25 appeals of the Revenue under Litigation Policy without going into the merits of the case. - HELD THAT:- Appeals dismissed in the peculiar facts and circumstances of the case; question of law, if any, kept open.

Consideration of application for provisional release of seized goods - Opportunity of personal hearing

Consideration of the application for provisional release of the seized vessel, oil and cash pending customs adjudication - HELD THAT: - The respondents fairly agreed that the application for provisional release could be decided within a fixed time after affording the petitioner a hearing and observing principles of natural justice. The Court did not examine the merits of the rival contentions and directed the concerned respondent to consider any further documents, grant a personal hearing and pass a reasoned order in accordance with law. [Paras 8, 9]

The application for provisional release was directed to be decided by a reasoned order after hearing the petitioner, within the stipulated period.

Final Conclusion: The petition was disposed of with directions for time-bound consideration and reasoned disposal of the application for provisional release, without any expression on its merits.

Issuance of summons under Section 108 of the Customs Act, 1962 to an Advocate who had rendered a legal opinion - HELD THAT:- Ordinarily, an Advocate ought to be summoned only in rare and exceptional circumstances. Since the Impugned Summons has already been withdrawn, no further orders are called for. However, the authorities are expected to exercise due care and caution while issuing summons to Advocates in such matters.

Opportunity of hearing on jurisdictional Commissioner's report in customs settlement proceedings - Consistent adjudication of intrinsically connected settlement applications

Opportunity of hearing on jurisdictional Commissioner's report in customs settlement proceedings - Violation of natural justice - Enhancement of customs duty liability on imported cigarettes on the basis of a jurisdictional Commissioner's report not supplied to the settlement applicant. - HELD THAT: - Section 127C(5) requires the Settlement Commission, after examining the Commissioner's report, to afford the applicant an opportunity of hearing before passing an order. The report relied upon for enhancing the duty liability had not been supplied to the applicant, depriving it of an opportunity to respond; this violated both the statutory requirement and principles of natural justice. [Paras 22, 23, 24, 25]

The settlement order was quashed and the matter remanded for fresh consideration after affording the applicant an opportunity of hearing.

Consistent adjudication of intrinsically connected settlement applications - Treatment of separate settlement applications arising from show-cause notices concerning the same seized imported goods. - HELD THAT: - The proceedings arising from the two show-cause notices were intrinsically connected, both emanating from the same seized goods. The Settlement Commission's inconsistent approach to the related applications, including its differing treatment of the Revenue report, lacked a discernible basis; consequently, the subsequent orders could not stand once the order in the principal proceeding was set aside. [Paras 30, 31, 32, 33]

The subsequent settlement order was quashed and remanded for fresh consideration in accordance with law and principles of natural justice, without any expression on the merits.

Final Conclusion: Both writ petitions were allowed. The impugned settlement orders were quashed and the connected matters remanded for fresh consideration, with all merits left open.

Classification of scaffolding items for duty drawback - Binding precedent on customs classification - Specific Description Prevailing Over General Description

Validity of the show cause notice alleging misclassification of nuts, bolts, washers, plastic caps, clamps and hand tools, exported as scaffolding items under Chapter Headings 7318, 8205 and 3926 instead of Chapter Heading 7308 - HELD THAT: - The classification controversy had already been conclusively decided in substantially identical matters, and the Revenue had not disputed that position. See M/S. JBS EXPORTS & ANR. VERSUS UNION OF INDIA & ANR. [2025 (4) TMI 382 - GUJARAT HIGH COURT] and M/S SJS INTERNATIONAL VERSUS UNION OF INDIA [2021 (12) TMI 1339 - GUJARAT HIGH COURT].

Another judgment passed in Gargip International v/s. Union of India & Ors. [2017 (6) TMI 1414 - GUJARAT HIGH COURT ] wherein, the Division Bench of this Court while examining the classifications of Chapter Heading 7318 and 8205 with regard to the ‘scaffolding items’, placing reliance on other judgments, has quashed and set aside the deficiency memo issued by the respondents and further directed to process the drawback claims of the petitioner and released the drawback amount with interest.

The Court held that the impugned notice could not be sustained when the classification of the exported scaffolding items under the specific headings claimed by the exporter had attained finality. [Paras 9]

The show cause notice was quashed; any duty drawback withheld solely on its account was directed to be released within the stipulated period.

Final Conclusion: Both writ petitions were allowed. The impugned show cause notice was quashed, and the consequential release of withheld duty drawback and the export promotional copy was directed.

Prospective or Retrospective operation of oppressive circulars- application of circular withdrawing additional customs duty exemption for imported ore concentrates

HELD THAT: - As decided in SUCHITRA COMPONENTS LTD.[2007 (1) TMI 4 - SUPREME COURT] relying upon MYSORE ELECTRICALS INDUSTRIES LTD. [2006 (11) TMI 202 - SUPREME COURT] a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively and when the circular is against the assessee, they have right to claim enforcement of the same prospectively.

The earlier circular treated ore concentrates within the expression "ore" for the applicable exemption. Although the impugned circular was clarificatory in form, it imposed an additional customs-duty liability upon traders by restricting the exemption to imported ores and excluding concentrates.

Applying the principle that a beneficial circular operates retrospectively whereas an oppressive circular operates prospectively, the Court held that the circular could not be retrospectively enforced. The question whether the meaning of manufacture under the Central Excise law could be adopted for the Customs Tariff Act was expressly left unexamined. [Paras 5]

The circular could not sustain retrospective recovery of additional customs duty for the stated period; the impugned show-cause notices were quashed.

Final Conclusion: The writ petitions were partly allowed. The impugned show-cause notices seeking retrospective recovery of additional customs duty were quashed.

Refund of special additional duty - Limitation prescribed by exemption notification - Refund claims for special additional duty paid on imported goods and claimed after their subsequent sale rejected as time-barred under the one-year period inserted by Notification No. 93/2008-Cus. from the date of payment of such duty -

HELD THAT: - Section 27 of the Customs Act did not cover special additional duty paid at import. Consequently, the one-year limitation introduced through the amended condition in Notification No. 102/2007-Cus. amounted to imposing, by subordinate legislation, a limitation affecting the substantive right to refund, without statutory amendment. Following the Larger Bench decision in Ambey Sales and [2024 (6) TMI 257 - CESTAT CHANDIGARH-LB] the Tribunal's view was held justified. [Paras 6]

No substantial question of law arose from the Tribunal's order allowing the refund claims.

Final Conclusion: The appeals were dismissed, as the Tribunal correctly held that the notification could not prescribe a one-year limitation from payment of special additional duty for the refund claims.

