TaxTMI Updates e-Newsletter
Aug 11,2026

Condonation of delay in GST appeal - Opportunity to explain delay - Rejection of a GST appeal filed within the condonable period without considering the registered person's explanation for delay - HELD THAT: - The appeal was rejected because the petitioner did not respond to the notice seeking an explanation for delayed filing. As no material was produced to discredit the stated circumstances, the Court found sufficient cause to permit the petitioner an opportunity to justify the delay beyond the period stipulated for filing the appeal. [Paras 4]

The rejection order was set aside and the petitioner was directed to submit its response before the Appellate Authority, which shall consider the explanation after affording a hearing.

Final Conclusion: The writ petition was disposed of by restoring the opportunity to explain the delay in filing the GST appeal and requiring the Appellate Authority to consider that explanation after hearing the petitioner.

Cancellation of GST registration for non-filing of returns - Restoration of GST registration on furnishing pending returns and payment of dues

Restoration of GST registration cancelled for continuous non-filing of returns where the registered person undertakes to furnish all pending returns and discharge tax dues with applicable interest and late fee - HELD THAT: - The proviso to Rule 22(4) permits the proper officer to drop cancellation proceedings and issue the prescribed order where, instead of replying to the notice issued for contravention relating to non-furnishing of returns, the registered person furnishes all pending returns and makes full payment of tax dues, interest and late fee. In view of the serious civil consequences of cancellation, the empowered officer has authority and jurisdiction to consider restoration upon compliance with those requirements. [Paras 9, 11]

The petitioner was permitted to approach the concerned authority for restoration of registration within the stipulated period; upon compliance with Rule 22(4), the application must be considered and disposed of in accordance with law.

Final Conclusion: The writ petition was disposed of with liberty to seek restoration of GST registration by complying with the requirement of furnishing pending returns and paying the applicable tax dues, interest, penalty and late fee. The concerned authority was directed to consider the application expeditiously in accordance with law.

Maintainability of public interest litigation in tax-evasion allegations - Judicial supervision of statutory tax investigations

Maintainability of a public interest petition seeking court-monitored investigation and recovery of alleged GST and income-tax liabilities arising from private commercial transactions -HELD THAT: - A public interest petition must disclose a genuine public injury and cannot be employed to pursue a private cause or to supervise matters committed to statutory authorities. Determination of alleged tax evasion, its quantum and consequential liability requires examination of commercial and tax records in accordance with the statutory procedure.

As enquiries had been initiated and no material established mala fides or a failure by the authorities to discharge their statutory duties, non-disclosure of the enquiry's progress to the petitioner did not warrant mandamus or judicial monitoring. The earlier dismissal of substantially similar reliefs for want of locus also could not be overcome merely by styling the petition as a PIL. [Paras 7, 8, 9, 10]

The petition was held to be a misconceived and non-bona fide PIL, not warranting exercise of writ jurisdiction.

Final Conclusion: The PIL was dismissed at the threshold. The security deposit made at institution was forfeited for abuse of the jurisdiction intended for genuine public causes.

Extended time-limit for input tax credit - Entitlement to input tax credit claimed in a return filed after the earlier statutory cut-off for Financial Year 2018-19 - HELD THAT: - Section 16(5) permitted a registered person to avail input tax credit in a return under Section 39 filed on or before 30.11.2021 for the specified financial years. As the petitioner availed the credit on 20.12.2019, the claim fell within the extended period. [Paras 9, 11]

The assessment order requiring payment or reversal of the input tax credit was set aside.

Final Conclusion: The writ petition was allowed and the impugned assessment order was set aside in view of the extended period introduced by Section 16(5) of the GST Act.

Penalty for delayed GST return filing after payment of late fee - Statutory maximum limit on GST penalty - UP GST

Validity of penalty imposed under the GST enactments despite the petitioner having filed the return and paid the applicable late fee, where the penalty exceeded the statutory maximum - HELD THAT: - The Court noted that the return had already been filed and late fee paid in accordance with law. It further found that the aggregate penalty imposed exceeded the maximum limit prescribed under the U.P. GST Act, 2017. [Paras 3, 4]

The show-cause notice and the consequential penalty order were quashed.

Final Conclusion: The writ petition was disposed of by quashing the impugned show-cause notice and penalty order.

Writ petition challenging the GST adjudication order - Alternative statutory remedy - Exercise of writ jurisdiction in exceptional circumstances - Violation of principles of natural justice - Writ jurisdiction against GST adjudication - challenge alleged denial of hearing, non-consideration of reply, inadmissible electronic evidence, denial of cross-examination and overlap with an earlier statutory audit.

HELD THAT: - The petitioner had participated through its authorised representative and submitted a detailed reply; therefore, the grievance concerned the appreciation of its defence and adequacy of the adjudicating authority's reasons, not denial of opportunity or demonstrated prejudice from alleged defects in service. Questions concerning admissibility, authenticity and evidentiary value of electronic material, the need for cross-examination, and the effect of the earlier audit required examination of disputed facts and evidence and fell within the appellate authority's jurisdiction. No recognised exception to the rule requiring exhaustion of the efficacious statutory appeal was established. [Paras 22, 23, 24, 25, 26]

The writ petition was dismissed, leaving all factual and legal contentions open for consideration in a statutory appeal.

Final Conclusion: The writ petition was dismissed on account of the available statutory appellate remedy. The period during which the writ petition remained pending was directed not to be reckoned for limitation if an appeal is preferred.

Valid Service of show-cause notice and adjudication order through Common Portal - Electronic service under the CGST Act

Whether Uploading a show-cause notice and order-in-original in the 'View Additional Notices and Orders' tab on the Common Portal does not by itself constitute valid service where the assessee neither acknowledged receipt nor filed a reply? - HELD THAT: - Following Luxmi Traders [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] and its clarification in The Amar Cooperative LC Society Ltd [2026 (8) TMI 75 - PUNJAB AND HARYANA HIGH COURT] the Court held that the retrospective amendment enabling functions under the CGST Rules to be performed on the Common Portal did not alter the position.

The Rules do not provide for service of a show-cause notice or order through the Common Portal; its specified functions do not substitute formal service. Portal upload alone, particularly where it entails civil consequences and the assessee had no knowledge of it, is insufficient service. [Paras 6, 7]

The writ petition was disposed of on the same terms as Luxmi Traders.

Final Conclusion: The writ petition was disposed of in terms of the decisions holding that mere upload of the show-cause notice and order-in-original on the Common Portal does not amount to valid service in the absence of acknowledgement or response by the assessee.

Opportunity of personal hearing in tax adjudication - Non-consideration of reply to show-cause notice - Application of mind in assessment proceedings

Validity of an assessment order passed without considering the reply filed before its issuance and without affording a personal hearing in proceedings initiated for short-paid GST - HELD THAT: - Section 75(4) requires an opportunity of hearing where a written request is made or an adverse decision is contemplated. Issuance of a show-cause notice itself indicates contemplation of adverse proceedings, and a written request is consequently not necessary in such a case. The DRC-01 form specifically contemplates a personal hearing; no hearing date was fixed after expiry of the time for reply. Since the reply and request for personal hearing were on record before the assessment order was passed, the authority could not proceed as though no reply had been filed. [Paras 8, 10, 11]

The assessment order was set aside, with liberty to commence fresh proceedings from consideration of the reply after granting a personal hearing in accordance with law.

