TMI Tax Updates e-Newsletter
Aug 05,2026

Doctrine of merger - dismissal of special leave petition - Premature challenge to reference order pending adjudication of residual issues

Doctrine of merger - dismissal of special leave petition - effect of dismissal of the department's special leave petition against a High Court decision concerning exemption of affiliation fees - HELD THAT: - The dismissal of the special leave petition did not result in merger of the High Court decision with the order of this Court. The Court applied the principle in Kunhayammed and Ors. v. State of Kerala and Anr.[2000 (7) TMI 67 - SUPREME COURT (LB)] to hold that the dismissal did not constitute a binding adjudication by this Court on the claimed exemption. [Paras 4]

The earlier dismissal of the special leave petition was held not to result in merger.

Premature challenge to reference order pending adjudication of residual issues - maintainability of the challenge to the Division Bench reference order while the residual issues stood remanded to the Single Judge - HELD THAT: - As the Division Bench had remanded the matter for decision on the residual grounds, the Court declined to examine the exemption question at that stage. The petitioner was reserved liberty to challenge any prejudicial order passed after such adjudication together with the reference decision; any intervening decision of this Court favourable to the assessee could be produced before the Single Judge and would prevail over the reference finding. [Paras 4, 5, 6]

The special leave petitions were closed with liberty to challenge the reference order after disposal of the remanded matter by the Single Judge.

Final Conclusion: The special leave petitions were closed as the remanded residual issues remained to be decided by the Single Judge. Liberty was reserved to challenge a prejudicial subsequent order along with the Division Bench reference decision.

Availability of statutory appellate remedy before GST Appellate Tribunal - Continuation of the writ petition after constitution and commencement of the GST Appellate Tribunal - High Court has not interfered in the matter on the ground that now the GST Appellate Tribunal has started functioning and the matter is required to be considered by the said Appellate Tribunal

HELD THAT:- GST Appellate Tribunal has specifically been constituted to lessen the load of the High Court in such matters for a specific purpose and the same has become functional, we expect that the same would start functioning fully also.

Accordingly, the Special Leave Petition stands disposed of with liberty to the petitioner to mention the matter before the President of the GST Appellate Tribunal for not only registering/numbering the case but also to take up the matter and if required, at least hear it for the purpose of any interim relief which the petitioner may require, and priority consideration.

Dismissal of GST appeal as time-barred - HELD THAT: - The Court noted that, where the CGST Act prescribes an outer limit for condonation, the Appellate Authority lacks competence to condone delay beyond one month after expiry of the initial three-month period. Having regard to the circumstances concerning pronouncement, communication and uploading of the impugned appellate order, the Court set aside that order and directed fresh consideration of the appeal on merits. [Paras 4, 7]

The appellate order was set aside and the appeal was remanded to the Appellate Authority for fresh decision on merits.

Final Conclusion: The petition was disposed of by remanding the statutory appeal for decision on merits. Liberty was reserved to the petitioner to challenge the amendment to Section 17(5)(d) of the CGST Act in accordance with law, if required.

Alternative remedy - jurisdictional challenge - Adjudicating authority - power to rule on jurisdiction - writ petition raising a pure jurisdictional challenge to the competence of the State GST investigation officer to issue the show-cause notice

Maintainability of the writ petition despite the statutory appellate remedy where the competence of the Bureau of Investigation officer to issue the show cause notice and adjudicate the input tax credit proceedings was questioned - HELD THAT: - A writ petition raising a pure jurisdictional question which does not require adjudication of disputed facts may be entertained notwithstanding an alternative remedy. As the petitioner had raised questions concerning the adjudicating officer's competence, including the officer's power to adjudicate under the GST enactments, the Court entertained the writ petition; however, since those questions had not been raised before the adjudicating authority, they were not decided on merits. An adjudicating authority is competent to rule on its own jurisdiction and was required to determine that issue first. [Paras 25, 26, 27, 29, 30]

The adjudication and appellate orders and consequential steps were set aside, and the matter was remanded for a fresh reasoned adjudication after permitting the petitioner to raise all grounds, including jurisdiction; the jurisdictional issue, if raised, shall be decided first.

Final Conclusion: The writ petition was allowed and the impugned adjudication and appellate orders were quashed. The proceedings were remitted for fresh adjudication, with the jurisdictional objection to be determined first.

Provisional Attachment Orders of the petitioners' bank accounts -application seeking de-freezing of their bank accounts - HELD THAT:- The writ petitions challenging the provisional attachment orders were disposed of with a direction to the petitioner-companies to appear before the concerned authority on decided date and time.

Inadvertent errors occurred while declaring the taxable value and IGST in the shipping bills - Consequential corrections in GST returns for Financial Year 2017-18 following amendment of the export shipping bills and correction of GSTR-1 and GSTR-3B.

HELD THAT:- By consent of the parties and in the peculiar facts of the case, the petitioner was permitted to rectify the specified GST returns, subject to assessment, verification or scrutiny in accordance with law.

Alternative statutory remedy in GST demand proceeding - Maintainability of the writ petition challenging a GST demand order where the plea that the second show cause notice was founded on material available in the earlier audit proceedings required factual and legal examination - HELD THAT: - The question whether the material underlying the impugned show cause notice had already been available with the Department during the earlier proceedings, and the consequences of that circumstance, required factual as well as legal examination. Such questions were held appropriate for adjudication by the statutory Appellate Authority, particularly as the impugned order was appealable. [Paras 6, 7]

The writ petition was not entertained; the petitioner was left to avail the statutory appellate remedy, with liberty to seek exclusion of the time spent in the writ proceedings under section 14 of the Limitation Act, 1963.

Final Conclusion: The petition was disposed of without examining the merits of the challenge to the second demand proceedings, leaving the petitioner to pursue the statutory appeal.

Service of show-cause notice and adjudication order through Common Portal - Limitation for appeal against portal-uploaded adjudication order

Service of show-cause notice and adjudication order through Common Portal - Limitation for appeal against portal-uploaded adjudication order - Uploading a show-cause notice or order-in-original only in the 'View Additional Notices and Orders' tab on the Common Portal does not constitute sufficient service where the assessee neither acknowledges receipt nor files a reply. - HELD THAT: - Following Luxmi Traders v. Union Territory of Chandigarh and Others, [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] as clarified in The Amar Cooperative LC Society Ltd. v. State of Haryana and Others [2026 (8) TMI 75 - PUNJAB AND HARYANA HIGH COURT] the Court held that the retrospective amendment enabling functions under the CGST Rules to be performed on the Common Portal did not alter the position. The Rules do not specify the Common Portal as a mode for service of a show-cause notice or adjudication order. Consequently, portal-only upload cannot substitute formal service, particularly where it entails civil consequences. Where an ex parte order follows such service, proceedings must be restored to the show-cause-notice stage; where an order after contest is only portal-uploaded, the appellate limitation is not triggered. [Paras 7]

The writ petition was disposed of on the terms laid down in Luxmi Traders and The Amar Cooperative LC Society Ltd.

Final Conclusion: The Court disposed of the writ petition in terms of the settled position that portal-only upload of the show-cause notice or order-in-original is not valid service in the absence of acknowledgement or response, with the consequential remedies identified in the earlier decisions.

Mandatory personal hearing before adverse GST adjudication - Independent requirements of written reply and oral hearing

Denial of personal hearing in GST adjudication where the notice required a written reply but recorded personal hearing as not applicable - HELD THAT: - Section 75(4) mandates an opportunity of personal hearing before an adverse decision. The statutory safeguards of written reply and oral hearing are independent requirements; failure to avail the opportunity to submit a written reply does not extinguish the right to an oral hearing. As the notices expressly showed personal hearing as not applicable, the petitioner was never afforded that mandatory opportunity, rendering the procedural defect self-evident and material to the outcome. [Paras 3, 4, 5, 7]

The impugned adjudication order was set aside and the matter remitted for fresh decision after permitting a final reply and granting personal hearing.

Final Conclusion: The writ petition was allowed. The assessment matter was remitted to the assessing authority for a fresh reasoned order in accordance with the mandatory procedure.

Effective Service of GST notice on cancelled registrantsolely through the GST portal -Opportunity of personal hearing in adverse GST adjudication - principle of audi alteram partem

HELD THAT: - As the firm's registration had been cancelled before issuance of the show-cause notice, portal upload alone did not constitute effective service in the circumstances.

The Court applied the cited decisions Raj Shekhar Pandey vs. State Tax Officer [2026 (2) TMI 1071 - UTTARAKHAND HIGH COURT] as relying on M/S AHS STEELS VERSUS COMMISSIONER OF STATE TAXES AND ANOTHER [2024 (10) TMI 1038 - ALLAHABAD HIGH COURT] and M/S KATYAL INDUSTRIES VERSUS STATE OF UP AND 2 OTHERS [2024 (2) TMI 1447 - ALLAHABAD HIGH COURT] holding that a cancelled registrant is not required to monitor the portal and that service must satisfy the statutory requirement. The Revenue was also required to afford a personal hearing if sought before passing an adverse order. [Paras 6, 7]

The adjudication order and the appellate order were quashed, with liberty to the Revenue to proceed afresh from the show-cause-notice stage and to grant a personal hearing if requested.

Final Conclusion: The writ petition was allowed. The impugned adjudication and appellate orders were quashed, leaving the Revenue free to recommence proceedings from the show-cause-notice stage in accordance with law.