Punitive action against an authorised courier - Authorised courier's due diligence in concealed contraband - Penalty for abetment of smuggling

Liability of an authorised courier for regulatory action and penalty in relation to gold ingeniously concealed in a consignment - HELD THAT: - The Adjudicating Authority had found, consistently with the Inquiry Report, that no evidence implicated the authorised courier in the attempted smuggling or established its knowledge of the concealed gold. The concealment within the carton boxes was such that it could be detected only through X-ray examination on arrival, and the courier had acted bona fide and exercised due diligence. The Tribunal also noted that the proposed penalty in separate proceedings concerning the contraband had been dropped. [Paras 8]

No ground existed to interfere with the order dropping proceedings against the authorised courier.

Final Conclusion: The Revenue's appeal was dismissed, and the order dropping proceedings against the authorised courier was sustained.

Export duty on iron ore fines - determination of Fe content - Reliability of delayed chemical test reports

Differential export duty on iron ore fines based on Fe content allegedly exceeding the threshold for concessional duty - HELD THAT: - The Tribunal held that the controversy stood settled by its earlier decision in the appellant's own case [2009 (7) TMI 705 - CESTAT, BANGALORE] which applied the principle that Fe content for duty purposes must be determined with reference to the condition of the goods at export and not on a dry basis after excluding moisture. The Revenue's chemical examination reports, obtained after substantial delay from sampling, could not displace the test reports showing Fe content below the prescribed threshold. [Paras 10]

The demand of differential duty was unsustainable; the impugned order was set aside.

Final Conclusion: Following the earlier decision in the appellant's own case, the Tribunal allowed the appeal with consequential relief in accordance with law.

Refund of customs duty deposit on unfinalised bill of entry - Absence of out-of-charge order for home consumption

Refund of the amount paid at import where the bill of entry was not finalised and the imported pillow and duvet goods were destroyed before an out-of-charge order for home consumption - HELD THAT: - The bill of entry remained unfinalised because the imported goods did not meet the statutory quarantine requirement, and no amount paid at import was appropriated towards duty in the adjudication proceedings. In the absence of such appropriation and of an out-of-charge order, the amount could not be treated as payment of duty but only as a deposit. Since redemption fine and penalty had separately been imposed and paid for the illegality concerning the goods, the deposit made before clearance for home consumption was refundable. [Paras 11]

The order denying refund was set aside and the appellant was held entitled to refund of the amount deposited.

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

Scope of cross-objections - Rejection of declared transaction value - Post-import redetermination of retail sale price - Classification of therapeutic transdermal products - Redemption fine where goods are unavailable

Scope of cross-objections - whether respondent's cross-objection under section 129A(4) can challenge the whole or any part of the order appealed against, notwithstanding that the respondent had not independently appealed? - HELD THAT: - The provision expressly permits a cross-objection against any part of the order appealed against and requires its disposal as if it were an appeal. Its scope is therefore not confined to answering the grounds raised in the opposite party's appeal. [Paras 7]

The preliminary objection to the maintainability and scope of the cross-objections was overruled.

Rejection of declared transaction value - Related persons under Customs Valuation Rules - Undervaluation based on proforma invoices - declared transaction values of Far Infrared BioCeramic healthcare products imported from the Malaysian suppliers rejected on the alleged relationship, parallel invoices, consultancy payments, or alleged excess foreign-exchange remittances - HELD THAT: - No evidence established allotment of shares or administrative and financial control by Conybio Malaysia over the importer. The alleged parallel invoices were proforma invoices unsupported by evidence of flow-back or remittance beyond the declared invoice values. Companies could not be treated as members of the same family merely because their directors or shareholders were related natural persons; nor did common directorship establish relationship. Payments under the consultancy arrangement and earnings on investments were not proved to be additional consideration for the imported goods. The Department consequently failed to establish either a relationship influencing price or payment in excess of the declared values. [Paras 12, 13, 14, 15]

The undervaluation finding and consequential differential-duty demand, interest and penalties were held unsustainable.

Post-import redetermination of retail sale price - Natural justice in retail sale price determination - additional customs duty demand founded on revised retail sale prices of the imported notified goods was sustainable neither on evidence nor in law - HELD THAT: - The invoices allegedly relied upon for determining the retail sale price were not furnished, causing prejudice to the importer's defence. Further, for the period concerned, there was no statutory machinery for post-import ascertainment or redetermination of retail sale price for levy of additional customs duty. [Paras 16]

The demand based on revised retail sale price was set aside.

Classification of therapeutic transdermal products - Medicament versus skin-care preparation - ConyTakara, a foot-applied sheet intended to relieve pain, promote blood circulation and detoxification, was classifiable as a medicament under CTH 3004 or as a skin-care product under CTH 3304 - HELD THAT: - The product's therapeutic and curative attributes, coupled with its form as a patch applied directly to the skin, brought it within the scope of medicaments. It was neither a beauty nor a make-up preparation for skin care, and the adjudicating authority had not established its exclusion from CTH 3004 or its inclusion under CTH 3304. [Paras 17]

The declared classification under CTH 3004 was upheld and the proposed reclassification under CTH 3304 was rejected.

Redemption fine where goods are unavailable - whether Redemption fine could be imposed in respect of imported goods that were unavailable, particularly when the underlying findings warranting confiscation were unsustainable? - HELD THAT: - As the findings of relationship and undervaluation were not proved, the conclusion that the goods were liable to confiscation could not survive. Independently, redemption fine was not imposable when the goods were unavailable. [Paras 19, 20]

The Revenue's challenge to non-imposition of redemption fine and to non-inclusion of interest in penalty was rejected.

Final Conclusion: The cross-objections were allowed, the impugned order was set aside, and the Department's appeals were rejected with consequential relief.

Denial of benefit of preferential duty benefit - revised/rectified COOs in the prescribed format were duly submitted by the Appellant within the prescribed time limits

Entitlement to preferential customs duty benefit for Light Naphtha on the basis of revised Certificates of Origin submitted after import - HELD THAT: - The initial Certificates of Origin could not be rejected for not conforming to Origin Rules issued after their issuance, for identifying the Singapore subsidiary under a permitted third-party invoicing arrangement, or for an endorsement that did not alter the origin, value or description of the goods. The applicable duty rate was that prevailing on presentation of the Bills of Entry, when the exemption notification was in force.

