TaxTMI Updates e-Newsletter
Aug 06,2026

Clean Environment Cess - levy includes assessment and collection - incorporation by reference - rule-making power versus notification power - intra vires challenge to notification u/s 83(7) - harmonious construction of statutory provisions

HELD THAT:- In view of the fact that the Assessment Order is already under challenge in the subject proceedings, we are not inclined to interfere with the impugned order passed by the High Court. The Special Leave Petition is, accordingly, dismissed.

Petitioner shall be at liberty to pursue the pending proceedings.

Cancellation of GST registration without reasons and application of mind - non application of mind - no effective opportunity of hearing in cancellation of registration

Validity of cancellation of GST registration where the cancellation order did not disclose reasons or application of mind and the petitioner had not effectively responded to the show-cause notice - HELD THAT: - The Court found that no reason had been ascribed for taking the harsh action of cancellation of registration. An order passed without application of mind fails the test of Article 14. The petitioner was therefore permitted to submit a reply to the show-cause notice, to be considered after affording an opportunity of hearing. See M/S CHANDRA SAIN [2022 (9) TMI 1047 - ALLAHABAD HIGH COURT][Paras 7, 8, 9]

The cancellation and appellate orders were quashed, with a direction for fresh adjudication after receipt of the petitioner's reply and hearing.

Final Conclusion: The writ petition was allowed. The cancellation of registration and the appellate order were set aside, and the matter was directed to be decided afresh after opportunity of hearing.

Bail in GST offences involving alleged fraudulent input tax credit - Presumption of innocence and speedy trial

Grant of bail to an accused charged with alleged fraudulent availment and passing of input tax credit through shell entities - HELD THAT: - In Sanjay Chandra [2011 (11) TMI 537 - SUPREME COURT] Hon'ble Supreme Court has held that accused cannot be in jail during trial as a punitive measure for his conduct.

Pre-trial detention is not punitive; its object is to secure the accused's presence at trial. Although the alleged offences were non-bailable, the prosecution was triable by a Magistrate and carried a maximum punishment of five years. Investigation had been completed and the complaint filed, no charge had been framed, the trial was not likely to conclude within a reasonable time, and the applicant had no criminal antecedents. No exceptional circumstance, likelihood of absconding, repetition of offence, intimidation of witnesses, or tampering with evidence was shown. [Paras 14, 16, 17, 18, 19]

The applicant was held entitled to bail, subject to conditions protecting the trial and the evidence.

Final Conclusion: The bail application was allowed, subject to conditions requiring the applicant to cooperate with the trial and refrain from tampering with evidence or influencing witnesses.

Bail application in pending trial in a case alleging fraudulent availment of input tax credit and allied forgery offences - contention of learned counsel that the GST officials have suo motu cancelled GST registration for the year 2019 for which appeal is pending

HELD THAT:- Considering the period of alleged to claim of incorrect Input Tax Credit from 2016 to 2019, the delay in lodging the FIR, suo motu cancellation of registration for which the appeal is pending, the accused/applicant is entitled to be released on bail.

Hence, without touching merit of the case, the bail application is allowed.

The accused/applicant be released on bail in the aforesaid case on furnishing a personal bond and two sureties each in the like amount to the satisfaction of court concerned in view of observation made by the Supreme Court in its dictums of Girish Gandhi Vs. State of Uttar Pradesh [2024 (8) TMI 1140 - SUPREME COURT] and Policy Strategy for grant of bail in re [2023 (1) TMI 1544 - SUPREME COURT].

GST on assignment of long-term leasehold rights - Transfer of benefits arising from immovable property

Levy of GST on assignment by sale and transfer of long-term leasehold rights in land and building allotted by GIDC - HELD THAT: - The Court held that assignment of leasehold rights by the lessee-assignor to a third-party assignee for consideration is a transfer of benefits arising from immovable property, the assignee becoming the lessee in place of the original allottee. Such transaction falls outside the scope of taxable supply under section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III, and is consequently not chargeable to GST under section 9. [Paras 6]

The impugned action charging GST on the assignment transaction was quashed and set aside.

Final Conclusion: The writ petition was allowed, and the action levying GST on the assignment of long-term leasehold rights was quashed and set aside.

Condonation of delay in statutory GST appeal - Effective communication of adjudication order

Condonation of delay in filing a statutory GST appeal where the adjudication order was only uploaded on the GST portal and the petitioner could not file the appeal within the prescribed limitation - HELD THAT: - Though the Appellate Authority is bound by the limitation prescribed under Section 107 of the RGST/CGST Act, the reasons preventing timely filing of the appeal were beyond the petitioner's control. Denial of adjudication on merits in those circumstances would cause grave injury and prejudice. Following the consistent view of the Court in the cited decisions, the delay was condoned. [Paras 6, 7, 8]

The delay in filing the appeal 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 statutory appeal shall be entertained and adjudicated on merits if filed within the time directed by the Court.

Vacancies in the Uttar Pradesh Benches of the Goods and Services Tax Appellate Tribunal and measures for filling sanctioned posts - large number of vacancies are lying vacant in every Benches of GST Appellate Tribunal.

HELD THAT:- The Court sought an affidavit from a senior officer of the Department of Revenue regarding efforts to fill sanctioned vacancies in the Goods and Services Tax Appellate Tribunal Benches in Uttar Pradesh, continued the interim order, and directed listing on the next date.

Cancellation of GST registration - Non recording of reasons and without affording an opportunity of hearing - Reasoned quasi-judicial order - validity of unreasoned ex parte order

HELD THAT: - The cancellation order disclosed no reason for taking the harsh action of cancelling registration and reflected no application of mind. A quasi-judicial order adversely affecting the right to carry on business must be reasoned and conform to Article 14; absence of an opportunity of hearing also rendered the order unsustainable. [Paras 8]

The cancellation order and the appellate order were quashed; the petitioner was permitted to reply to the show-cause notice and the adjudicating authority was directed to pass a fresh order after hearing the parties and considering the defence.

Final Conclusion: The writ petition was allowed. The cancellation of registration and dismissal of the appeal were set aside, with a direction for fresh adjudication after reply and opportunity of hearing.

Demand beyond show-cause notice under GST - Statutory limit on confirmation of tax, interest and penalty - scope of Section 75(7) of the Goods and Services Tax Act, 2017

Validity of a GST demand for tax, interest and penalty exceeding the aggregate amount specified in the show-cause notice - HELD THAT: - Section 75(7) prohibits a demand in the adjudication order exceeding the amount specified in the notice and confirmation on grounds other than those stated therein. As the notice specified an aggregate amount towards tax, interest and penalty that was substantially lower than the amount ultimately demanded, the impugned demand was ex facie contrary to that provision. [Paras 8, 9, 10]

The impugned order was quashed for violation of Section 75(7), and the matter was remanded for a fresh order after permitting a response to the notice and affording hearing.

Final Conclusion: The writ petition was allowed. The demand order was set aside and the adjudicating authority was directed to decide the matter afresh in accordance with law after affording the petitioner an opportunity to respond and be heard.

Rectification of bona fide errors in GST returns - Input tax credit following correction of GSTIN details - Scope of amendments brought to Section 16 of the Act

Rectification of GSTR-1 and GSTR-3B where invoices were inadvertently filed against the GST TDS GSTIN instead of the regular GSTIN, affecting input tax credit - HELD THAT: - A bona fide and inadvertent error in furnishing GST return particulars may be corrected where no loss of revenue results. The inability of the portal to alter entries cannot justify denial of correction. The retrospective relaxation of the time-limit for input tax credit for the relevant financial year further supported the petitioner's entitlement to seek correction.

There is only the issue of filing of the invoices in the correct GSTIN. Instead of filing it in the regular GSTIN, the petitioner had filed it in the wrong GSTIN i.e. GST TDS GSTIN. There is no loss of revenue to the respondents at all. Though the respondents had taken the plea that entries once made in the GSTIN Portal cannot be altered that stand is no longer correct in view of the judgments of Star Engineers (I) Pvt. Ltd. [2023 (12) TMI 729 - BOMBAY HIGH COURT] as followed in Aberdare Technologies Pvt. Ltd. and Another [2024 (8) TMI 142 - BOMBAY HIGH COURT] which has been affirmed by the Supreme Court in the case of Central Board of Indirect Taxes and Customs [2025 (4) TMI 101 - SC ORDER] [Paras 15, 16, 17, 18, 19]

The respondents were directed to permit amendment or rectification of GSTR-1 and GSTR-3B, through online or manual means, within four weeks.

Final Conclusion: The writ petition was allowed, and the petitioner was permitted to rectify the GST returns for the relevant period so as to enable consideration of input tax credit.

Liability of legal representative for GST dues of deceased proprietor - Opportunity of hearing and speaking assessment order

Recovery of GST liability from the legal representative of a deceased sole proprietor where no notice or hearing was afforded to the legal representative - HELD THAT: - Section 93(1)(b) makes the legal representative liable, out of the deceased's estate to the extent capable of meeting the charge, for tax, interest or penalty due where the business stands discontinued. That liability is, however, subject to compliance with Section 75(4) and (6): the legal representative against whom liability is to be enforced must be given an opportunity of hearing, and the assessment order must state the relevant facts and basis of decision. As no independent notice was issued to the legal heir before the orders were made, and the impugned order also did not satisfy the requirement of a reasoned order, the assessment proceedings stood vitiated. [Paras 8, 9, 10, 11, 12]

The impugned assessment orders were quashed, with liberty to issue notice to the legal representative and pass fresh orders after affording a hearing in accordance with law.

Final Conclusion: The writ petition was allowed. The assessment orders were set aside for non-compliance with the statutory requirements of notice, hearing and a speaking order, without granting immunity from liability recoverable from the deceased's estate.

Refund claim - adjudication on a ground not disclosed in show cause notice - Consequential refund relief following Tribunal order

Rejection of refund of excess service tax on the ground that tax had been paid on an abated value while CENVAT credit on inputs was availed, without prior notice of that ground to the assessee - HELD THAT: - The Tribunal's finding that the assessee was eligible for refund, with consequential relief, did not constitute an unconditional direction to disburse the refund without examination of other legal impediments, including those arising under a notification or from unjust enrichment. The adjudicating authority could therefore examine the objection relating to payment of tax on abated value. However, as that objection had not been put to the assessee through a show cause notice, the refund claim could not be rejected on that basis without affording an opportunity to answer it. [Paras 10, 11, 12]

The impugned rejection order was quashed; the authority was directed to issue a show cause notice on the stated objection, consider the assessee's reply after hearing, and pass a reasoned order in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the refund rejection for want of prior notice of its decisive ground and directing fresh adjudication after notice and hearing.