Non-application of mind in assessment proceedings - Consequences of the assessing authority recording that no reply had been filed despite the reply being available on record - HELD THAT: - The authority's treatment of the proceedings as if no reply had been submitted disclosed gross failure to apply its mind to the material before it. The resulting hardship to the assessee warranted imposition of exemplary costs. [Paras 12]

Exemplary costs were directed to be paid by the concerned respondent authority.

Final Conclusion: The writ petition was allowed and the assessment order was set aside for non-consideration of the reply and denial of the requisite personal hearing. Fresh proceedings may be undertaken from the stage of considering the reply, after affording personal hearing in accordance with law.

Statutory pre-deposit for GST appeal - Remand for adjudication after opportunity to reply to show cause notice

Rejection of a time-barred GST appeal where the pre-deposit made was below the statutory requirement and the assessee asserted prior recovery from its electronic ledger - HELD THAT: - The appeal had been filed after expiry of limitation and without the mandatory pre-deposit. As the asserted recovery from the electronic ledger could not be confirmed by the respondents, the rejection order was quashed on terms. The amount already recovered or paid was directed to be adjusted, subject to verification, towards 50% of the disputed tax required to be deposited; the assessee was also required to submit a reply with supporting documents, treating the impugned order as an addendum to the earlier show cause notice. [Paras 9, 10, 11, 12, 13]

The matter was remitted for a fresh merits decision upon deposit of 50% of the disputed tax and filing of a reply; on compliance, any bank-account attachment was to stand vacated subject to the stated conditions.

Final Conclusion: The writ petition was disposed of by quashing the appellate rejection and remitting the matter for fresh adjudication subject to the stipulated pre-deposit, adjustment of verified recoveries and submission of a reply to the show cause notice.

Effective service of GST notices - Opportunity of personal hearing in assessment

Validity of an ex parte GST assessment where the show-cause notice was uploaded on the common portal, the taxpayer did not respond, and no personal hearing was afforded - HELD THAT: - Although uploading a notice on the portal constitutes sufficient service, where repeated portal communications receive no response, the officer must apply mind to the use of other statutorily prescribed modes of service under Section 169(1), preferably RPAD, to ensure effective service. Passing an ex parte assessment merely by completing formalities, without affording an effective opportunity and personal hearing, would lead to avoidable litigation. [Paras 9, 10]

The assessment order was set aside and remanded for fresh consideration after the taxpayer files objections; the respondent shall issue a clear 14-day notice fixing personal hearing and decide the matter on merits.

Final Conclusion: The writ petition was disposed of by setting aside the impugned assessment and remanding the matter for a fresh decision after effective notice and personal hearing.

Assignment of long-term leasehold rights as transfer of immovable property - GST on assignment of GIDC leasehold rights - taxable supply of services under the GST law

Taxability under GST of assignment of leasehold rights in a GIDC plot to a third-party assignee for consideration - HELD THAT: - Following Gujarat Chamber of Commerce, Industries & Ors. [2026 (7) TMI 1434 - SC ORDER] the Court held that, unlike GIDC's original grant of a long-term lease, the lessee's assignment transfers its entire right and interest in the land and building to the assignee. Such assignment is a transfer of benefits arising out of immovable property and falls outside the scope of supply of services; it is consequently not liable to GST. [Paras 9]

The show cause notice treating the assignment of leasehold rights as a taxable supply of service was quashed.

Final Conclusion: The petition was allowed and the impugned GST show cause notice was quashed, since assignment of the GIDC leasehold rights constituted transfer of immovable property and not a taxable supply of service.

Revocation of GST registration cancellation for nil returns - Revocation of cancellation of GST registration where nil returns were filed owing to absence of business transactions caused by financial and health problems.

HELD THAT: - The Court found the explanation for non-conduct of business and consequent filing of nil returns for three consecutive years to be genuine. It therefore revoked the cancellation, while requiring filing of pending returns and payment of tax dues, interest and belated-return fee; any unutilised input tax credit could be used only after scrutiny and approval by the competent officer. [Paras 8, 9]

The cancellation of GST registration was revoked subject to the stipulated conditions; failure to comply with them would cause the benefit to cease automatically.

Final Conclusion: The writ petition was disposed of by revoking the cancellation of the GST registration, subject to compliance with the conditions prescribed by the Court.

Classification of Papad Khar - GST exemption for inputs used in exempt final products - Carbonates and bicarbonates

Classification of Papad Khar, an alkaline salt mixture used to impart crispness and puffing to papad and similar snacks, under heading 2501, heading 2102 or heading 2836 - HELD THAT: - Papad Khar, comprising sodium chloride, sodium carbonate and sodium bicarbonate, is manufactured by mixing and processing the constituents and is neither common salt nor rock salt in its crude state or a product of the limited processes contemplated by heading 2501. It is also neither yeast nor prepared baking powder within heading 2102, as its composition, function and culinary use differ from those products.

Though sodium chloride forms the larger proportion, it acts as a diluent/carrier; the carbonates and bicarbonates are the functionally active constituents. Papad Khar, being sodium sesquicarbonate/carbonate-bicarbonate in character, is classifiable as other disodium carbonate under sub-heading 28362090. [Paras 13, 14, 15, 17]

Papad Khar is classifiable under sub-heading 28362090 and not under headings 2501 or 2102.

GST rate on inorganic chemicals - GST exemption for inputs used in exempt final products - GST rate and exemption eligibility of Papad Khar classified as a carbonate/bicarbonate product, notwithstanding its use in manufacturing exempt papad - HELD THAT: - Papad Khar is not covered by the specified exclusions or other schedules and therefore falls within the entry for inorganic chemicals in Schedule II of Notification No. 09/2025-Central Tax (Rate). The exemption applicable to papad does not extend to Papad Khar merely because it is an input in papad manufacture: inputs and finished products are separately classified and taxed under their respective tariff entries and rate schedules. [Paras 18, 19]

Papad Khar is liable to GST at 18% and does not qualify for the claimed GST exemption.

Final Conclusion: The application was answered against the applicant. Papad Khar was held classifiable under sub-heading 28362090 and chargeable to GST at 18%, without exemption.

Composite supply of job work services - GST rate on offset printing of kraft paper and duplex paper - taxable at 5% or 18% GST

GST rate applicable to the composite job work supply involving offset printing on kraft paper and duplex paper owned by principal manufacturers - HELD THAT: - The sequential activities of cutting, sorting, plate preparation, offset printing, drying or curing, finishing, quality checking, bundling and return of the printed paper were naturally bundled and supplied together in the ordinary course of business. Offset printing was the principal supply and the remaining activities were ancillary. A composite supply is taxable as its principal supply.