Statutory appeal against assessment order - Inapplicability of Section 128A waiver mechanism to challenge tax liability

Challenge to the underlying tax demand through an application under Section 128A of the TNGST Act, 2017 - HELD THAT: - Section 128A, read with the relevant notification, is available where tax liability is accepted but payment was not made in time. It cannot be invoked where the taxpayer disputes liability itself and challenges the basis of the demand confirmed in an assessment order. Such a challenge must be pursued by statutory appeal against the assessment order. [Paras 4, 5, 6]

The petitioner was granted liberty to file an appeal against the assessment order before the Appellate Authority; on a timely appeal, it shall be decided on merits without reference to limitation, and further recovery shall remain in abeyance pending its disposal.

Final Conclusion: The writ petition was disposed of with liberty to pursue the statutory appellate remedy against the assessment order. The protection against further recovery was made conditional upon filing that appeal within the stipulated period.

Composite show-cause notice for multiple financial years - proceedings for distinct assessment years initiated through a composite notice

HELD THAT: - A composite notice covering more than one financial year is not legally sustainable. The Court applied the principles in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 (2) TMI 666 - KERALA HIGH COURT] and Tharayil Medicals v. Deputy Commissioner, Audit Division - IV [2025 (4) TMI 1152 - KERALA HIGH COURT]

The consolidated show-cause notice and consequential order were quashed, with liberty to issue separate notices for the relevant assessment years; the interval specified by the Court was excluded for computing limitation for fresh proceedings.

Final Conclusion: The writ petition was disposed of by quashing the composite notice and consequential order for the stated financial years. Fresh proceedings may be initiated through separate notices, subject to the limitation exclusion directed by the Court.

Late fee for failure to furnish GST returns - Assessment under Section 73 read with Section 47 of the GST Acts

Validity of levy of late fee upon a registered dealer who failed to file GST returns during the relevant tax period - HELD THAT: - The Court found that, following issuance of show-cause notice, the authority had assessed tax and late fee under Section 73 read with Section 47 of the GST Acts. In view of the failure to furnish returns during the tax period, no infirmity was found in the demand notice. [Paras 7]

The challenge to the demand of late fee was rejected.

Final Conclusion: The writ application was dismissed as devoid of merit, and the demand notice levying late fee was sustained.

Condonation of delay in GST appeal for sufficient cause - Delay in filing an appeal against GST demand arising from wrongful availment of input tax credit, where the assessment order was uploaded under an incorrect portal category - HELD THAT: - Though the Appellate Authority is bound by the statutory limitation under Section 107 of the RGST/CGST Act, the petitioner's inability to file the appeal within time resulted from circumstances beyond its control. Denial of an adjudication on merits in those circumstances would cause grave injury and prejudice. [Paras 7, 8, 9]

The delay was condoned, and the Appellate Authority was directed to entertain and decide the appeal on merits if filed within the stipulated period.

Final Conclusion: The writ petition was allowed to the extent of condoning the delay. The GST appeal was directed to be entertained and adjudicated on merits, subject to filing within the prescribed period.

Pass-through of input tax credit in ongoing real estate projects - Identification of recipients of profiteered amount - Set-off of excess benefit against recipient-specific liability - Inclusion of GST in profiteered amount - Interest on unpassed input tax credit benefit - Prospective operation of anti-profiteering penalty

Pass-through of input tax credit in ongoing real estate projects - Post-GST bookings of flats under continuing construction - Units booked after 30.06.2018 in a project whose construction continued after the introduction of GST exclusion/inclusion from computation of the input tax credit benefit - HELD THAT: - Where construction commenced before GST and continued or was completed thereafter, a purchaser is entitled to the benefit of post-GST input tax credit availed on construction inputs. The benefit is project-specific and must be passed on to all eligible purchasers; a claim that post-GST prices were negotiated afresh cannot establish commensurate reduction without transparent supporting evidence. [Paras 15]

The objection seeking exclusion of post-GST bookings was rejected.

Identification of recipients of profiteered amount - Deposit in Consumer Welfare Fund - whether unpassed benefit attributable to identified homebuyers was required to be returned to them and could not be deposited in the Consumer Welfare Fund? - HELD THAT: - The Consumer Welfare Fund provision is residuary and applies only where eligible recipients genuinely cannot be ascertained or traced despite due diligence. Non-filing of a complaint, difficulty in contacting purchasers, or transfer of the project does not render them unidentifiable where buyer-wise records identify the original allottees. The registered person's obligation to pass on the benefit is not extinguished by transfer of the project. [Paras 16]

The net profiteered amount was directed to be returned to the identified homebuyers.

Set-off of excess input tax credit benefit - Recipient-specific anti-profiteering obligation - Excess benefit passed to certain homebuyers set off against the benefit due to other homebuyers - HELD THAT: - The obligation to pass on input tax credit benefit is owed to each recipient of the supply. An excess payment to one set of customers creates no right to reduce the supplier's liability towards distinct recipients. The statutory framework confers no power to direct recovery from consumers or permit such adjustment; the principle that a power to grant includes a power to withdraw is inapplicable to private recipients' rights under the anti-profiteering provision. [Paras 17]

The plea for set-off or recovery of excess benefit from other customers was rejected.

Inclusion of GST in profiteered amount - GST charged on the inflated base price formed part of the profiteered amount notwithstanding its deposit with the Government - HELD THAT: - The relevant question is whether the homebuyer paid an amount not payable absent profiteering, and not whether the supplier retained the tax. GST charged upon the inflated base price is an additional cost borne by the homebuyer; refunding the entire excess consideration, including such GST, restores the homebuyer to the position that would have obtained had the benefit been passed on. [Paras 18]

Inclusion of GST in the profiteered amount was upheld.

Interest on unpassed input tax credit benefit - Interest from last instalment payment - Interest payable on the amount to be returned to the homebuyers, commencing from payment of the last instalment by each homebuyer - HELD THAT: - The rule providing interest on the amount not passed on is a valid enabling provision within the scope of the anti-profiteering mandate. Since the benefit was computed on a project-wide completion basis and the precise date of collection of the higher amount from each purchaser could not be determined, the date of payment of the last instalment was adopted as a reasonable benchmark for commencement of interest. [Paras 19]

Interest at the prescribed rate was directed from the respective dates of payment of the last instalments until actual refund.

Prospective operation of anti-profiteering penalty - Penalty under the anti-profiteering provision inserted with effect from 01.01.2020 where the entire contravention had concluded before that date - HELD THAT: - The period of contravention stood completed before the penalty provision came into force. A penal provision cannot be retrospectively applied to conduct completed when the provision was not in operation. [Paras 20]

No penalty was leviable.

Final Conclusion: The investigation report was accepted and the respondent was held to have failed to pass on the full input tax credit benefit to eligible homebuyers. The unpassed amount, with applicable interest, was directed to be refunded to the identified recipients; no penalty was imposed.

Rectification application - non-adjudication of appellate grounds - Recall of the appellate order on the ground that grounds Nos. 2 to 5 had not been adjudicated - As decided by HC Tribunal had considered the contention regarding alleged non-adjudication and found that the said grounds had already been considered and rejected. No ground for interference was therefore made out.

Final Conclusion: The appeal was dismissed, as the grounds alleged to have remained undecided had in fact been considered by the Tribunal.

Deduction on interest and dividend from investments with co-operative societies and co-operative banks - Balance additional depreciation for assets put to use for less than 180 days - Additional depreciation on milk cans and artificial insemination and laboratory equipment

Deduction on interest and dividend from investments with co-operative societies and co-operative banks - Deduction claimed by a co-operative society on interest and dividend income from investments with co-operative societies and co-operative banks - HELD THAT: - The issue stood concluded by the earlier decision in the assessee's own case [2014 (6) TMI 977 - GUJARAT HIGH COURT], which held that the statutory requirement is satisfied where the income is received from investments in co-operative societies and co-operative banks. [Paras 8]

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

Additional depreciation u/s 32(1)(ii) in respect of machinery installed in the preceding year - Balance additional depreciation for assets put to use for less than 180 days - scope of amendment introduced by the third proviso to section 32(1)(ii) of the Act by the Finance Act, 2015 - HELD THAT: - The third proviso permits the remaining additional depreciation in the immediately succeeding previous year with effect from 1.4.2016. Since the dispute related to A.Y. 2016-17, the claim was allowable. [Paras 11]

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

Additional depreciation on milk cans and artificial insemination and laboratory equipment - Eligibility of milk cans and equipment used for artificial insemination and laboratory testing for additional depreciation as plant and machinery - HELD THAT: - The issue was governed by the earlier decision in the assessee's own case, wherein milk cans were held to be plant after considering the statutory definition; the Assessing Officer having allowed normal depreciation on them, additional depreciation could not be denied if the other conditions were met. [Paras 10]

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

Final Conclusion: All the proposed questions were answered in favour of the assessee and against the revenue. The tax appeals were dismissed.

Bogus purchases - disallowance confined to profit element - Reassessment - compliance with procedure under section 148A

Bogus purchases - profit estimation - Disallowance of purchases alleged to be bogus where the assessee was unable to establish actual movement of goods corresponding to suppliers' invoices, but the books of account, sales and disclosed profits were not rejected or doubted - HELD THAT: - The assessment order treated the purchases as bogus without invoking section 69C. Since the source of purchases was not in issue, and the sales and profit entries in the books were not disbelieved, the entire value of the alleged purchases could not be added. The Tribunal was entitled, on the material and the applicable line of decisions, to estimate and bring to tax only the profit element embedded in the disputed purchases; its restriction of the disallowance to 10 per cent was a factual and discretionary determination disclosing no legal infirmity.