Deemed withdrawal of best-judgment assessment on furnishing valid GST return

Whether a best-judgment assessment order for non-filing of GSTR-3B returns stands deemed withdrawn when the registered person subsequently furnishes the valid return with applicable late fee and interest? - HELD THAT: - Section 62(2) provides that an assessment made under Section 62(1) is deemed withdrawn where a valid return is furnished within the prescribed period, while liability for interest and late fee continues. Since the return for the disputed period was subsequently furnished with the applicable late fee and interest, the benefit of deemed withdrawal was held available.

Further, this Court following the judgment rendered by Hon’ble High Court of Madras, allowed filed by M/s. Brothers Engineering and Errectors Limited Vs. State of Andhra Pradesh [2025 (8) TMI 1763 - ANDHRA PRADESH HIGH COURT]. In such circumstances, the benefit under Section 62(2) of the Act has to be extended to the petitioner as well. [Paras 5, 6, 8, 9]

The assessment order was deemed withdrawn and set aside.

Final Conclusion: The writ petition was allowed. The best-judgment assessment for February, 2023 stood deemed withdrawn upon filing of the return with late fee and interest.

IGST refund claims denied - technical portal errors - Statutory refund entitlement

Denial of IGST refund claims on the ground that the automated system reflected errors and did not permit manual sanction - HELD THAT: - A refund entitlement statutorily recognised under the respective GST enactments cannot be curtailed or denied merely because of technical issues in the web portal. The customs authority remains duty-bound to process and grant refund in accordance with the GST enactments. [Paras 2, 3]

The rejection of the refund claims was quashed, and the respondent was directed to process them manually on receipt of requisite physical documents and pass appropriate refund orders.

Final Conclusion: Writ petition was disposed of by quashing the impugned rejection and directing manual processing of the IGST refund claims.

Deemed withdrawal of best-judgment assessment on filing of GST returns

Whether Assessment orders passed for non-filing of GSTR-3B returns were liable to be deemed withdrawn after the returns were filed with the requisite late fee? - HELD THAT: - Section 62(2) stipulates that an assessment order passed under Section 62 is deemed withdrawn upon filing of the necessary returns within the stipulated framework; where filing is delayed, the registered person is required to pay late fee.

Similar issue has fallen for consideration in Helmet House, Represented by its Proprietor Kumba Sundram Jeyaram [2024 (9) TMI 391 - MADRAS HIGH COURT] and after considering the same, the High Court of Madras had held that in view of the amendment to Section 62(2) of the Act, it would be appropriate to condone the delay in filing GSTR 3-B returns and consequently the Assessment Order would have to be deemed to be withdrawn.

Since the petitioner had filed the relevant returns and paid the necessary late fee, the benefit of deemed withdrawal under Section 62(2) had to be extended. [Paras 4, 5, 7, 8]

The assessment orders were deemed withdrawn; recovery proceedings and any consequential attachment of immovable property were set aside.

Final Conclusion: The writ petition was allowed. The assessments for the relevant periods stood deemed withdrawn, with consequential recovery action and property attachments, if any, rendered ineffective.

TDS u/s 194C/194I - External Development Charges (EDC) were received by HUDA from some private persons/builders in which TDS has not been deducted - HELD THAT:- Following the order passed by this Court in DLF Homes Panchkula Pvt. Ltd.[2024 (2) TMI 1203 - SC ORDER] we dismiss this special leave petition also.

Reassessment beyond four years - failure to disclose material facts - Deemed dividend-loan or advance to non-shareholder concern - Alternative remedy - exception to writ jurisdiction

Reassessment beyond four years - failure to disclose material facts - Alternative remedy - exception to writ jurisdiction - Validity of reopening a completed scrutiny assessment after four years where the assessee had disclosed the shareholding pattern and relevant transaction details - HELD THAT: - Though a statutory appeal was available, writ jurisdiction could be exercised where the assessment order disregarded settled legal precedent and the reopening was contrary to the statutory conditions. An assessment completed under section 143(3) cannot be reopened beyond four years unless the assessee failed fully and truly to disclose material facts. The material concerning the shareholding and the transaction had been furnished during scrutiny, and no failure of disclosure was established; the reopening was therefore de hors the proviso to section 147. [Paras 7]

The assessee was not relegated to the alternative appellate remedy, and the reopening notice was held unsustainable.

Deemed dividend - loan or advance to non-shareholder concern - Shareholding threshold under deemed-dividend provision - Applicability of the deemed-dividend provision to an advance received by a company which was not a registered shareholder of the payer company, where the alleged common shareholder held only 4.60% in the recipient company - HELD THAT: - The statutory fiction enlarges the meaning of dividend but does not extend the concept of shareholder to a non-member recipient concern. Further, the undisputed shareholding of the alleged common shareholder in the assessee-company was below the prescribed threshold. The conditions for treating the advance as deemed dividend were consequently not fulfilled. The assessment order had also ignored the authorities cited in the assessee's objection on this question. [Paras 9, 11, 12]

The deemed-dividend provision was held inapplicable to the impugned advance.

Final Conclusion: The writ petition succeeded. The reassessment notice, consequential assessment order and demand notice were quashed.

Pronouncement of appellate tribunal orders within prescribed period - Compliance with Rule 34 of the Income Tax (Appellate Tribunal) Rules, 1963

Delay in pronouncement of an order by the Income Tax Appellate Tribunal after conclusion of hearing and repeated release of the appeal without judgment. - HELD THAT: - Rule 34 requires that, where an order is not pronounced immediately and no date is given, every endeavour must be made to pronounce it within 60 days of conclusion of hearing; only in exceptional and extraordinary circumstances may a further date, ordinarily not exceeding 30 days, be fixed with notice. Releasing an appeal without judgment despite this 90-day outer timeline, particularly after repeated hearings, was held impermissible and detrimental to litigants subjected to repeated arguments. [Paras 7, 8]

The Tribunal was directed to deliver judgment in the petitioner's appeal within the applicable 90-day period, and all Income Tax Appellate Tribunals were directed to scrupulously follow Rule 34 by fixing a pronouncement date and delivering orders within 60 days, or, for exceptional or extraordinary reasons, by the 90th day.

Final Conclusion: The petition was partly allowed. Directions were issued for timely pronouncement in the petitioner's appeal and for uniform compliance by all Income Tax Appellate Tribunals with Rule 34.

Inherent jurisdiction to quash criminal proceedings -prosecutions for wilful failure to furnish returns pursuant to search-assessment notices - Disputed questions of fact - Willful failure to furnish return of income

Whether prosecutions for wilful failure to furnish returns pursuant to search-assessment notices could be quashed under inherent jurisdiction when the alleged non-supply of seized material and the existence of wilful default were disputed factual matters? - HELD THAT: - The petitioner's assertions as to prior requests for the documents, their non-supply to the authorised representative, and the absence of willfulness or mens rea were seriously disputed. In the absence of prima facie material establishing the asserted requests before expiry of the stipulated period, these matters required evidence and could not be determined by conducting a mini-trial under the inherent jurisdiction. At the quashing stage, the Court is confined to the existence of a prima facie case and cannot evaluate the accused's factual defence. [Paras 18, 23, 24, 25, 26]

The petitions for quashing were rejected, leaving the disputed factual defences and merits to be determined by the Trial Court on evidence.

Final Conclusion: The criminal miscellaneous petitions were dismissed. The Trial Court was directed to decide the prosecutions on the evidence adduced, uninfluenced by the observations in the order.

Review of writ dismissal - subsequent statutory amendment and liberty to challenge its validity

Review of the dismissal of the writ petition concerning reassessment notices in view of the subsequent retrospective insertion of Section 147-A and the liberty granted to challenge that provision - HELD THAT: - The Court accepted the review applicant's submissions, which were not disputed by the Income Tax Department, and was inclined to review its earlier order. The applicant was permitted to amend the restored writ petition to challenge Section 147-A introduced by the Finance Act No. 4 of 2026.

The earlier dismissal was set aside, the writ petition was restored and tagged with the pending writ petitions challenging Section 147-A; reassessment proceedings pursuant to the impugned notice were stayed during pendency of the writ petition.

Final Conclusion: The review application was allowed, the writ petition was restored with liberty to amend it to challenge the retrospective provision, and the reassessment proceedings were stayed pending its determination.

Validity of Reassessment - non disposal of objections by speaking order - Jurisdictional validity of reassessment

Validity of reassessment completed without prior disposal, by a separate speaking order, of the assessee's objections to the recorded reasons for reopening - HELD THAT: - The Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT] has categorically held that upon receipt of the recorded reasons, the assessee is entitled to file objections and the Assessing Officer is under a mandatory obligation to dispose of such objections by passing a speaking order before proceeding further with the reassessment. This procedural safeguard is intended to provide the assessee an effective opportunity to challenge the assumption of jurisdiction.

The above principle has been further explained in KSS Petron Pvt. Ltd. [2016 (10) TMI 1112 - BOMBAY HIGH COURT] wherein it was held that failure to comply with the procedure prescribed in GKN Driveshafts (India) Ltd. (supra) renders the reassessment order without jurisdiction and that such a defect cannot be cured by restoring the matter to the Assessing Officer, as doing so would amount to granting a licence to ignore the mandatory procedure prescribed by law.

Thus, AO was under a mandatory obligation to dispose of the objections to reopening by a separate speaking order before proceeding with reassessment. Consideration of those objections during reassessment proceedings or in the assessment order cannot substitute that safeguard, which enables an effective challenge to the assumption of jurisdiction. Failure to follow this procedure vitiated the reassessment at its root; the defect could not be cured by restoring the matter for fresh assessment. [Paras 7, 8, 9]

Final Conclusion: The appeal was allowed. The reassessment for Assessment Year 2012-13 was quashed for failure to dispose of the reopening objections through a prior separate speaking order, and the merits were left open.