The concessional job-work entry for printing goods under Chapters 48 and 49 applies only where the goods on which printing is undertaken attract central tax at 2.5% or nil. Since kraft paper and duplex paper were taxable at 18%, that entry was inapplicable and the residuary job-work entry governed the supply.

Ruling:- GST rate of 18% (9%CGST + 9%SGST) is applicable on the job work services (composite supply where offset printing is the principal supply) provided by the applicant on Kraft Paper and Duplex Paper supplied by the principal manufacturers in view of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended).[Paras 10, 11, 12]

The composite job work supply, with offset printing as its principal supply, is taxable at 18%.

Final Conclusion: The application was answered by holding that offset-printing job work on kraft paper and duplex paper supplied by principal manufacturers attracts GST at 18%. The separate question concerning ancillary charges was not required to be answered.

Classification of detergent soap bars as laundry soaps - Common-parlance test for distinguishing toilet soaps - Inapplicability of definitions under statutes with different objects

Classification and GST rate of semi-detergent and detergent soap bars manufactured for washing clothes and perfuming apparel - HELD THAT: - We find that the term ‘toilet soap’ is not defined under the CGST Act, 2017. We also find that the applicant is looking for definitions of ‘toilet soap’ in other Acts instead of referring to the definition of the said product as available in common parlance, to support his cause. This does not appear to be justifiable. It is a settled principle of law that definition of one statute cannot be made applicable in another statute.

The Hon’ble Supreme Court in it’s judgement [2012 (12) TMI 149 - SUPREME COURT] in the case of appeal filed in Connaught Plaza Restaurant (P) Ltd. involving the classification of ‘soft serve’ served at the restaurant, has discussed the aspect of non-applicability of the definition of one statute in another statute.

The definition of a toilet preparation under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 could not be imported for GST classification, since that enactment has a different object and scheme. Applying the common-parlance meaning, toilet soap is intended specifically for washing the body, hands or face, whereas the products in question were intended to remove stains and deodorise apparel. Their stated use and composition, including substantial fillers and absence of constituents identified as characteristic of toilet soaps, established that they were laundry soaps. [Paras 13, 14, 15, 16, 19]

The products are classifiable as laundry soaps under sub-heading 34011942 and, being covered by Entry 66 of Schedule II to Notification No. 09/2025-Central Tax (Rate), are liable to GST at 18%.

Final Conclusion: The detergent and semi-detergent soap bars manufactured for washing clothes were held to be laundry soaps, classifiable under sub-heading 34011942 and taxable at 18%.

Limitation for final assessment pursuant to DRP directions - Harmonious construction of sections 144C and 153

Validity of the final assessment order for Assessment Year 2018-19 where it was passed beyond the limitation prescribed u/s 153 read with section 144C - HELD THAT: - Following the binding Roca Bathroom Products [2022 (6) TMI 848 - MADRAS HIGH COURT] precedent, the Tribunal held that sections 144C and 153 are interdependent and must be harmoniously construed. The non-obstante clause in section 144C(13) does not exclude the outer limitation under section 153; the prescribed time limit governs completion of the final assessment. The Revenue's objection seeking deferral of adjudication pending the Supreme Court proceedings was rejected. [Paras 4, 10]

The final assessment order was held barred by limitation and quashed, with liberty to the parties to seek revival if the Supreme Court's decision necessitates modification.

Final Conclusion: The appeal was allowed on the limitation issue and the final assessment order was quashed. The merits grounds were kept open, subject to liberty to seek revival depending on the Supreme Court's decision.

Authority for Advance Rulings - withdrawal of AAR application - abeyance of departmental proceedings - maintainability of show cause notice - compliance with CBDT Circular - jurisdiction of the Assessing Officer - Article 226 writ remedy

HELD THAT:- The special leave petitions were dismissed as the show cause notice issued to the assessee had been withdrawn and nothing survived for consideration.

Reasoned orders on stay of disputed tax demand - Application of prescribed parameters for stay pending appeal

Validity of the condition requiring payment of part of the disputed demand for stay pending appeal without reasons under the applicable administrative instructions - HELD THAT: - The authorities were required to decide the stay application by applying the parameters prescribed under the relevant circulars and to record reasons for the extent of demand stayed and made recoverable. As neither impugned order disclosed why only part of the demand was stayed while the balance was made collectible, the order affirming that condition could not be sustained. [Paras 4, 5]

The order of the Principal Commissioner was quashed and the stay application was restored for expeditious reconsideration after opportunity to the petitioner by a reasoned order; recovery was barred until such reconsideration.

Final Conclusion: The petition was partly allowed. The restored stay application was directed to be decided expeditiously by a reasoned order, with no coercive recovery in the meantime.

Condonation of delay on sufficient cause - Foreign tax credit for taxes paid in Germany

Condonation of delay on sufficient cause - Condonation of delay in filing the appeal against the intimation denying foreign tax credit - HELD THAT: - The assessee's explanation comprised personal difficulties, disruption caused by the COVID-19 pandemic, income-tax portal glitches and the complexity of the foreign tax credit claim. The Tribunal held that it was not unusual for a taxpayer to encounter such difficulties when these circumstances coincided. Documentary proof of portal glitches was not indispensable, since such difficulties were a matter of common experience. An assessee need not explain every day's delay; its length is not decisive where sufficient cause is established. [Paras 7]

Sufficient cause for the delay was established; the delay was condoned and the appellate order refusing condonation was reversed.

Foreign tax credit for taxes paid in Germany - Claim for foreign tax credit in respect of German taxes paid on stock option plan payout - HELD THAT: - Though the Tribunal noted that Form No. 67 was on record and that the assessee sought only proportionate credit, it expressly refrained from deciding the claim on merits. The claim requires substantiation and examination in accordance with law. [Paras 8, 9]

The foreign tax credit claim was remanded to the jurisdictional Assessing Officer for fresh examination and grant of the correct admissible credit, if any.

Final Conclusion: The appeal was allowed for statistical purposes. The delay in filing the first appeal was condoned, and the foreign tax credit claim was restored to the Assessing Officer for fresh adjudication in accordance with law.

Credit of tax deducted at source on jointly owned property income - Procedural requirements and substantial justice - Credit of TDS reflected against deductee's PAN

Entitlement of a co-owner to credit of the entire tax deducted at source on rental income from jointly owned property, where the entire deduction was reported against that co-owner's PAN and the other co-owners neither claimed nor sought credit for their respective shares - HELD THAT: - Section 199 read with rule 37BA contemplates TDS credit in favour of the deductee, while transfer of credit to another person assessable on the income requires compliance with the prescribed declaration and reporting requirements.

Since the entire TDS stood deducted and reported against the assessee's PAN, no declaration had been furnished for transfer of credit, and the other co-owners had not claimed their shares of TDS and supported the assessee's claim, the unclaimed credit could not be granted to them. Procedural requirements must advance rather than defeat substantial justice; the Revenue cannot permanently retain TDS without allowing credit to any person. [Paras 12, 13, 14, 15]

The assessee was entitled to credit of the entire TDS deducted against his PAN; the restriction of credit to his one-third share was set aside.