The Tribunal has therefore rightly followed the decision in case of Pankaj Choudhary [2023 (3) TMI 1402 - GUJARAT HIGH COURT] wherein held that conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called tor in the said conclusion and findings of the Tribunal in the present appeal by this court. [Paras 12, 14]

The restriction of disallowance to 10 per cent of the alleged bogus purchases was upheld.

Reassessment - compliance with procedure u/s148A - Validity of reassessment initiated on information concerning non-genuine purchases, on the ground that the material available with the Assessing Officer was not supplied with the notice under section 148A(b) - HELD THAT: - The Court held that the Assessing Officer was not required, while issuing notice under section 148A(b), to provide all material in his possession. On the facts and documents on record, the prescribed procedure for reopening had been followed and no infirmity in the reassessment process was established. [Paras 15]

The challenge to the reopening was rejected.

Final Conclusion: Both cross-appeals were dismissed. No substantial question of law arose from the Tribunal's order restricting the disallowance to 10 per cent of the alleged bogus purchases or from the reassessment proceedings.

Reassessment after scrutiny assessment - change of opinion - Reason to believe - absence of fresh tangible material - disclosed cotton-purchase transactions - Fishing and roving inquiry

HELD THAT: - The assessee had fully disclosed the transactions with the supplier during the scrutiny assessment, and the payments were supported by invoices relating to cotton purchases. The investigation information concerning subsequent cash withdrawals by the supplier's proprietor disclosed no new tangible material indicating escapement of the assessee's income. Reopening on that basis was a fishing and roving inquiry and amounted to a change of opinion; it did not establish a valid reason to believe that income had escaped assessment. [Paras 8, 9]

The reassessment notice was quashed.

Final Conclusion: The writ petition was allowed and the notice issued for reopening the assessment was quashed.

Business expenditure deduction u/s 37(1) - proof of genuineness and allowability - Secret commission payments - onus to establish deduction

Allowability of business promotion expenditure claimed as commission or incentive payments to persons connected with client companies for procuring hospitality-services business - HELD THAT: - A deduction under section 37(1) cannot be allowed on the assessee's assertion alone; the assessee must establish the nature of the expenditure and the circumstances of its incurrence. The assessee failed to furnish the recipients' particulars, payment details, mode and dates of payment, or supporting documentary material.

Principles laid down in Ram Bahadur Thakur [2002 (6) TMI 34 - KERALA HIGH COURT] regarding the requirements to be satisfied for claiming deduction under Section 37(1) of the Act and held that, in the absence of necessary particulars and supporting evidence, the expenditure claimed could not be allowed as deduction.

The disallowance was thus founded on failure to prove the genuineness and allowability of the claimed expenditure, and not merely on whether the recipients were private persons rather than public servants. An increase in turnover could not, by itself, establish satisfaction of the statutory conditions for deduction. [Paras 18, 20, 21, 23, 24]

The disallowance of the claimed business promotion expenditure was upheld.

Final Conclusion: The substantial questions of law were answered against the assessee and in favour of the Revenue. The appeal was dismissed.

Reassessment notice beyond three years - approval of specified authority - Jurisdictional invalidity for non-compliance with mandatory approval requirement

Validity of reassessment notice for assessment year 2018-19 issued beyond three years with approval of the Principal Commissioner rather than the Principal Chief Commissioner or other appropriate authority - HELD THAT: - The notice u/s 148 was issued beyond three years from the relevant assessment year.

The Court accepted the Tribunal's application of M/s. Core Logistic Company [2025 (6) TMI 727 - MADRAS HIGH COURT] which held that, in such a case, approval under Section 151(ii) from the specified higher authority is mandatory. Approval obtained from the Principal Commissioner did not satisfy that requirement; consequently, initiation of reassessment proceedings was without jurisdiction. [Paras 8, 9]

The reassessment notice was invalid, and the Tribunal's order allowing the assessee's appeal was upheld.

Final Conclusion: No substantial question of law arose. The Revenue's tax case appeal was dismissed.

Taxation of testamentary family trust as association of persons - income receivable under the sole trust declared by will - taxability at the maximum marginal rate notwithstanding the proviso to section 164(1)

Applicability of the maximum marginal rate to a family trust created under the deceased's sole will and assessable as an association of persons - HELD THAT: - The Tribunal held that the trust, being the only trust created by the deceased through will, fell within proviso (ii) to section 164(1). It held that, notwithstanding its treatment as an association of persons, the trust was not liable to tax at the maximum marginal rate under section 167B; the statutory proviso and the CBDT clarification supported taxation otherwise than at that rate. Thus, the reliance on the decision of the Tribunal in case of Nathiben Kalidas Patel Family Trust [2025 (5) TMI 687 - ITAT AHMEDABAD] is very much relevant in the assessee’s case. The appeal of the assessee is allowed. [Paras 8, 9]

The assessee's income for both assessment years was held not taxable at the maximum marginal rate, and both appeals were allowed.

Final Conclusion: The appeals for Assessment Years 2009-10 and 2017-18 were allowed. The testamentary family trust, being the sole trust declared by will, was held ineligible for taxation at the maximum marginal rate.

Tax deduction at source on transfer of agricultural land - Enhanced TDS rate for non-furnishing of PAN - Assessee in default for failure to deduct tax - applying the enhanced rate under section 206AA

Liability to deduct tax on purchase of agricultural land u/s 194IA - consequential treatment of the purchaser as an assessee in default for alleged short deduction at the enhanced rate owing to the sellers' non-furnishing of PAN - HELD THAT: - The primary obligation to deduct tax must arise under the provision governing consideration for transfer of immovable property before the enhanced deduction rate for non-furnishing of PAN can apply. The registered sale deed described the transferred property as agricultural land, and the Revenue produced no material establishing that it was land excluded from that description for the relevant provision. As agricultural land lay outside its scope, no obligation to deduct tax arose; the provision prescribing an enhanced rate could not independently create such liability. The cancellation of the sale deed and non-encashment of the cheques further supported the conclusion that the demand was unsustainable on the facts, though the foundational failure of the TDS provision was determinative.

It is a settled principle that the machinery provisions relating to tax deduction at source cannot operate unless the substantive provision creating the obligation is first attracted. Section 206AA merely prescribes a higher rate of deduction where tax is otherwise deductible and the deductee fails to furnish his PAN. It does not create an independent liability to deduct tax. Therefore, unless the transaction is one falling within the ambit of section 194-IA, the provisions of section 206AA cannot be invoked independently. In other words, where section 194-IA itself has no application, the question of applying the enhanced rate under section 206AA does not arise.

Jurisdiction under section 201 can be invoked only where a person who is statutorily liable to deduct tax has either failed to deduct or after deduction, failed to pay such tax to the credit of the Central Government. In the absence of any legal obligation to deduct tax u/s. 194-IA of the Act, the assessee could not have been treated as an assessee in default under section 201(1). [Paras 5, 6]

The demand for short deduction and the consequential interest were deleted; the purchaser could not be treated as an assessee in default.

Final Conclusion: The appeal was allowed. The demand for alleged short deduction of tax and the consequential interest were deleted.

Valuation of unsaleable land used for roads and gardens in real-estate stock - Agricultural income from leased agricultural land - Disallowance of expenditure in absence of exempt income

Valuation of unsaleable land used for roads and gardens in real-estate stock - Consistency in inventory valuation - Addition to the closing stock of a real-estate developer in respect of land consumed for non-saleable roads and gardens - HELD THAT: - Land utilised for roads and gardens was not available for sale and therefore had nil net realisable value. The assessee had consistently excluded such non-saleable land from closing stock, while the opening stock and assessments for other years had not been disturbed. Under section 145A, inventory being valued at lower of cost or net realisable value, its exclusion from closing stock was held justified. [Paras 6]

The addition for alleged undervaluation of closing stock was deleted.

Agricultural income from leased agricultural land - Addition relating to rent claimed as agricultural income from agricultural land leased to farmers - HELD THAT: - The assessee did not furnish evidence supporting the claim either before the Assessing Officer or in the first appellate proceedings. [Paras 7]

The addition was confirmed.

Disallowance of expenditure in absence of exempt income - Disallowance under section 14A where no exempt income was earned during the relevant year - HELD THAT: - Since no exempt income was earned during the year, no disallowance could be made under section 14A. [Paras 8]

The disallowance under section 14A was deleted.

Final Conclusion: The appeal was partly allowed. The closing-stock addition and the disallowance under section 14A were deleted, while the addition relating to the unsupported claim of agricultural income was sustained.

Diamond grading and certification charges as fees for technical services - Make available requirement for fees for included services - Tax deduction at source on sums chargeable to tax

Diamond grading and certification charges as fees for technical services - Independent evaluation and certification - Whether Diamond grading and certification charges paid to non-resident laboratories were not fees for technical services and did not attract tax deduction at source? - HELD THAT: - The service was confined to examination of diamonds and issuance of an independent report recording their physical characteristics. It neither involved managerial, technical or consultancy services rendered to the assessee, nor imparted grading methodology, technical know-how, scientific standards or expertise enabling the assessee to undertake certification independently. The use of specialised personnel or equipment by the service provider did not, by itself, make the consideration fees for technical services. [Paras 6]

The assessee could not be treated as an assessee in default, and consequential interest was not leviable in respect of the grading and certification payments.

Make available requirement for fees for included services - Business profits in absence of permanent establishment - Payments for diamond grading services did not satisfy the make available condition under Article 12(4) of the India-USA and India-UK DTAAs - HELD THAT: - Article 12(4) requires that technical knowledge, experience, skill, know-how or process be made available so that the recipient can apply it independently in future. A grading report only certifies the characteristics of the submitted diamond; it does not transmit the provider's methodology or equip the assessee to perform future grading. Even if the payments were regarded as technical services under domestic law, they fell outside the treaty definition and were taxable only as business profits, which were not chargeable in India in the admitted absence of a permanent establishment. [Paras 6]

No obligation to deduct tax at source arose on the remittances.