Deduction for profits of eligible industrial undertakings u/s 80-IB/80-IE - Disallowance of expenditure relating to exempt income - Capital loss on transfer of LLP interest - Book profit computation - Debenture Redemption Reserve as ascertained liability - Appellate power to admit lawful claim

Deduction for eligible industrial undertakings - Deduction under sections 80-IB/80-IE in respect of interest on staff advances and statutory/bank deposits - HELD THAT: - The issue stood consistently decided against the assessee in its own cases for earlier years [2024 (11) TMI 859 - ITAT AHMEDABAD]. No distinguishing facts or contrary precedent were shown. [Paras 8]

The disallowance of deduction on such interest income was upheld.

Interest income on overdue bills - Deduction for eligible industrial undertakings - Deduction under sections 80-IB/80-IE in respect of interest on overdue bills from a customer - HELD THAT: - The appellate relief was in accordance with the consistent view in the assessee's preceding years, and the Revenue did not establish any basis for departure. [Paras 14]

The Revenue's challenge to allowance of the deduction was dismissed.

Disallowance of expenditure relating to exempt income - Presumption regarding interest-free funds - Disallowance under section 14A read with rule 8D in relation to investments in tax-free bonds made in earlier years - HELD THAT: - Where sufficient own interest-free funds cover investments yielding exempt income, a presumption arises that the investments were made from those funds and no interest disallowance under rule 8D(2)(ii) is warranted. The availability of such funds required verification; administrative disallowance was to be restricted to the prescribed percentage of average exempt-income investments after credit for the suo motu disallowance. [Paras 9]

The matter was remanded for verification and consequential recomputation.

Capital loss on transfer of LLP interest - Fair valuation in related-party transfer - Allowability of short-term capital loss on assignment of partnership interest in an LLP following erosion of the LLP's investment - HELD THAT: - Partnership rights in an LLP are capital assets and their assignment constitutes a transfer; however, neither party had adopted a proper valuation mechanism for the transfer to an allegedly related entity. As no valuation report was available and the related-party status required examination, the actual gain or loss could not be determined without financial records and valuation by an approved methodology. [Paras 10]

The issue was set aside for fresh determination after obtaining the relevant financial statements and a valuation report.

Deduction for Sikkim industrial unit - Reconstruction of existing business - Deduction under section 80-IE for the Sikkim-I manufacturing unit - HELD THAT: - The appellate relief followed binding decisions in the case of the erstwhile firm and the assessee's own earlier years. The Revenue showed neither distinguishing facts nor a change in law. [Paras 13]

The allowance of deduction under section 80-IE was upheld.

MAT adjustment for expenditure relating to exempt income - Addition to book profit under section 115JB of expenditure disallowed under section 14A - HELD THAT: - The issue was covered by consistent orders in the assessee's earlier years, which had been followed by the appellate authority. No material justified a different view. [Paras 15]

The deletion of the MAT adjustment was upheld.

Amortisation of intangible assets in book profit - Disallowance of amortisation of intangible assets while computing book profit under section 115JB. - HELD THAT: - The issue was governed by orders in the assessee's preceding assessment years AY 2008-09 to AY 2010-11 and AY 2012-13 followed by the appellate authority, and the Revenue produced no distinguishing material. [Paras 16]

The deletion of the disallowance was upheld.

Revenue expenditure on software upgradation and consultancy services - Deductibility of software upgradation and maintenance expenditure and consultancy fees paid for management and market-related services - HELD THAT: - The challenges concerning software expenditure and consultancy fees paid to the identified service providers were covered by the Tribunal's order for the preceding year. The appellate authority had followed that view, and the Revenue did not show grounds for departure. [Paras 17, 18, 19, 20]

The deletions of the respective disallowances were upheld.

Debenture Redemption Reserve as ascertained liability - Book profit computation - Treatment of the amount transferred to Debenture Redemption Reserve in computing book profit under section 115JB - HELD THAT: - A sum set apart for redemption of debentures represents provision for a known and existing liability, rather than a reserve. The amount had been charged against the year's profits, and a substantive claim could not be denied because of the manner in which it was presented in the return. [Paras 21]

The deletion of the addition to book profit was upheld.

Reduction of exempt income from book profit - Appellate power to admit lawful claim - Reduction of tax-free bond interest exempt under section 10(15) while computing book profit under section 115JB, though omitted in the return - HELD THAT: - Once the exempt character of income and the statutory conditions for reduction were undisputed, the adjustment could not be denied for omission to claim it in the return. The restriction on an Assessing Officer entertaining a fresh claim otherwise than by revised return does not curtail appellate powers to admit and allow a lawful claim arising from the record. [Paras 22]

The direction to reduce the exempt interest income from book profit was upheld.

Final Conclusion: The assessee's appeal was partly allowed for statistical purposes, with the section 14A issue and the capital-loss issue remanded for the specified verification and fresh adjudication. The Revenue's appeal was dismissed.

Foreign tax credit for overseas legal services - Fees for technical services under the India-Japan DTAA - Tax Credit for Foreign Withholding

Entitlement to foreign tax credit in respect of tax withheld abroad on gross receipts from legal and consultancy services rendered to overseas clients - HELD THAT: - Following Amarchand & Mangaldas & Suresh A. Shroff & Co. [2020 (12) TMI 776 - ITAT MUMBAI] and Cyril Amarchand Mangaldas [2023 (7) TMI 81 - ITAT MUMBAI] the Tribunal held that, under the India-Japan DTAA, Article 14 concerning independent personal services applies to individuals and does not exclude a partnership firm's professional receipts from Article 12(4). The foreign withholding on the assessee's overseas receipts was therefore not unjustified. The assessee had rendered services abroad, declared the gross receipts in India, furnished Form 67 and authenticated foreign tax withholding certificates, and claimed credit for the taxes withheld. Rule 128 contains no restriction warranting denial of the credit on these undisputed facts. [Paras 13, 14]

The assessee was entitled to foreign tax credit under section 90/90A read with Rule 128, and the Revenue's challenge was rejected.

Final Conclusion: The orders allowing foreign tax credit for all the concerned assessment years were upheld. The Revenue's appeals were dismissed.

Depreciation on website development cost - Payment gateway charges as banking service fees - Revenue character of advertisement, marketing and publicity expenditure - Disallowance for non-deduction of tax on reimbursements to group company

Depreciation on website development cost - Depreciation allowable at 60% or 25% - HELD THAT: - The allowance of depreciation at 60% was in conformity with the earlier decision in the assessee's own case A.Y. 2005-06 and the jurisdictional High Court decision Amway India Enterprises [2011 (11) TMI 4 - DELHI HIGH COURT] relied upon by the appellate authority. [Paras 4]

The Revenue's challenge to the depreciation allowance was rejected.

TDS u/s 194H - payment made on account of gateway charges -Whether Payment gateway charges paid to banks did not constitute commission or brokerage requiring tax deduction at source? - HELD THAT: - A payment gateway merely facilitates secure settlement of payments between principals and does not act as an agent in the purchase or sale transaction. Its charges are fees for banking services, and the notification concerning credit card or debit card charges paid between merchant establishments and acquiring banks also applied. [Paras 5]

No tax was deductible under section 194H on the gateway charges, and the disallowance was deleted.

Characterization of advertisement, marketing and publicity expenditure - revenue expenditure or capital expenditure - HELD THAT: - The coordinate-bench decisions [2020 (6) TMI 698 - ITAT DELHI], applicable to the assessee treated advertising expenditure as part of the profit-earning process. An enduring benefit by itself was not decisive, particularly where no permanent asset or advantage resulted from the expenditure. [Paras 6]

The allowance of the advertisement, marketing and publicity expenditure was upheld.

Disallowance for non-deduction of tax on reimbursements to group company - TDS u/s 195 - HELD THAT: - The issue was covered by the coordinate-bench decision for the immediately preceding assessment year A.Y. 2009-10 [2026 (4) TMI 104 - ITAT DELHI] on identical facts. The appellate authority's finding that the ticket-cost reimbursement was not an expenditure claimed by the assessee was accordingly left undisturbed. [Paras 7]

The Revenue's challenge to deletion of the disallowance was rejected.

Final Conclusion: The Revenue's appeal was dismissed. The relief granted in respect of depreciation, gateway charges, advertisement expenditure, and payments to the overseas group company was sustained.

TP Adjustment - Arm's length interest on foreign currency loans - Corporate guarantee commission - Selection of tested party under TNMM - Section 10A deduction for separate software undertakings - Export turnover and total turnover parity - Disallowance of expenditure relating to exempt income - ESOP expenditure - Foreign exchange hedging loss - Dividend distribution tax and treaty rate - Foreign tax credit

Arm's length interest on foreign currency loans - LIBOR benchmarking - Transfer-pricing adjustment on interest received on GBP-denominated loans advanced to an associated enterprise - HELD THAT: - The arm's length rate for a foreign-currency loan must be determined with reference to the currency in which the loan is advanced and repayable, rather than domestic prime lending rates.

Relevant LIBOR plus bps would be, as applied by the Ld DRP in the assessee’s own case in AY 2011-12 for the USD dominated loan and directed to apply 6 month LIBOR plus 400 basis points, for the sake convenience, even we adopt the same, in GBP dominated currency, the applicable rate would be, the rate prevailing for FY 2008-09 would be 3.72%, the applicable rate would be 7.72% (it is factual matter, the points are fluctuating currency wise depending upon the market conditions, it may not be 400 basis points for 6 months Libor, but for convenience, we agree with the Ld DRP for analysis).

Applying GBP LIBOR with the basis-point adjustment adopted in the assessee's own case resulted in a rate lower than the interest actually charged. [Paras 42]

The interest charged was held to be at arm's length and the adjustment was deleted.

Corporate guarantee commission - International transaction u/s 92B - Transfer-pricing adjustment for corporate and performance guarantees furnished for associated enterprises - HELD THAT: - Corporate guarantees furnished by the holding company for its step-down subsidiaries constituted indirect long-term financing and fell within the definition of an international transaction. The bank-rate based commission with an additional risk mark-up adopted by the Transfer Pricing Officer was not appropriate; the guarantee commission was restricted to 0.50% of the outstanding guarantees. [Paras 174, 175]

The adjustment was sustained only at 0.50% of the outstanding guarantee amount at the end of each relevant year.