Final Conclusion: The appeal was allowed and the Assessing Officer was directed to grant credit for the whole TDS deducted against the assessee's PAN. The remaining grounds were left open.

Penalty u/s 271B for failure to obtain tax audit - reasonable cause u/s 273B

Levy of penalty for failure to obtain audit of books in respect of milk-pouch sales conducted on commission/trade-discount basis - HELD THAT: - The assessee had furnished materials explaining the nature of the business, the commission income and the reasonable cause for non-audit. The statutory protection available where reasonable cause is established was not considered by either lower authority. This was material particularly as the reassessment accepted the income returned and no addition was made. [Paras 5]

The penalty levied for non-audit of books was directed to be deleted.

Final Conclusion: The appeal was allowed and the penalty for failure to obtain tax audit was deleted.

Addition u/s 56(2)(x) - difference between the purchase consideration stated in the sale deed and the stamp-duty valuation - Reference to Departmental Valuation Officer

HELD THAT: - The assessee had specifically disputed the stamp duty valuation, explained that the basement and ground floor could not be valued on the same footing, and requested a reference to the Departmental Valuation Officer. The Assessing Officer neither considered those objections through a reasoned finding nor referred the property for valuation. Once such a request was made, the Assessing Officer was required to make the reference; adoption of the stamp duty value without doing so was unjustified. [Paras 5]

The addition, as sustained to the assessee's share by the Commissioner (Appeals), was deleted.

Final Conclusion: The appeal was allowed and the addition based on the difference between the declared consideration and stamp duty valuation was deleted.

Notional rent assessable as income from other sources - Deduction of expenditure incurred for income from other sources - Trade incentives as revenue expenditure - Depreciation on assets put to use

Notional rent assessable as income from other sources - Taxability of notional usage charges for premises occupied by the assessee's sister concern, where the income was assessable under the head "Income from Other Sources" - HELD THAT: - The agreement contemplated usage charges and/or reimbursement of expenses, and the parties had implemented only the reimbursement arrangement. The Tribunal held that this was not a subsequent private understanding overriding the agreement. Where no evidence established that the usage charges were received or had become receivable, notional rent could not be taxed under the head "Income from Other Sources". [Paras 15]

The addition of notional rent was deleted for Assessment Year 2004-05; the same finding was directed to apply mutatis mutandis for Assessment Year 2005-06.

Deduction of expenditure incurred for income from other sources - Building expenditure relatable to house-property rent - Disallowance of repairs and maintenance, service charges and depreciation on the building in relation to premises occupied by the sister concern and premises let to a third party - HELD THAT: - As the amount relating to the sister concern was assessable as income from other sources, the related expenditure had to be considered under the statutory provisions allowing expenditure laid out wholly and exclusively for earning such income. The disallowance attributable to the sister concern was therefore unsustainable. However, rent actually received from the third-party occupant was undisputedly assessable as income from house property; consequently, only depreciation and building-related expenses pertaining to that occupied area could be disallowed. [Paras 17]

The disallowance relatable to the sister concern was deleted, and the Assessing Officer was directed to recompute and restrict the disallowance to depreciation and building-related expenses pertaining to the third-party occupant's area.

Ad hoc disallowance of brand-promotion expenditure - Disallowance of trade incentives on the ground that expenditure incurred for promotion of product brands yielded an enduring benefit. - HELD THAT: - The Commissioner (Appeals) had restricted the disallowance by following the order for a subsequent assessment year A.Y. 2007-08 [2026 (4) TMI 1903 - ITAT MUMBAI]. Since the Coordinate Bench had subsequently deleted the corresponding disallowance for that year, the Tribunal followed that decision and held that the disallowance sustained could not continue. [Paras 26]

The disallowance of trade incentives was deleted.

Depreciation on assets put to use - Moulds and dies used in manufacture of plastic containers - Allowability of depreciation on moulds and dies used for manufacture of shampoo bottles - HELD THAT: - The manufacture or packing of final products in plastic containers made using the moulds and dies demonstrated their utilization during the relevant financial year. The condition that the assets be put to use was thus satisfied. [Paras 31]

Depreciation on the moulds and dies was directed to be allowed.

Final Conclusion: The assessee's appeals were allowed to the extent indicated: notional rent from the sister concern was deleted, the related expenditure disallowance was deleted subject to recomputation for the third-party tenant, and the trade-incentive and depreciation claims were allowed. The Revenue's cross-appeal was disposed of consistently with those directions.

Consequential assessment founded on annulled revisional order - Business character of interest income having direct nexus with real estate business

Validity of an assessment framed solely pursuant to revisional directions after the revisional order was quashed - HELD THAT: - The revisional order was the sole source of jurisdiction for the consequential assessment. Once that foundational order had been annulled, the assessment resting exclusively upon it could not survive independently; the consequential proceeding necessarily collapsed with its foundation. [Paras 4]

The assessment could not be sustained, and the relief granted by the Commissioner (Appeals) was upheld.

Business character of interest income having direct nexus with real estate business - Set-off of brought-forward business losses against business income - Assessment of interest earned on temporarily deployed funds generated in the real estate business and entitlement to set off brought-forward business losses against it - HELD THAT: - The issue had already been concluded in the assessee's own case [2022 (7) TMI 1592 - ITAT MUMBAI] the interest income bore a direct nexus with its business activities and was assessable as business income. The Commissioner (Appeals) had followed that binding coordinate-Bench decision, and the Revenue showed no distinguishing feature requiring a contrary view. [Paras 4]

Interest income was rightly treated as business income, against which the brought-forward business losses were allowable to be set off.

Final Conclusion: The Revenue's appeal was dismissed. The consequential assessment, being founded exclusively on an annulled revisional order, could not survive, and the treatment of the interest receipts as business income with corresponding set-off of brought-forward business losses was sustained.

Unexplained cash credit u/s 68 - Genuineness and creditworthiness of loan transaction- funds received from a corporate lender and placed in short-term deposits, claimed as a loan or advance treated as unexplained

HELD THAT: - For Section 68, the assessee must establish the creditor's identity and creditworthiness and the genuineness of the transaction. Although the creditor's identity stood established as it was a corporate entity having a valid PAN and address, neither its capacity to advance the funds nor a genuine business purpose for the advance was established. Repayment in the same financial year, after the funds had been invested in short-term deposits, was by itself insufficient to prove genuineness, particularly when no explanation was placed on record for an advance without an identified object or purpose. [Paras 15, 16, 17]

The deletion was not justified; the addition as unexplained cash credit was restored.

Final Conclusion: The Revenue's appeal was allowed and the addition under Section 68 was restored.

Valididty of Reassessment - communication of reasons recorded for reopening - Valid assumption of reassessment jurisdiction - Principles of natural justice

Validity of reassessment where the reasons recorded for reopening were not supplied to the assessee despite repeated requests - HELD THAT: - Hon’ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. [2012 (8) TMI 612 - BOMBAY HIGH COURT] has held where the A.O failed to communicate the “reasons to believe” on the basis of which the case of the assessee was reopened, the Hon’ble High Court quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. Also see JAGAT TALKIES DISTRIBUTORS [2017 (9) TMI 192 - DELHI HIGH COURT] gave ruling therein is failure of the A.O to supply to the assessee a copy of the “reasons to believe” for reopening of the assessment u/s.147 of the Act, the re-assessment proceedings stands vitiated in law.