The Origin Rules expressly permit replacement of erroneous certificates and retrospective issuance within the stipulated period; they must be harmoniously read with the domestic verification provision so that a procedural defect in a particular certificate does not permanently extinguish the substantive treaty benefit. The Board Instruction also protects the benefit on subsequent submission of a valid Certificate of Origin where product origin and authenticity are undisputed.

Board has clarified the issue vide Circular No. 21/2024-Cus. (Instruction) dated 16 October 2024 which allows preferential duty benefit on subsequent submission of COO. Beneficial Circulars need to be given retrospective effect as held by the Hon’ble Supreme Court in the case of Suchitra Components Ltd.[2007 (1) TMI 4 - SUPREME COURT]

We find that the Ld. Adjudicating Authority, in the de novo proceedings, has denied the benefit of the said Circular to the Appellant based on the contention that the said Instruction is applicable only to cases where the preferential treatment was not claimed or extended at the time of import. We observe that this restrictive interpretation is fundamentally flawed. The said Instruction explicitly covers scenarios where preferential treatment was not extended due to "procedural discrepancies" and categorically states that the importer does not lose the right to claim the benefit upon subsequent submission of a valid COO within the stipulated timeframe, provided the origin of the product is not in dispute.

We also rely on the judgement of Okaya Power Limited [2017 (4) TMI 634 - CESTAT CHANDIGARH]wherein at the time of filing of the Bill of Entry, the said assessee produced COOs that were not in the prescribed format; however, the claim for duty exemption was allowed when the assessee produced the revised COOs in the prescribed format.

Similar views have been consistently echoed by the judicial fora, holding that substantive benefits cannot be denied due to curable procedural infractions. This view has been held in the case of M/s Pradeep Phosphates Limited v. Commissioner of Customs [2024 (6) TMI 913 - CESTAT KOLKATA] wherein this Tribunal specifically held that subsequent compliance with the COO format conditions of an exemption notification entitles the assessee to the benefit. [Paras 5]

The revised Certificates of Origin were valid and the denial of concessional customs duty benefit was unsustainable; consequently, the duty demand, interest and penalties were set aside.

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

Appropriate action against the Directors for non-compliance of the provisions of the Companies Act, 1956, as well as the Companies Act, 2013 - Binding force of Supreme Court pleadings - Mandamus - prior demand and refusal

Binding of assertion in pleadings filed before the Supreme Court, without adjudication on that assertion - Article 129 - Court of Record - Article 141 - law declared by Supreme Court - Applicability of company law - Whether an assertion in pleadings filed before the Supreme Court, without adjudication on that assertion, binds other courts as to the statute governing the company? - HELD THAT: - The Court held that the Court-of-Record attribute under Article 129 ensures the authenticity of the Supreme Court record and establishes that an assertion was made; it does not establish the legal correctness of the assertion or its judicial acceptance. Binding force under Article 141 attaches only to law declared by the Supreme Court. The statutory regime governing a company must be determined from the relevant statutory framework, its objects, activities, operational area and other relevant circumstances, and cannot rest upon a party's admission or pleading. [Paras 26, 30, 31, 32, 33]

The pleading relied upon did not furnish a binding declaration that the company was governed by the Companies Act, 2013.

Mandamus - prior demand and refusal - Failure to perform mandatory duty - Whether mandamus could issue for action against the company when the appellant had not first approached the statutory authorities with a demand? - HELD THAT: - A writ of mandamus ordinarily requires a distinct prior demand for performance of the alleged mandatory duty and a refusal or neglect by the authority. Since no demand was made to the statutory authorities and no refusal was shown, the essential precondition for mandamus was absent. [Paras 35, 36, 37]

The refusal of mandamus was upheld.

Final Conclusion: The writ appeal was dismissed. The Court held that the appellant could not rely on an unadjudicated Supreme Court pleading to establish the applicable statutory regime and had not satisfied the prerequisite for mandamus.

Uncrystallized provident fund interest and damages claims in corporate insolvency resolution - Clean slate principle in resolution plans

Uncrystallized provident fund interest and damages claims in corporate insolvency resolution - Clean slate principle in resolution plans - Exclusion of unadjudicated interest and damages under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 from an approved resolution plan. - HELD THAT: - Though provident fund dues are excluded from the liquidation estate, the corporate debtor's liability for interest and damages, if not determined and finalised before commencement of CIRP, is a contingent liability. The Committee of Creditors may, in its commercial wisdom, make a lump-sum provision for such uncrystallized claims; but, if it does not do so, the resolution plan cannot be faulted, since permitting uncertain claims to survive would defeat the fixed timelines and clean-slate objective of CIRP. Approval may be declined only on the limited statutory grounds, and the plan provided for the crystallized provident fund dues. [Paras 11, 12]

There being no blatant violation of the statutory mandate, exclusion of the uncrystallized claims for interest and damages was upheld.

Final Conclusion: The appeal was dismissed and the approval of the resolution plan was sustained.

Committee of Creditors' recommendation of Liquidator - Replacement of Resolution Professional as Liquidator under section 34 - Authorisation for Assignment of Insolvency Professional

Committee of Creditors' recommendation of Liquidator - Replacement of Resolution Professional as Liquidator under section 34 - Non-application of mind to material recommendation - Appointment of a Liquidator independently of the Committee of Creditors' unanimous recommendation, based on the IBBI communication concerning appointment of an erstwhile IRP or RP as Liquidator. - HELD THAT: - The Adjudicating Authority neither recorded nor considered the CoC's unanimous and twice reaffirmed recommendation of the appellant as Liquidator. Such recommendation was material and required consideration before another professional could be appointed. Section 34 makes continuation of the resolution professional as Liquidator the default, and replacement can occur only on the grounds specified therein; the statutory power cannot be converted into a general prohibition against appointment of an erstwhile IRP or RP. In any event, the communication relied upon was factually inapplicable because the appellant had never been the IRP or RP of the Corporate Debtor. [Paras 32, 34, 35, 36, 38]

The appointment of Respondent No. 2 was held unsustainable, and the appellant was appointed Liquidator in accordance with the CoC's resolution.

Authorisation for Assignment of Insolvency Professional - Verification of eligibility of Liquidator - Validity of the appellant's Authorisation for Assignment as an objection to his appointment as Liquidator. - HELD THAT: - Eligibility for appointment as Liquidator entails compliance with the regulatory safeguard of a valid AFA and could be considered despite being raised in appeal. However, the impugned order contained no finding on that question, and the conflicting material on the limited appellate record did not permit a conclusive finding on the AFA's validity. The appropriate course was verification of the appellant's current AFA status by the Adjudicating Authority before assumption of charge. [Paras 39, 40, 41]

The AFA objection did not sustain the impugned appointment, but the appellant's assumption of charge was made subject to verification of a valid and subsisting AFA.