Selection of tested party under TNMM - ITES/BPO comparability - Benchmarking of BPO services rendered through associated enterprises in different economic jurisdictions - HELD THAT: - The associated enterprises, operating in different economic zones and currencies and reporting segmental losses, could not be jointly adopted as the tested party. However, the Transfer Pricing Officer's adjustment based on the entire amount retained by them was held disproportionate. Certain comparables were excluded for functional dissimilarity, extraordinary events, scale, or absence of segmental data; other comparables were directed to be examined with segmental information. [Paras 179, 180, 181]

The matter was remanded for fresh benchmarking after finalising comparables and undertaking FAR analysis, restricting examination to the relevant retained portion of revenue.

Section 10A deduction for separate software undertakings - Separate undertaking test - Eligibility of separately claimed software development centres for deduction under section 10A notwithstanding their coverage under fewer STPI licences and a belated revised-return claim - HELD THAT: - Hon’ble High Court that the court in the assessee’s own case for AY 2005-06 [2015 (4) TMI 841 - DELHI HIGH COURT] ruled that an assessee can raise a claim on the merits of the law, even if they had not challenged a lower authority’s view on the same claim in a previous assessment year.

A prior failure to claim the statutory benefit does not create an estoppel. The entitlement depends upon whether each unit is, on facts, a separate undertaking satisfying the statutory requirements; the assessee's revised claim could not be rejected merely because the earlier claim had been made on a consolidated licence-wise basis. [Paras 185]

The issue was remanded to verify whether the claimed units constituted separate undertakings for section 10A purposes and to decide the revised-return claim in accordance with law.

Export turnover and total turnover parity - Section 10A computation - Exclusion of foreign-currency expenses and link charges from export turnover without a corresponding exclusion from total turnover for computing deduction under sections 10A, 10AA and 10B - HELD THAT: - The issue was covered by earlier orders in the assessee's own case and the Supreme Court decision in CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT]. Expenses excluded from export turnover for the deduction formula require a corresponding exclusion from total turnover. [Paras 189]

The assessee's grounds were allowed.

Disallowance of expenditure relating to exempt income u/s 14A - Rule 8D satisfaction - Suo moto disallowance made by assessee - HELD THAT: - The assessment order contained sufficient satisfaction for rejecting the suo motu disallowance. No interest disallowance was warranted where interest-free funds exceeded investments. Administrative expenditure under Rule 8D was to be computed at 0.50% only of investments which actually yielded exempt income. [Paras 199, 200, 201, 203]

The suo motu disallowance was sustained, interest disallowance was deleted, and the administrative-expense component was remanded for recomputation.

ESOP expenditure - Enhanced deduction claim - HELD THAT: - The issue was identical to that decided in the assessee's favour for earlier assessment years AYs 2006-07 and 2007-08 [2026 (4) TMI 1123 - ITAT DELHI] [Paras 207]

The ESOP expenditure and enhanced claim were allowed.

Software licence expenditure - nature of expenditure - Revenue or capital expenditure - HELD THAT: - The nature of the software licences required factual verification, including whether the software acquired was off-the-shelf software used for smooth business operations. [Paras 211]

The matter was remanded for factual verification and decision according to law.

Foreign exchange hedging loss - Mark-to-market loss - Deductibility of loss on premature cancellation of forward contracts and mark-to-market restatement of outstanding forward covers taken to hedge export proceeds - HELD THAT: - Forward contracts entered into to hedge foreign-currency exposure arising from export business were integral to the business and not speculative. The mark-to-market loss, arising under the mercantile system on binding foreign-exchange contracts and consistently accounted for along with gains accepted by the Revenue, was a revenue loss; CBDT Instruction No. 3/2010 did not govern hedging contracts. [Paras 215, 233]

The losses on premature unwinding and mark-to-market restatement were allowed.

Remission or cessation of trade liability - Static creditors - Addition of long-outstanding sundry creditor balances as income from cessation of liability - HELD THAT: - The issue required verification whether balances had been paid subsequently or written back and offered to tax in later years. [Paras 237]

The issue was remanded for verification and decision in accordance with law.

TDS credit on deferred revenue - Proportionate TDS credit - Credit for tax deducted at source relating to revenue assessable over more than one year - HELD THAT: - The claim required factual verification. Credit for tax deducted at source is to be allowed proportionately across the years in which the corresponding income is assessable, in accordance with Rule 37BA(3)(ii). [Paras 244]

The issue was remanded for verification and grant of credit according to law.

Dividend distribution tax and treaty rate - Applicability of the dividend rate under the relevant tax treaty to distributions made to non-resident shareholders. - HELD THAT: - The issue was identical to that allowed in the assessee's own case for earlier years following Colorcon Asia Pvt. Ltd. [2025 (12) TMI 677 - BOMBAY HIGH COURT] [Paras 248]

The additional ground was allowed.

Section 10A deduction on surplus-fund income - Enhanced deduction under sections 10A, 10AA and 10B on interest and other income from investment of surplus funds generated by eligible undertakings - HELD THAT: - The claim was governed by earlier orders in the assessee's own case [2026 (4) TMI 1123 - ITAT DELHI]. Deduction is subject to verification that the income from bank deposits, mutual funds and similar investments arose from the assessee's internal accruals. [Paras 253]

The additional ground was allowed subject to verification.

Foreign tax credit - Enhanced foreign tax credit in respect of income eligible for deduction under sections 10A and 10AA - HELD THAT: - Additional evidence was admitted, and the claim required verification in accordance with the earlier orders in the assessee's own case. [Paras 257]

The matter was remanded for verification of additional evidence and allowance of the claim according to law.

Final Conclusion: The appeals were allowed for statistical purposes. The Tribunal deleted the transfer-pricing adjustment on foreign-currency loan interest, restricted guarantee commission to 0.50%, allowed the claims relating to export-turnover computation, ESOP expenditure, hedging losses and treaty-rate dividend distribution tax, and remanded the remaining identified matters for verification or fresh benchmarking.

Depreciation on acquired goodwill arising on amalgamation - Goodwill as a depreciable intangible asset

Allowability of depreciation on goodwill recognised as the excess of independently valued purchase consideration over net assets acquired under a court-approved amalgamation - AO disallowed the claim by holding that the goodwill was merely an accounting adjustment without any actual cost and, therefore, hit by the fifth proviso to section 32(1)(ii) - HELD THAT: - Goodwill arising from a court-approved amalgamation, where the purchase consideration is determined through an independent valuation, is acquired goodwill and not a self-generated, fictitious or merely accounting entry. Such goodwill constitutes an intangible asset eligible for depreciation under section 32(1)(ii).

The Hon'ble Supreme Court in Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] has held that goodwill is an asset falling within the ambit of Explanation 3(b) to section 32(1) and is eligible for depreciation. Similar view has been taken in Arun Excello Urban Infrastructure (P.) Ltd. [2022 (12) TMI 356 - ITAT CHENNAI] wherein goodwill arising on amalgamation was held to be a depreciable intangible asset. We also find that the Ld. CIT(A) has rightly applied the ratio of the decision in Zydus Wellness Ltd. [2017 (10) TMI 373 - GUJARAT HIGH COURT] holding that goodwill arising from a court-approved amalgamation supported by an independent valuation constitutes acquired goodwill eligible for depreciation.

Thus, revenue has not brought on record any material to demonstrate that the amalgamation was a sham transaction or that the valuation adopted was incorrect or contrary to law. Mere excess of purchase consideration over the net assets acquired cannot, by itself, render the goodwill fictitious or disentitle the assessee from claiming depreciation.[Paras 5]

The deletion of the disallowance of depreciation on the goodwill was upheld and the Revenue's grounds were dismissed.

Final Conclusion: The Revenue's appeal was dismissed, affirming depreciation on goodwill acquired through the court-approved and independently valued amalgamation.

Penalty for belated filing of TDS returns - Delayed initiation of penalty proceedings - Validity of penalty imposed for belated filing of TDS returns after a lapse of nine years - HELD THAT: - Following the co-ordinate Bench precedent on materially similar facts [2023 (12) TMI 1508 - ITAT DELHI] titled as Lucknow Sitapur Expressways Limit the Tribunal held that the penalty imposed after nine years for belated filing of TDS returns was illegal and unsustainable. [Paras 7]

The penalty order was set aside and the assessee's appeal was allowed.

Final Conclusion: The penalty for delayed filing of TDS returns, imposed after nine years, was held illegal and set aside. The appeal was allowed.

Characterization of receipt - Capital or revenue character of project assistance - Amortisation of infrastructure-project expenditure over concession period

Capital or revenue character of project assistance - Financial assistance received from the development authority for construction and setting up of the water infrastructure project was capital or revenue in character - HELD THAT: - The character of a subsidy or grant depends upon its purpose. Assistance intended for development or setting up of a project is capital in nature, whereas assistance for carrying on business operations may constitute revenue. As the assistance was for construction and development of the project, the Tribunal followed the consistent view in the assessee's own case [2024 (12) TMI 1788 - ITAT DELHI] and treated it as a capital receipt.

The addition made by treating the financial assistance as revenue receipt was deleted.

Amortisation of infrastructure-project expenditure over concession period - Deduction of excess construction cost of the water infrastructure project, over the capital assistance received, by amortisation over the concession period - HELD THAT: - The assessee's treatment was held to accord with the applicable accounting principles and the CBDT Circular providing for claim of expenditure incurred for development of an infrastructure facility as deferred revenue expenditure after completion of the project. The contrary adjustment was therefore unsustainable. We again find that the issue is covered in favour of the assessee by the CBDT Instruction No.9/2014 as well as the decision of ITAT in [2019 (12) TMI 446 - ITAT DELHI] [Paras 9]

The disallowance of the amortised project expenditure was deleted.

Final Conclusion: The assessee's appeal was allowed. The financial assistance was held to be a capital receipt and the disallowance of amortised project expenditure was deleted; interest and penalty grounds were consequential and premature, respectively.

Misreporting of income under section 270A - Disallowance of political donation deduction - Levy of penalty for misreporting of income upon withdrawal of deduction claimed for donation to a political party under section 80GGC - HELD THAT: - Following the coordinate Bench decision HIRO MULCHAND TANWANI, AHMEDABAD VERSUS THE INCOME TAX OFFICER, WARD-3 (3) (5), AHMEDABAD. [2026 (6) TMI 214 - ITAT AHMEDABAD] and Siddharth Laxminkant Vaderkar [2026 (8) TMI 179 - ITAT AHMEDABAD] the Tribunal held that, in the absence of any change in the factual matrix or legal position, penalty for misreporting could not be sustained merely because the deduction claimed for political donation had been withdrawn in reassessment. [Paras 8]

The penalty levied under section 270A was deleted.