The Assessing Officer's recording of reasons was insufficient where the recorded reasons were not communicated to the assessee on request. Non-supply deprived the assessee of the right to object to the reopening and obtain a speaking determination of such objections. Compliance with this jurisdictional requirement is essential to the valid exercise of reassessment power; its breach vitiates the reassessment proceedings. [Paras 5, 7, 8, 9, 10]

The notice for reassessment and the consequent reassessment order were held void for want of valid jurisdiction and were quashed.

Final Conclusion: The appeal was allowed. The reassessment notice and reassessment order were quashed because the recorded reasons for reopening were not furnished despite the assessee's repeated requests.

Deduction of interest income from co-operative bank under section 80P(2)(d)

HELD THAT: - The Tribunal found that the facts were identical to those in the assessee's earlier case [2025 (8) TMI 1848 - ITAT SURAT] wherein deduction was allowed on interest earned from investments with a co-operative bank which was itself a co-operative society. As the Revenue produced no distinguishing facts or fresh material, the binding co-ordinate Bench decision was followed. [Paras 4, 5]

The assessee was held entitled to deduction under section 80P(2)(d) for both assessment years.

Final Conclusion: Both appeals were allowed, and the claimed deduction under section 80P(2)(d) on interest income from co-operative banks was directed to be allowed.

Vague show cause notice in Customs Broker disciplinary proceedings - Natural justice-specific allegations in show cause notice

Validity of disciplinary proceedings against a Customs Broker for alleged breach of the duties to advise the client and exercise due diligence, where the show cause notices merely reproduced material from proceedings against the importer without specifying the alleged contraventions attributable to the Customs Broker - HELD THAT: - The show cause notices and the orders were founded on the earlier order concerning misclassification and undervaluation of the imported boiled betel nuts, but did not substantiate or specify how the appellant had violated the applicable Customs Broker obligations. The notices were materially identical to those considered in the appellant's earlier case, in which it was held that the noticee could not be left to decipher the allegations. A show cause notice is the foundation of departmental action; where it is vague and the order travels beyond its allegations, the noticee is denied an effective opportunity to meet the case. Case followed M/S. ENTIRE LOGISTICS PVT. LTD. [2026 (3) TMI 860 - DELHI HIGH COURT]. [Paras 7, 9, 10]

The show cause notices were set aside as vague, and the consequential orders revoking the Customs Broker licence, forfeiting the security deposit and imposing penalty were also set aside.

Final Conclusion: The appeals were allowed. The disciplinary action failed because the show cause notices did not disclose specific allegations establishing the Customs Broker's alleged regulatory breaches.

Extended limitation for deliberate misclassification and wrongful exemption claim - Invocation of the extended period for recovery of customs duty arising from classification of optical network terminals as subscriber end equipment and consequential availing of exemption - HELD THAT: - The importer had adopted inconsistent classifications for goods having the relevant technical features, while describing optical network terminals as subscriber end equipment to claim exemption. It had also classified ONTs, ONUs and OLTs under tariff items attracting duty in other instances, continued the disputed classification despite provisional reassessment of a Bill of Entry, and possessed an equipment approval describing the goods as GPON ONT rather than subscriber end equipment. These circumstances established intentional availment of ineligible exemption with intent to evade customs duty; the bare oral assertion that the Department had not previously raised the classification dispute did not displace those findings. [Paras 10]

The finding of deliberate misclassification and intentional wrongful availment of exemption, warranting the extended period, was upheld.

Final Conclusion: The three appeals were dismissed, the Tribunal upholding the demand on the finding that the appellant had intentionally availed ineligible exemption by misclassifying the imported goods.

Rejection of declared transaction value on corroborated evidence - Exclusion of refundable VAT from assessable value - Exemption for temporarily registered new motor vehicle - Redemption fine where goods are unavailable for confiscation - Penalties for deliberate undervaluation

Rejection of declared transaction value on corroborated evidence - Exclusion of refundable VAT from assessable value - Rejection and enhancement of the declared transaction value of the imported Maserati GranTurismo - HELD THAT: - Transaction value has statutory primacy and cannot be rejected on suspicion alone; however, Rule 12 applies where objective and reliable material creates reasonable doubt as to its truth or accuracy. The contemporaneous invoices for the same vehicle, corroborated by official overseas verification, electronic correspondence and commercial records, established deliberate misdeclaration of value. The refundable VAT shown in the higher invoice did not form part of the price paid or payable for export to India and was consequently excluded from assessable value. [Paras 11, 15, 16, 18, 25]

Rejection of the declared value and enhancement were upheld, subject to exclusion of the refundable VAT component; re-quantification was remanded on that limited basis.

Exemption for temporarily registered new motor vehicle - Independent examination of exemption eligibility - Eligibility of the imported Maserati GranTurismo for concessional duty as a new motor vehicle notwithstanding its registration in the United Kingdom before export - HELD THAT: - Temporary registration in the exporting country, without evidence that the vehicle was actually used, does not render it a used motor vehicle. Registration undertaken as a statutory or transportation formality cannot by itself defeat the exemption. Valuation and exemption operate on distinct statutory foundations; established undervaluation does not by itself deny an exemption whose substantive conditions are otherwise fulfilled. [Paras 21, 22, 23, 24, 25]

The benefit of Serial No. 344(2) of Notification No. 21/2002-Cus. was held available, and the duty was directed to be re-quantified accordingly.

Confiscation for misdeclaration of value - Redemption fine where goods are unavailable for confiscation - Sustainability of confiscation and redemption fine in respect of the imported vehicle misdeclared in value and already cleared - HELD THAT: - Deliberate misdeclaration of value rendered the vehicle liable to confiscation, independently of the importer's entitlement to the exemption. However, redemption fine could not be imposed when the vehicle had already been cleared and was no longer available for confiscation. [Paras 26, 27, 30]

Confiscation was upheld, but the redemption fine was set aside.

Penalties for deliberate undervaluation - Consequential modification of penalty - Penalties for deliberate undervaluation of the imported Maserati GranTurismo - HELD THAT: - The finding of deliberate undervaluation was affirmed on the corroborated documentary evidence. Since the differential duty required re-quantification after allowing the exemption and excluding refundable VAT, the penalty linked to such duty could not survive at its original quantum; the penalty on the intermediary for facilitating the undervaluation was unaffected. [Paras 28, 29, 30]

The penalty under Section 114A was restricted to the penalty legally leviable on the re-quantified duty, while the penalty under Section 112(a) on the intermediary was confirmed.

Final Conclusion: The appeals were partly allowed to the extent of granting the concessional notification benefit, excluding refundable VAT from assessable value, setting aside redemption fine and modifying the duty-linked penalty. The matter was remanded solely for re-quantification; confiscation and the penalty on the intermediary were sustained.