Replacement of incumbent Liquidator - Effect of liquidation steps already undertaken - Whether the liquidation steps undertaken by the incumbent Liquidator and the alleged absence of objection by the sole financial creditor justified refusing substitution of the Liquidator. - HELD THAT: - The steps undertaken by Respondent No. 2 were routine statutory functions and actual realisation of assets had remained on hold. They were neither irreversible nor sufficient to override the CoC's unanimous choice after the basis of Respondent No. 2's appointment had failed. The sole financial creditor continued to support the appellant, and its resolutions could not be displaced by a bare reference to absence of objection in a meeting of the Stakeholders' Consultation Committee. Equity nevertheless required compensation to Respondent No. 2 for work genuinely performed and preservation of valid steps taken during his tenure. [Paras 42, 43, 44, 45, 46]

The incumbent Liquidator was directed to hand over charge upon verification of the appellant's AFA, while retaining entitlement to costs and fee determined for the period of his functioning; valid prior steps were to continue for the benefit of liquidation.

Final Conclusion: The appeal was allowed to the limited extent of setting aside the appointment of Respondent No. 2 as Liquidator, without disturbing the liquidation order. The appellant was appointed Liquidator subject to verification of a valid and subsisting AFA, with directions preserving the benefit of valid steps already taken and compensating the outgoing Liquidator.

Vicarious liability for company contraventions under FEMA - Neglect in non-realisation of export proceeds - Mens rea not required for civil penalty under FEMA -Ex-Managing Director, Directors and/or Officers of the Company

Vicarious liability for company contraventions under FEMA - Neglect in non-realisation of export proceeds - Liability of the Financial Advisor and Chief Accounts Officer for the company's failure to realise export proceeds. - HELD THAT: - Vicarious liability attaches where a person was in charge of and responsible to the company for conduct of its business; absent material establishing such responsibility, action under section 42(1) is unsustainable. Although the appellant was not, merely by virtue of his office, in charge of the export business, the authorisation to sign all export-related documents submitted to the bank, together with export, import and bank-account operation papers, established assigned responsibility in relation to export transactions. He could not therefore wholly disclaim responsibility for non-realisation of export proceeds. While consent or connivance was not established, neglect was attributable to him. [Paras 28, 30]

The appellant's liability for the contravention was sustained on the basis of neglect.

Mens rea not required for civil penalty under FEMA - Reduction of penalty for export-proceeds contravention - Requirement of mens rea and appropriate penalty for the appellant's responsibility in the non-realisation of export proceeds. - HELD THAT: - FEMA contraventions entail civil, rather than criminal, consequences; penalties may be imposed for technical or procedural non-compliance without proof of a particular mental state or mens rea. The Tribunal nevertheless held that the ends of justice warranted limiting the penalty to the pre-deposit already made. [Paras 30, 31]

The penalty was reduced to the amount of the pre-deposit, and the balance penalty was deleted.

Final Conclusion: The appeal was partly allowed by modifying the penalty to the amount already deposited, while sustaining the appellant's liability for neglect connected with the company's failure to realise export proceeds.

Money Laundering - legality of freezing order under Section 17 of the PMLA and its confirmation - existence of sufficient reasons to believe or not - mandatory requirements of Section 20 of the PMLA were duly complied with prior to the passing of the order under Section 8 by the learned Adjudicating Authority

HELD THAT:- We are not inclined to interfere with the impugned judgment and order(s) of the High Court [2025 (11) TMI 1031 - DELHI HIGH COURT] hence, the special leave petitions are dismissed.

Anticipatory bail in money-laundering investigation - Twin conditions for bail - High Court [2026 (8) TMI 18 - TELANGANA HIGH COURT] held that the petitioner was not entitled to anticipatory bail, either on merits or medical grounds. - HELD THAT:- Special Leave Petition seeking pre-arrest bail dismissed; pending applications disposed of.

Seeking bail on medical grounds - HELD THAT:- This Court has carefully gone through the aforesaid judgment(s)/order(s) in Amar Sadhuram Mulchandani [2024 (11) TMI 131 - SUPREME COURT (LB)]; Satyendra Kumar Jain [2023 (5) TMI 1469 - SC ORDER]; P. Sarath Chandra Reddy [2023 (5) TMI 1263 - DELHI HIGH COURT]; Sameer Mahandru [2023 (10) TMI 1377 - DELHI HIGH COURT]; Directorate of Enforcement v. Sameer Mahandru [2023 (7) TMI 1468 - SC ORDER]. However, as the bail petition of the petitioner herein is already listed before the High Court of Punjab and Haryana at Chandigarh, and as learned Additional Solicitor General on instructions has given a categoric undertaking before this Court to ensure best possible treatment to the petitioner even for an Angiography in case need so arises in future, this Court is of the opinion that the present special leave petition deserves to be dismissed and is accordingly dismissed. However, it is made clear that the Jail Authority shall provide all possible treatment in case of any medical emergency as and when required keeping in view the Medical Report of the petitioner.

The special leave petition seeking bail on medical grounds was dismissed, without expression of opinion on the merits of the pending bail application before the High Court.

Immunity to corporate debtors and their assets, upon approval of a resolution plan - jurisdiction of NCLT to release the attached properties by invoking Section 32A of the IBC, 2016 - approval of resolution plan under Section 31 - non-obstante provision - NCLT jurisdiction under Section 60(5) - moratorium under Section 14 - attachment under the PMLA, 2002

Whether attached properties of the corporate debtor covered by an approved resolution plan could be restored to the successful resolution applicants by consent under the second proviso to Section 8(8) of the Prevention of Money Laundering Act, 2002? - HELD THAT:- The present restitution order is deemed to have been passed in terms of the second proviso to sub-Section (8) of Section 8 of PMLA.

In view of Section 32A of the IBC, the name of the Corporate Debtor shall be deleted from the array of accused in the Prosecution Complaint before the Special PMLA Court, Mumbai, while continuing with the prosecution of the erstwhile directors and/or persons in control or conspirators or abettors and confiscation of their attached/restrained properties/entitlements, if any.

Needless to state, the benefit of Section 32A of the IBC is subject to the condition that the SRA is neither connected with the erstwhile Directors of the Corporate Debtor nor is the SRA a beneficiary of proceeds of crime derived from the alleged scheduled offence. If this foundation is eroded in the ongoing investigation, the Directorate of Enforcement shall be at liberty to take appropriate steps in accordance with law, including by way of questioning the resolution plan.