Final Conclusion: The appeal was allowed and the penalty imposed under section 270A was deleted.

Unexplained cash credits - trade advances and opening balances - Proof of identity, creditworthiness and genuineness of unsecured loans - Explanation of cash deposits from recorded cash balances and withdrawals - Unexplained expenditure based on unverified third-party information - Unexplained investments in assets found during search

Trade advances as unexplained cash credits - Addition for outstanding customer advances received in the ordinary course of business - HELD THAT: - Section 68 requires a credit during the relevant previous year for which the assessee offers no satisfactory explanation. The customer particulars, receipts, and consequent sales had been furnished and accepted; the AO neither doubted the receipts and sales nor conducted independent enquiry. Outstanding closing balances of such accepted trade advances could not, on assumptions, be treated as unexplained. [Paras 15, 40, 41, 61, 76]

The deletion of additions for customer advances was upheld for the relevant assessment years.

Opening balances u/s 68 - Addition of unsecured loan and sundry creditor balances brought forward from earlier years as fresh unexplained credits - HELD THAT: - Section 68 applies to sums credited during the relevant year. The unsecured loan represented an opening balance and no fresh credit had been received in the year. Likewise, the substantial sundry creditor balance was brought forward from an earlier assessment in which the underlying purchases and closing balance had been accepted. Such brought-forward balances could not be added as unexplained credits in the current year. [Paras 18, 59, 66]

The deletions of additions relating to opening unsecured-loan and creditor balances were sustained.

Cash deposits explained by cash book entries - Addition for cash deposited in bank where the source was recorded opening cash balance and bank withdrawals - HELD THAT: - The cash book and bank statements showed the opening cash balance and cash withdrawals from which the deposits were made. As the Assessing Officer had not doubted the cash-book entries, the deposits could not be treated as unexplained merely on assumptions. [Paras 22]

The sustained addition for bank cash deposits was deleted and the Revenue's challenge to corresponding relief was rejected.

Unsecured loans - creditworthiness of corporate lenders - Addition for unsecured loans from corporate lenders despite confirmations, tax returns, financial statements and bank records - HELD THAT: - The assessee discharged the burden under section 68 by producing confirmations, tax returns, financial statements and bank statements of the lenders. Availability of funds in their bank accounts, their assessed status, and receipt through banking channels established the identity, creditworthiness and genuineness of the loans; current-year losses and absence of interest did not displace this evidence. [Paras 27, 28, 32]

The deletion of the unsecured-loan addition was upheld.

Housing-loan interest deduction - Disallowance of interest paid on a housing loan despite bank certification - HELD THAT: - The bank certificate substantiated payment of interest on the housing loan, and the claim was within the statutory ceiling. The same certificate had also been accepted in a subsequent assessment year. [Paras 43]

The deletion of the housing-loan interest disallowance was confirmed.

Rent disallowance for non-deduction of tax at source - Treatment of rent expenditure on which tax had not been deducted where the related business loss was carried forward without set-off - HELD THAT: - As the business loss containing the rent expenditure had not been set off against income under other heads and was carried forward, no separate addition was warranted. The statutory disallowance attributable to the rent was, however, to reduce the business loss carried forward. [Paras 46]

Deletion of the separate addition was upheld, subject to reduction of the applicable disallowance from the carried-forward business loss.

Cash deposits from agricultural trading receipts - Addition for bank cash deposits where the assessee attributed the source to recorded cash balance and trading in agricultural produce - HELD THAT: - The cash book reflected opening cash, while sales from agricultural-produce trading were included in turnover. Since the trading activity and the profit declared therefrom had not been doubted, the source of the bank deposits stood explained. [Paras 52]

The addition for cash deposits was deleted.

Credit-card payments through banking channels - Addition for alleged unexplained expenditure on credit-card payments reported as cash payments - HELD THAT: - The payments were verifiable from the assessee's bank account maintained in the regular books. The addition rested on unverified third-party information that the payments were made in cash and was therefore factually erroneous. [Paras 63, 64]

The deletion of the addition for credit-card payments was upheld.

Purchase reconciliation with GST portal data - Addition for the difference between purchases recorded in the books and purchases reflected on the GST/Insight Portal - HELD THAT: - The reconciliation established that the portal figure included acquisition of fixed assets and expenditure on which GST was paid, apart from trading purchases. In the absence of contrary material, the differential amount could not be treated as unexplained expenditure. [Paras 69, 70]

The deletion of the addition based on the GST/Insight Portal difference was upheld.

Cash found during search recorded in regular books - Addition for cash found during search to the extent recorded in the regular books of account - HELD THAT: - The cash had been released at the time of search because it was recorded in the regular books, a fact supported by the cash book. Its recorded nature furnished a satisfactory explanation. [Paras 81]

The deletion of the addition for recorded cash found during search was confirmed.

Assets found in locker not owned by assessee - gold items found in a locker belonging to family members - HELD THAT: - The search inventory and valuation record showed that the items were found in a locker owned by family members, not in the assessee's possession. The assessee had not admitted ownership of those items. [Paras 85]

The addition for the gold items was deleted.

Explained jewellery found during search - Addition for jewellery found during search where jewellery owned by a family member living jointly had been only partly credited - HELD THAT: - The wealth-tax assessment of the family member established ownership of jewellery exceeding the balance found. Since the Assessing Officer accepted that the family member lived jointly with the assessee, credit for the full jewellery owned by that person was required. [Paras 90]

The addition for the remaining jewellery was deleted.

Final Conclusion: All Revenue appeals were dismissed. The assessee's appeals were partly allowed for the assessment years 2019-20 and 2020-21, and allowed for the assessment year 2022-23.

Rejection of plaint seeking declaration of property as joint family property - Benami transaction - joint family property and property purchased in child's name - scope of inquiry under Order VII Rule 11 CPC -

Rejection of a suit claiming property purchased in the name of a son from joint family income as barred by the prohibition against benami claims - HELD THAT: - As per Section 2(9)(i), the joint family properties are excluded from the definition of Benami transaction and as per Section 2(9)(iii), the property purchased in the name of spouse or child of such of individual is not covered in the definition of Benami transaction.

Therefore, if the definition of Benami transaction is seen, then the plaint assertions do not disclose the transaction of sale of year 1976 to be Benami transaction, though the defendant no. 2 can take such defence in the written statement and it would be for the defendant No. 2 to prove the fact in support of his assertions if he takes such an objection. However, the plaint pleadings and documents attached to this plaint do not disclose the transaction in question to be Benami transaction.

At the stage of considering an application under Order VII Rule 11 CPC, the inquiry is confined to the averments in the plaint and the documents annexed thereto. The plaint asserted that the property was purchased from the nucleus of joint family income in the name of a son and was held as joint family property.

Such assertions did not, on their face, disclose a benami transaction, since property held by a Karta or member for the benefit of the Hindu undivided family out of its known sources, and property purchased by an individual in the name of a child out of known sources, stand excluded from the statutory definition. Any defence that the transaction was benami could be raised and established at trial. [Paras 9, 10, 11, 12]

The plaint could not be rejected as barred by the prohibition against benami claims; the defendant was left free to raise the benami objection in the written statement and at trial.

Final Conclusion: The appeal was allowed, the order rejecting the plaint was set aside, and the application under Order VII Rule 11 CPC was rejected.

Benami transaction through accommodation RTGS entries - Cross-examination and prejudice in quasi-judicial proceedings

Benami transaction through accommodation RTGS entries - Burden of substantiating claimed gold sales - RTGS credits received from entities controlled by the alleged benamidar, claimed to represent sale proceeds of gold bullion, constituted a benami transaction - HELD THAT: - The deposit of demonetised cash with the alleged benamidar and the RTGS transfers to the appellant were undisputed. The appellant failed to establish any prior business relationship with the remitting firms, while the explanation founded on invoices, purchase bills, ledger and stock statements lacked independent corroboration. The timing of the transactions soon after demonetisation and the bank records supported the finding that the claimed gold-sale documentation did not substantiate the explanation. [Paras 16]

The confirmation of provisional attachment was upheld and the appellant's claim that the credits were genuine gold-sale proceeds was rejected.

Cross-examination and prejudice in quasi-judicial proceedings - Principles of natural justice - Whether Denial of cross-examination of the intermediary and the alleged benamidar violate principles of natural justice? - HELD THAT: - No statement of the intermediary was on record, and therefore no question of cross-examination arose. A copy of the alleged benamidar's statement had been supplied and he had been summoned for cross-examination but did not appear. Cross-examination is not an inflexible requirement in quasi-judicial proceedings; procedural breach warrants relief only where actual prejudice is demonstrated. No prejudice to the appellant was established. [Paras 17, 21, 22]

The plea of breach of natural justice was rejected.

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

Classification under Chapter Heading 31.05 as micronutrient fertilizers - classification under Chapter Heading 29.22 as chemical compounds - essential constituent test for "other fertilizers" - exclusion of separate chemically defined compounds in HSN Explanatory Notes - deeming fiction treating repacking and relabelling as manufacture - availability of exemption from CVD and SAD under Notifications 4/2006 and 20/2006

HELD THAT:- The appeals were dismissed, the Court finding no good ground to interfere with the impugned orders.[2008 (12) TMI 475 - CESTAT, CHENNAI] and [2018 (3) TMI 565 - CESTAT CHENNAI]

Prospective prohibition of sugar exports - Judicial review of export policy in public interest - Legitimate expectation and vested rights under export quotas

Transitional protection for sugar export consignments - Irrevocable Commercial Letter of Credit - Physical export pipeline - Whether Pre-existing private contracts and advance payments for sugar exports did not entitle merchant exporters to continue exports after the policy was changed from restricted to prohibited? - HELD THAT: - The export policy applicable is the policy prevailing on the date of export. The transitional protection under the Foreign Trade Policy required an Irrevocable Commercial Letter of Credit existing before the restriction and its prescribed registration; private contracts and advance remittances could not substitute that statutory requirement. Nor could the petitioners claim that their consignments were already in the physical export pipeline without material showing customs clearance or permission for loading for exportation. The prohibition operated prospectively and did not affect consignments for which a Let Export Order had already been issued before the notification. [Paras 62, 68, 69, 71, 72]

The petitioners were not entitled to an exception from the prohibition on the basis of their private contractual and financial commitments.

