TaxTMI Updates e-Newsletter
Aug 10,2026

Condonation of delay of 418 days in filing the Writ Appeal challenging the order of the learned single Judge - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court [2026 (8) TMI 572 - MADRAS HIGH COURT] hence, the special leave petition is dismissed.

Entitlement to the benefit of concessional rate of tax at 0.1% under Notification: 41/2017-I.T. (Rate) - concessional rate for merchant exporters - registered supplier and registered recipient - Strict interpretation - Compliance with prescribed conditions for concessional IGST - requirement of supply and movement between registered supplier and registered recipient

HELD THAT:- We do not find a good ground to interfere with the impugned judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition is dismissed.

Pending application(s), if any, shall stand disposed of.

Availability of the statutory appellate remedy against the order-in-original and consequential recovery action - petitioner approached this Court alleging that it has come to know about the liability only upon the issuance of the garnishee notice in Form GST DRC-13 on 24.06.2026 for attachment of its bank account

HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal with the prescribed pre-deposit and an application for condonation of delay; no coercive steps were to be taken for the period allowed for filing the appeal.

Condonation of delay in statutory GST appeal - Recovery pending adjudication of belated appeal

Maintainability of the belated statutory appeal against the GST adjudication order and consequential recovery from the assessee's bank account - HELD THAT: - Having regard to the peculiar facts and the assessee's factual challenge to the tax liability, the Court considered it expedient to afford an opportunity to prosecute the appeal. Following its decision in SEPL Infra Private Limited [2026 (7) TMI 2004 - KARNATAKA HIGH COURT] the Court condoned the delay; the merits of the tax demand were left open for appellate determination. [Paras 8, 10]

The delay in filing the appeal was condoned, the recovery communication was quashed, and the Appellate Authority was directed to hear and decide the appeal on merits in accordance with law.

Final Conclusion: The writ petition was partly allowed. The assessee was permitted to pursue the statutory appeal on merits, with all rights and contentions on the tax liability kept open.

Liberty to pursue the statutory appellate remedy - amount proposed to be attached under the impugned garnishee notice is far in excess of the demand raised in the Order-in-Original - HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal with pre-deposit and an application for condonation of delay; no coercive steps pursuant to the garnishee notice were to be taken during the period allowed for filing the appeal.

Order passed u/s 73 of the Telangana Goods and Services Tax Act - petitioner submits that the respondent authorities never notified the show cause notice in the GST common portal, therefore, the petitioner had no knowledge and thereby deprived of an opportunity to participate in the proceedings - HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal, along with the prescribed pre-deposit and an application for condonation of delay.

Common show cause notice for multiple financial years under the CGST Act - Statutory appellate remedy against adjudication and appellate orders

Validity of quashing proceedings solely because a common show cause notice covered multiple financial years under Section 74 of the CGST Act -HELD THAT: - Following the decision in [2026 (5) TMI 125 - KARNATAKA HIGH COURT] and connected appeals, the Court held that a common show cause notice concerning multiple financial years is permissible. The Single Judge's order, which had quashed the proceedings on that sole ground, could not be sustained.

The order quashing the show cause notice and consequential proceedings was set aside.

Statutory appellate remedy against adjudication and appellate orders - Appropriate remedy where the assessee challenged the order-in-original and the appellate order - HELD THAT: - The Court held that the assessee's remedy was to pursue an appeal before the Goods and Service Tax Appellate Tribunal.

The assessee was granted six weeks to avail the appellate remedy, and the Appellate Tribunal was directed not to raise limitation if the appeal was filed within that period.

Final Conclusion: The writ appeal was allowed and the order of the Single Judge was set aside. The assessee may pursue the statutory appellate remedy within the time granted, with all contentions left open.

Authority of the Tribunal to constitute a Larger Bench to examine the applicability of the jurisdictional High Court's interpretation of cash refund of CENVAT credit under section 142(3) of the CGST Act in the face of a contrary decision of another High Court

Refund of CENVAT credit in cash - As argued that once the jurisdictional High Court had authoritatively decided the issue in Granules India Ltd. v. Commissioner of Central Tax, Hyderabad[2024 (12) TMI 1770 - TELANGANA HIGH COURT] the said judgment became binding on the Tribunal within its territorial jurisdiction. Therefore, the Tribunal could neither take a different view nor refer the issue to a Larger Bench for determining which of the conflicting High Court judgments ought to be followed.

HELD THAT: - A judgment of the jurisdictional High Court continues to bind all Tribunals and authorities within its territorial jurisdiction unless stayed, reversed or overruled by the Supreme Court. The Tribunal could not constitute a Larger Bench to examine the correctness or applicability of that binding judgment. However, as the issue was pending before the Supreme Court and an interim order was operating, the appropriate course was to defer the appeal rather than proceed solely under the jurisdictional High Court judgment. [Paras 10]

The Larger Bench reference was set aside; the pending appeal was directed to remain deferred until final disposal of the pending Special Leave Petition.

Final Conclusion: The writ petition was allowed. The Tribunal's order constituting a Larger Bench was set aside, and the pending appeal was kept in abeyance until the Supreme Court's final decision in the Special Leave Petition arising from the jurisdictional High Court judgment.

Opportunity to contest tax demand proceedings - assessment orders passed without the taxpayer's reply to show-cause notices

Validity of Setting aside of tax demand orders passed without the petitioner filing replies to the show-cause notices, and of the consequential appellate order dismissing the appeals as time-barred - HELD THAT: - Having regard to the petitioner's assertion that the failure to submit replies and contest the proceedings was due to bona fide reasons, unavoidable circumstances and sufficient cause, the Court adopted a justice-oriented approach and considered it appropriate to afford one further opportunity to respond to the show-cause notices. [Paras 6]

The demand orders and the appellate order were set aside, subject to costs, and the matter was remitted for fresh consideration from the stage of submission of replies to the show-cause notices, with a direction to provide sufficient and reasonable opportunity of hearing.

Final Conclusion: The petition was allowed subject to payment of costs. The proceedings were remitted to the assessing authority for fresh adjudication after affording the petitioner an opportunity to file replies and place documents.

Scrutiny of self-assessment before GST demand - Investigation into alleged undervaluation of bank guarantees

Validity of confirmation of GST demand alleging suppression of taxable value in respect of bank guarantees without prior scrutiny and verification of the self-assessment returns - HELD THAT: - After filing of self-assessment returns, the department was required to undertake scrutiny under the GST enactments and could invoke the statutory machinery for audit, special audit or inspection and investigation to ascertain any revenue leakage. A show-cause notice in Form GST DRC-01 could not validly be issued straightaway without undertaking that exercise. [Paras 8, 9]

The impugned demand order was quashed and the matter remitted for inspection or investigation under Section 67 and a fresh determination of any revenue leakage arising from guarantees issued to customers. The merits of the alleged corporate guarantees and valuation were left open for fresh proceedings.

Final Conclusion: The writ petition was disposed of by quashing the demand order and remitting the matter for statutory investigation and, if warranted, fresh proceedings. The intervening period was directed to be excluded for limitation, and recovery was kept in abeyance pending such exercise.

Release of detained perishable goods by non-owner - Entitlement of a person found not to be the owner to seek release of perishable goods detained under the CGST Act - HELD THAT: - In view of the adjudicating authority's specific finding that the appellant was not the owner and that the owner could not be traced, the appellant was not entitled to seek release as owner under Section 129(1)(a). A non-owner could, however, seek release of the perishable goods under Section 129(1)(b). The direction requiring the appellant to participate in an auction of the goods was erroneous. [Paras 13, 14, 15, 19]

The appellant may approach the authority for release under Section 129(1)(b), subject to the final decision in the writ petition.

Final Conclusion: Except for the direction for release of the vehicle in favour of its registered owner, the impugned order was set aside. The writ petition was directed to be heard afresh after exchange of affidavits, with the jurisdictional challenge left open.

Condonation of delay in GST appeal - Limitation for appeal against GST adjudication order

Dismissal of the GST appeal as time-barred without consideration of an application for condonation of delay, where the summary order in FORM GST DRC-07 had been uploaded on the portal - HELD THAT: - The Court noted that the summary order in FORM GST DRC-07 was uploaded on 22.08.2024 and that the appeal was filed on 21.12.2024. In the circumstances, the appellate order dismissing the appeal as barred by limitation was liable to be set aside so that the petitioner could submit a delay-condonation application and the question of limitation could be considered in accordance with law. [Paras 5, 6]

The matter was remanded to the appellate authority for fresh hearing; upon satisfaction regarding the explanation for delay, it shall decide the appeal on merits.

Final Conclusion: The impugned appellate order was set aside and the appeal was remanded for consideration of the delay-condonation application and, if delay is condoned, for decision on merits.

Expiry of provisional attachment - Continuance of the writ petition challenging a provisional attachment after expiry of its statutory duration - HELD THAT: - A provisional attachment under Section 83 of the Telangana Goods and Services Tax Act, 2017 remains operative only for one year from the date of the order. The impugned attachment consequently ceased to have effect by operation of law, rendering adjudication of its validity unnecessary. [Paras 5, 6, 7]

The writ petition was disposed of as infructuous, with liberty to the petitioner Bank to avail other remedies in accordance with law, if required.

Final Conclusion: The challenge to the provisional attachment was not adjudicated on merits, since the attachment had ceased to operate by efflux of the statutory period.