Any challenge of the Directorate of Enforcement to the approval of the Resolution Plan by the National Company Law Tribunal, Mumbai, shall stand closed, and accordingly the Directorate of Enforcement shall have no right or lien either on the properties of the Corporate Debtor attached under Provisional Attachment Order, or on any other assets of the Corporate Debtor that form part of the resolution plan approved by the NCLT. The Resolution Plan already stands substantially implemented in accordance with law. The attached properties shall be released by the appellant within a period of two weeks from the date of receipt of a copy of this order.

This order is being passed based on the peculiar facts and circumstances of the case and with the consent of the parties under the second proviso to sub-Section (8) of Section 8 of the PMLA, and shall not be treated as a precedent. We once again make it clear that the questions of law shall remain open to be decided in an appropriate case.

We place on record our appreciation for the earnest efforts made by the officers of the Directorate of Enforcement in restoring the attached properties to secure the interests of justice. We also reiterate that the ECIR against the erstwhile directors and promoters would continue and, thus, the present order will have no bearing on those proceedings.

Service tax on composite construction of residential flats prior to 01.07.2010 - Personal-use exclusion from residential complex service - Extended limitation for interpretational service-tax disputes

Service tax on composite construction of residential flats prior to 01.07.2010 - Personal-use exclusion from residential complex service - Levy of service tax on construction and sale of residential flats to prospective individual purchasers, substantially for the period before 01.07.2010. - HELD THAT: - Composite construction contracts could not be subjected to service tax before the introduction of the specific charging provisions for works contract service. Further, in the absence of machinery for segregating the value of goods and services in composite construction agreements, tax could not be sustained on the composite consideration. The construction for individual purchasers' personal use was also supported by the exclusion from the definition of residential complex and the applicable Board clarification. [Paras 6, 7, 8, 9, 10]

The service-tax demand was held unsustainable.

Extended limitation for interpretational service-tax disputes - Penalty for non-payment of service tax in a bona fide interpretational dispute - Invocation of the extended limitation period and imposition of interest and penalties for non-payment of service tax on residential-flat construction. - HELD THAT: - The dispute arose from interpretation of the taxable entry and the applicability of the Board Circular in an area where the law had undergone changes and conflicting pronouncements. Registration with the Department and filing of statutory returns negatived deliberate suppression or wilful misstatement with intent to evade tax. Mere non-payment, without such intent, could not justify the extended period; the bona fide interpretational dispute also warranted the statutory protection against penalties. [Paras 12, 13, 14, 15, 16]

The extended period was held wrongly invoked; consequential interest and penalties were set aside.

Adjustment of late fee paid for delayed service-tax returns - Adjustment of late fee claimed to have been paid for delayed filing of service-tax returns. - HELD THAT: - The appellant produced evidence of payment of the late fee. Verification of that payment was required before consequential adjustment could be granted. [Paras 17]

The adjudicating authority was directed to verify the payment and grant consequential adjustment if it was found correct.

Final Conclusion: The service-tax demand, interest and penalties were set aside, with consequential relief. Verification and consequential adjustment of the late-fee payment were directed.

Works contract exemption for sub-contractor services - Extended limitation period-bona fide interpretational dispute

Works contract exemption for sub-contractor services - Deemed sale of goods consumed in works contract - Exemption for sub-contractor's earth excavation and site-formation work under entry 29(h) of Notification No. 25/2012-ST. - HELD THAT: - The contract was composite, requiring the sub-contractor to provide machinery, fuel, lubricants, spares, labour and materials for the excavation work. For a works contract, goods used in execution need only be leviable to VAT as a deemed sale; actual separate billing, physical transfer in their original form, or actual VAT payment is not required. The subsequent reimbursement of VAT deducted by the main contractor did not alter the character of the contract, particularly where the non-payment of VAT was attributable to the applicable exemption. Goods consumed or incorporated in executing the work passed by accretion and supported the characterisation of the activity as a works contract. [Paras 20, 22, 28, 29, 30]

The appellant provided works contract service to the main contractor and was entitled to exemption under entry 29(h); the demand could not be sustained on merits.

Extended limitation period-bona fide interpretational dispute - Suppression of facts-absence of intent to evade tax - Invocation of the extended period for service tax on the sub-contractor's earth excavation and site-formation work. - HELD THAT: - The availability and interaction of exemptions concerning Government dam and canal construction, works contract service and VAT treatment gave rise to a bona fide interpretational dispute. The Managing Director's statement regarding non-transfer of goods reflected the appellant's understanding of the transaction and, without cogent evidence of deliberate suppression or intent to evade tax, could not sustain the extended period. The finding that no complicity or active planning by the Managing Director was established further undermined the allegation of intentional suppression by the appellant. [Paras 33, 34, 35, 36, 38]

The extended period was not invocable, and the demand was time-barred.

Final Conclusion: The impugned order was set aside since the sub-contractor's services qualified for the works contract exemption and, independently, the demand was barred by limitation. Consequently, the penalties were also set aside and the appeal was allowed.

Manpower recruitment and supply service - Extended period of limitation for non-payment of service tax - Penalty for suppression of taxable service

Manpower recruitment and supply service - Nature of labour contract - Admissibility of assessee's statement - The appellant's labour contract for operating manufacturing processes at the recipient's factory was taxable as manpower recruitment and supply service or as job work? - HELD THAT: - The contract, read as a whole, appointed the appellant as a labour contractor, expressly contemplated labour bills and required production of PF and ESIC challans. Payment calculated on the basis of finished goods did not alter the essential character of the arrangement as labour supply, particularly when no contractual standards regarding output, quality or production liability were stipulated. The appellant's unretracted statement affirming that he was a labour contractor corroborated the contractual terms; the objection based on non-compliance with section 9D was untenable since the appellant, though afforded repeated opportunities of hearing, chose not to appear. [Paras 16, 17, 20, 21, 22]

The demand of service tax on the labour-supply service was sustained.

Extended period of limitation for non-payment of service tax - Penalty for suppression of taxable service - Service tax demand based on TDS certificate - HELD THAT: - The appellant was aware that the contract involved labour supply but neither disclosed the taxable service nor paid the tax. Where the appellant failed to produce the relevant records, reliance on Form 16A showing payments was permissible; having established the nature of the appellant's business, the burden lay on the appellant to show that those receipts related to a non-taxable purpose, which he failed to do. [Paras 23, 24]

The extended limitation period, interest and penalty under section 78 were upheld.

Final Conclusion: The impugned order sustaining service tax, interest and penalty under section 78 was upheld, and the appeal was dismissed.