Final Conclusion: The Revenue's appeals for Assessment Years 2013-14 and 2014-15 were dismissed. The grading and certification remittances were held not chargeable to tax in India, and no withholding-tax default or consequential interest survived.

Depreciation on goodwill arising from slump sale - depreciation was allowable on non-compete fees

Depreciation on non-compete fee - Depreciation claimed on non-compete fee arising from acquisition of a proprietary business through slump sale - HELD THAT: - In view of the settled position in SHARP BUSINESS SYSTEM [2025 (12) TMI 1235 - SUPREME COURT], accepted by the assessee, that non-compete fee is allowable only as revenue expenditure, the claim for depreciation thereon was unsustainable. [Paras 10]

The depreciation claim on non-compete fee was rejected.

Depreciation on goodwill arising from slump sale - Applicability of successor-depreciation restrictions - Prospective exclusion of goodwill from depreciation - Depreciation on goodwill recognised as the excess of consideration over net assets on conversion of a proprietary business into a company through slump sale. - HELD THAT: - The restrictions contained in the sixth proviso to section 32(1), Explanation 7 to section 43(1), and Explanation 2 to section 43(6) presuppose transfer of an existing depreciable asset or block from the predecessor to the successor. They did not apply where goodwill was not recorded in the predecessor's books and arose only from the slump sale consideration exceeding the value of net assets acquired. The Finance Act, 2021 exclusion of business goodwill from depreciation was effective from 01/04/2021 and did not govern the year in question. See DOW CHEMICAL INTERNATIONAL PRIVATE LTD. [2024 (11) TMI 1301 - ITAT MUMBAI]. [Paras 15]

The assessee was held entitled to depreciation on goodwill under section 32, and the Assessing Officer was directed to allow the claim.

Final Conclusion: The appeal was partly allowed: depreciation on non-compete fee was disallowed, while depreciation on goodwill arising from the slump sale was directed to be allowed.

Rectification enhancing assessment without notice - Opportunity of hearing u/s 154(3)

Validity of additions made by enhancement in a rectification order without prior notice and opportunity of hearing to the assessee - HELD THAT: - It is a settled proposition of law that an order passed in breach of a mandatory statutory provision and in violation of the principles of natural justice cannot be sustained in the eyes of law.

Section 154(3) mandates prior notice proposing rectification and a reasonable opportunity of hearing where an amendment enhances an assessment or increases liability. The assessee's portal record showed that no notice had been issued, and the Department produced no material to establish either issuance of a notice or grant of hearing. An order passed in breach of this mandatory requirement and the principles of natural justice could not be sustained. [Paras 4]

The rectification order was held unsustainable to the extent of enhancement, and the additions made through such enhancement were directed to be deleted.

Final Conclusion: The assessee's appeal was allowed, and the enhanced additions made through the rectification order were deleted for non-compliance with the mandatory notice and hearing requirement.

Air transport profits under Article 8 of the India-UK DTAA - Cash deposits during demonetisation as regular business receipts

Ground handling and engineering service receipts of an international airline - Air transport profits under Article 8 of the India-UK DTAA - Eligibility of receipts from engineering and ground handling services rendered to other airlines in India for the benefit of Article 8 of the India-UK DTAA - HELD THAT: - The issue stood consistently decided against the assessee in its earlier years. Article 8 exempts profits from operation of aircraft in international traffic and participation in pools, but the organised provision of engineering and ground handling services to other airlines did not constitute participation in a pool or an activity directly connected with such transportation within the treaty definition. The India-UK DTAA was materially narrower than the India-Germany and India-Netherlands treaties considered in other airline cases. [Paras 5]

The receipts were held taxable in India and ineligible for Article 8 benefit, subject to the assessee's stated pursuit of remedies before higher forums.

Cash deposits during demonetisation as regular business receipts - Addition for cash deposits made during the demonetisation period by a foreign airline carrying on regular business in India - HELD THAT: - The assessee established that the deposits represented regular business receipts recorded in its books, and no specific defect in those books was found. The deposits were explained as cash collected at airport counters from passengers and cargo agents in the ordinary course of airline operations. [Paras 7]

Deletion of the addition was upheld and the Revenue's cross appeal was dismissed.

Final Conclusion: The assessee's appeals challenging taxation of engineering and ground handling service receipts were dismissed. The Revenue's cross appeal against deletion of the addition for demonetisation-period cash deposits was also dismissed.

Unexplained investment in immovable property - Stamp duty value of immovable property

Investment in immovable property - Addition for unexplained investment in purchase of immovable property and registration charges where the purchase consideration was sourced through bank credits, gifts, premature encashment of fixed deposits, and business income. - HELD THAT: - The documentary material, including bank statements, the return of the assessee's spouse, a donor's bank statement and gift declaration, and records of fixed deposits and their premature encashment, substantiated the sources of the purchase consideration. The rejection of this evidence by the revenue authorities was untenable. Disclosed business income reasonably explained the registration and allied charges as having been met from cash generated by the business. [Paras 18, 20, 24, 25, 27]

The addition for unexplained investment in the property and for registration-related charges was deleted.

Determination of fair market value of immovable property - Addition based on stamp duty value - Addition of the difference between the stamp duty value and actual consideration for a basement property after reference to the Departmental Valuation Officer remained unresolved - HELD THAT: - Once a reference had been made to the Departmental Valuation Officer to ascertain fair market value, the Assessing Officer could not treat the stamp duty value as fair market value without receipt of the valuation report or without identifying any defect in the assessee's explanation that the basement property's market value was lower than the uniform stamp-duty rate. [Paras 31, 32]

The addition made on the difference between the stamp duty value and actual consideration was deleted.

Final Conclusion: The appeal was allowed. The delay was condoned, and both additions relating to the property purchase were deleted; the additional jurisdictional ground was left open.

Credit for tax deducted at source in the assessment year in which income is assessable

Entitlement to credit of tax deducted at source on salary for January and February 2012, received and subjected to deduction in the succeeding financial year but returned as income in A.Y. 2012-13 - HELD THAT: - Under section 199 read with rule 37BA(3)(i), credit for tax deducted at source is to be allowed for the assessment year in which the corresponding income is assessable. Since the salary for January and February 2012 was included by the assessee in the income returned for A.Y. 2012-13, credit of the tax deducted thereon could not be denied merely because the salary was received and the tax was deducted in May 2012 and reflected in Form 26AS for the succeeding year. [Paras 9, 10, 11, 12, 13]

The Assessing Officer was directed to grant credit of the tax deducted at source pertaining to the salary for January and February 2012 in A.Y. 2012-13.

Final Conclusion: The appeal was allowed and credit of tax deducted at source on the salary included in the income of A.Y. 2012-13 was directed to be granted.

Benami transaction through alleged accommodation entries for gold sales - Cross-examination and prejudice in quasi-judicial proceedings

Confirmation of provisional attachment of bank funds alleged to represent cash routed through entities controlled by the benamidar and shown as proceeds of gold sales - HELD THAT: - The receipt of RTGS transfers from entities linked to the benamidar and the deposit of cash with him were undisputed. The appellant produced no material establishing a prior business relationship with those entities, and its invoices, ledgers and stock statements did not independently substantiate the asserted gold sales. The bank records instead corroborated transfers from unknown entities in the circumstances alleged by the respondent. [Paras 16]

The transaction was held to justify confirmation of the provisional attachment under the PBPTA.

Cross-examination and prejudice in quasi-judicial proceedings - Denial of cross-examination of the alleged intermediary and benamidar in the benami attachment proceedings - HELD THAT: - No statement of the alleged intermediary was on record, and therefore no question of his cross-examination arose. The appellant had been supplied the benamidar's statement; he was summoned for cross-examination but did not appear. Observing that cross-examination is not invariably required in quasi-judicial proceedings and that procedural breach invalidates an order only upon actual prejudice, the Tribunal found no prejudice or violation of natural justice. [Paras 17, 21, 22]

The objection based on denial of cross-examination was rejected.

Final Conclusion: The appeal was dismissed and the impugned order confirming provisional attachment of the bank funds was upheld.

Appellate jurisdiction over customs valuation and anti-dumping duty disputes

Maintainability of an appeal to the High Court against an Appellate Tribunal order concerning anti-dumping duty and valuation of imported goods - HELD THAT: - An appeal under section 130 excludes orders relating, among other things, to determination of questions having a relation to the rate of customs duty or the value of goods for assessment. The proposed questions concerned anti-dumping duty and rejection and redetermination of declared values. Such appeal was held to lie before the Supreme Court under section 130E. [Paras 5]

The departmental appeal before the High Court was dismissed as the remedy lay before the Supreme Court under section 130E of the Customs Act, 1962.

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

Direction for consideration of representation - Prematurity of writ petition against anti-dumping final findings

Whether, in the absence of any statutory provision conferring a right to make a representation or requiring the authority to decide such representation, a Constitutional Court ought to issue directions for its consideration? - HELD THAT: - A direction to consider a representation cannot be issued as a matter of course, nor can it create a remedy absent in law or compel consideration where no statutory duty exists. The final findings were merely recommendatory and had not culminated in a Central Government notification; upon notification, the petitioners acknowledged the availability of a statutory appeal. In the absence of a statutory provision requiring consideration of the representations, no basis existed for exercise of writ jurisdiction. [Paras 8, 9, 10, 11]

The writ petition was held premature and dismissed, without a direction to decide the representations.