Reversal of Input Tax Credit (ITC), interest and penalty by retrospectively applying Rule 42(3) of the Central Goods and Services Tax Rules, 2017 to ITC availed prior to 01.04.2019, the date on which the amended Rule 42(3) of the Rules came into force - respondent Nos.1 to 4 submits that against the impugned order-in-appeal, the petitioner has a remedy of appeal before the Goods and Services Tax Appellate Tribunal (GSTAT)

HELD THAT:- Writ Petition is disposed of as withdrawn with liberty to the petitioner to file an appeal along with statutory pre-deposit before the learned GSTAT, taking all such grounds of law and facts available to it.

Writ petition for revocation of cancellation of GST Registration Certificate - GST registration of the petitioner was cancelled on the ground that the petitioner has not updated the bank account even after intimations - As it is time-barred to prefer an appeal by the petitioner against the order of cancellation of GST registration WP was filled

HELD THAT:- If the petitioner approaches the competent authority within a period of two weeks from today for submission of application for revocation of cancellation of GST registration in physical form, the competent authority would entertain it and take a decision thereupon in accordance with law within a period of three weeks thereafter.

Conditional remand and statutory right of appeal - Automatic confirmation of ex parte appellate order - Speaking order by first appellate authority - Unsecured loan addition under Section 68

Conditional remand and statutory right of appeal - Automatic confirmation of ex parte appellate order - Validity of making remand after breach of natural justice conditional upon payment of costs and providing for automatic confirmation of the ex parte appellate order upon default - HELD THAT: - Though the Tribunal may regulate its proceedings and impose ordinary costs for procedural delay, its discretion u/s 254(1) cannot be exercised to defeat the substantive statutory right of appeal.

Having found that the assessee had been denied a hearing, Tribunal was required to secure a merits adjudication through remand; it could not make non-payment of costs result in automatic validation of an otherwise invalid ex parte order. Such a default clause impermissibly fetters access to justice and renders the appellate remedy illusory. [Paras 16, 17, 18, 21]

The automatic-confirmation clause was quashed the cost was reduced, and the matter was restored unconditionally for fresh appellate adjudication on merits.

Reasoned appellate order u/s 250(6) - Validity of the ex parte first appellate order which did not state the points for determination, decision and reasons - HELD THAT: - Section 250(6) requires the first appellate authority to render a reasoned decision disclosing application of mind. A summary, non-speaking confirmation of the assessment is void in law and cannot attain finality merely because a procedural cost imposed by the Tribunal was not paid. [Paras 19]

The first appellate authority was directed to consider the evidence and pass a reasoned speaking order in the fresh de novo adjudication.

Unsecured loan addition u/s 68 - Identity, creditworthiness and genuineness of lender - Addition in respect of an unsecured loan under Section 68 where the assessee relied on banking records and corporate details of the lender - HELD THAT: - Section 68 places an initial burden on the assessee to establish the lender's identity and creditworthiness and the genuineness of the transaction. As the assessee had produced contemporaneous banking and corporate records and the revenue authorities had relied on generalised third-party reports without independent inquiry or evaluation of that evidence, the addition required fresh factual examination after full opportunity to the assessee. [Paras 20, 21]

The merits of the unsecured-loan addition were remanded to the first appellate authority for fresh, unhindered adjudication.

Final Conclusion: The appeal was partly allowed. The conditional default clause was quashed, the cost was reduced, and the assessment appeal was restored to the first appellate authority for a fresh reasoned adjudication on merits.

Maintainability of an appeal u/s 260A - challenge concerns refusal to condone delay on medical grounds and adoption of stamp-duty value of immovable property over its stated purchase price - HELD THAT: - An appeal under section 260A is maintainable only upon a substantial question of law. Questions concerning sufficiency of cause for delay, appreciation of medical evidence and valuation of immovable property are questions of fact; absent statutory interpretation, conflict of judicial opinion, or perversity capable of converting the factual dispute into a legal question, they cannot meet that threshold. The monetary-limit circulars issued for Revenue appeals do not dispense with the statutory requirement for an assessee to establish a substantial question of law. [Paras 7, 9, 10, 11]

No substantial question of law arose and the appeal was dismissed as non-maintainable.

Final Conclusion: The appeal and connected application were dismissed for want of a substantial question of law, leaving the Tribunal's order undisturbed.

Retrospective taxation by clarificatory amendment - Taxability of non-resident technical-service income - Beneficial interpretation of tax treaty

Retrospective application of the Finance Act, 2010 amendment to tax fees for technical services paid to non-residents for services rendered outside India - Whether Section 9(1)(vii) requires a nexus between the services rendered by the non-resident in India, and the income generated from such services.?

Whether the earlier judgment granting relief on offshore technical-service payments was liable to be modified because of the Finance Act, 2010 amendment to Section 9 AND Whether the amendment to Section 9 could operate retrospectively from 01.06.1976? - HELD THAT: - The Explanation to section 9(2), though expressed to be for removal of doubts, widened the charging provision by dispensing with the requirement that services be rendered in India and thereby created a fresh tax charge on non-residents.

In the present case, the phrase ‘for the removal of doubts’ in Explanation to Section 9(2) of the Act added by the impugned Amendment is applicable from 01.06.1976. Such retrospective application of the amendment, which is admittedly a mere clarification by the Legislature, is to be interpreted in a prospective manner. The benefits accrued to the Appellant-Petitioner from such provision prior to the impugned Amendment cannot be taken away by the retrospective application of a mere clarification. A provision of law added by an amendment under the garb of a clarification cannot create a fresh charge of tax and impose tax liability on an assessee whose transaction was not covered by the said amendment. It is well settled that retrospective amendments cannot impose a tax liability on the Assessee. In UNION OF INDIA V. MARTIN LOTTERY AGENCIES LTD. [2009 (5) TMI 1 - SUPREME COURT] the Supreme Court held that an Explanation clause, which appears to be a charging provision and widens the taxing net, cannot be held to be retrospective in operation on the premise that it is clarificatory or declaratory in nature.

An amendment which alters or broadens the taxing provision cannot retrospectively take away benefits accrued under the unamended law. The withdrawal of beneficial Board circulars was likewise prospective. Further, where domestic law and the India-USA DTAA admit competing interpretations, the interpretation more beneficial to the assessee must prevail; Article 12(4) was held to concern services rendered, rather than merely utilised. The amendment could not consequently displace the earlier interpretation requiring rendition and utilisation of the technical services in India for taxability.

The phrase ‘business or profession carried on by such person in India’ still holds the interpretation as laid down in ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD.[2007 (1) TMI 91 - SUPREME COURT] i.e., requiring the condition of the service to be rendered in India. The decision of this Court dated 16.03.2009 interpreted that the operation of the Finance Act, 2007 does not affect the interpretation of Section 9 as laid down in ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD. (SUPRA), we do not have any hesitation to hold that the impugned amendment does not have any effect on the interpretation of Section 9 as per the ISHIKAWAJMA Case.[Paras 34, 36, 37, 38, 40]

The Finance Act, 2010 amendment was read down as prospective and incapable of retrospective operation from 01.06.1976; the appeals and writ petition were allowed and the review petitions were dismissed.

Final Conclusion: The Finance Act, 2010 amendment to section 9 was held prospective in operation and could not retrospectively impose liability for offshore technical services. The appeals and writ petition were allowed, and the review petitions were dismissed.

TDS u/s 194A - Tax deduction at source on interest paid by co-operative banks to non-member co-operative societies - Exemption for inter co-operative society interest payments - Distinct operation of tax deduction and co-operative society income deduction provisions

Tax deduction at source on interest paid by co-operative banks to non-member co-operative societies - Exemption for inter co-operative society interest payments - Entitlement of a co-operative bank to exemption from tax deduction at source on interest paid on deposits to non-member co-operative societies - HELD THAT: - Section 194A(3)(v) contains two distinct limbs. The exclusion of a co-operative bank in the first limb concerns interest paid by a co-operative society to its members; it does not extend to the second limb governing interest paid by one co-operative society to another. A co-operative bank does not cease to possess the legal character of a co-operative society. The legislative omission to exclude co-operative banks from the second limb must be given effect, and the Court cannot introduce such exclusion by interpretation. Paragraph 42.7 of CBDT Circular No. 19/2015 confirms that the exemption for interest paid by a co-operative society to another co-operative society continues to apply to co-operative banks. [Paras 23, 26, 28, 30, 31]

The assessee was not required to deduct tax at source on interest paid to depositor co-operative societies which were not its members.

Independent operation of tax deduction and co-operative society income deduction provisions - Relevance of the recipient co-operative society's eligibility for income deduction in determining the payer co-operative bank's obligation to deduct tax at source - HELD THAT: - The provision governing deduction of income of co-operative societies operates at the assessment stage for determining the recipient's final tax liability, whereas Section 194A governs the payer's transactional obligation to deduct tax. The tax-deduction obligation is governed by the self-operating exceptions under Section 194A(3), and cannot be controlled by the recipient's eligibility for deduction of its interest income. [Paras 35]

The Assessing Officer's reliance on the recipient societies' entitlement to income deduction for imposing tax-deduction liability on the assessee was not well founded.

Final Conclusion: The appeals were allowed and the Tribunal's order was quashed. The assessee was entitled to exemption from tax deduction at source on interest paid to non-member co-operative societies and could not be treated as an assessee in default.