Statutory limitation for appeal - Power to condone delay

Condonation of delay in filing a service-tax appeal before the Commissioner (Appeals) beyond the statutorily permissible extended period - HELD THAT: - The appellate authority, being a creature of statute, could entertain an appeal filed within the prescribed two-month period and condone delay only for the further one month allowed by the proviso to section 85(3A) of the Finance Act, 1994. The statutory limitation excluded any power to condone delay beyond that outer limit; merits of the underlying dispute could not justify condonation. An appeal filed more than seven years after receipt of the original order was consequently beyond the appellate authority's jurisdiction to entertain. [Paras 3]

The dismissal of the appeal as time-barred was upheld.

Final Conclusion: The appeal was dismissed, the challenge to the rejection of the delayed statutory appeal having no merit.

Service tax on stockbroker's turnover/transaction charges - Extended limitation for suppression of taxable value

Service tax on stockbrokers' turnover/transaction charges - HELD THAT: - The appellant acknowledged liability on merits following the amendment effective from 16.05.2008. The Tribunal further noted that the departmental clarification and the decision in M/s. Raj Commodities [2020 (2) TMI 41 - CESTAT NEW DELHI] established that amounts paid as a pure agent alone could be excluded; the appellant was not acting as a pure agent in collecting turnover/transaction charges. [Paras 6, 7, 8]

The short-payment of service tax arising from exclusion of turnover/transaction charges was sustained.

Extended limitation for suppression of taxable value - HELD THAT: - This Tribunal, Mumbai Bench, in the case of Jai Bharat Automobiles Ltd. [2015 (8) TMI 503 - CESTAT MUMBAI], as referred by the learned departmental representative, has held that the extended period of limitation can be invoked in cases where the assessee had not declared the total commission received and the assessee is aware of the liability to pay tax.

The prior clarification that the gross amount received by a stockbroker was taxable, coupled with the department's denial of the appellant's earlier request to treat transaction charges as reimbursable amounts, negatived the plea of bona fide confusion. The appellant had not filed service tax returns and had deliberately failed to disclose the tax liability on such charges despite paying tax on brokerage, constituting wilful suppression with intent to evade tax. [Paras 9]

Invocation of the extended period of limitation was upheld.

Final Conclusion: The order sustaining service tax on the turnover/transaction charges, with interest and consequential penalties, was upheld. The appeal was dismissed.

Refund of accumulated Cenvat credit on input services - Nexus between input services and exported output services

Entitlement to refund of accumulated Cenvat credit on input services used for rendering exported output services, where refund had been denied for want of nexus - HELD THAT: - The Tribunal noted that, in the appellant's own case [2022 (5) TMI 867 - CESTAT BANGALORE], it had already held that the nexus of the disputed input services with the output services stood settled and had allowed the refund. Since the impugned rejection rested on the same ground of absence of nexus, there was no reason to sustain it. [Paras 4]

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

Final Conclusion: The denial of refund on the ground that the input services lacked nexus with the exported output services was unsustainable in view of the Tribunal's earlier decision in the assessee's own case. The appeal was allowed with consequential relief.

Review order - Refund of unlawfully collected amount - constitutional invalidity of levy/premium - unjust enrichment - restitution for payment made under mistake of law - effect of higher court leaving questions of law open - exercise of discretionary jurisdiction where relief is sought after delay

HELD THAT:- Application seeking permission to file review petitions and urging additional grounds is allowed.

Delay of 50 days in filing the Review Petitions is condoned.Application seeking listing of the Review Petitions in open Court is rejected.

These review petitions have been filed by the petitioner seeking review of the Order dated [2025 (12) TMI 1882 - SC ORDER] passed in the captioned Special Leave Petitions whereby the said petitions were dismissed.

As carefully gone through the said Order and the record. In our opinion, no case for review is made out. Consequently, the review petitions are dismissed.

CENVAT credit on input services used for procurement of fly ash - Input services used outside factory premises

Eligibility to CENVAT credit on services used for maintenance of the fly ash pond and for loading, unloading and transportation of fly ash, an input for manufacture of cement, from the supplier's plant to the factory - HELD THAT: - The fly ash was admittedly a raw material for the finished goods, and the services were used for its procurement and movement to the factory. Rule 2(l) permits credit of services used directly or indirectly in or in relation to manufacture; it does not restrict credit merely because the services are received outside the factory premises. The precedents on identical facts were held squarely applicable. See ULTRATECH CEMENT LTD. [2010 (7) TMI 302 - CESTAT, MUMBAI], M/S. BIRLA CORPORATION LTD [2013 (11) TMI 987 - CESTAT NEW DELHI][Paras 7, 9]

The denial of CENVAT credit was unsustainable; the impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The appeal was allowed, and the denial of CENVAT credit on services connected with procurement and movement of fly ash was set aside with consequential relief in accordance with law.

Practice of adjournments sought mechanically - misuse of the adjournments granted by the court -Counsel for the appellant either in person or through the letter has only sought adjournments in the matter.

HELD THAT:- In case of Ishwar lal Mali Rathod [2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal’s Hon’ble Supreme Court highlighted Grant of repeated adjournments in routine manner and how it affects ultimately the justice delivery system as such came to be considered by this court in catena of decisions and asking/grant of repeated adjournments have been repeatedly condemned by this court.

The appeal was dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982 after repeated adjournments sought by the appellant exceeded the statutory limit.

Practice of adjournments sought mechanically - misuse of the adjournments granted by the court -Counsel for the appellant either in person or through the letter has only sought adjournments in the matter.

HELD THAT:- In case of Ishwar lal Mali Rathod [2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal’s Hon’ble Supreme Court highlighted Grant of repeated adjournments in routine manner and how it affects ultimately the justice delivery system as such came to be considered by this court in catena of decisions and asking/grant of repeated adjournments have been repeatedly condemned by this court.

The appeal was dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982 after repeated adjournments sought by the appellant exceeded the statutory limit.