Final Conclusion: The Court declined to direct consideration of the petitioners' representations against the unnotified anti-dumping final findings and dismissed the writ petition as premature.

Customs Broker's obligation to advise client on statutory compliance - Due diligence in information imparted by Customs Broker to client

Customs Broker's obligation to advise client on statutory compliance - Misdeclaration of green peas as yellow peas - Violation of the Customs Broker's obligation to advise the importer and report non-compliance, in relation to bills of entry describing green peas as yellow peas - HELD THAT: - The import-policy notifications made yellow peas freely importable during the relevant period while restrictions continued for other peas, a position capable of creating doubt. The Customs Broker filed the bills of entry on documents supplied and approved by the importer; the invoice described the goods as peas under the tariff item for yellow peas, though packing lists described them as green peas. In the absence of evidence that the Customs Broker knew of, or colluded in, the misdeclaration, and where the discrepancy was detected only upon subsequent investigation, the charge could not be sustained. [Paras 9]

The finding of violation of Regulation 10(d) was set aside.

Due diligence in information imparted by Customs Broker to client - Violation of the Customs Broker's duty to exercise due diligence regarding information imparted to the importer - HELD THAT: - The information regarding the description of the imported goods had been supplied by the importer to the Customs Broker through the invoice and bill of lading. As the Customs Broker had not imparted any specific information to the importer, the allegation that it failed to exercise due diligence in imparting correct information to its client had no factual or documentary basis. The circumstances also warranted benefit of doubt to the Customs Broker. [Paras 10]

The finding of violation of Regulation 10(e) was held unsustainable.

Final Conclusion: The revocation of the Customs Broker licence, forfeiture of security deposit and penalty were set aside, and the appeal was allowed.

Confiscation for excess quantity of imported goods - Redemption fine without determination of market price and margin of profit - Penalty for alleged misdeclaration of imported goods

Liability of imported polyester knitted ladies leggings, found in excess of the declared quantity, to confiscation, redemption fine and penalty for alleged misdeclaration - HELD THAT: - The supplier's invoice and packing list supported the declared quantity, and no evidence established that the importer had ordered the excess goods or sought to suppress them. The enhanced value was also not founded on a specified rule under the Customs Valuation Rules, 2007 or identifiable contemporaneous import data for identical goods. The authorities had neither established misdeclaration attracting confiscation nor determined the market price and margin of profit necessary for fixing redemption fine. Following ASR Multi metals Private Limited Vs. Commissioner of Customs, Kandla [2014 (3) TMI 925 - CESTAT AHMEDABAD] redemption fine could not be sustained without such determination. [Paras 9, 10, 11]

The redemption fine and the penalty imposed under section 112(a)(ii) were set aside.

Final Conclusion: The appeal was allowed in part by setting aside the redemption fine and penalty imposed on the importer. The Revenue's cross-objection stood disposed of.

Classification of magnesium bis-glycinate chelate for imports through the port of Raigad - Coordination compounds under Chapter 29 - Classification by objective characteristics rather than intended end use - Heading 2922 OR Heading 2106 OR Heading 2941

Classification of magnesium bis-glycinate chelate, a chemically defined coordination compound of magnesium and glycine containing water and citric acid as stabilizer, between food preparations, amino-acid compounds and antibiotics - HELD THAT: - Classification is governed by the objective characteristics and composition of the goods at importation, and not by their intended use as an ingredient in nutritional supplements. The product is a single chemically defined coordination compound; water and citric acid used solely as a necessary stabilizer do not take it outside Chapter 29.

Further, in the case of Hon'ble Supreme Court in CCE v. Wood Craft Products Ltd. [1995 (3) TMI 93 - SUPREME COURT] held that HSN Explanatory Notes constitute a safe guide for interpretation of tariff entries. Further, in Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] the Court reiterated that classification must first be determined according to the specific provisions of the tariff before resorting to any residuary heading. Since the impugned goods are specifically covered under Chapter 29.

Under Chapter Note 5(C)(3), the coordination compound is classifiable with the organic ligand obtained on cleavage of the metal bond. Since that ligand is glycine, an amino acid, the goods fall under Heading 2922. They are neither a food preparation under Heading 2106 nor an antibiotic under Heading 2941. [Paras 11, 13, 16]

Magnesium bis-glycinate chelate was held classifiable under CTI 2922 49 90 as other amino-acids and their esters; salts thereof.

Final Conclusion: The advance ruling classified magnesium bis-glycinate chelate under CTI 2922 49 90, rejecting classification as a food preparation or an antibiotic.

False statements in statutory returns - mens rea of independent professional certifier - Limitation for criminal complaint

False statements in statutory returns - mens rea of independent professional certifier - Criminal liability of an independent Chartered Accountant for certification of allegedly false statutory e-Forms under the Companies Act, 1956 - HELD THAT: - Section 628 applies to any person who knowingly makes a materially false statement or intentionally conceals a material fact; an independent professional is therefore not immune merely because he is not an officer of the company. However, criminal liability requires specific allegations and foundational material establishing conscious knowledge of falsification or active complicity. The complaint attributed the falsification and mala fide intent to the company director and merely alleged that the Chartered Accountant had certified the forms, without pleading knowledge, connivance, or any direct nexus with the falsification. [Paras 24, 25, 26, 33]

The discharge was sustained, as the complaint disclosed no essential ingredients of mens rea or active complicity against the independent professional certifier.

Limitation for criminal complaint - Condonation of delay in taking cognizance - Limitation for prosecution concerning allegedly false e-Forms and share allotments filed between March 2011 and March 2014. - HELD THAT: - For an offence punishable with imprisonment up to two years, the prescribed period for taking cognizance is three years. The decisive date for computing limitation is the date of filing of the complaint. As the complaint was instituted after expiry of that period, and neither an application for condonation nor an explanation for delay was made under Section 473 of the Cr.P.C., the prosecution was barred by limitation. [Paras 29, 30, 31, 32, 33]

The complaint was held incurably time-barred.

Final Conclusion: The revision was dismissed against the surviving independent professional, and the discharge was affirmed for absence of pleaded mens rea and because the prosecution was barred by limitation. The revision stood abated against the deceased accused.

Alternative statutory remedy in corporate disputes - Writ jurisdiction and private rights in company management

Maintainability of a writ petition seeking investigation into alleged fraudulent transfer of shares, removal from directorship, and consequential enforcement of industrial-policy and lease conditions - HELD THAT: - The petition substantially concerned disputed private rights arising from the company's internal affairs, namely the petitioner's directorship, share transfer and alleged misuse of corporate records. Such allegations required examination of disputed facts and evidence and were amenable to the comprehensive statutory mechanism under the Companies Act, including recourse to the National Company Law Tribunal for an investigation into the affairs of the company.

The asserted inaction concerning industrial-policy and lease conditions was intrinsically dependent on resolution of the underlying corporate dispute and did not introduce a public-law element warranting writ jurisdiction. [Paras 32, 33, 34, 35, 36]

The writ petition was held not maintainable in view of the equally efficacious remedies under the Companies Act, with liberty to pursue remedies before the competent authorities.

Final Conclusion: The writ petition was dismissed as a corporate dispute concerning private rights and disputed facts for which efficacious statutory remedies were available under the Companies Act. Interim directions stood vacated.

Proof of non-physical software import against foreign-exchange remittance - Vicarious liability of officer in charge for FEMA contravention

Contravention relating to foreign-exchange remittances for the purported import of software through a data communication channel - HELD THAT: - The intimation furnished to Customs could not constitute proof of import or acceptance of its contents by Customs. The Chartered Accountant's report, having been issued before the claimed import, was a valuation report for acquisition and finance and did not certify actual receipt of the software. The later expert certificate, based on CDs supplied by the company and recording that one CD was non-functional, was also insufficient to establish import in the relevant period. The failure to establish import was independently found from the material on record and did not rest upon investigations under other enactments. [Paras 15, 16]

The company's FEMA contravention was sustained; however, the penalty was reduced in view of the pleaded financial duress.

Vicarious liability of officer in charge for FEMA contravention - Liability of the Chief Executive Officer and Director for the company's contravention in making foreign-exchange remittances without establishing import of the software - HELD THAT: - We find that the individual Appellant cannot take the plea that the contravention occurred without his knowledge, in view of the evidence that he signed the papers relating to remittances made abroad and his own statement under Section 37 of FEMA, which is admissible evidence, that the software received was of no value, as well as having informed Shri G Dhananjaya Reddy about the same. We also do not find any evidence that he exercised all due diligence to prevent such contravention. We therefore hold him liable for penalty by virtue of his vicarious liability under Section 42(1) of FEMA for the contraventions found established against the Appellant Company.

The officer was a joint authorised signatory for the company's bank accounts and signed the remittance papers. His statement that the software received was of no value, coupled with the absence of evidence of due diligence to prevent the contravention, established that he was responsible for the company's conduct during the relevant period. [Paras 17]

His vicarious liability under Section 42(1) of FEMA was upheld, with reduction of the penalty.

Final Conclusion: The appeals were partly allowed only to the extent of reducing the penalties. The findings of FEMA contravention by the company and vicarious liability of its Chief Executive Officer and Director were maintained.