Computation of the compounding fee - Compounding fee under applicable CBDT Guidelines - finding recorded by a court of competent jurisdiction - Computation of compounding fee for the assessee's offence under the Income-tax Act under the CBDT Guidelines dated 16.05.2008 or the revised Guidelines dated 17.10.2024

HELD THAT: - It is well settled that a finding recorded by a court of competent jurisdiction, once it attains finality inter partes, binds the parties in all subsequent proceedings touching the same cause of action. The Department, having allowed the finding regarding the applicability of the 2008 Guidelines to become final, cannot be permitted to reopen that very question through the device of a subsequent Circular in the course of complying with a direction to quantify the fee.

The Supreme Court [2025 (3) TMI 2201 - SC ORDER] required the Department to calculate the compounding fee and did not direct the Department to adjudicate once again. Nothing in that order can be read as licence to revisit an issue that had been settled by three concurring orders of this Court.

The reliance placed by the Department on the decision of the Supreme Court in Y.P.Chawla[1992 (3) TMI 2 - SUPREME COURT] is misplaced. The said decision is an authority for the proposition that the exercise of discretion under Section 279(2) of the Act must conform to the Board's instructions "from time to time", by virtue of the Explanation.

The applicability of the 2008 Guidelines to the assessee's compounding application had been determined in earlier proceedings and that finding had attained finality between the parties. A direction to calculate the compounding fee did not permit the Department to reopen that settled question by applying subsequent Guidelines. The statutory power to issue instructions for composition of offences could not override a final judicial determination inter partes.

The 2024 Guidelines did not apply, since their provision concerning fresh applications was confined to applications rejected for specified curable defects and excluded applications rejected on merits. [Paras 10, 12, 13, 14, 15]

The compounding fee must be recomputed strictly under the CBDT Guidelines dated 16.05.2008 after crediting the amount already paid.

Final Conclusion: The writ appeal was dismissed and the direction for fresh computation of the compounding fee under the CBDT Guidelines dated 16.05.2008, after adjustment of the amount already paid, was affirmed.

Search-triggered scrutiny assessment - Reassessment after search - Validity of completing a scrutiny assessment u/s 143(3) following a post-1 April 2021 search when the time for original assessment had not expired

HELD THAT: - A search initiated after 1 April 2021 does not, by itself, exclude recourse to scrutiny assessment under Section 143(3). The deeming provision concerning information suggesting escaped income permits reassessment under Section 147 through a notice under Section 148 where the original assessment proceedings have concluded or the limitation for scrutiny assessment has expired. Where the return remains capable of processing or scrutiny assessment within the statutory limitation, it may be dealt with under Sections 143(1) or 143(3), as applicable. The notice under Section 143(2) and the assessment order were within time; therefore, the Assessing Officer was entitled to complete the scrutiny assessment.

The decision of the Rajasthan High Court, rendered in Shyam Sunder Khandelwal [2024 (4) TMI 196 - RAJASTHAN HIGH COURT] is of no relevance, as it deals with the provisions, as they stood prior to the above amendments, in the context of Sections 153A and 153C read with Section 153B of the Act, as they stood prior to the substitution by the Finance Act, 2021.

That apart, the petitioner has participated in the proceedings without demur. Thus, the challenge to the impugned assessment order and consequential recovery proceedings also cannot be countenanced. Therefore, on this count also there is no merit in the challenge to the impugned Assessment Order dated 31.03.2025 [Paras 100, 116, 117, 118, 120]

The assessment under Section 143(3) was not without jurisdiction merely because a search had been conducted.

Final Conclusion: The writ petitions were dismissed. The consequential recovery proceedings were also not interfered with.

Validity of reassessment - non issuance of Notice u/s 143(2) in reassessment proceedings - Reassessment beyond recorded reasons

Validity of reassessment completed pursuant to a notice under section 148 without issuance of a notice under section 143(2) - HELD THAT: - A return furnished in response to a notice under section 148 is treated as a return under section 139; however, issuance of notice under section 143(2) arises only where the Assessing Officer considers it necessary or expedient to verify understatement of income, excessive loss or underpayment of tax. The statutory period for completion of reassessment could expire before the outer period for issuing such notice, and the provision could not be construed to make the reassessment machinery unworkable. Further, having participated in the proceedings, the assessee could not challenge the assessment for want of jurisdiction in view of section 292BB. [Paras 69, 71, 72, 73, 79]

The absence of a notice under section 143(2) did not invalidate the reassessment or warrant interference with the assessment order.

Reassessment beyond recorded reasons - Disallowance of business loss in reassessment - Validity of the reassessment where the assessment considered the claimed business loss against the non-compete fee forming the basis of reopening - HELD THAT: - There was a direct nexus between the recorded reasons concerning non-reporting of non-compete fee and the disallowance of the excessive business loss claimed against that income. The challenge that the ultimate assessment travelled beyond the reasons recorded was therefore rejected; the justification for the claimed write-off was left to be examined on merits in appellate proceedings. [Paras 74, 75, 77, 78]

No interference with the assessment order was justified on the ground that it went beyond the recorded reasons.

Final Conclusion: The challenge to the notice under section 148 was dismissed. The assessment order was not interfered with, but the assessee was granted liberty to pursue the statutory appeal without reference to limitation.

Unexplained cash credit on sale of penny-stock shares - Documentary evidence of genuine share transactions - Unexplained expenditure for alleged accommodation-entry commission

Unexplained cash credit on sale of penny-stock shares - Documentary evidence of genuine share transactions - HELD THAT: - The assessee had produced share application and broker documents, bank statements evidencing purchase and receipt of sale proceeds, and Demat records. The Assessing Officer neither controverted this documentary evidence nor brought cogent material establishing that the assessee was involved in price manipulation, accommodation entries or sham transactions. Third-party investigation information, without evidence specifically connecting the assessee with the alleged scheme, could not justify treating the sale proceeds or capital gain as unexplained cash credit.

We find that in the case of Himani M. Vakil[2012 (9) TMI 1099 - GUJARAT HIGH COURT] held that where assessee duly proved genuineness of sale transaction by bringing on record contract notes of sale and purchase, bank statement of broker and Demat account showing transfer in and out of shares, AO was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit.

Hon'ble Jurisdictional High Court in the case of PCIT Vs. Indravadan Jain, HUF [2023 (7) TMI 1091 - BOMBAY HIGH COURT] also held that when Assessing Officer nowhere alleged that transactions made by assessee with a particular broker or share broker was bogus, merely because investigation was done by SEBI against the broker or its activities, the assessee cannot be said to have entered into ingenuine transaction. [Paras 7, 8, 9, 10]

The deletion of the addition under section 68 was affirmed for AY 2014-15 and, on the principle of consistency, for AY 2015-16.

Unexplained expenditure for alleged accommodation-entry commission - HELD THAT: - Consequent upon the finding that the share-sale transaction could not be treated as unexplained cash credit, the alleged commission addition lacked foundation. Independently, no evidence established that the assessee had incurred unexplained expenditure towards such commission. [Paras 10]

The addition under section 69C was deleted for both assessment years.

Final Conclusion: The Revenue's appeals were dismissed. The deletions of the additions for alleged bogus long-term capital gain and consequential commission expenditure were affirmed for both assessment years.

Unexplained investment in immovable property - Burden of proof of source of investment - Cash deposits from disclosed income - Unsubstantiated opening cash balance

Addition for unexplained investment in immovable property where the purchase consideration was traced to refunds, loans and family funds received through banking channels - HELD THAT: - Section 69 applies where the assessee offers no satisfactory explanation of an unrecorded investment. The assessee produced confirmations, bank statements, returns, financial statements, ledger accounts and fund-flow statements establishing the identity of the sources, the nature of the receipts and their proximate utilisation for payment of the purchase consideration. The principal parties also responded to notices under section 133(6). Once this primary evidence discharged the initial burden, the Assessing Officer was required to make further enquiry and produce cogent material to displace it. In the absence of any identified defect, adverse enquiry or material showing that the funds belonged to the assessee or were accommodation entries, the explained sources could not be rejected on suspicion or general observations. [Paras 15, 16, 17, 18, 19]

The addition for unexplained investment in the immovable property was deleted.

Cash deposits from disclosed income - Unsubstantiated opening cash balance - Addition for cash deposits in savings bank accounts claimed to have arisen from disclosed professional receipts, rental income, interest income and opening cash balance - HELD THAT: - Cash receipts from professional activity, rent and interest that had been accounted for and offered to tax could not be treated again as unexplained money merely because they were subsequently deposited in bank accounts, absent evidence that such disclosed receipts were fictitious or inflated. The absence of tenant and borrower confirmations alone was insufficient where the Revenue neither disproved the disclosed receipts nor conducted enquiry to rebut the explanation. However, the claimed opening cash balance lacked sufficient contemporaneous support through a cash book or equivalent records. Having regard to the surrounding circumstances, only half of that opening balance was accepted as explained. [Paras 22, 23, 24, 25, 26]

The cash-deposit addition was restricted to 50% of the claimed opening cash balance, and the balance addition was deleted.

Final Conclusion: The appeal was partly allowed. The addition for unexplained investment in immovable property was deleted, while the cash-deposit addition was confined to the unsubstantiated portion of the opening cash balance.