Appellate jurisdiction over goods imported as baggage - gold ornament found worn on an arriving passenger's wrist -Strict construction of exclusionary appellate provisions - scope of word “imported or exported as baggage” appearing in the proviso

Maintainability of an appeal concerning a gold kada found worn on an international passenger's wrist under the exclusion for goods imported or exported as baggage - HELD THAT: - The statutory exclusion applies only where the challenged order relates to goods imported or exported as baggage. An exclusion of the ordinary appellate remedy must be applied only where its conditions are clearly and unambiguously satisfied. Arrival from abroad or interception at an international airport does not by itself establish that an article worn on the person is baggage. Since the gold kada was recovered from the appellant's wrist, and its character as a personal ornament, bona fide personal effect, declarable article and concealed goods requires examination on merits, it could not conclusively be treated at the preliminary stage as goods imported as baggage. The Revenue authorities cited, involving goods recovered from baggage, luggage or articles admittedly presented as baggage, were factually distinguishable; nor could the description assigned by the Department determine jurisdiction. [Paras 19, 20, 21, 22, 23]

The preliminary objection was rejected and the appeal was held maintainable for hearing on merits.

Final Conclusion: The appeal was held maintainable because the gold kada found worn on the appellant's wrist could not, at the preliminary stage, conclusively be regarded as goods imported as baggage. The matter was directed to be listed for disposal on merits.

Customs exemption for flavour compounds - Compound alcoholic preparations used for manufacture of beverages - Burden to establish applicability of exemption exclusion

Eligibility of imported Tab Mapelein ST, classified under Customs Tariff Heading 3302, for the exemption available to goods other than compound alcoholic preparations of a kind used for manufacture of beverages with alcoholic strength exceeding the prescribed limit - HELD THAT: - The exclusion applies only where the imported goods are established to be compound alcoholic preparations of the specified alcoholic strength and of a kind used for manufacture of beverages. The earlier Tribunal order in the appellant's case [2009 (12) TMI 786 - CESTAT BANGALORE] had denied exemption to beverage flavours actually used in beverage manufacture, but required a categorical finding regarding flavour compounds not sold to beverage manufacturers. The Revenue could not deny the exemption merely by relying on that earlier order, without proving that the present goods, supplied to a tobacco manufacturer, were of a kind used in manufacture of beverages. Reliance on an earlier test report, without a test report for the present consignment, did not establish the exclusion. [Paras 8, 10]

The Revenue having failed to establish that the imported goods fell within the exclusion, denial of the claimed exemption was unsustainable.

Final Conclusion: The impugned order denying the customs exemption was set aside and the appeal was allowed.

Penalty for involvement in gold smuggling - Confiscation of vehicle used for carriage of passengers possessing smuggled gold

Liability of the driver to penalty and of the hired vehicle to confiscation where smuggled gold was recovered from passengers travelling in the vehicle - HELD THAT: - Mere carriage of passengers from whose possession smuggled gold was recovered did not establish that the driver was engaged in smuggling. In the absence of corroborative statement or other evidence connecting the driver with the smuggling activity, neither penalty nor confiscation of the vehicle was sustainable. [Paras 7, 8]

The penalty on the driver was dropped, and the vehicle was held not liable to confiscation and directed to be released.

Penalty for involvement in gold smuggling - Liability of the hotel operators to penalty for alleged involvement in smuggling of gold recovered from other persons - HELD THAT: - Revenue produced no evidence that the hotel operators had knowledge of, connection with, or involvement in the smuggling activity of the persons from whose custody the gold was recovered. Their penal liability could not therefore be sustained. [Paras 9, 10]

The penalties imposed on the hotel operators were dropped.

Final Conclusion: The appeals were allowed. The penalties were set aside, and the seized vehicle was directed to be released.

Rejection of declared transaction value for imported Main PCB Boards - Redetermination of customs value on contemporaneous imports - Penalties for deliberate undervaluation and abetment of misdeclaration - Cross-examination in customs adjudication

Rejection of declared transaction value for imported Main PCB Boards - Contemporaneous-import valuation - Extended-period customs demand - Rejection and redetermination of the declared value of imported Main PCB Boards for Digital Satellite Receivers, with consequential recovery of duty, interest and confiscation for misdeclaration - HELD THAT: - The declared transaction value was rightly rejected where the importer acted merely as a commission conduit, the goods were imported through the overseas supplier's arrangement and were immediately supplied to the domestic beneficiary. The valuation adopted the lowest contemporaneous value of comparable Main PCB Boards imported from the same country during the same period and in comparable quantities. In the absence of declared distinguishing technical specifications, the appellants could not dispute comparability. Subsequent investigation disclosing suppression and undervaluation also sustained proceedings for recovery notwithstanding initial clearance. [Paras 6, 9]

The redetermined value, consequential duty with interest, and confiscation were upheld.

Penalty on importer for deliberate undervaluation - Penalty for abetment of customs misdeclaration - Penalties on the importer, the person managing the proprietary concern, and persons coordinating and benefiting from the undervalued imports - HELD THAT: - The proprietor, through the authorised representative, accepted responsibility for import-related declarations and admitted that the imports were undertaken for third parties at non-genuine declared values. The person managing the concern admitted lending its import entitlement, receiving commission, issuing fabricated invoices and routing the goods to the beneficiary, thereby attracting penalty for acts rendering the goods liable to confiscation. The overseas supplier's controller and the domestic beneficiary were found, on statements and documentary evidence, to have respectively coordinated the undervalued exports and actively abetted the scheme. [Paras 7]

The penalties imposed under Sections 112(a), 112(b) and 114A were sustained.

Cross-examination of witnesses in customs adjudication - Reliance on voluntary admissions and documentary evidence - Necessity of cross-examination where the customs adjudication rested on Bills of Entry, documentary material and voluntary admissions of the appellants - HELD THAT: - Cross-examination was neither relevant nor necessary because the adjudication was founded on documentary evidence and the appellants' own voluntary admissions, and no statement of an investigating officer was relied upon against them. [Paras 8]

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

Final Conclusion: The appeals were dismissed and the impugned order, including the redetermined value, consequential duty, confiscation and penalties, was upheld.

Penalty for misdeclaration of retail sale price of imported mobile phones and laptops

Sustainability of personal penalties imposed on co-noticees for alleged post-importation replacement of retail price stickers on imported mobile phones and laptops - HELD THAT: - The duty demand and allegations in the adjudication order had been dropped by the Commissioner (Appeals) in respect of the main noticee and other co-noticees. Since the foundation for the penalties no longer survived, the penalties imposed on the present appellants were held unsustainable. [Paras 6, 7]

The personal penalties imposed on the appellants were dropped.

Final Conclusion: The appeals were allowed and the penalties imposed on the appellants were set aside with consequential relief in accordance with law.

Penalty for alleged involvement in smuggling of cigarettes - Admissibility of hostile witness testimony in cross-examination

Penalty on the respondent for alleged involvement in the smuggling of cigarettes, founded on the statement of the IEC holder - HELD THAT: - The witness, during cross-examination, stated that the respondent had no role in the matter, could not produce substantial documents establishing the respondent's ownership, and acknowledged a friendly relationship with the respondent. That testimony was admissible notwithstanding that the witness had turned hostile; it did not establish the respondent's involvement in smuggling. [Paras 7, 8, 9]

The dropping of penalties was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal upheld the order dropping the penalties imposed on the respondent, as the evidence relied upon did not establish his involvement in the smuggling activity.