Delay in FEMA adjudication proceedings - Prejudice from procedural irregularity - Transfer of bank shares to non-residents without Reserve Bank approval - Vicarious liability for corporate contraventions under FEMA - Unauthorised escrow accounts and cross-border deposit arrangements - Guarantee through custody of shares and title deeds for overseas loans - Residential status for foreign exchange repatriation obligations

Delay in FEMA adjudication proceedings - Prejudice from procedural irregularity - Validity of the FEMA adjudication proceedings challenged on delay, alleged non-application of mind in issuance of the show-cause notice, pre-judging of guilt and non-compliance with adjudication procedure - HELD THAT: - The investigation involved cross-border transactions, two banks, numerous noticees and extensive documentation. The time taken was not unreasonable when reckoned from discovery of the contraventions, and the noticees received the complaint, relied-upon material, opportunities to file replies and personal hearings. The provision requiring expeditious disposal within one year accommodates delay where reasons are recorded; in the absence of demonstrated prejudice, the alleged procedural deficiencies did not vitiate the proceedings. [Paras 52]

The preliminary objections were rejected.

Transfer of bank shares to non-residents without Reserve Bank approval - Void subsequent transfer of unauthorised shareholding - Penalty for civil contravention under FEMA - Liability for recording transfers of bank shares to foreign entities other than those approved by the Reserve Bank, and for subsequent transfers by those entities to other non-residents - HELD THAT: - The regulatory approval was granted in specified names, whereas the shares were recorded in the names of different entities. Regulation 4 permitted recording of a transfer to a non-resident only upon Reserve Bank permission. The subsequent transfers could not be protected by the general permission for transfers between non-residents because the transferors did not hold the shares in accordance with the Regulations; the initial unauthorised holding was void from inception. The value of the shares rendered the contravention quantifiable. Penalty for contravention of civil obligations under FEMA does not require proof of mens rea. [Paras 56, 57, 59, 60]

The bank's contraventions in relation to the initial and subsequent share transfers were sustained, subject to reduction of penalty.

Vicarious liability for corporate contraventions under FEMA - Consent, connivance or neglect of company officers - Vicarious liability of the bank's chairman, managing directors, directors, nominee directors and company secretaries for unauthorised recording of transfers of bank shares to non-residents - HELD THAT: - Section 42 applies to contraventions of Regulations made under FEMA, since those Regulations derive from the Act and penalty is expressly attracted for their contravention. A person in charge of and responsible for the company's business is liable unless lack of knowledge or due diligence is established; other officers are liable where consent, connivance or neglect is proved. The responsible officers either countersigned or placed misleading board notes, or approved resolutions without examining the Reserve Bank approval and the relevant material. Non-executive or nominee status did not excuse the failure to exercise due diligence; a managing director's abstention from voting did not establish due diligence where the officer failed to guide the company lawfully. [Paras 65, 66, 67, 68, 69]

The vicarious liability findings were sustained, with penalties on the concerned officers reduced.

Unauthorised escrow accounts and cross-border deposit arrangements - Contravention of the Deposit Regulations through opening and operating sale-consideration and share escrow accounts without prior Reserve Bank permission - HELD THAT: - The Indian bank performed substantive escrow functions by opening the accounts, receiving and disbursing sale consideration, taking custody of share certificates and transfer deeds, and acting independently in seeking registration of shares in names not approved by the Reserve Bank. The arrangement was an escrow arrangement in substance and not merely a current account or a paper sub-agency. Before the applicable amendment took effect, prior Reserve Bank permission was required; in any event, the subsequent relaxation could not assist a transaction involving share transfers contrary to the transfer regulations. [Paras 77, 78, 79]

The contravention of the Deposit Regulations by the Indian bank, and the vicarious liability of its responsible business head, were sustained, subject to reduction of penalty.

Guarantee through custody of shares and title deeds for overseas loans - Contravention of the Guarantee Regulations by custody of bank shares and title deeds as security for loans advanced by an overseas bank to non-resident borrowers - HELD THAT: - The non-disposal undertaking, powers of attorney, physical custody of shares, and custody of title deeds under the security arrangements had the effect of guaranteeing overseas loan obligations. The Indian bank was the security agent and possessed rights over the assets that secured the lending. Regulation 3 prohibits a resident from undertaking, by whatever name called, a transaction having the effect of guaranteeing a non-resident's debt or liability without the requisite Reserve Bank permission; absence of later liquidation of the assets did not negate the guarantee arrangement. [Paras 80, 81]

The contravention of the Guarantee Regulations by the Indian bank, and the vicarious liability of its responsible business head, were sustained, subject to reduction of penalty.

Residential status for foreign exchange repatriation obligations - Liability for holding foreign exchange abroad, maintaining a foreign currency account and failing to repatriate foreign exchange received abroad - HELD THAT: - A co-ordinate bench [2025 (10) TMI 1449 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] had already upheld the finding that, on the relevant date, the appellant was a person resident outside India after excluding the day of arrival while computing the statutory period. That determination was followed. Consequently, the provisions applicable to a person resident in India concerning holding, realisation and repatriation of foreign exchange, and maintenance of a foreign currency account, were inapplicable. [Paras 84]

The contraventions relating to receipt, holding and non-repatriation of foreign exchange abroad were not established and the corresponding penalty was set aside.

Final Conclusion: The appeals were partly allowed. The findings on the unauthorised share transfers, the related vicarious liabilities, and the deposit and guarantee contraventions were maintained with substantial reduction of penalties; the foreign-exchange repatriation contravention against the concerned chairman was set aside.

Regular bail under the Prevention of Money Laundering Act - High Court [2026 (6) TMI 1500 - MADHYA PRADESH HIGH COURT] held that the application for regular bail under the PMLA was dismissed. The Court found that a scheduled offence subsisted and that the applicant failed to meet the statutory requirements for bail. - HELD THAT:- The Special Leave Petition was dismissed, with liberty to the petitioner to renew the prayer before the Trial Court at an appropriate stage.

Seeking regular bail in the money-laundering proceedings - nature and gravity of allegations indicated misuse of local area development funds through 32 tenders for sports equipment and diversion of public funds.

HELD THAT:- This Court has considered the nature and gravity of the allegations as set out in the complaint filed by the ED. The investigation reveals that the petitioner, while serving as an MLA, allowed his MLA Local Area Development (LAD) funds to be misued for the purchase of sports equipment through floating of 32 tenders, which, according to the investigation conducted by the ED, were illegal and constituted a classic case of diversion of public funds.

Having regard to the overall facts and circumstances of the case, this Court is not inclined to entertain the present bail application at this stage

Premature adjudication of service tax adjustment or refund - Entitlement to adjustment or refund of service tax paid, contingent on classification of the contract as a works contract or a service contract -primary argument of the assessee before the learned Single Judge was that the ‘Service Tax’ and ‘Value Added Tax’ are mutually exclusive and cannot be imposed at the same time

HELD THAT: - The question of adjustment or refund depended on the Assessing Authority's pending determination of the nature of the contract and the consequential tax liability.

The Single Judge's finding that no adjustment or refund could be granted was therefore premature and speculative; the question was required to be left open for consideration by the appropriate authority after that determination. [Paras 2, 4, 6]

The finding precluding future adjustment or refund of service tax was vacated, leaving the parties free to pursue the issue after the Assessing Authority decides the nature of the contract.

Final Conclusion: The appeals were partly allowed. The issue of adjustment or refund of service tax was left open for determination after the Assessing Authority completes the remanded exercise.

Exemption for examination-related services provided to educational institutions - Extended limitation for suppression of facts - Penalty for alleged suppression in interpretational dispute

Exemption for examination-related services provided to educational institutions - Recipient of examination services - Eligibility of services for conducting optional Olympiad and talent-search examinations for exemption as examination-related services provided to educational institutions - HELD THAT: - Entry No. 9(b) exempted services relating to conduct of examination when provided to an educational institution, without requiring that the examination be mandatory, prescribed by the curriculum, or conducted by a Board. Preparation of question papers, supply of examination material and OMR sheets, evaluation, tabulation and declaration of results were integral to conducting examinations.

The contractual and commercial relationship was between the appellant and the schools, which identified participants, collected and remitted fees, conducted the examinations and forwarded answer sheets; the students' ultimate benefit did not make them recipients of the service. Subsequent payment of GST on similar services could not govern taxability under the earlier service-tax regime. [Paras 20, 23, 24, 25, 29]

The services were covered by Entry No. 9(b) of Notification No. 25/2012-ST, and the denial of exemption was unsustainable.

Extended limitation for suppression of facts - Validity of invocation of the extended period for the demand concerning exempt examination-related services - HELD THAT: - The dispute concerned the interpretation of the exemption entry. The appellant maintained regular accounts, disclosed receipts in financial statements and income-tax returns, furnished information during investigation, and the demand was worked out from its own records. Mere non-payment of tax or adoption of an interpretation does not establish suppression or wilful misstatement; positive evidence of intent to evade was absent. Divergent judicial views on taxability also demonstrated the interpretational character of the dispute. [Paras 31, 32, 33, 34, 35]

Invocation of the extended period under the proviso to Section 73(1) was held unsustainable.

Penalty for alleged suppression in interpretational dispute - Sustainability of penalties for alleged non-payment of service tax on examination-related services - HELD THAT: - The penalty for suppression could not survive once the demand and invocation of the extended period failed. The other penalties were consequential to the principal demand. Independently, the interpretational dispute and the appellant's bona fide belief in the exemption excluded any deliberate attempt to evade tax. [Paras 36]

The penalties imposed on the appellant and its Director were set aside.

Final Conclusion: The appeal was allowed. The service-tax demand, interest and penalties were set aside, as the examination-related services were exempt and the extended period was unavailable.