Refund of contractual security deposit - Burden and shifting onus of proof - Contractual adjustment for alleged input tax credit loss - Interest on wrongfully retained security deposit

Refund of contractual security deposit - Burden and shifting onus of proof - Contractual adjustment for alleged input tax credit loss - Entitlement to refund of the balance security deposit withheld on the allegation that defective tax invoices caused loss of input tax credit to the employer. - HELD THAT: - Though the initial burden lay on the contractor to establish completion of work, expiry of the relevant retention period and entitlement to refund, the evidentiary onus shifted to the employer once those foundational facts were proved. The employer, having accepted the invoices, processed the running bills, deducted tax at source and issued Form VAT 156, was required to prove the alleged invoice defects, the resulting denial of input tax credit, the causal connection between the two, and contractual recoverability of that loss. No independent evidence of rejection of input tax credit, actual loss or its computation was produced. The contractual clauses permitted deduction only for loss or compensation shown to be attributable to the contractor's default; they did not authorise appropriation of the security deposit for an unproved fiscal consequence. The employer could not rely upon its own failure to seek rectification during the statutory period after having accepted the invoices. [Paras 28, 29, 30, 32, 33]

The withholding was not contractually justified, and the contractor was entitled to refund of the balance security deposit.

Interest on wrongfully retained security deposit - Entitlement to interest on the security deposit after expiry of the contractual performance guarantee period. - HELD THAT: - The contractual exclusion of interest applied while retention of the security deposit was contractually permissible. Upon expiry of the five-year performance guarantee period, the purpose of retention ceased and continued withholding became wrongful. In the absence of a contractual stipulation for the claimed rate, interest at a reasonable commercial rate was warranted from the day following expiry of that period. [Paras 34]

Interest at 9% per annum was awarded from 31.10.2018 until realisation.

Final Conclusion: The appeal was allowed, the dismissal of the suit was set aside, and the claim for refund of the balance security deposit was decreed with interest at 9% per annum from 31.10.2018 until realisation.

Post-award interim measures under arbitration law - Maintainability of interim relief by an unsuccessful arbitral party - Plain meaning of "a party" to an arbitration agreement - Conflicting High court decisions

Whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 at the post-award stage, by a party that has lost in the arbitral proceedings and has no enforceable award in its favour, is maintainable in law? - HELD THAT: - Section 9, read with the definition of "party", makes interim measures available to every party to the arbitration agreement before, during, and after the award until its enforcement; it contains no qualification restricting post-award recourse to an award-holder. Reading such a restriction into the provision would impermissibly alter its plain language. Sections 34 and 36 operate in distinct spheres: they provide remedies against, or a stay of, the award, whereas Section 9 protects the subject matter of arbitration or the amount in dispute.

Undoubtedly, the threshold for grant of interim relief will be higher in the case of an unsuccessful party in arbitration seeking such relief. In rare and compelling cases, permitting the unsuccessful party to invoke Section 9 of the Act would prevent irreparable prejudice and preserve the efficacy of the challenge proceedings. However, the rights of such a party cannot be curtailed merely on the apprehension of possible misuse of a statutory provision.

The statutory expression is broader than the fruits of an award, and an award may be modified in limited circumstances, set aside, or followed by fresh arbitral proceedings. Though an unsuccessful party may apply under Section 9, relief remains governed by prima facie case, balance of convenience and irreparable injury; the threshold is higher and relief is warranted only with care, caution and circumspection in rare and compelling cases. [Paras 52, 59, 60, 61, 62]

The judgments of the Bombay, Delhi, Madras, and Karnataka High Courts insofar as they deny an opportunity to unsuccessful parties in arbitration to apply for relief under Section 9, do not lay down good law. The contrary views expressed by the Telangana, Gujarat, and Punjab & Haryana High Courts correctly reflect the statutory position.

Consequently, this Court holds that any party to an arbitration agreement, including an unsuccessful party in arbitration, may invoke Section 9 of the Act at the post-award stage. However, the Courts would be well advised to exercise care, caution and circumspection while dealing with a Section 9 application filed by an unsuccessful party in arbitration.

Final Conclusion: The Court held that post-award interim protection under Section 9 is not confined to the successful arbitral party. The appeal arising out of SLP (C) No.11139/2020 was disposed of, while the remaining appeals were directed to be listed for hearing on merits.

Writ jurisdiction against private bodies performing public functions - IBA Caution List for third parties involved in banking fraud - Exclusive disciplinary jurisdiction of Bar Councils over advocates' professional misconduct

Writ jurisdiction against private bodies performing public functions - Public law element - Maintainability of a writ petition challenging inclusion of an advocate's name in the IBA Caution List. - HELD THAT: - Article 226 is not confined to authorities falling within Article 12. The relevant considerations are the nature of the function, the source of power and the effect of the impugned action on legally protected rights. The sector-wide Caution List, maintained under RBI guidelines, has a public law character and materially affects an advocate's professional reputation, future engagements and right to practise; hence, the IBA's status as a non-State body is not determinative. [Paras 11, 12, 17, 18, 19]

The writ petition under Article 226 was maintainable.

IBA Caution List for third parties involved in banking fraud - Fraud and professional negligence - Validity of including an advocate in the Caution List for an allegedly negligent title-verification opinion. - HELD THAT: - The RBI framework for reporting third parties and preparation of Caution Lists is directed to fraud and professionals who facilitate fraudulent banking transactions. Fraud requires dishonest intention or deliberate design to defraud; an erroneous legal opinion or omission in due diligence, without an allegation of fraud, collusion, criminality or deliberate facilitation, cannot be treated as fraud. Though a bank may discontinue an advocate's empanelment on dissatisfaction with services, it cannot use the fraud-related Caution List to circulate an adverse declaration of professional incompetence or negligence. [Paras 24, 25, 26, 27, 28]

Inclusion of the advocate's name in the Caution List solely on the allegation of negligence was held unsustainable, and its removal was directed.

Exclusive disciplinary jurisdiction of Bar Councils over advocates' professional misconduct - Independence and self-regulation of the legal profession - Authority of banks and the IBA to determine or publicise an advocate's alleged professional negligence or misconduct. - HELD THAT: - The Advocates Act creates a complete disciplinary framework under which questions of an advocate's professional conduct, competence and misconduct are to be examined by the State Bar Councils and the Bar Council of India. The self-regulatory disciplinary jurisdiction of the Bar is integral to the independence of the legal profession. Banks may place relevant material before the competent State Bar Council, but cannot bypass that statutory process by unilaterally blacklisting an advocate or portraying the advocate as professionally incompetent through the Caution List. [Paras 31, 32, 33, 35, 36]

The Bank and the IBA lacked authority to use the Caution List to determine or punish alleged professional negligence or misconduct of the advocate.