Penalty u/s. 271(1)(b) - non-compliance with statutory notices - Reasonable cause for non-compliance - non-compliance with notices issued to an educational trust during the COVID-19 pandemic

HELD THAT: - The pandemic-related disruption, the assessee's plausible bona fide belief concerning its return-filing obligation, and its subsequent participation in assessment proceedings constituted reasonable cause. Mere non-compliance did not establish deliberate or wilful disregard; the Revenue had produced no independent material to support that conclusion. Penalty provisions, being quasi-criminal, could not be invoked for a technical or venial default where the surrounding circumstances established reasonable cause. [Paras 9, 10, 11, 12, 13]

The penalty was held unsustainable and was directed to be deleted.

Final Conclusion: The appeal was allowed and the penalty for non-compliance with statutory notices was deleted.

Unexplained money arising from business transactions - Presumptive taxation and profit-element addition - Profit-element addition on credit-card payments for trading purchases

Addition of cash payments towards credit-card dues used for trading purchases as unexplained money - HELD THAT: - Where cash payments settle credit-card liabilities arising from business purchases, the entire payment cannot be assessed as unexplained money merely because the source was not explained during assessment. As the transactions were intrinsically connected with the trading business and the corresponding turnover had not been rejected, taxation had to be confined to the profit element embedded in those transactions. The income already disclosed at a profit rate of 20.2% under the presumptive scheme was accepted as a fair basis, the Revenue having produced no material to show that the rate did not represent the true profitability of the business. [Paras 9, 10, 11, 12, 13]

The addition was restricted to the profit element at 20.2% of the cash payments towards credit-card dues, and the balance addition was deleted.

Final Conclusion: The assessee's appeal was partly allowed and the addition of the entire cash payments as unexplained money was modified by restricting it to the disclosed profit element.

Charitable trust exemption - violation of section 13 - Taxability confined to benefit conferred on specified persons

Denial of exemption to a charitable trust on account of advances to trustees allegedly attracting section 13 - HELD THAT: - The controversy involved in the present appeal is no longer res integra. The Hon'ble Madras High Court in the case of Working Women's Forum has categorically held that violation of section 13 does not result in forfeiture of exemption in respect of the entire income of the trust and that only the income which has been diverted or applied for the benefit of specified persons is liable to be brought to tax. The aforesaid view has consistently been followed in Sheth Mafatlal Gagalbhai Foundation Trust [2000 (10) TMI 26 - BOMBAY HIGH COURT], Audyogik Shikshan Mandal [2018 (12) TMI 1344 - BOMBAY HIGH COURT] and Maharashtra Academy of Engineering and Educational Research [2024 (3) TMI 775 - BOMBAY HIGH COURT] and Fr. Mullers Charitable Institutions [2014 (2) TMI 1033 - KARNATAKA HIGH COURT]

Significantly, the SLP preferred by the Revenue against the judgment of the Hon'ble Karnataka High Court in Fr. Mullers Charitable Institutions has also been dismissed by the Hon'ble Supreme Court.[2015 (9) TMI 395 - SC ORDER].

We also find merit in the reliance placed by the assessee on CBDT Circular No.387 dated 06.07.1984, which clarifies that where section 13 is attracted, the maximum marginal rate is applicable only to that part of the income which has enured for the benefit of the persons specified u/s. 13(3) of the Act, while the remaining income continues to enjoy exemption u/s. 11 of the Act. Being a beneficial circular explaining the legislative intent, the same is binding upon the Revenue authorities.

A violation of section 13 does not entail forfeiture of exemption under section 11 in respect of the trust's entire income. CBDT Circular No. 387 clarifies, and the binding judicial position confirms, that the maximum marginal rate applies only to income or property applied for the benefit of persons specified under section 13(3); the remaining income continues to qualify for exemption. The subsequent statutory amendment was held to reinforce this settled interpretation. The decision in DIT v. Bharat Diamond Bourse [2002 (12) TMI 8 - SUPREME COURT] did not support taxation of the entire income in the circumstances. [Paras 15, 16, 17, 18, 19, 20, 21]

The Assessing Officer was directed to recompute the income by restricting denial of exemption to the value of the benefit, if any, conferred upon the trustees; exemption in respect of the balance income was preserved subject to fulfilment of other statutory conditions.

Final Conclusion: The appeal was partly allowed. The denial of exemption was confined to the benefit, if any, conferred on the trustees, and the balance income remained eligible for exemption subject to statutory conditions.

Taxability of balance-sheet reclassification entries - Capitalisation of pre-operative expenditure - Reversal of duplicate accounting entries

Capital Work-in-Progress - balance-sheet adjustments - Reversal of duplicate accounting entries - Addition based on the difference between opening Capital Work-in-Progress and the amount capitalised during the year - HELD THAT: - The reconciliation established that the Capital Work-in-Progress balance was fully accounted for through capitalisation of fixed assets and rectification of duplicate entries. Transfer of project expenditure from Capital Work-in-Progress to fixed asset accounts was a balance-sheet movement and not revenue expenditure. Taxability depended upon the real nature and effect of the entries, and the Revenue neither established a debit to the Profit and Loss Account nor a deduction claimed in computing income. A mere numerical difference, without examination of corresponding ledger entries, could not support an addition. [Paras 20, 21, 22, 23, 24]

Deletion of the addition was upheld, as the impugned amount represented neither revenue expenditure nor taxable income.

Pre-operative expenditure-capitalisation to fixed assets - Presumptive addition from reduction in balance-sheet asset account - Addition of the reduction in the Pre-operative Expenses account as purported amortisation of expenditure - HELD THAT: - The Pre-operative Expenses comprised project-related capital expenditure which was transferred to fixed asset accounts on capitalisation, while part of the reduction arose from reversal of duplicate entries. Such reclassification within balance-sheet accounts was not amortisation charged to the Profit and Loss Account. An addition cannot follow merely from reduction of a balance-sheet asset account; the Revenue must establish an inadmissible expenditure debited to the Profit and Loss Account, a deduction claimed, taxable remission or benefit, or applicability of a charging or deeming provision. No such finding or contrary accounting material was produced. [Paras 25, 26, 27, 28]

Deletion of the addition was upheld, the adjustment not having resulted in any debit to the Profit and Loss Account or deduction claimed by the assessee.

Final Conclusion: The Revenue's appeal was dismissed. The balance-sheet adjustments reflecting capitalisation of project expenditure and reversal of duplicate entries could not be assessed as income in the absence of a debit to the Profit and Loss Account, a deduction claim, or any other demonstrated basis of taxability.

Penalty u/s. 270A for under-reporting of income - Bona fide claim of deduction - deduction u/s. 80P(2)(a)(i) - Defective penalty notice

Levy of penalty for under-reporting arising from disallowance of deduction claimed by a co-operative society on interest income from deposits with co-operative and other banks - HELD THAT: - The deduction claim had been accepted in the scrutiny assessment and again in an earlier rectification order. The assessee's claim was therefore founded on a genuine belief which had initially found acceptance with the AO. Such income could not, in the peculiar facts, be regarded as under-reported income under section 270A(6). Further, the use of the word "may" in section 270A(1) required consideration of the entire circumstances and did not warrant an automatic levy of penalty. [Paras 11, 12, 13]

The penalty under section 270A was unsustainable and liable to be deleted.

Defective penalty notice - Sustainability of penalty where the notice and penalty order did not specify the applicable sub-clause or limb of section 270A - HELD THAT: - The notice and the penalty order merely referred to section 270A without identifying the relevant sub-clause or limb. On this independent ground also, the penalty could not be sustained. [Paras 14]

The penalty was deleted.

Final Conclusion: The orders sustaining penalty for under-reporting of income were set aside, and the penalty was directed to be deleted.

Tax deduction at source on leave travel concession involving foreign travel - Exemption for leave travel concession confined to travel within India

Liability of the employer to deduct tax at source from leave travel concession reimbursements where the employees' journeys involved a foreign leg - HELD THAT: - The Tribunal held that the Supreme Court [2022 (11) TMI 426 - SUPREME COURT] had settled that leave travel concession under section 10(5) is confined to travel within India and that a journey involving a foreign leg is outside its scope, notwithstanding that its origin and destination are in India. Since the employer had the employees' travel particulars while settling the claims, it could not plead a bona fide mistake in estimating taxable income or in failing to discharge its statutory withholding obligation. [Paras 6, 7]

The finding that the assessee was in default for non-deduction of tax on such reimbursements was sustained.

Effect of pending challenge to withdrawal of overseas leave travel facility - Effect of the pending Supreme Court proceeding concerning the setting aside and fresh consideration of the circulars withdrawing the overseas leave travel facility - HELD THAT: - The pending proceeding concerns the validity and reconsideration of the circulars governing the overseas facility, whereas the tax-deduction issue stood governed by the Supreme Court ruling on foreign-leg travel. The appellate authority had already deferred recovery until consideration of that pending proceeding; therefore, its order was required only to remain subject to the final outcome therein. [Paras 7]

The appellate order was upheld subject to the final decision in SLP No. 16734/2023.

Final Conclusion: The appeal was partly allowed for statistical purposes only. The order treating the assessee as in default for non-deduction of tax on leave travel concession involving foreign travel was maintained, subject to the final outcome of SLP No. 16734/2023.