Judicial review of export policy - Legitimate expectation - Vested right in export quota - Reasonable restriction on trade - policy decision prohibiting sugar exports in the interest of domestic availability and price stability was not arbitrary, and did not infringe any vested right, legitimate expectation, promissory estoppel claim or freedom of trade of the petitioners - HELD THAT: - The prohibition was a considered policy decision taken after deliberation to maintain sufficient domestic sugar stock and price stability, and was neither irrational, irregular nor illegal. Export quotas allocated to sugar mills under the earlier notifications did not create vested rights in merchant exporters, while a one-time relaxation in another sugar season could not constitute a binding precedent. Legitimate expectation is not an enforceable right and could not restrain the Government from evolving a new policy in supervening public interest; the plea of promissory estoppel was unsupported by pleadings and material. The conditional and prospective export prohibition was a reasonable restriction, having regard to sugar being an essential commodity of mass consumption. [Paras 80, 81, 83, 85, 86]

No ground for interference with the export prohibition in writ jurisdiction was made out.

Final Conclusion: The writ petitions were dismissed. The petitioners were, however, permitted to sell or dispose of the retained sugar in the domestic market in accordance with the applicable law.

Review on discovery of new evidence - Scope of review jurisdiction - Customs duty exemption for diagnostic centres

Review on discovery of new evidence - Customs duty exemption for diagnostic centres - Review of the denial of customs-duty exemption to a diagnostic centre lacking inpatient beds on the basis of subsequently produced communications of the Director General of Health Services. - HELD THAT: - New material can justify review only if it is relevant and of such character that its earlier production might have altered the judgment. The communications merely conveyed the Director General of Health Services' view that diagnostic centres need not have inpatient beds and requested clarification or inclusion of such centres; they did not amend the conditions of the exemption notifications. Since the petitioners admittedly had not complied with those conditions, the communications could not have altered the order under review. [Paras 4, 5, 6]

The subsequently produced communications afforded no ground for review of the order denying the claimed exemption.

Scope of review jurisdiction - Reconsideration of merits through additional contentions in review proceedings. - HELD THAT: - Review jurisdiction cannot be used to re-argue the case on merits. Contentions seeking such reconsideration were therefore outside the remit of review. [Paras 7]

The additional contentions were not entertained as an impermissible attempt to reopen the merits.

Final Conclusion: The Review Petition was dismissed, as the subsequently obtained communications did not modify the conditions of the customs exemption notifications and furnished no basis to reopen the earlier decision.

Brand rate drawback on bus bodies - Simultaneous DEPB benefit and drawback - Double benefit of duty reimbursement - Binding departmental circulars

Brand rate drawback on bus bodies - Simultaneous DEPB benefit and drawback - Duty-paid documents - Double benefit of duty reimbursement - Entitlement to 7% brand rate drawback on the bus body portion of exported passenger buses while availing DEPB benefit for the chassis component - HELD THAT: - The 1988 Circular created a special dispensation by allowing drawback at an average rate on the bus body cost precisely because independent body builders could not furnish detailed duty-paid documents; the requirement of such documents could not therefore be reintroduced so as to nullify that dispensation. The 2003 Circular expressly continued that practice after introduction of the DEPB Scheme. The DEPB circular did not absolutely prohibit simultaneous benefits, and the Board's clarificatory communications could not impose substantive conditions inconsistent with an existing beneficial circular that had not been withdrawn. Further, the authorities could not presume duplication merely because DEPB was availed; they were required to establish by acceptable material that the same duty incidence had been reimbursed twice. No such material was produced. [Paras 14, 15, 16, 21, 22]

The denial of the 7% brand rate drawback and the consequential recovery, founded on assumed double benefit and non-production of duty-paid documents, were unsustainable.

Recovery of wrongly granted drawback - Jurisdiction of adjudicating authority - Competence of the adjudicating authorities to reopen and determine whether drawback already granted was contrary to law - HELD THAT: - Proceedings to determine whether drawback already granted was contrary to law were distinct from proceedings for revision or re-fixation of a brand rate. The Drawback Rules empowered the adjudicating authorities to examine wrongful grant of drawback and initiate proceedings under the statutory framework. [Paras 17]

The challenge to the jurisdiction of the adjudicating authorities to reopen the grant of drawback was rejected.

Limitation for recovery of drawback - Reasonable time - Applicability of the limitation prescribed for recovery of customs duty to recovery of wrongly paid drawback - HELD THAT: - Rule 16 provided an independent mechanism for recovery of wrongly paid drawback, and the limitation under section 28 of the Customs Act could not automatically apply to such proceedings. Though Rule 16 prescribed no specific period, recovery action had to be commenced within a reasonable time; on the facts, it had been so commenced. [Paras 18]

The recovery proceedings were not barred by limitation.

Final Conclusion: The impugned revisional order and the Board's impugned communications were quashed, and the writ petitions were allowed. The relief was confined to exports made while the 1988 Circular, as reaffirmed in 2003, remained operative before issuance of the impugned communications and consequential demand notices.

Classification of triangular umbrella fabric panels - made-up textile articles or woven synthetic filament fabric - Extended limitation in classification disputes

Classification of triangular umbrella fabric panels as made-up textile articles - classifiable as made-up textile articles under Heading 6307 OR woven synthetic filament fabric under Heading 5407 - HELD THAT: - Articles cut otherwise than into squares or rectangles fall within the meaning of "made-up" under Section Note 7 to Section XI. Once the fabric was cut into triangular panels for umbrella assembly, it acquired the essential character and commercial identity of umbrella panels rather than textile fabric. Heading 6307 specifically covered such made-up textile articles and prevailed over the general heading for woven synthetic filament fabrics. The Tribunal followed Karnataka Umbrella Manufacturers [1998 (9) TMI 285 - CEGAT, MADRAS]. [Paras 6]

The Revenue's reclassification under Heading 5407 was rejected.

Extended limitation in classification disputes - extended period for recovery of differential customs duty availability where the description and classification of the imported umbrella panels had been fully declared in Bills of Entry and accepted on assessment - HELD THAT: - There was no suppression or misdeclaration, since the imports, description of the goods and claimed classification were openly declared and assessed by Customs without objection. The extended period u/s 28(4) could therefore not be invoked for the classification dispute. Tribunal relied on Padmini Products [1989 (8) TMI 80 - SUPREME COURT]. [Paras 6]

The entire demand was also held barred by limitation.

Final Conclusion: The impugned order confirming differential duty, interest and penalty was set aside on merits and on limitation, and the appeal was allowed with consequential relief in accordance with law.

Penalty u/s. 112A for abetment of improper import - Customs Broker G Card holder's knowledge of prohibited goods

Penalty on a Customs Broker's G Card holder for alleged involvement in import of prohibited crackers concealed as glassware - HELD THAT: - The appellant had returned the import documents without clearing the goods after noticing a mismatch in their description and had intimated Customs of the return. His role had remained confined to the initial processing of the Bills of Entry, and no involvement in the importation or any act, omission or abetment rendering the goods liable to confiscation was established. Deposit of funds in his personal bank account could not, in the circumstances, establish knowledge of the illegal import. [Paras 6]

The penalty under section 112A of the Customs Act, 1962 was unsustainable and was set aside.

Final Conclusion: The appeal was allowed and the order confirming penalty against the appellant was set aside with consequential relief.

Actual user condition for duty-free imported inputs - Job work and sale of imported raw materials - Bond-based customs duty demand and limitation - Penalty on Director for diversion of duty-free imports

Actual user condition for duty-free imported inputs - Job work and sale of imported raw materials - Violation of the actual user condition by supplying duty-free Beta Napthol to purported job workers who used their own raw materials and sold Gamma Acid and 6-Nitro to the importer. - HELD THAT: - Job work requires production substantially out of materials supplied by the customer; where the processor contributes its own raw materials to manufacture a different product, the activity is not job work. The processors used their own inputs, issued tax-paid sale invoices for the intermediate goods, adjusted the value of Beta Napthol against the sale price, and recorded the transactions as sales. The imported material was thus sold or transferred in breach of the exemption conditions, which prohibited its sale or transfer. [Paras 5]

Confiscation of the imported Beta Napthol, recovery of customs duty with interest, and penalty on the importing company were upheld.

Bond-based customs duty demand and limitation - Penalty for suppression of diversion of duty-free imports - Limitation and penalty in respect of customs duty recoverable under bonds executed for compliance with exemption notification conditions. - HELD THAT: - The obligation under the bonds executed at import to pay duty and interest upon breach of notification conditions was continuing and remained enforceable until discharge of the bonds; consequently, invocation of the extended limitation period was unnecessary. Further, the importer had suppressed the sale of duty-free Beta Napthol by portraying the transactions as job work, while placing purchase orders for the intermediate goods, warranting penalty for such contravention. [Paras 5]

The duty demand was held not time-barred, and the equal penalty on the importing company was sustained.

Penalty on Director for diversion of duty-free imports - Penalty on the Director responsible for the company's diversion and sale of duty-free Beta Napthol. - HELD THAT: - The Director controlled and managed the company's affairs and was responsible for the diversion, removal and sale of duty-free imported material in breach of customs law and the Foreign Trade Policy. However, as the adjudicating authority had not specified the applicable sub-section and clause of the penalty provision, the penalty was appropriately imposed under section 112(a)(ii). [Paras 6, 7]

The Director's penalty was modified and imposed under section 112(a)(ii) in a reduced amount.

Final Conclusion: The company's appeal was rejected and the confiscation, duty demand with interest, and penalty were sustained. The Director's appeal was disposed of by modifying the penalty to one under section 112(a)(ii) in a reduced amount.

Penalty for abetment of attempted export of red sanders - Penalty on Customs House Agent for alleged assistance in smuggling

Penalty for abetment of attempted export of red sanders - Penalty on the exporter, its Managing Partner and employees for alleged abetment of attempted export of red sanders concealed in a container carrying roofing tiles. - HELD THAT: - Abetment requires a positive act. There was no evidence that the appellants assisted in loading the red sanders, tampered with the container, or were aware that red sanders had been stuffed into it during transit. In the absence of evidence of assistance in the attempted export, the penalties could not be sustained. [Paras 14]

The penalties imposed on the exporter, its Managing Partner and employees were set aside.