Performance audit of advocates' disciplinary mechanisms - Accountability in professional self-regulation - Need for institutional assessment of the efficacy of disciplinary mechanisms administered by the Bar Council of India and State Bar Councils. - HELD THAT: - Professional self-regulation must operate with accountability, transparency, fairness and institutional effectiveness. In view of concerns regarding pendency, delay, procedural inconsistency and limited public information about disciplinary proceedings, an objective performance audit is necessary to assess whether the statutory disciplinary framework is meeting its intended purposes. [Paras 41, 42, 44, 46, 50]

The Bar Council of India was directed to constitute a committee, undertake a comprehensive performance audit of its disciplinary mechanisms and consider consequential action.

Final Conclusion: The appeal was allowed and the Caution List entry against the advocate was declared impermissible and without jurisdiction. The Bar Council of India was also directed to audit the effectiveness of its disciplinary mechanisms.

Dishonour of cheque - Inquiry before issue of process against accused residing outside territorial jurisdiction - Non-compliance with the mandatory inquiry under Sections 200 and 202 - Statutory presumption on admitted execution of cheque - Quashing of cheque dishonour complaint at pre-trial stage - Presumption of legally enforceable debt or liability - Rebuttable presumption - Inherent jurisdiction

Inquiry before issue of process against accused residing outside territorial jurisdiction - Pre-summoning evidence by affidavit - Compliance with the mandatory inquiry requirement before issuance of process in cheque dishonour complaints where the accused reside beyond the Magistrate's territorial jurisdiction. - HELD THAT: - The Magistrate had considered the complaint, the complainant's affidavit by way of pre-summoning evidence, the original dishonoured cheque, return memos, statutory demand notice, the MoU and supporting documents before taking cognizance. Such examination of documentary material and affidavit evidence furnished sufficient grounds to proceed and satisfied the inquiry contemplated under Sections 200 and 202 of the Code. [Paras 9]

The challenge to the cognizance orders for alleged non-compliance with Section 202 of the Code was rejected.

Statutory presumption on admitted execution of cheque - Quashing of cheque dishonour complaint at pre-trial stage - Quashing of cheque dishonour complaints on the defence that the security cheques were prematurely presented and that no enforceable liability had arisen under the MoU. - HELD THAT: - The Hon'ble Supreme Court in Sanjabij Tari [2025 (9) TMI 1634 - SUPREME COURT] assumes significance. In the aforesaid decision, the Hon'ble Supreme Court emphasized the mandatory nature of the statutory presumptions under Sections 118 and 139 of the N.I. Act, and deprecated any approach inconsistent with the settled legal position governing prosecutions under Section 138 of the Act.

Once issuance of the cheques and non-payment despite statutory notice were admitted, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act operated in favour of the complainant. The defence concerning the due dates, terms of the MoU and alleged fraud raised disputed factual questions requiring evidence at trial; the inherent jurisdiction could not be used to conduct a pre-trial enquiry or displace the rebuttable presumption. [Paras 9, 10]

The petitioners were required to face trial and were left at liberty to rebut the statutory presumptions by evidence.

Final Conclusion: The petitions challenging the cognizance orders and the cheque dishonour proceedings were dismissed. The trial court was directed to proceed with the trials without further delay.

Revisional jurisdiction against concurrent findings of convictioncommission of an offence punishable under Section 138 of the Negotiable Instruments Act - Presumption of legally enforceable debt on admitted cheque execution - Security cheque towards subsisting liability - Dishonour of cheque for account closed - Sentencing and compensation for cheque dishonour

Revisional jurisdiction against concurrent findings of conviction - Interference in revision with concurrent findings convicting the accused for dishonour of cheque - HELD THAT: - Revisional jurisdiction is supervisory and cannot be exercised as a second appeal for reappreciation of evidence. Concurrent findings may be disturbed only upon a patent defect, jurisdictional or legal error, perversity, non-consideration of material evidence, or a gross miscarriage of justice. No such infirmity was established in the concurrent findings. [Paras 14, 15, 16, 17, 18]

The concurrent conviction did not warrant interference in revision.

Presumption of legally enforceable debt on admitted cheque execution - Rebuttal of presumption under the Negotiable Instruments Act - Security cheque towards subsisting liability - Signed blank cheque - Cash loan in contravention of income-tax provisions - accused's liability under Section 138 of the Negotiable Instruments Act where issuance of the signed cheque and the loan were admitted, but repayment, security-cheque status, blank filling of the cheque and cash advancement were pleaded in defence - HELD THAT: - Admission of execution of the cheque attracted the presumptions that it was issued for consideration and towards a legally enforceable debt; the burden lay upon the accused to establish a probable defence. The accused's statement under Section 313 CrPC could corroborate the complainant's evidence, but the unsupported assertion of repayment did not rebut the presumption. The agreement permitting presentation of the cheques, the admitted subsisting loan liability, and absence of proof of repayment established that a cheque described as security could be presented upon default. A voluntarily signed blank cheque handed over towards payment was not invalid merely because its particulars were filled by the payee. Further, contravention of the statutory restriction on cash loans attracted penalty but did not render the underlying transaction illegal, void or unenforceable.

It was laid down by the Hon'ble Supreme Court in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers [2020 (2) TMI 629 - SUPREME COURT] that when the issuance of a cheque and signature on the cheque are not disputed, a presumption would arise that the cheque was issued in discharge of the legal liability. [Paras 41, 42, 43, 44, 45]

The accused failed to rebut the presumptions or prove discharge of the admitted liability; the cheque was enforceable notwithstanding its security character, blank particulars or cash nature of the loan.

Dishonour of cheque for account closed - Proof of cheque dishonour by admission - Proof of dishonour where the cheque return memo lacked bank signature and seal, but the accused admitted dishonour with the endorsement 'account closed' - HELD THAT: - Even if the statutory presumption concerning the return memo was unavailable, the accused's admission proved dishonour of the cheque for closure of the account. Dishonour because the account was closed falls within Section 138, since the account then had no funds available to honour the cheque. [Paras 46, 47, 48]

The dishonour of the cheque with the endorsement 'account closed' stood proved and attracted Section 138.

Sentence and compensation for cheque dishonour - Whether the imprisonment and compensation imposed for dishonour of the cheque were excessive? - HELD THAT: - It was laid down by the Hon’ble Supreme Court in Kalamani Tex v. P. Balasubramanian [2021 (2) TMI 505 - SUPREME COURT] that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum.

The penal provision is deterrent, while compensation in cheque dishonour proceedings is compensatory and restitutive. Having regard to the delay in recovery, loss of interest and expenses incurred in prosecuting the complaint, neither the imprisonment nor the compensation was excessive. [Paras 51, 52, 53, 54]

The sentence and compensation were upheld.

Final Conclusion: The revision was dismissed. The concurrent conviction for dishonour of cheque, together with the sentence and compensation, was sustained.