Independent adjudication of separate show cause notices - Scope of interim stay order - Alternative statutory remedy

Stay of proceedings under one show-cause notice barred adjudication of another notice arising from the same investigation - Whether adjudication of the show cause notice concerning seized goods was barred by the stay of proceedings under a distinct show cause notice concerning earlier imports? -HELD THAT: - Though both notices arose from the same investigation, were assigned to a common adjudicating authority and were heard together, they concerned distinct subject matters and had independent statutory foundations. Common hearings for administrative convenience did not merge them into a composite proceeding. The interim order expressly stayed only further proceedings under the notice concerning earlier imports, and its scope could not be enlarged by implication to restrain adjudication under the notice concerning seized goods. [Paras 17, 18, 20, 21, 23]

The adjudication order concerning the seized goods was not invalid merely because proceedings under the separate notice had been stayed.

Alternative statutory remedy against customs adjudication order - Writ jurisdiction - Whether the writ court should examine objections to the customs adjudication order based on alleged denial of natural justice and non-supply of relied-upon documents? - HELD THAT: - The assertions regarding supply of relied-upon documents, adequacy of hearing, justification for adjournments and resultant prejudice involved disputed matters requiring examination of the adjudication record. As an effective statutory appeal lay to the Customs, Excise and Service Tax Appellate Tribunal, which could examine those objections as well as the evidence and legality of the adjudicating authority's findings, no exceptional circumstance warranted exercise of writ jurisdiction. [Paras 26, 27, 29, 30, 31]

Interference with the adjudication order was declined, leaving the petitioners to pursue the statutory appellate remedy.

Effective opportunity of hearing in customs adjudication - Continuation of adjudication under the show cause notice concerning earlier imports after vacation of the interim stay - HELD THAT: - The questions concerning limitation, the Call Book mechanism, extension of the adjudication period and communication of such extension were left open, since they remained to be determined in the pending adjudication. The adjudicating authority was directed to afford an effective hearing and comply with principles of natural justice before making a final order. [Paras 37, 38, 39, 43, 44]

The interim stay was vacated and adjudication was permitted to continue, without any adjudication on the merits of the parties' contentions.

Final Conclusion: The challenge to the adjudication order was declined in view of the available statutory appeal. The stay of proceedings under the separate notice was vacated, with all merits contentions left open for determination in accordance with law.

Exclusion of period of institutional incapacity from statutory limitation - Abatement of customs settlement proceedings for want of quorum - Computation of the statutory period for disposal of admitted customs settlement applications where the Interim Board became non-functional for want of quorum after final hearing

Whether Section 127C(12) of the Customs Act mandates automatic abatement of settlement proceedings even where the competent statutory authority itself had become legally incapable of deciding the proceedings for want of quorum, or whether the period during which such institutional incapacity continued deserves to be excluded while computing the statutory period prescribed for disposal of the settlement applications? - HELD THAT: - The statutory timeline for passing a settlement order must be construed in the context of the entire settlement scheme and presupposes a duly constituted forum legally competent to discharge its adjudicatory functions. Abatement for non-passing of an order cannot equate a failure by a functioning authority with a situation in which the Interim Board was legally incapable of acting for want of quorum, particularly where the applicant had completed all required steps. Accordingly, the period of the Interim Board's institutional incapacity must be excluded while computing the period under Section 127C(8A), as extended under Section 127C(12). [Paras 32, 33, 34, 35, 36]

The period from 01.10.2025 until the date of the judgment was directed to be excluded; the settlement proceedings had not abated, and the communications treating them as abated were set aside.

Final Conclusion: The writ petition was allowed. The duly constituted Interim Board was directed to resume the pending settlement applications from the stage immediately preceding the impugned communications and decide them expeditiously in accordance with law, without any opinion on their merits.

Appellate jurisdiction over interest on delayed duty drawback - Statutory interest on delayed duty drawback - Deemed filing of drawback claim upon Let Export Order

Appellate jurisdiction over interest on delayed duty drawback - Strict construction of exclusion of statutory appeal - Maintainability before the Appellate Tribunal of an appeal seeking interest on delayed payment of sanctioned duty drawback - HELD THAT: - The exclusion in the first proviso to Section 129A(1) is confined to disputes relating to payment of drawback and must be strictly construed. Interest under Section 75A, though consequential upon drawback being payable, arises from a distinct statutory liability caused by delay in its disbursement. As the entitlement to and quantum of drawback stood concluded and the controversy concerned only the commencement of statutory interest, it did not fall within the limited exclusion of appellate jurisdiction. [Paras 21, 22, 23, 24, 25]

The appeal before the Appellate Tribunal was maintainable, and its order was not without jurisdiction.

Statutory interest on delayed duty drawback - Deemed filing of drawback claim upon Let Export Order - Commencement of interest on delayed disbursement of duty drawback where the exporter's entitlement was subjected to adjudicatory proceedings - Whether interest under Section 75A became payable only after culmination of the adjudicatory proceedings? - HELD THAT: - Rule 13 deems the shipping bill to be the drawback claim on the date of the Let Export Order. Section 75A makes interest payable where drawback is not paid within one month from filing of that claim, without making its accrual contingent upon completion or finality of adjudication. Pending proceedings questioning valuation did not displace the statutory deeming fiction; once those proceedings concluded in favour of the exporter, the sanction merely gave effect to the entitlement already claimed. A contrary construction would permit postponement of statutory interest through prolonged adjudication. [Paras 34, 35, 36, 37, 38]

Interest was payable from expiry of one month after the Let Export Order until actual payment of the sanctioned drawback.

Final Conclusion: The appeal was dismissed, no substantial question of law arising. The exporter's entitlement to interest on delayed drawback from expiry of one month after the Let Export Order was sustained.

CBI investigation against corruption by Customs officials - credible material of cognizable offence - Customs clearance - verification of misdescription and valuation - Compensation claim involving disputed facts - writ jurisdiction - Judicial restraint in policy formulation

CBI investigation - credible material of cognizable offence - Customs clearance - verification of misdescription and valuation - Whether allegations of corruption arising from delayed clearance of cryptocurrency mining equipment justified a direction for investigation by the CBI? - HELD THAT: - The discrepancy between the description of the goods as a server and their stated nature as cryptocurrency mining equipment, together with the difference between the declared and market values, required verification by Customs before clearance.

A valuation or clearance dispute under the Customs Act does not, by itself, establish corruption. A direction for CBI investigation requires credible material disclosing a cognizable offence or reasonable suspicion of abuse of office; suspicion, conjecture, personal belief, or delay unconnected with extraneous considerations cannot substitute such material.

No material showed illegal gratification, abuse of authority, manipulation of records, or other circumstances from which corruption could reasonably be inferred. [Paras 12, 13, 14, 15, 16]

The prayer for a CBI investigation was rejected.

Compensation claim involving disputed facts - writ jurisdiction - Whether compensation for loss allegedly caused by delayed clearance of the imported equipment could be awarded in writ jurisdiction. - HELD THAT: - The existence and causation of the alleged loss, including the respective responsibility of Customs authorities, the courier agency, the foreign supplier, and the petitioner, involved disputed questions requiring evidence. Such claims cannot be satisfactorily adjudicated under Article 226 and must be pursued before the competent Civil Court or other available forum. [Paras 17, 18]

The compensation claim was declined, without prejudice to remedies available before the competent forum.

Judicial restraint in policy formulation - Fiscal and administrative policy - separation of powers - Whether the Court could compel the Government to formulate a policy for import and clearance of cryptocurrency mining equipment or to create a mechanism penalising Customs for delay? - HELD THAT: - Policy formulation, including fiscal and administrative mechanisms concerning import clearance, lies within the legislative and executive domain. In the absence of a statutory or constitutional obligation to formulate a particular policy, writ jurisdiction cannot be used to compel the executive to frame policy or exercise its policy-making power in a specified manner. [Paras 19, 20]

The policy-related prayers were rejected.

Final Conclusion: No material established arbitrariness, mala fides, abuse of statutory power, violation of a legal right, or circumstances warranting an independent investigation. The writ petition was disposed of, with liberty to pursue such civil remedies as may be available in law.

Limitation for customs interest refund - Statutory refund remedy for alleged unauthorised collection

Limitation for customs interest refund - Payment under protest - Whether a refund claim for interest paid u/s 47(2) of the Customs Act, 1962, filed after one year from payment, is maintainable under Section 27 of the Customs Act, 1962? - HELD THAT: - A refund application before the Customs authorities for duty or interest is governed by the statutory limitation u/s 27. Payment made to enable generation of electronic challans or clearance of goods does not by itself establish payment under written protest. As no material showed such protest, the exception to the one-year limitation was unavailable. Neither the statutory authorities nor the Tribunal has power to condone delay where the Act confers none; technical difficulty, bona fide conduct or late knowledge of the procedure cannot enlarge the prescribed period. [Paras 15, 22, 25]

The refund claim was barred by limitation and could not be entertained on merits.

Statutory refund remedy for alleged unauthorised collection - whether Interest collected u/s 47(2), alleged to have been not legally payable because of Electronic Cash Ledger system failure, could be refunded outside the limitation under Section 27? - HELD THAT: - Following Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT] refund claims presented before statutory customs authorities, including claims alleging an illegal or unauthorised levy, must be pursued within the statutory refund mechanism and its limitation. The limited constitutional exception does not apply to a statutory refund proceeding. Administrative waiver orders could not dispense with the limitation enacted by Parliament, and describing the amount as an unauthorised collection did not take the claim outside Section 27. [Paras 17, 19, 21, 23, 24]

The challenge to the levy could not avoid the statutory limitation applicable to the refund claim.

Final Conclusion: The rejection of the time-barred claim for refund of customs interest was upheld and the appeal was dismissed.