Penalty on Customs House Agent for alleged assistance in smuggling - Departmental challenge to the dropping of penalty against the Customs House Agent and request for remand for fresh adjudication. - HELD THAT: - There was no admissible evidence that the Customs House Agent assisted in loading the red sanders, tampered with the container, or knew that the red sanders had been stuffed into it. The adjudicating authority had therefore rightly dropped the proposed penalty. Further, as no aggrieved party had challenged confiscation of the goods, no justification existed for remanding the matter for fresh adjudication. [Paras 15]

The Departmental appeal was dismissed.

Final Conclusion: The appeals of the exporter, its Managing Partner and employees were allowed and the penalties were set aside for want of evidence of abetment. The Departmental appeal seeking fresh adjudication was dismissed.

Maintainability of appeal against ex parte ad interim order - Director without shareholding - Bar of civil court jurisdiction in corporate governance matters - Definition of director under Section 2(34) - Statutory removal of director - absence of locus standi before the NCLT revives civil court jurisdiction - Reasoned satisfaction of prima facie case, balance of convenience and irreparable injury - Oppression and mismanagement remedy - Waiver of eligibility requirements - Balance of convenience - Irreparable injury - Clean hands doctrine.

HELD THAT:- Special Leave Petitions were dismissed, the Court finding no ground to interfere with the common impugned order of the High Court [2026 (5) TMI 1384 - CALCUTTA HIGH COURT]

Supervisory jurisdiction under Article 227 - Jurisdiction and executability before the executing Tribunal - Jurisdictional Objection - Maintainability of Execution Proceedings - Restitution - Status Quo Ante

Whether the High Court should, under Article 227, stay execution proceedings arising from the appellate order pending civil appeals before the Supreme Court or determine their jurisdiction and maintainability before the Tribunal considers them? - HELD THAT: - Questions concerning the jurisdiction, maintainability and executability of the execution petition must initially be determined by the Tribunal before which the petition is pending. Exercise of supervisory jurisdiction to pre-empt that determination was neither proper nor necessary. Since the civil appeals were pending before the Supreme Court and the petitioners had sought, but had not obtained, stay, any request to stay the execution proceedings was required to be made before that Court. [Paras 14, 15, 16]

The requests for stay and for a declaration that the execution petition was not maintainable were declined.

Final Conclusion: The original petitions were dismissed, leaving the questions relating to the execution petition for determination by the Tribunal and preserving the parties' recourse before the Supreme Court for any interim relief.

Extinguishment of arbitral award claim on approval of resolution plan - Deposit in court as security for arbitral award

Extinguishment of arbitral award claim on approval of resolution plan - Clean slate principle under insolvency resolution - Survival of an arbitral award claim where the award-holder failed to submit its claim during the corporate insolvency resolution process and the resolution plan was approved. - HELD THAT: - An arbitral award constitutes a claim, and its holder is a creditor required to submit that claim to the resolution professional. Upon approval of the resolution plan, claims not forming part of it stand extinguished; no proceeding concerning such claim can thereafter be initiated or continued. Since the award-holder did not lodge its claim, the award debt stood extinguished and the challenge to the award became academic. [Paras 7, 8, 9, 10]

The petition challenging the arbitral award was rendered infructuous.

Deposit in court as security for arbitral award - Ownership of court-deposited assets during insolvency resolution - Entitlement to refund of the amount deposited in court as a condition for stay of execution of the arbitral award after extinction of the award-holder's claim. - HELD THAT: - A deposit directed as a condition for stay secures the award amount pending the challenge and does not constitute payment to the decree-holder or alter ownership of the asset. Release remains subject to the court's permission and conditions, and no vested right to unconditional receipt arises merely from the deposit. The deposited amount remained an asset of the corporate debtor; objections concerning the approved resolution plan or the information memorandum could not be examined in the proceedings under the Arbitration and Conciliation Act. [Paras 14, 15, 16, 19, 20]

The deposited amount, with accrued interest, was directed to be released to the petitioner.

Final Conclusion: The award-holder's unsubmitted claim stood extinguished on approval of the resolution plan. The Section 34 petition was dismissed as infructuous and the court-deposited security, with accrued interest, was ordered to be refunded to the petitioner.

Retroactive application of statutory amendment to pending insolvency applications - Interim moratorium in personal guarantor insolvency proceedings

Retroactive application of statutory amendment to pending insolvency applications - Applicability of the exclusion from the interim moratorium to insolvency applications against personal guarantors that were filed before the amendment came into force and remained pending - HELD THAT: - The words "where an application is filed" in the amended provision encompass applications already filed and pending before the Adjudicating Authority. Its application to pending proceedings is retroactive, not retrospective: it operates prospectively from its commencement upon an existing and continuing status, without impairing vested rights. The provision is indifferent to the identity of the person who initiated the insolvency application. [Paras 11, 14, 15, 16]

The interim moratorium operating in respect of the individual guarantors ceased from the date on which the amendment took effect, and the petition was not barred by the moratorium.

Protective interim measures pending arbitration - Disclosure and preservation of guarantors' assets - Grant of asset disclosure and restraint against dissipation of the guarantors' assets pending arbitration - HELD THAT: - Since the petitioner confined its request to disclosure of assets and preservation against their dissipation, without seeking a deposit, the reliefs were limited and equitable. The availability of such information to the insolvency professional did not preclude the exercise of the Court's equitable jurisdiction to grant the protective measures. [Paras 19, 20]

The petition was disposed of by directing disclosure of assets and restraining their alienation or dissipation, subject to commencement of arbitration and further orders of the arbitral tribunal.

Final Conclusion: The petition was held maintainable upon cessation of the interim moratorium under the amended insolvency provision. Limited protective measures for disclosure and preservation of assets pending arbitration were granted.

Pre-existing dispute over operational debt - Settlement of operational creditor's claim after commencement of CIRP

Admissibility of a corporate insolvency resolution process where the operational debt was settled and the parties admitted a pre-existing dispute regarding transportation charges - HELD THAT: - The operational creditor's claim stood fully satisfied under the settlement, and it consented without objection to setting aside the admission order. The parties had also acknowledged that the transportation-charge claim was disputed before issuance of the demand notice, particularly regarding the measurement of distance. No other creditor's claim survived, the provident fund claim having been discharged. In these circumstances, there was no impediment to setting aside the admission order and closing the CIRP. [Paras 18]

The admission order was set aside and the CIRP was closed.

Final Conclusion: The appeal was allowed, the order admitting the corporate debtor to CIRP was set aside, and the CIRP was closed in view of the settlement, the admitted pre-existing dispute, and absence of surviving creditor claims.

Closure of corporate insolvency resolution process in absence of claims - Inherent power to close insolvency proceedings

Closure of the corporate insolvency resolution process where no claims were received following the public announcement and the proceedings had been stayed - HELD THAT: - The Tribunal noted that no claims had been received in the CIRP despite publication of Form-A. Applying the principle stated in Rajeev Goyal, which referred to the exercise of inherent power in appropriate cases to close insolvency proceedings, it held that there was no impediment to closure of the CIRP. [Paras 4]

The CIRP was closed and the impugned order was set aside.

Final Conclusion: The appeal was disposed of by closing the CIRP and setting aside the impugned order. The bank lien was withdrawn and the funds were directed to be disbursed in terms of the discharge agreements.

Refund of unauthorisedly collected service tax - Double recovery of service tax under reverse charge mechanism - Limitation - exceptional exercise of writ jurisdiction

Refund of service tax deposited by a manpower recruitment and supply agency after the service became subject to complete reverse charge mechanism, where the Department subsequently recovered the same tax from the service recipient - HELD THAT: - The audit report and the Revenue's admission established that, from 01.04.2015, manpower supply services were covered by complete reverse charge and the petitioner was not liable to collect or pay service tax.

Department nevertheless accepted the petitioner's deposit and later recovered the tax from the service recipient, thereby retaining tax twice without authority of law. In these exceptional circumstances, the refund claim could not be defeated by limitation when the petitioner became aware of the erroneous recovery only upon issuance of the debit note and the Department had itself benefited from unjust enrichment. The manifest illegality warranted exercise of writ jurisdiction notwithstanding the alternative appellate remedy. [Paras 17, 18, 19, 20, 21]

The rejection of refund on limitation and the appellate order were quashed; the Department was directed to refund the amount within six weeks, with interest upon default.

Final Conclusion: The writ petition was allowed as the Department had unauthorisedly retained service tax after recovering the same liability from the service recipient under reverse charge. The refund was directed notwithstanding limitation and availability of an alternative remedy.

Extended limitation for non-payment of service tax - Bona fide belief and absence of suppression

Invocation of the extended period for service tax on income from weigh bridge use - HELD THAT: - The extended period could not be invoked in the absence of material showing that the appellant's failure to pay tax was not bona fide or was attended by an intent to evade payment. The appellant was registered, regularly filed returns, and recorded the relevant income in its financial records; the matter also emerged during audit. These circumstances negated suppression with intent to evade. [Paras 5]

The demand was held barred by limitation; consequently, the impugned order could not be sustained and the merits were not examined.

Final Conclusion: The appeal was allowed as the service tax demand was barred by limitation, the extended period being unavailable on the facts recorded.

Classification of material-inclusive canal construction contracts - Exemption for subcontracted works contract services

Classification of material-inclusive canal construction contracts - Service tax liability on construction work performed for the warehousing corporation and on material-inclusive irrigation works executed as a subcontractor sustained under the category of manpower supply services - HELD THAT: - The demand in the show-cause notice was raised under manpower supply services. The office-building work for the warehousing corporation had been held by the adjudicating authority to be a works contract and the demand had been dropped; as the Department's appeal contained no ground challenging that finding, it had attained finality. The subcontracted canal, dam and irrigation work was likewise treated as works contract work rather than manpower supply. [Paras 6, 8]

The appellant was held not liable to service tax under manpower supply services on either count.