Revenue neutrality of service tax under reverse charge mechanism - Service tax on legal services received from advocates

Sustainability of service tax demand, interest and penalty on legal services received from advocates under reverse charge mechanism where the tax paid was available as CENVAT credit - HELD THAT: - Though service tax on legal services received from advocates was payable by the recipient under Notification No. 30/2012-S.T., the appellant was eligible to avail CENVAT credit of the tax paid as input-service credit for its taxable output services. Payment of tax and simultaneous availment of the corresponding credit rendered the transaction revenue neutral; consequently, the adjudged demand could not be sustained. The demand having failed, interest and penalty could not survive. [Paras 8, 9, 10]

The confirmation of service tax demand was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The service tax demand on legal services received under reverse charge mechanism, together with consequential interest and penalty, was set aside on the ground of revenue neutrality.

Declared service of agreeing to tolerate an act - Forfeiture of life insurance premium - Agreement to tolerate an act - Flow of consideration - Independent contractual arrangement - Nexus between service and consideration

Service taxability of premium retained upon lapse or repudiation of life-insurance policies for non-payment of premium or mis-declaration by policyholders - Whether the amount forfeited by the appellants on account of non-payment of premium or mis-declaration by the policy holder, are liable for payment of service tax under the taxable category ‘declared service’ under Section 66E(e) ibid?

HELD THAT: - A declared service under the category of agreeing to tolerate an act requires an independent contractual arrangement specifically providing for such tolerance and a nexus between that arrangement and consideration. The insurance contract did not contain any separate agreement to tolerate non-payment or mis-declaration; lapse of the policy without revival, or its repudiation for mis-declaration, merely resulted in the policy becoming void and in no further insurance service being rendered. The retained premium could not consequently be treated as consideration for a distinct declared service; such treatment would also result in double taxation. [Paras 7, 8, 9]

The demand of service tax, and the consequential interest and penalties, on the retained premium were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed, as the retained insurance premium was not consideration for a declared service of tolerating an act.

Adjournments sought mechanically - HELD THAT:- No justification for adjourning the matter beyond three times which is the maximum number statutorily provided. The appeal was dismissed for non-prosecution under Rule 20 of the CESTAT Procedure Rules, 1982, after the appellant repeatedly sought adjournments and remained absent.

Res judicata - inapplicability to continuation of remand proceedings - Reasoned appellate order

Application of res judicata to an appeal arising from the continuing remand proceedings concerning refund of accumulated Cenvat credit on export of services - HELD THAT: - Res judicata bars a matter directly and substantially in issue in a former proceeding only where it has been heard and finally decided by a competent court. The proceeding before the Commissioner (Appeals) was a continuation of the original refund proceeding after remand for verification; it was not a parallel proceeding before another forum for the same cause of action. The issue had remained unsettled at the original stage and could not be rejected as barred by res judicata. [Paras 6]

The finding that the appeal was barred by res judicata was held erroneous.

Reasoned appellate order - Commissioner (Appeals)' duty to determine the appeal on merits in the remand proceedings concerning admissibility of Cenvat credit - HELD THAT: - The Commissioner (Appeals) was required to render a written order stating the points for determination, the decision on those points and reasons therefor. Having dismissed the appeal solely by applying res judicata without deciding all points arising for determination, the statutory requirement of a merits-based reasoned appellate order was not fulfilled. [Paras 7]

The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) for de novo hearing and determination on merits.

Final Conclusion: The appeal was allowed by way of remand. The Commissioner (Appeals) must reconsider the dispute de novo on merits, without treating the continuing remand proceedings as barred by res judicata.

Extended period of limitation - bona fide belief regarding non-taxable trading activity

Extended period of limitation - bona fide belief regarding non-taxable trading activity - Invocation of the extended period for service tax demand on receipts claimed to arise from trading in plant saplings and seeds. - HELD THAT: - The demand was founded solely on income-tax data, without further investigation into the nature of the activity, although Form 26AS disclosed no receipt for provision of services. The appellant had consistently asserted that the receipts represented trading in plant saplings and seeds, and the adjudicating authority was required to inquire into that specific contention. In the circumstances, the appellant had sufficient basis for a bona fide belief that service-tax registration and payment were not required; consequently, suppression with intent to evade tax was not established for invoking the extended period. [Paras 4]

The demand was held barred by limitation; the impugned order was set aside.

Final Conclusion: The appeal was allowed and the service-tax demand, interest and penalties founded on the extended period were set aside.

CENVAT credit on capital goods used in captive power plant - CENVAT credit on specified common input services - CENVAT credit on iron and steel items used for repair and maintenance - Duty on clearance of waste and scrap from capital goods

CENVAT credit on capital goods installed in a captive power plant where surplus electricity was supplied outside the factory - Exclusive use of capital goods for exempted goods - Captive consumption of electricity in manufacture of dutiable goods - HELD THAT: - The embargo under Rule 6(4) applies only where capital goods are used exclusively in the manufacture of exempted goods. Since the electricity generated was substantially consumed in manufacturing dutiable final products and only surplus electricity was supplied outside, the capital goods formed part of an integrated manufacturing process and were not put to exclusive exempt use. The principle concerning nexus of inputs used for electricity cleared outside the factory did not govern the distinct statutory test applicable to capital goods.

The aforesaid interpretation also finds support from Circular No. 665/56/2002-CX dated 25.09.2002 issued by the Central Board of Excise and Customs, wherein it has been clarified that CENVAT credit on capital goods used in the manufacture of exempt intermediate goods cannot be denied where such intermediate goods are captively consumed in the manufacture of final products chargeable to duty. Though the Revenue has sought to distinguish the said Circular by contending that electricity supplied outside the factory loses the character of an intermediate product, the Circular unmistakably proceeds on the principle that the decisive consideration is whether the capital goods are employed as part of an integrated manufacturing process culminating in dutiable final products.

Once it is accepted that the capital goods installed in the Captive Power Plant were not used solely for generation of electricity supplied outside the factory but formed part of an integrated manufacturing process resulting in dutiable final products, the essential condition for invoking Rule 6(4) of the CENVAT Credit Rules, 2004 remains unfulfilled. In such circumstances, we are unable to hold that the learned Tribunal committed any error in concluding that denial of CENVAT credit on the entire capital goods was unsustainable merely because a portion of the electricity generated was wheeled out to the Bihar State Electricity Board. [Paras 50, 51, 54, 56, 58]

CENVAT credit on the capital goods was rightly allowed.

Credit on specified input services under Rule 6(5) - Exclusive use of common services for exempted goods - Admissibility of CENVAT credit on specified input services used in the captive power plant generating electricity substantially consumed in manufacture of dutiable products - HELD THAT: - Rule 6(5) permitted full credit on the specified services unless they were used exclusively in relation to exempted goods or exempted services. The specified services were not shown to have been exclusively used for electricity supplied outside the factory; the electricity was substantially consumed in manufacturing dutiable final products. The Board's clarification treating such services as common services supported the allowance of full credit. [Paras 61, 62, 63, 64]

The credit on the specified input services was rightly held admissible.

CENVAT credit on iron and steel items, namely M.S. Angles, Channels, Joists, Plates and other similar goods - Actual use test for iron and steel items - Repair and maintenance of existing plant and machinery - HELD THAT: - Eligibility of iron and steel items turns on their actual use, not merely their description. While credit is ordinarily unavailable where such goods are used in constructing buildings or fabricating immovable supporting structures, the Tribunal's factual finding that the items were used for repair and maintenance of existing manufacturing machinery was neither perverse nor unsupported by evidence. Such a factual finding could not be reopened in an appeal confined to a substantial question of law. [Paras 67, 68, 69, 70]

The denial of credit on the iron and steel items was rightly set aside.

Central Excise Duty on waste and scrap arising from capital goods - Scope of appellate interference with findings of fact - Liability to duty on clearance of waste and scrap arising from capital goods - HELD THAT: - The Revenue failed to identify any statutory provision or material establishing legal infirmity in the Tribunal's finding that the demand was unsustainable. In the absence of perversity or a conclusion contrary to statute, the factual determination of the Tribunal was not open to re-appreciation in an appeal under Section 35G. [Paras 72, 73]

The setting aside of the duty demand on waste and scrap was affirmed.

Final Conclusion: The appeal was dismissed and the order allowing CENVAT credit on the disputed capital goods, specified input services and repair-and-maintenance items, and setting aside the demand on waste and scrap, was affirmed.

CENVAT credit on duty-paid inputs from exemption-notification units - Extended limitation for CENVAT credit demand

CENVAT credit on duty-paid inputs from exemption-notification units - Harmonious construction of CENVAT Credit Rules - Admissibility of CENVAT credit on duty-paid inputs procured from units availing exemption under Notification No. 01/2010-CE before the amendment to Rule 12 - HELD THAT: - The CENVAT Credit Rules must be read harmoniously. Credit is available where the inputs have suffered duty, are used in manufacture or provision of output service, and are received under the prescribed documents. As the Department did not dispute fulfilment of those conditions, and the Rules contained no express pre-amendment prohibition, credit could not be denied merely because an express provision permitting it was introduced subsequently. [Paras 5, 6]

The CENVAT credit was held admissible on merits.

Extended limitation for CENVAT credit demand - Suppression with intent to evade duty - Invocation of the extended period for recovery of allegedly inadmissible CENVAT credit where the issue arose from audit and involved legal interpretation. - HELD THAT: - The relevant enquiry is whether there was suppression of facts with intent to evade duty, not merely whether the Department had knowledge of the facts. Revenue produced no evidence of such intent. Further, the dispute arose from audit and concerned legal interpretation, circumstances in which the extended period was not invocable. [Paras 7]

The demand was also barred by limitation.

Final Conclusion: The appeal was allowed, the claimed CENVAT credit being admissible and the demand being unsustainable on limitation.