Appellate jurisdiction over baggage imports - appeal against an order relating to gold chains imported as passenger baggage -Statutory bar on Tribunal appeals

Maintainability before the Tribunal of an appeal concerning confiscation of gold chains brought in checked-in baggage and penalty for alleged non-declaration and improper importation - HELD THAT: - The first proviso to Section 129A(1) expressly excludes the Tribunal's jurisdiction over an order relating to goods imported as baggage. Jurisdiction depends on the nature of the goods and the order appealed against; questions concerning interception, declaration, passenger eligibility, confiscation or penalty are matters of merit and cannot overcome that statutory exclusion. The statutory remedy for such baggage-import matters lies before the competent Revisional Authority.

The decisions relied upon by the Revenue in Shri Abdul Raheem Kaulani [2024 (12) TMI 176 - CESTAT HYDERABAD], Shri Mohammed Dosri [2025 (6) TMI 1827 - CESTAT HYDERABAD], Shri Ravinder Kumar [2026 (1) TMI 439 - CESTAT NEW DELHI] and Mr, Sunil Kumar Keswani [2025 (10) TMI 1081 - CESTAT ALLAHABAD] reiterate that an appeal arising out of an order concerning goods imported as baggage is not maintainable before the Tribunal. In Abdul Raheem Kaulani, this Bench held that, in view of the express proviso to Section 129A(1), the Tribunal have no jurisdiction and the appellant was required to approach the appropriate Revisional Authority.

Madras High Court in Principle Commissioner of Customs (Air Port) Vs Ahamed Gani Natchiar [2022 (10) TMI 100 - MADRAS HIGH COURT] has also recognized the statutory scheme under which matters relating to goods imported as baggage fall within the Revisional Jurisdiction of the Central Government and not within the appellate jurisdiction of the Tribunal.[Paras 6, 7, 8, 9, 10]

The appeal was held not maintainable before the Tribunal and the appeal papers were directed to be returned to enable pursuit of the revisional remedy, without any opinion on merits.

Final Conclusion: The appeal, arising from goods imported as baggage, was disposed of as not maintainable before the Tribunal. The appellant was left to pursue the statutory revisional remedy.

Classification of Glow Plug Control Unit as electrical ignition or starting equipment - CTH 8511 OR CTH 9032 OR CTH 8537 -Extended limitation for reclassification demand - Penalty for alleged misclassification without suppression or intent to evade

Classification of Glow Plug Control Unit as electrical ignition or starting equipment - Functional-unit classification under Section XVI - HSN Explanatory Notes in tariff classification - Classification of the Glow Plug Control Unit, which regulates the heating current supplied to glow plugs in diesel engines, under CTH 8511 OR the residual automatic-control entry under CTH 9032 OR the electrical-control-board entry under CTH 8537 - HELD THAT: - Chapter 90 excludes apparatus for switching or controlling electrical circuits more specifically covered by Chapter 85; consequently, the residual entry claimed under CTH 9032 was unavailable. The GCU, being a single electronic module comprising a shunt, relay and micro-controller, did not structurally satisfy the requirement of a board, panel or similar base equipped with two or more apparatus for electric control under CTH 8537. Applying GIR 1, Section XVI Notes 3 and 4, and the HSN Explanatory Notes, the GCU and glow plugs constitute a functional system for electrical ignition or starting of compression-ignition engines. As the GCU exclusively regulates glow-plug operation and assists engine ignition, it is appropriately covered by CTH 8511. [Paras 6]

The Glow Plug Control Unit was held classifiable under CTH 8511, and the demand for the normal period was upheld.

Extended limitation for reclassification demand - Penalty for alleged misclassification without suppression or intent to evade - HELD THAT: - The earlier Bills of Entry showed that identical goods had been imported under the declared classification and cleared by Customs authorities without objection. In those circumstances, suppression or misdeclaration with intent to evade could not be accepted. The extended-period demand and the penalty under section 114A were therefore unsustainable. [Paras 8]

The demand beyond the normal period and the penalty imposed under section 114A were set aside.

Final Conclusion: The appeal was partly allowed. The GCU was classified under CTH 8511 and the normal-period demand was sustained, while the extended-period demand and penalty were set aside.

Limitation for refund of IGST paid on imports by United Nations agencies - Absence of prescribed refund mechanism - COVID-19 extension of limitation

Refund claims for IGST paid on import of goods by a United Nations agency were barred by limitation - HELD THAT: - Prior to Circular No. 23/2019-Customs, no authority had been specified for entertaining refund claims of IGST paid on imports, though the statutory refund entitlement existed. Following the binding decision in M/s. World Health Organization [2026 (6) TMI 846 - CESTAT KOLKATA] limitation for such claims was held to run from 01.08.2019, and the period extended by the Supreme Court on account of the COVID-19 pandemic was also applicable. The claims were consequently within time. [Paras 5]

The refund claims were held not time-barred; the impugned orders were set aside and the appeals allowed with consequential relief.

Final Conclusion: The Tribunal held that the refund applications for IGST paid on imports were filed within the applicable limitation period and allowed the appeals with consequential relief.

Customs supervision charges for special warehouse - Cost recovery basis and Merchant Overtime basis

Cost recovery basis and Merchant Overtime basis - Exclusive posting of Customs officers - Demand of differential customs supervision charges from a special warehouse licensee by treating supervision as being on cost recovery basis despite payment and acceptance of Merchant Overtime charges - HELD THAT: - The applicable guidelines required the Commissioner to evaluate the warehouse's operational requirements and distance from the customs office for determining the appropriate mode of recovery. Although such evaluation was intimated, the records disclosed neither a proposal for cost-recovery posting nor any additional Customs officer exclusively posted for supervision of the warehouse. Cost recovery charges arise from posting Customs officials additionally sanctioned over regular posts; where supervision was actually charged, paid and accepted on Merchant Overtime basis, differential cost recovery charges could not be sustained merely by computing them with reference to an assumed posting of an Inspector. Regulation 3(e) required an undertaking to pay the cost of Customs supervision, without mandating either Merchant Overtime or cost recovery as the exclusive mode. [Paras 10, 11]

The differential demand was held unsustainable and the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief. In the absence of an exclusive cost-recovery posting of Customs officers, the demand for differential supervision charges over the Merchant Overtime charges paid and accepted could not be maintained.

Classification of interactive LED touchscreen display panels with integrated CPU, GPU, RAM and storage - automatic data processing machines under Customs Tariff Item 8471 41 90 OR display monitors under Customs Tariff Item 8528 59 00

HELD THAT: - The Tribunal held that the classification issue stood covered by the decision in M/s. Ingram Micro India Private Limited [2022 (2) TMI 308 - CESTAT NEW DELHI]. It further noted that Hitevision Tech India Pvt. Ltd. [2026 (1) TMI 1240 - CESTAT CHENNAI] had classified interactive flat panels at the four-digit level under CTH 8471. The imported panels, being integrated systems with automatic data-processing capability rather than mere display devices, were accordingly classifiable under CTI 8471 41 90. [Paras 10, 11]

The classification adopted under CTI 8471 41 90 was accepted; the impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The interactive LED display panels were held classifiable as automatic data processing machines under CTI 8471 41 90. The appeal was allowed with consequential relief in accordance with law.

Substantial compliance with service requirements for ex parte injunction - Cause of action for recovery of alleged provident fund defalcation - Civil court jurisdiction in provident fund trust defalcation dispute - Material suppression in ex parte injunction proceedings - High Court power to direct SFIO investigation

Substantial compliance with service requirements for ex parte injunction - Service of the interlocutory application with the plaint annexed, while the plaint annexures were separately appended to the application, constituted substantial compliance with Order XXXIX Rule 3 CPC - HELD THAT: - The purpose of the rule is to enable defendants to effectively oppose an ex parte injunction on the returnable date. The defendants had received the application and the plaint, the relevant plaint annexures were available with the application, and they were able to make extensive submissions without surprise. Though service was beyond the prescribed time, it was effected before the returnable date; the delay and absence of separately served plaint papers did not warrant vacation of the injunction.

The interim order was not liable to be vacated for non-compliance with Order XXXIX Rule 3 CPC.

Cause of action for recovery of alleged provident fund defalcation - Civil court jurisdiction in provident fund trust defalcation dispute - Non-joinder of trustees - The plaintiff, as the exempted establishment answerable for provident fund deposits, had a prima facie cause of action concerning the alleged defalcation of the exempted provident fund trust; the suit was neither barred by the PF Act nor liable to fail at the interim stage for non-joinder or misjoinder - HELD THAT: - Provident fund dues stood outside the resolution plan by virtue of the statutory exclusion, and the plaintiff could examine the funds held by the trust after taking over management. The plaintiff remained accountable as the establishment granted exemption, while employees dealt with the employer and their claims were certified and routed through it. The defendants did not produce cogent material for the subsequent periods to prima facie displace the alleged shortfall or defalcation. The statutory inquiry powers of provident fund authorities did not exclude the civil court's jurisdiction over the dispute. Further, specific allegations against impleaded trustees precluded a finding, at this stage, that the suit was barred merely because other trustees had not been joined.

The objections to the plaintiff's cause of action, the maintainability of the suit, jurisdiction, and joinder of parties were rejected for purposes of the interim application.