Exemption for subcontracted works contract services - Subcontracted works contract services relating to exempt canal, dam and irrigation works where the main contractor's works contract services were exempt - HELD THAT: - The work awarded to the main contractor related to canal, dam and other irrigation works and was exempt under Notification No. 25/2012-ST. Consequently, the works contract services re-allocated to the appellant as subcontractor fell within the exemption for a subcontractor providing works contract services to a contractor providing exempt works contract services. The Tribunal followed M/s Saritha Infra & Geo Contractor [2019 (5) TMI 75 - CESTAT HYDERABAD] [Paras 6, 7, 8]

The subcontracted works contract services were held exempt, and the demand was set aside on merits.

Final Conclusion: The appeal was allowed and the impugned demand was set aside on merits with consequential relief. The issue of limitation was not decided.

Extended limitation for service tax demand - Reverse charge liability for manpower supply services - Late fee for filing ST-3 returns

Extended limitation for service tax demand - Late fee for filing ST-3 returns - Invocation of the extended period for service tax demand based on third-party income-tax data despite timely filing of ST-3 returns, and levy of late fee for those returns - HELD THAT: - The departmental records and the relied-upon third-party information themselves showed that the appellant had filed returns and disclosed the value of work contract services for the disputed period. The show cause notice nevertheless proceeded on the erroneous premise that no returns had been filed and demanded tax on the entire receipts reflected in Form 26AS. As the returns had been filed before the due dates, there was no basis either to invoke the extended period or to levy late fee. [Paras 4]

The demand founded on the extended period and the late fee for delayed filing of returns were set aside.

Reverse charge liability for manpower supply services - Service tax demand on manpower supply services where the service recipient had discharged tax under the reverse charge mechanism - HELD THAT: - The contracts and tax-payment challans established that the appellant supplied manpower services to the electricity distribution divisions and that the service recipients had paid the entire service tax under the reverse charge mechanism prescribed for such services. Once the tax liability had been discharged by the service recipients, no demand could be sustained against the appellant. [Paras 4]

The service tax demand was set aside on merits; the consequential interest and penalties were also set aside.

Final Conclusion: The impugned order was found to be without merit. The appeal was allowed and the service tax demand, consequential interest, penalties and late fee were set aside.

Classification of welded mesh parts of poultry battery cages - Parts of poultry keeping machinery

Classification of welded mesh top, side, bottom, door and centre-part components, made from galvanised iron wire exclusively for poultry battery cages, under CETH 84369100 as parts of poultry keeping machinery OR under CETH 73089090 as iron and steel structures or parts thereof - HELD THAT: - The undisputed material showed that the goods were manufactured to specified designs as identifiable components of poultry battery cages and were exclusively used for that purpose. The Revenue rejected the declared classification principally because the assembled battery cage had no mechanical function, but did not establish how such galvanised-wire components could answer the description of structures or parts of structures under CETH 7308.

The reliance on Azra Poultry Equipments Vs UOI [2014 (10) TMI 774 - SC ORDER] was misplaced, since the Supreme Court permitted the matter to be agitated before the Commissioner (Appeals), who subsequently accepted classification under CETH 84369100. Rejection of the declared classification without proper justification was therefore erroneous. [Paras 8, 11, 12]

The impugned classification under CETH 73089090 was rejected and the declared classification under CETH 84369100 was restored.

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

Availment of Cenvat Credit in ST-3/ ER-1 returns - Condition No. 25 of Notification No. 12/2012-CE Violation - Concessional excise duty conditional upon non-availment of Cenvat credit - Extended period for wrongful availment of concessional duty

Eligibility to concessional duty where Cenvat credit was reflected in statutory returns but was asserted to be unutilised, unrelated to manufacture, or subsequently lapsed on transition to GST - Whether during the disputed excise period the appellant had availed credit while simultaneously availing concessional excise duty? - HELD THAT: - Condition No. 25 required complete abstinence from taking credit on inputs or input services. Entry and availment of credit in statutory records constituted taking of Cenvat credit; utilisation was a distinct event and non-utilisation could not efface the breach. Nor could subsequent migration or lapse of credit under GST retrospectively cure the completed breach of the strict exemption condition. [Paras 16, 17, 18, 19, 22]

The appellant was ineligible for the concessional rate of duty.

Extended period for wrongful availment of concessional duty - Penalty for short payment of central excise duty - Sustainability of the extended-period demand, consequential interest and penalty for availing concessional duty despite taking prohibited Cenvat credit - HELD THAT: - Mere filing of returns did not absolve the appellant where the discrepancy was detected only in audit and concessional duty continued to be availed despite credit prohibited by the notification. The extended period was therefore invocable; interest followed the differential duty demand, and penalty was justified for the resulting short payment. [Paras 20, 21, 22]

The differential duty demand, interest and penalty were sustained.

Final Conclusion: The impugned order was upheld and the appeal was dismissed. The appellant's availment of Cenvat credit disentitled it to concessional duty, and the consequential demand, interest and penalty were sustained.

Rule 6 CENVAT liability on inevitable by-products - Job-work valuation of goods returned to principal manufacturer

Rule 6 CENVAT liability on inevitable by-products - Liability under Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of coal gas inevitably emerging during manufacture of coke - HELD THAT: - The said issue has been examined by the Hon’ble Apex Court in the case of Union of India Vs. Hindustan Zinc Ltd. [2014 (5) TMI 253 - SUPREME COURT] wherein it has been held that the by-product cannot be said as a final product.

Coal gas emerged in the course of manufacture of coke and was a by-product, not a final product. Applying the principle that a by-product cannot be treated as a final product for this purpose, Rule 6(3) was held inapplicable. [Paras 6]

The demand, interest and penalty founded on Rule 6(3) in respect of coal gas were set aside.

Job-work valuation of goods returned to principal manufacturer - Applicability of Rule 10A(iii) read with Rule 8 of the Central Excise Valuation Rules, 2000 to lam coke manufactured on job work and returned to the principal manufacturer for further manufacture - HELD THAT: - Where job-worked goods are returned to the principal manufacturer and thereafter used by it in further manufacture, Rules 10A(i) and 10A(ii) do not apply, and Rule 8 is equally inapplicable because the goods are not consumed by the job worker or on its behalf. Valuation is to proceed on the basis of the raw-material cost and job-work charges, rather than by applying Rule 10A(iii) read with Rule 8.

Same view has expressed in Rolastar Pvt. Ltd. [2011 (9) TMI 776 - CESTAT, AHMEDABAD] wherein this Tribunal held that in a case where the goods manufactured on job work basis were sent back to the principal manufacturer and used by the latter in further manufacture, Rule 10A(i) and Rule 10A(ii) were not applicable, Rule 8 was not attracted since the goods were not consumed by the assessee or on his behalf and valuation has to be proceeded on the basis of cost of raw materials plus job work charges.[Paras 15, 16]

The appellant's valuation and duty payment were held correct, and the differential-duty demand was set aside.

Final Conclusion: All three appeals were allowed with consequential relief. The demands based on Rule 6(3) for coal gas and on Rule 10A(iii) read with Rule 8 for job-worked lam coke were set aside.

Exemption of seeds used for sowing purposes - Purchase tax on certified seeds produced under research and development programme

Levy of purchase tax on certified seeds procured and processed under a research and development programme for sowing purposes - HELD THAT: - The notification dated 29.03.2006 exempted seeds of all types, other than imported seeds, when used for sowing. The Department neither asserted that the seeds were imported nor established that the processed and certified seeds, produced after germination and other tests, were not meant for sowing. The earlier determination order relied upon by the Department was distinguishable, while the subsequent determination concerning seeds produced under a research and development programme supported the conclusion that purchase tax was not leviable. [Paras 7, 8, 9]

The revisional order levying additional purchase tax, interest and penalty was rightly set aside.

Final Conclusion: The writ petition was dismissed, affirming the setting aside of the revisional levy of purchase tax, interest and penalty.

Violation of principles of natural justice in assessment proceedings - Non Service of show-cause notice and assessment order

Validity of the assessment under the CST Act where the show-cause notice preceding the assessment and the assessment order were not received by the petitioner - HELD THAT: - The Court found that the subsequent show-cause notice could not be served at the principal place of business and that the registered-post cover containing the assessment order was returned. The petitioner had consequently received neither the show-cause notice preceding the impugned assessment nor the assessment order. An assessment made in those circumstances violated the principles of natural justice. [Paras 4]

The assessment order was set aside and the matter was remanded to the appropriate assessing authority for fresh orders after due notice to the petitioner; the intervening period was directed to be excluded for limitation purposes.

Final Conclusion: The writ petition was allowed. Fresh assessment proceedings may be undertaken only after due notice to the petitioner.

Presumption of legally enforceable debt on admitted cheque signature - Limits of revisional reappreciation of concurrent findings

Presumption of legally enforceable debt on admitted cheque signature - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Liability for dishonour of cheque issued towards a hand loan where the drawer admitted the signature but alleged misuse of a blank security cheque. - HELD THAT: - Admission of the signature on the cheque attracted the presumptions that it was drawn for consideration and towards discharge of a debt or liability. The complainant established compliance with the statutory requirements for dishonour of cheque and adduced consistent evidence regarding the hand loan and the financial assistance obtained for advancing it. The accused's assertion that the cheque had been issued as security for a separate loan was unsupported by contemporaneous documentary evidence; the subsequent demand for return of the cheque was held to be an afterthought. The challenge to the complainant's financial capacity also failed, as the accused neither raised it in response to the statutory demand nor produced material sufficient to dislodge the presumptions. [Paras 6]

The accused failed to rebut the statutory presumptions, and the conviction for dishonour of cheque was justified.

Limits of revisional reappreciation of concurrent findings - Interference in revision with concurrent findings of conviction for dishonour of cheque by reappreciating the evidence. - HELD THAT: - Revisional jurisdiction is supervisory and cannot be equated with appellate jurisdiction. A revisional court should not substitute its own conclusion upon an elaborate reappreciation of evidence or reverse concurrent findings merely because another view may be possible, absent perversity, glaring error, non-consideration of relevant material, or miscarriage of justice. The High Court identified no such defect and exceeded its jurisdiction by reassessing the evidence and overturning the concurrent conviction. [Paras 7]

The High Court's revisional order acquitting the accused was unsustainable.

Final Conclusion: The appeal was allowed, the High Court's revisional order was set aside, and the concurrent judgments of conviction and sentence were restored.