Condonation of delay in brand rate drawback applications - Liberal construction of beneficial drawback scheme

Rejection of applications for fixation of drawback Brand Rate or Special Brand Rate for export shipping bills on the ground of delay - HELD THAT: - The Tribunal followed M/s. Amber Distilleries Ltd. [2016 (4) TMI 1197 - CESTAT MUMBAI] which held that the provision permitting an application beyond the initial period but within twelve months from the Let Export Order must be construed in accordance with the beneficial character of the drawback scheme.

Delay in filing an application for fixation of brand rate within the statutorily extendable period is to be considered liberally rather than on a narrow or technical approach. [Paras 14, 15]

The delay was condoned; the matter was remanded for consideration of the applications on merits and fixation of the drawback Brand Rate/Special Brand Rate in accordance with law, with consequential relief.

Final Conclusion: The appeal was allowed by remand. The applications for fixation of drawback Brand Rate or Special Brand Rate are to be considered on merits after condoning the delay.

Locus standi of former Director in winding-up proceedings - Finality of prior adjudication - Maintainability of an appeal by a former Director in an individual capacity against orders passed in winding-up proceedings concerning creditors' claims

HELD THAT: - An earlier Division Bench order [2018 (11) TMI 1861 - DELHI HIGH COURT] between the same parties, rendered in identical circumstances, had held that objections by the former Director in his individual capacity could not be entertained for want of locus standi. As that order had attained finality inter se the appellant and the Official Liquidator, no different view could be taken in the present appeal. [Paras 9, 10]

The appeal was held not maintainable and was dismissed with costs.

Final Conclusion: The appeal was dismissed as barred by the appellant's lack of locus standi, already conclusively determined between him and the Official Liquidator. Costs were imposed on the appellant.

Cognizance of offences under the Securities Contracts (Regulation) Act on police report - Criminal breach of trust and cheating - essential ingredients

Statutory bar on cognizance under the Securities Contracts (Regulation) Act - Whether offences under the Securities Contracts (Regulation) Act alleged in relation to dabba trading could be prosecuted on a police report? -HELD THAT: - Though the police could investigate the cognizable offence, the statutory requirement of a written complaint before the Court governed cognizance. A police report could not enable the Sessions Court to take cognizance; material collected during investigation could, however, be used by the competent authority for filing a complaint before the appropriate court. [Paras 7]

The FIR and consequential proceedings for the offences under the Securities Contracts (Regulation) Act were quashed qua the applicants, without precluding fresh proceedings in accordance with law.

Criminal breach of trust - entrustment of property - Cheating-dishonest inducement - Whether the allegations relating to dabba trading disclosed criminal breach of trust or cheating under the Indian Penal Code? - HELD THAT: - Even accepting the prosecution case as true, there was no material showing entrustment of property, dishonest misappropriation, financial loss to any person, wrongful gain, or dishonest inducement for delivery of property. The alleged regulatory breach could not, without the requisite ingredients, be characterised as criminal breach of trust or cheating. See case of State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT] Apex Court has set out the categories of cases in which the inherent power under Section 482 CrPC can be exercised [Paras 8, 9]

The FIR and consequential proceedings for the offences under Sections 406 and 420 of the Indian Penal Code were quashed qua the applicants; investigation regarding the remaining offences was left to proceed in accordance with law.

Final Conclusion: The application was partly allowed. The FIR was quashed qua the applicants in respect of the offences under Sections 406 and 420 of the Indian Penal Code and the Securities Contracts (Regulation) Act, while investigation into the remaining offences was permitted to continue in accordance with law.

Applicability of Section 32A IBC to extinguish the corporate debtor's criminal liability and its consequence for suspension of sentence where the resolution plan was not approved - Extinguishment of corporate criminal liability under Section 32A IBC - effect of moratorium under Section 14 IBC on criminal liability.

HELD THAT:- We are not inclined to interfere with the impugned order passed by the High Court of Delhi [2026 (3) TMI 1210 - DELHI HIGH COURT]. The Special Leave Petition is, accordingly, dismissed.

Committal of scheduled offence to Special Court under the PMLA - Cognizance of money-laundering complaint as pre-condition - Speedy trial and discretionary committal

Committal of the pending disproportionate assets case to the Special Court dealing with the connected money-laundering complaint when that Court had not taken cognizance of the complaint - HELD THAT: - Section 44(1)(c) contemplates that cognizance has already been taken both of the scheduled offence and of the money-laundering complaint by different courts. Its committal mechanism cannot be invoked in anticipation of cognizance by the Special Court. A pre-cognizance notice under the BNSS does not amount to cognizance; further, the required prosecution sanction had not been produced, rendering the application premature.

On the admitted facts here, the Special Court at Madurai has not taken cognizance of the money-laundering complaint. It has only issued a notice under Section 223 of the BNSS calling the accused to appear before it decides whether to take cognizance at all, which is a pre-requisite that is held to be mandatory and must be complied with before cognizance can be taken, as has been held by the Supreme Court in Kushal Kumar Agarwal [2025 (5) TMI 2001 - SUPREME COURT] and was also emphasized in Seeman [2025 (11) TMI 2047 - MADRAS HIGH COURT]

Admittedly, one of the two essential facts on which Section 44(1)(c) of the PMLA is built, viz., cognizance by the Special Court, is not yet satisfied. An application asking the Thoothukudi Court to commit the case, even when cognizance was not taken by the Special Court, in our considered view, is premature.

It also needs to be pointed out that the petitioner had, in April 2023, already sought similar relief by way of an application under Sections 301(2) and 302(2) of the Code before the same court, and that petition was dismissed on merits in July 2024, without any appeal being carried against it. While this Court refrains from treating that dismissal as a formal bar, it is a relevant circumstance bearing on the propriety of a second attempt, through a different provision, to secure what is substantially the same outcome, particularly when raised only after the scheduled-offence trial had progressed still further towards conclusion.[Paras 11, 12, 13, 14, 23]

The refusal to commit the scheduled-offence case was upheld, the application being premature.

Speedy trial and discretionary committal - Interest of justice in committal proceedings - Committal of a nearly concluded disproportionate-assets trial to another court despite the connected money-laundering complaint remaining at the pre-cognizance stage - HELD THAT: - Committal under Section 44(1)(c) is intended to save time and avoid inconsistent findings, not to reopen or delay a trial that has substantially concluded. The discretion to order committal must be exercised in the interests of justice. Since evidence had closed and final arguments had substantially progressed, while the connected complaint had not reached cognizance, committal would cause real prejudice to the accused and frustrate the statutory purpose as well as the imperative of speedy trial. [Paras 18, 19, 20, 21, 23]

Committal was declined; the stay of the scheduled-offence trial was vacated and the trial court was directed to proceed expeditiously.