Material suppression in ex parte injunction proceedings - Parallel civil and criminal proceedings - whether plaintiff had not suppressed any material fact by failing to disclose the police complaint and subsequent FIR, or the controversy regarding revocation of provident fund exemption? - HELD THAT: - A suppression justifying discharge of an ex parte order must be material, namely one which, if disclosed, would have dissuaded the Court from granting relief. The plaint and application had been affirmed and filed before the FIR was registered, and the plaint indicated that a complaint was contemplated. Disclosure of the complaint when the injunction was sought would not have altered the grant of interim protection. Civil recovery proceedings and criminal proceedings arising from a common cause may continue simultaneously in the absence of a legal bar. The legality of the exemption-revocation notice was not an issue determinable in the present defalcation suit.

No ground was made out to vary or discharge the interim order for material suppression.

High Court power to direct SFIO investigation - Investigation into affairs of an exempted provident fund establishment - whether direction for SFIO investigation into alleged defalcation of funds of the exempted provident fund trust was valid and was to continue? - HELD THAT: - The alleged deductions and employer contributions were reflected in the plaintiff company's accounts and their proper deposit in the exempted trust formed part of the company's affairs. The matter concerned multiple units across different States, whereas regional provident fund authorities and local police could face practical and statutory limitations in conducting a comprehensive inquiry. The High Court's constitutional and inherent authority to direct an appropriate investigation was not curtailed by the statutory power conferred on the Central Government under the Companies Act. Given the social-security character of the funds and the need for a comprehensive inquiry, SFIO was held to be the preferred investigating agency.

The direction for SFIO investigation was sustained.

Final Conclusion: The interim injunction and the direction for SFIO investigation were continued pending disposal of the injunction application. The vacating applications were dismissed.

Asset disclosure in aid of prospective attachment - Conclusive effect and presumption of jurisdiction of foreign judgments - Appellate restraint in interlocutory discretion

Validity of the direction requiring disclosure of assets from the commencement of the New York proceedings, notwithstanding the pendency of a suit concerning enforcement of the foreign judgments - HELD THAT: - The direction was neither vague nor an impermissible retrospective inquiry, since the commencement of the New York litigation was undisputed. Disclosure merely identifies assets for prospective attachment and does not itself determine their attachability. The appellant's prior anti-enforcement proceedings precluded him from disputing awareness or enforceability of the foreign judgments. Under Sections 13 and 14 of the CPC, a certified foreign judgment carries a mandatory presumption of competent jurisdiction, which the party challenging it must displace by credible evidence; mere disagreement with its findings or reliance upon the exceptions in Section 13 is insufficient. The appellant's conduct, including the findings of diversion of assets, justified the disclosure order. The decisions in L. K. Prabhu vs. K. T. Mathew [2025 (11) TMI 2046 - SUPREME COURT], Bank of Baroda v. Dr. Bavaguthu Raghuram Shetty & Ors [2021 (5) TMI 1097 - KARNATAKA HIGH COURT], Delhi Chemical and Pharmaceutical Works Ltd. vs. Himgiri Realtors Pvt. Ltd. [2021 (7) TMI 1430 - DELHI HIGH COURT], United Phosphorous Ltd. vs. A. K. Kanoria [2002 (6) TMI 611 - BOMBAY HIGH COURT] and Raman Tech. & Process Engg. Co. v. Solanki Traders [2007 (11) TMI 611 - SUPREME COURT] were held inapplicable or unhelpful. [Paras 28, 31, 34, 35, 36]

The disclosure direction from the commencement of the New York proceedings was sustained.

Appellate restraint in interlocutory discretion - Interference in appeal with the Single Judge's interlocutory disclosure and restraint order - HELD THAT: - An appellate court does not substitute its discretion for that of the court of first instance where the latter's view is reasonably possible on the material. Interference is warranted only where the discretion is arbitrary, capricious, perverse, or contrary to settled principles. The impugned exercise of discretion did not suffer from those defects. [Paras 33]

No interference with the interlocutory order was warranted.

Final Conclusion: The appeal was dismissed and the disclosure and restraint directions were maintained. The interim application was consequently disposed of.

Unreasoned fraud classification order - Natural justice in fraud-account classification

Whether the bank's order classifying the company's account as fraud was unreasoned? -HELD THAT: - As in State Bank of India Vs. Rajesh Agarwal [2023 (3) TMI 1205 - SUPREME COURT] the Hon’ble Supreme Court has held that, although the Order declaring a person as fraud must be reasoned, the reasons to be recorded need not be placed on the same pedestal as a Judgment of a Court. The reasons may be brief but they must comport with fairness by indicating a due application of mind.

A fraud-classification order need not contain reasons at the level required of a judicial judgment, but must disclose due application of mind. The order identified the applicable grounds under the Fraud Master Circular and, through its schedules, recorded the transaction auditor's findings concerning diversion of funds through an undisclosed bank account, related-party transactions, unjustified transfers and interest-free advances. It therefore contained adequate reasons for the classification. [Paras 32, 33]

The challenge to the order as unreasoned was rejected.

Natural justice in fraud-account classification - Whether refusal to extend time for replying to the show-cause notice before classifying the company's account as fraud violated natural justice? - HELD THAT: - The petitioners had previously received and discussed the draft transaction audit report, were afforded access to the company's office to furnish material, and were given a further opportunity to provide the required data, which they did not avail. The final transaction audit report was supplied with the show-cause notice, which allowed the prescribed time for a reply. In these circumstances, the request for further time founded on unspecified family and medical issues was rightly refused, since the petitioners had full prior knowledge of the case to be answered. [Paras 35, 36, 37, 38, 39]

There was no breach of natural justice in passing the fraud-classification order.

Final Conclusion: The writ petition was dismissed, the Court holding that the company's account was validly classified as fraud by a reasoned order passed without breach of natural justice.

Enforcement of appellate directions during pendency of challenge before Supreme Court - Distribution under approved resolution plan

Whether directions for redistribution and disbursement under the approved resolution plan could be restrained pending adjudication of the challenge before the Supreme Court? - HELD THAT: - The earlier appellate judgment had crystallised the appellant's admitted claim and directed the Monitoring Committee to redistribute the allocation under the resolution plan and decide distribution of the escrowed amount. Those directions were passed after considering the CoC resolution and the plan-approval order. Since the appellant had challenged that judgment before the Supreme Court and had obtained no stay against distribution, the Tribunal held that it could not interfere with or effectively stay its earlier directions. [Paras 8, 9, 10]

The application seeking suspension of distribution and exclusive implementation of the CoC resolution was dismissed as misconceived.

Final Conclusion: The Tribunal declined to restrain distribution under the resolution plan, holding that its prior directions remained operative in the absence of any stay by the Supreme Court.

Bona fide purchasers' claim to attached property - Adjudication of third-party ownership claims under the Prevention of Money Laundering Act - Claim for release of attached villa plots by purchasers asserting agreements to sell and payment of substantial sale consideration

Whether the appellants claiming rights in attached villa plots as bona fide purchasers were entitled to release of the properties in the appellate proceedings? - HELD THAT: - The Tribunal found that no sale deeds had been executed in favour of the appellants and that the material did not permit a conclusive determination of whether they were bona fide purchasers or had acted in collusion with the principal accused.

Although the alleged transactions, if genuine, indicated possible misdeclaration by the vendors regarding the plots being unsold, the purchasers' status and entitlement to the attached properties required adjudication upon prosecution and defence evidence before the Special Court under the Prevention of Money Laundering Act. [Paras 42]

The appeals were disposed of with liberty to the Enforcement Directorate to verify the purchasers' claims and report to the Special Court, and to the appellants to pursue their claims before that Court; no conclusive finding on their bona fides or ownership was recorded.

Final Conclusion: The appeals were disposed of without deciding the appellants' ownership or bona fide purchaser claims on merits. Their claims to the attached villa plots were left to be pursued before the Special Court in accordance with law.

Conversion into a finished article amounts to manufacture - business auxiliary service exclusion where the process amounts to manufacture - eligibility for exemption under Notification No.8/2005-ST for goods produced on behalf of a client - conditional character of exemption under Notification No.24/2003-CE

As decided by CESTAT [2013 (5) TMI 451 - CESTAT BANGALORE] Appeal is allowed: the Tribunal held that the electroplating job work constitutes manufacture (hence outside business auxiliary service) and, alternatively, that Notification No.8/2005 ST applies because Notification No.24/2003 CE is not an unconditional exemption; consequential relief follows and the stay petition is disposed of.

HELD THAT:- The Revenue's application to withdraw the appeal on the ground of low monetary value was allowed, and the appeal was dismissed as not pressed.

Pure agent reimbursements - expenses reimbursed to the assessee by the service recipient for payments made to third parties in the capacity of a pure agent - exclusion from taxable value of clearing and forwarding services

Reimbursement of expenses incurred by a clearing and forwarding service provider on behalf of the service recipient during Financial Year 2014-15 was liable to be excluded from the taxable value as pure-agent expenditure - HELD THAT: - The expenses were incurred by the assessee as pure agent of the service recipient, reimbursed by the recipient, and recorded and adjusted in the assessee's books as amounts paid to third parties. The transaction was therefore held to be squarely covered by Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006, which excludes qualifying pure-agent expenditure from the value of taxable service. [Paras 9, 10]

The service-tax demand was set aside; consequently, interest and the penalty for suppression under Section 78 of the Finance Act, 1994 were also set aside.