Demand invoking extended period of limitation u/s 11A(10) along with interest under Section 11AA - suppression of facts - freight incurred for FOR destination sales up to the buyers' premises forming part of the assessable value for central excise duty

Place of removal in FOR destination sales - Inclusion of freight in assessable value - Freight incurred for delivery of PCC Poles sold on FOR destination basis was includible in the assessable value - HELD THAT: - Where the goods were sold on FOR destination basis, the place of delivery was the buyers' premises. Transportation cost up to those premises was consequently required to be included in the assessable value for levy of excise duty. [Paras 10]

The valuation issue was decided against the assessee on merits.

Invoking Extended limitation - departmental knowledge of facts - Suppression of facts with intent to evade duty - Whether extended period of limitation for demand based on exclusion of freight and cartage from the assessable value was not invocable? - HELD THAT: - The Department had already issued an earlier notice concerning the same exclusion of freight and cartage, and therefore possessed all relevant facts when the present notice was issued. In view of the conflicting decisions on the place of removal, the assessee could entertain a bona fide belief that such transportation cost was not includible; no fraud, wilful misstatement, suppression, or intent to evade duty could consequently be attributed. The demand, being wholly beyond the normal limitation period, was barred. [Paras 12, 13, 14]

The demand was held time-barred; the impugned order was set aside and the appeal allowed with consequential relief.

Final Conclusion: Though freight was held includible in the assessable value for FOR destination sales, the extended limitation period was unavailable because the relevant facts were already known to the Department. The demand was therefore set aside as time-barred.

CENVAT credit on short-received imported base oil - Entitlement to credit based on Bills of Entry

Entitlement to the entire CENVAT credit of central excise duty/CVD reflected in invoices and Bills of Entry where a lesser quantity of base oil was received in the factory - HELD THAT: - The Tribunal held that the controversy was concluded by its earlier orders in the appellant's own case [2019 (6) TMI 1672 - CESTAT MUMBAI]. Those orders had allowed CENVAT credit based on the duty/CVD shown in the prescribed invoices and Bills of Entry notwithstanding short receipt of the imported base oil; a different interpretation could not be adopted for the same issue. [Paras 3, 4]

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

Final Conclusion: Following the earlier orders in the appellant's own case, the Tribunal allowed the appeal and set aside the denial of CENVAT credit.

Claim for tax concession for the Gurugram automobile-switch manufacturing unit - 'new industrial unit' under Rule 28C - whether it is a new industrial unit or an expansion of the existing Sonepat unit? - HELD THAT: - The appellant's existing Sonepat unit had not availed any tax exemption. The revenue could not resist the claim on alleged suppression, since the application had not been rejected on that ground and had been considered on merits.

The sole question requiring fresh adjudication was whether the Gurugram unit qualified as a new industrial unit or as an expansion unit under Rule 28C; no opinion was expressed on the appellant's substantive entitlement. [Paras 17, 18, 19]

The Tribunal's order was set aside and the claim was remitted for fresh adjudication after hearing the parties, with all questions on entitlement left open.

Final Conclusion: The appeal was allowed and the matter remitted to the Tribunal for fresh adjudication of the tax-concession claim in accordance with law.

Vicarious liability for dishonour of cheque issued by sole proprietorship concern - Liability of non-signatory under dishonoured cheque provisions - Inherent power to quash ex facie groundless prosecution - Revocation of Agency by Death - Abuse of Process

Vicarious liability for sole proprietorship concern - Family relationship and partnership liability - HELD THAT: - This Court observed in N. Mamatha Nagesh [2026 (8) TMI 87 - CALCUTTA HIGH COURT], domestic proximity or a filial connection within a shared household cannot be accepted as a valid legal surrogate for a registered partnership deed or a corporate matrix. The complainant's bold assertion that the petitioner acted as a “partner” of a sole proprietorship concern belonging to his mother is a legal absurdity. Criminal liability under a summary penal statute cannot be widened by crude implications or speculative logic. The failure of the complainant to recognize that a proprietorship concern cannot be sued as an independent juristic entity separate from its master constitutes a fundamental defect that invalidates the invocation of Section 141 against anyone else under the banner of that entity.

Section 141, being an exception to the rule of personal criminal liability, applies only to the entities included in its definition of "company". A sole proprietorship has no legal identity apart from its proprietor and does not fall within that statutory taxonomy. Domestic or filial relationship cannot substitute for a partnership deed or other legally recognised corporate structure so as to create vicarious criminal liability. [Paras 13, 14, 19, 20]

The petitioner could not be prosecuted on the footing that he was a partner or person in charge of the sole proprietorship concern.

Author-centric liability for dishonour of cheque - Revocation of banking mandate on death of account holder - A non-signatory who did not maintain the account could be prosecuted under Section 138 of the Negotiable Instruments Act for cheques allegedly issued from the account of a deceased person. - HELD THAT: - Section 138 creates a strict, author-centric offense. It mandates that the dishonoured instrument must be drawn by a person on an account “maintained by him.” The biological fact established by the death certificate shows that the alleged drawer, Ram Ratan Sharma, had suffered biological and legal demise on 23.11.2017. Under Section 201 of the Indian Contract Act, 1872, the banking mandate and agency stood automatically revoked the moment the account holder expired. A dead person cannot be deemed to maintain an active account, as the underlying relationship of customer and banker stands dissolved by operation of law.

Therefore, the petitioner, being neither the drawer nor the account holder, did not satisfy the essential statutory ingredients. Any alleged deception in negotiating pre-signed cheques of a deceased account holder could attract remedies under general penal law, but could not sustain prosecution under the dishonoured-cheque provisions. [Paras 15, 16, 19, 21]

The prosecution under Section 138 was unsustainable against the petitioner.

Quashing of ex facie groundless cheque dishonour prosecution - HELD THAT: - The procedural bar against a Magistrate recalling process does not limit the High Court's inherent jurisdiction under Section 482 of the Code of Criminal Procedure. Where public records and the complaint itself disclose absence of the statutory foundation for prosecution, the matter is not a factual dispute requiring trial and continuance of proceedings constitutes abuse of process. [Paras 17, 18, 19, 22]

The impugned order was set aside and the proceedings were quashed insofar as they concerned the petitioner.

Final Conclusion: The revisional application was allowed. The proceedings for dishonour of cheque were quashed insofar as they concerned the petitioner, there being no statutory basis to prosecute him either vicariously or as the drawer of the cheques.

Stamp duty on assignment of secured debt to reconstruction company - Double levy of stamp duty on previously mortgaged immovable property

Assignment of debt with underlying immovable-property security - Additional Panchayat and Municipal stamp duty - Levy of additional Panchayat and Municipal stamp duty on an assignment deed by which a reconstruction company acquired a bank's loan, rights and underlying mortgage security - HELD THAT: - The assignment deed merely substituted the reconstruction company for the original lending bank and transferred the latter's rights, liabilities and interest in the financing documents and underlying security. It did not create a fresh mortgage, charge or encumbrance over immovable property. Since stamp duty had been paid when the original mortgage was created, the notification governing securitisation of loan or assignment of debt confined duty on the assignment to 0.1 per cent of the loan securitised or debt assigned; assessment again under the Panchayat and Municipal enactments would entail an impermissible duplicate levy and unjust enrichment.

As relying on SHYAMSUNDAR RADHESHYAM AGRAWAL & ANR. VERSUS PUSHPABAI NILKANTH PATIL & ORS. [2024 (9) TMI 1406 - SUPREME COURT] the approach of the State is required to be just, fair and transparent in the matter of recovery of public exchequer and there cannot be dual liability regarding the same duty when there is change of lending institution on papers. [Paras 8, 10, 11, 12, 15]

The demand founded on the audit objection and the Collector's order were set aside; no duty beyond that already charged on the assignment deed was recoverable.

Final Conclusion: The writ petition was allowed and the impugned demand for additional stamp duty on the assignment of the secured debt was set aside. The duty already charged under the notification was held to be the only duty recoverable.

Statutory presumption of service of demand notice - acquittal for the offence of dishonour of cheque -Presumptions as to consideration and discharge of debt under the Negotiable Instruments Act

Whether the acquittal for the offence of dishonour of cheque was sustainable where the Magistrate found that the statutory demand notice was not served and questioned the complainant's financial capacity? - HELD THAT: - Production of the postal receipt showing dispatch of the notice in writing to the accused's correct address attracts the presumption of issuance under Section 27 of the General Clauses Act; actual service is not a statutory requirement. The Magistrate could not reject the notice merely by comparing the signature on the cheque with that on the acknowledgment card. Where receipt is disputed after the acknowledgment card is tendered, the accused must establish non-receipt, including by examining the postman concerned. [Paras 9]

The finding that no valid demand notice had been issued was reversed.

Presumptions as to consideration and discharge of debt under the Negotiable Instruments Act - Proof of the loan transaction and entitlement to presumptions under Sections 118 and 139 of the Negotiable Instruments Act in respect of the dishonoured cheque - HELD THAT: - The complainant's unchallenged re-examination evidence explained the source of the loan. The defence admitted earlier financial dealings and that the cheque had been entrusted as security, but did not establish discharge of that liability or explain its continued possession by the complainant. The complainant had therefore discharged the initial burden regarding the transaction and execution of the cheque and was entitled to invoke the statutory presumptions. [Paras 10]

The acquittal was set aside and the accused was convicted for the offence under Section 138 of the Negotiable Instruments Act.

Final Conclusion: The appeal was allowed, the acquittal was set aside, and the accused was convicted for dishonour of cheque and sentenced accordingly.