Final Conclusion: The appeal was allowed with consequential relief, as the reimbursed pure-agent expenses could not form part of the taxable value.

Original works under works contract valuation - Forfeited advance for purchase of goods - Reimbursement of fire loss

Classification of showroom fit-out works performed on bare structures of newly constructed commercial buildings as original works or completion and finishing services for valuation of the works contract service - HELD THAT: - The work converted bare commercial building structures into functional showrooms through flooring, ceilings, internal walls and partitions, HVAC, fire-suppression, plumbing and other fit-outs, with material being used and VAT paid on the goods component.

We hold that the work undertaken by the appellant is an original work as held by this Tribunal in the case of Kalpakaru Projects Pvt Ltd. [2025 (5) TMI 1832 - CESTAT NEW DELHI] therefore, the appellant has rightly paid service tax under rule 2A(ii)(A) on notional basis by claiming abatement of 60% of the value of works contract. Therefore, no demand is sustainable against the appellant.

The appellant was consequently entitled to determine service tax on the prescribed portion of the contract value under rule 2A(ii)(A). [Paras 13, 14]

The demand founded on denial of valuation applicable to original works was unsustainable.

Forfeited advance for purchase of goods - Taxability of an advance forfeited when the customer abandoned the purchase of ordered goods - HELD THAT: - The forfeited amount arose because the customer did not take delivery of the ordered goods. Such forfeiture could not be characterised as consideration for a service provided by the appellant. [Paras 15]

No service tax was payable on the forfeited advance.

Reimbursement of fire loss - Taxability of reimbursement received for goods lost in a showroom fire - HELD THAT: - The receipt was reimbursement of the loss suffered on account of the fire and did not represent consideration for any service rendered by the appellant. [Paras 16]

No service tax was payable on the reimbursement of fire loss.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. As no demand survived, the penalties also could not be imposed.

Coal beneficiation/washing as mining service - Taxability asBusiness Auxiliary Service

Taxability of beneficiation or washing of coal under Business Auxiliary Service before introduction of mining service - HELD THAT: - The activity of beneficiation or washing of coal is an activity in relation to mining and became taxable as mining service only with effect from 1 June 2007. Since the introduction of that taxable entry presupposed that the activity was not previously covered, it could not be classified under Business Auxiliary Service for the prior period. [Paras 10]

Thus, activity of beneficiation/ washing of coal does not fall under the category of “Business Auxiliary Service” prior to 01.06.2007 as the same is classified under Mining Service w.e.f. 01.06.2007.

Final Conclusion: The Revenue's appeal was dismissed and the order dropping the demand was upheld.

Demand of service tax on project - Completion certificate for completed construction project - Service tax on construction completed before 1 July 2010

Validity of the completion certificate issued by the Kolkata Municipal Corporation's authorised technical person for establishing completion of the construction project before 1 July 2010 - HELD THAT: - The certificate issued after the authorised technical person examined the project and certified that the building was complete in all respects was valid evidence of completion. The subsequent formal certificate issued by the competent municipal authority was only formal certification based on that certificate; consequently, the project was to be treated as completed on 11.06.2010. [Paras 6]

The completion certificate was accepted, and the service-tax demand founded on its rejection, with consequential interest and penalty, was set aside.

Final Conclusion: The appeal was allowed with consequential relief, as the project stood completed before 1 July 2010 and the confirmed service-tax demand did not survive.

Unjust enrichment in excise-duty refund - Passing on of duty incidence to consumers - Refund of duty paid on UF/PF resin solution

Whether its retention would result in unjust enrichment because the duty incidence had been passed on to consumers? - HELD THAT: - Whether the appellant passed on the duty incidence on UF/PF resin solution to consumers is a question of fact. If the incidence was passed on, retention of the refund would attract unjust enrichment; if it was not passed on, the refund would not be illegal or unfair. The factual issue requires determination by the concerned Assistant Commissioner after affording the appellant an opportunity to establish that the duty had not been passed on. [Paras 8, 9, 10, 11]

The issue was remanded for factual determination by the concerned Assistant Commissioner; no coercive recovery action may be taken until a final decision is rendered.

Final Conclusion: The appeal was disposed of with a direction to seek determination of the unjust-enrichment claim before the concerned Assistant Commissioner within the stipulated period, subject to protection against coercive recovery pending that decision.

CENVAT credit on outward transportation under F.O.R. destination contracts - Scope of input service prior to 1-4-2008 - Place of Removal - Activities Relating to Business

Eligibility to CENVAT credit on goods transport agency service used before 1-4-2008 for transporting final products from the factory or depot to customers' premises under F.O.R. destination contracts - HELD THAT: - We find that the said issue has been dealt by the Larger Bench of this Tribunal in the case of ABB Ltd. [2009 (5) TMI 48 - CESTAT, BANGALORE-LB] which has been affirmed by the Hon’ble Karnataka High Court [2011 (3) TMI 248 - KARNATAKA HIGH COURT] which was further affirmed by the Hon’ble Supreme Court [2015 (12) TMI 874 - SUPREME COURT] and [2018 (3) TMI 993 - SUPREME COURT] to hold that the definition of “input service” has to be interpreted in the light of the requirements of business and it cannot be read restrictively so as to confine only upto the factory or upto the depot of manufacturers.

The pre-amendment definition of input service was required to be construed in the light of business requirements and could not be restrictively confined to the factory or depot. Under the F.O.R. destination contracts, the appellant was obliged to deliver the goods at the buyers' premises and retained ownership until such delivery. The outward transportation service was consequently used for clearance of the final goods, and credit could not be denied merely because freight did not form part of the transaction value. [Paras 7, 8]

CENVAT credit on the outward transportation service was correctly availed; the impugned orders were set aside.

Final Conclusion: The appeals were allowed with consequential relief, as CENVAT credit on outward transportation to buyers' premises under the F.O.R. destination contracts was admissible.

Cash refund of unutilised Education Cess and Secondary and Higher Education Cess - Transitional refund under the CGST regime - Refund admissibility under the existing law

Whether the unutilised balance of Education Cess and Secondary and Higher Education Cess as on 30.06.2017 was refundable in cash under the transitional provisions of the GST law? - HELD THAT: - Section 142(3) permits a transitional cash refund only where such refund was otherwise admissible under the erstwhile law. Since the Cenvat Credit Rules contained no provision allowing cash refund of the unutilised balance of these cesses, the balance did not become refundable merely because it could not be transitioned into the GST regime. [Paras 7, 8]

The rejection of the refund claim was upheld.

Final Conclusion: The appeal was dismissed and the denial of cash refund of the unutilised cess credit was sustained.

Excisability of fly ash generated from burning coal for electricity generation - Manufacture as a condition for levy of central excise duty

Liability of fly ash generated as waste while coal is burnt for captive generation of electricity to central excise duty - HELD THAT: - Marketability alone does not render a product excisable; it must also be produced or manufactured.

Applying Union of India Vs Ahmedabad Electricity Company Ltd.[2003 (10) TMI 47 - SUPREME COURT] the Tribunal held that burning coal as fuel for generation of steam and electricity does not involve a process of manufacture resulting in a new product. Fly ash emerging from that process is therefore not manufactured excisable goods. [Paras 7, 9]

The departmental appeal was dismissed and no central excise duty was held leviable on the fly ash.

Final Conclusion: The appeal was dismissed, the Tribunal holding that fly ash generated from burning coal for captive electricity generation is not the result of manufacture and is not liable to central excise duty.

Composition permission for restaurant business with resale of liquor - Reassessment on change of opinion

Composition permission for restaurant business with resale of liquor - Retrospective amendment to composition conditions - Entitlement to composition permission for restaurant business where liquor, incapable of lawful production in the State, was purchased from outside the State and resold on payment of tax at the normal rate - HELD THAT: - The retrospective proviso to Rule 28C(6), read with section 14D, permits a composition dealer to purchase goods from outside the State where they cannot be produced in the State for legal or other reasons, provided tax is paid at the normal rate on their resale. The audit assessment had accepted the separate determination of liquor turnover, levy of tax thereon at the normal rate, and composition tax for the restaurant business. The later cancellation of composition permission could not govern the period under consideration.

The provision of Section 14D of the VAT Act read with amended proviso to Rule 28C(6) of the VAT Rules stipulates that a dealer is entitle to the benefit of composition permission if the goods which are not capable of being produced in the State of Gujarat for any reason or are prohibited from being produced in State of Gujarat, the tax is to be paid at normal rate on such goods.

It is not in dispute that the amendment is retrospective for payment of lump sum tax on composition permission for the goods already granted to the appellant in the facts of the case for the period under consideration.

It is pertinent to note that the order for cancellation of composition permission was passed in the year 2010 and therefore, the same would not be applicable for the period 2007-08. [Paras 8, 9, 10, 11, 12]

The assessee was entitled to the composition benefit for the restaurant business, and the rejection of that benefit was unsustainable.

Reassessment on change of opinion - Validity of reassessment withdrawing the accepted composition benefit and taxing the entire restaurant and liquor turnover at the normal rate - HELD THAT: - The original audit assessment had been made after consideration of the books, documents and the assessee's separate treatment of liquor turnover. The reassessment proceeded merely upon a changed view regarding the applicable tax rate and was therefore bad in law. [Paras 7]

The reassessment order was rightly set aside and the original audit assessment was restored.

Final Conclusion: No substantial question of law arose from the Tribunal's order. The Tax Appeal was dismissed.