Final Conclusion: The petition challenging rejection of committal under Section 44(1)(c) of the PMLA was dismissed. The interim stay of the disproportionate-assets trial was vacated, and the trial court was directed to proceed with due expedition, without any expression on the merits of either proceeding.

Regular bail in money-laundering offences - Twin conditions for bail under the Prevention of Money Laundering Act - Proceeds of crime from undervalued asset sales

Grant of regular bail to a corporate executive accused of laundering unrecorded cash generated through irregular sale of corporate land assets - HELD THAT: - The Court held that the material indicating undervalued land sales under revoked board resolutions and diversion of unrecorded cash, allegedly in derogation of the asset-disposal safeguards prescribed for repayment of depositors, disclosed conduct falling within money laundering and not a mere corporate or civil irregularity. The petitioner did not establish reasonable grounds to believe that he was not guilty or that he would not commit an offence while on bail. The continuing investigation, abscondence of other accused, and risks of witness intimidation and data manipulation supported refusal of bail; age, detention, medical grounds and parity with a land broker did not displace the statutory requirements. [Paras 24, 25, 26, 27, 28]

Regular bail was refused for failure to satisfy the mandatory twin conditions under Section 45 of the Prevention of Money Laundering Act.

Final Conclusion: The application for regular bail was dismissed. The Court held that the petitioner had not satisfied the statutory conditions governing bail for the alleged offence of money laundering.

CENVAT credit on input-service invoices bearing an incorrect recipient address - Disallowance of CENVAT credit on technical grounds without consideration of objections

Disallowance of CENVAT credit merely because the recipient address in input-service invoices did not correspond with the address in the ST-2 registration certificate - HELD THAT: - The adjudicating authority had proceeded solely on the mismatch between the address in the invoices and the registered address, without examining the petitioner's entitlement to credit on merits or recording reasons for rejecting its explanation that the former address continued in the service provider's records. The invoices otherwise fulfilled the requirements under Rule 4A of the Service Tax Rules, 1994. Disallowance founded only on such technicality, without consideration of the objections, was unsustainable. [Paras 12, 13]

The impugned order was set aside and the matter was remanded for fresh consideration after notice and opportunity of hearing.

Final Conclusion: The writ petition was allowed. The demand, interest and penalty order was set aside, with a direction for fresh adjudication after affording the petitioner an opportunity of hearing.

High seas sale transactions - characterisation as sale of goods - Banking and other financial services - letter of credit charges - Composite supply - indivisibility of sale price

Liability to service tax on letter of credit charges recovered by a trader from high seas sale buyers - HELD THAT: - The high seas sale agreement was predominantly an agreement for sale of imported goods: the buyer was required to pay the entire invoiced amount, inclusive of letter of credit charges and all costs incurred by the seller. The letter of credit was issued by the bank, which alone furnished the payment guarantee to the foreign supplier. The appellant, being a trading organisation and not a provider of banking or financial services, neither issued the letter of credit nor rendered a service to the buyer; the parties stood in the relationship of seller and buyer. The expression relating to issue of letters of credit in banking and other financial services could not be extended to recovery by the seller of charges incurred for obtaining the banking facility. Under the post-negative-list regime as well, transfer of title in goods by sale was excluded from the definition of service. [Paras 20, 22, 23, 26]

The recovered letter of credit charges formed part of the sale consideration and were not consideration for taxable banking and other financial services.

Composite supply - indivisibility of sale price - Whether letter of credit charges embedded in the high seas sale transaction could be separately subjected to service tax? - HELD THAT: - The principal purpose of the agreement was sale of goods, while procurement of the letter of credit was merely linked to and necessary for execution of that sale. The composite transaction could not be vivisected to levy service tax on the letter of credit charges recovered as part of the price of the imported goods. Applying the principle in Union of India vs. Mohit Minerals Pvt. Ltd. [2022 (5) TMI 968 - SUPREME COURT] the service component accompanying a composite supply of goods could not be separately taxed contrary to the character of the bundled transaction. [Paras 27]

The letter of credit charges could not be isolated from the high seas sale consideration for levy of service tax.

Final Conclusion: The demand of service tax, interest and penalties on letter of credit charges recovered in connection with high seas sales was unsustainable. The impugned order was set aside and the appeal was allowed.

Extended limitation for suppression of facts - Mutual exclusivity of service-tax penalties - Penalty under omitted statutory provision - Penalty beyond show-cause notice allegation - Reasonable cause for service-tax default

Extended limitation for suppression of facts - Penalty for non-payment of service tax - Mutual exclusivity of service-tax penalties - Penalties for non-payment of service tax on services rendered to a multi-system operator, where taxability turned on interpretation of a commercial agreement - HELD THAT: - Invocation of the extended period and penalty for suppression require proof of a positive act of deliberate concealment with intent to evade tax; mere payment of tax after commencement of enquiry does not establish suppression. As the dispute involved interpretation of a multi-clause commercial agreement and no such positive act was established, the penalty for suppression was unsustainable. The penalties for delay in payment and for suppression being mutually exclusive, the former penalty was also set aside. See CHEMPHAR DRUGS & LINIMENTS [1989 (2) TMI 116 - SUPREME COURT] [Paras 6, 7]

The penalties under Sections 76 and 78 were set aside, while the admitted and paid service-tax demand with interest was upheld.

Penalty under omitted statutory provision - Penalty imposed under Section 75A after its omission from the Finance Act, 1994 - HELD THAT: - Section 75A had been omitted with effect from 10.09.2004 and its penal consequence was not saved under the new Finance Act. A penalty under that omitted provision was therefore without jurisdiction. [Paras 7]

The penalty under Section 75A was set aside.

Penalty beyond show-cause notice allegation - Penalty under Section 77 imposed for failure to obtain service-tax registration when the show-cause notice alleged failure to file service-tax returns - HELD THAT: - The adjudicating authority could not confirm a penalty for an infraction different from that specified in the show-cause notice. A proposal concerning failure to file returns could not sustain a penalty imposed for failure to obtain registration. [Paras 7]

The penalty under Section 77 was set aside.

Reasonable cause for service-tax default - Availability of relief from service-tax penalties where the appellant held a bona fide belief that its services were not taxable - HELD THAT: - The appellant obtained registration and paid the tax with interest when taxability came to its notice. This conduct, coupled with the interpretational nature of the dispute, established reasonable cause and absence of deliberate intent to evade tax, attracting the benefit of Section 80. [Paras 8]

The appellant was held entitled to relief from penalties under Section 80.

Final Conclusion: The appeal was partly allowed. The service-tax demand and interest, already paid, were sustained, but all the penalties imposed were set aside.

Commercial or Industrial Construction Service - construction of grain-storage buildings for non-commercial use - Indivisible works contracts - classification under Commercial or Industrial Construction Service - Small-scale service-tax exemption for renting of immovable property

Service-tax demand under Commercial or Industrial Construction Service on construction of godowns, warehouses and office buildings used for storage of grain under indivisible contracts - HELD THAT: - The certificates of the concerned authorities established that the constructed buildings were used only for grain storage, and no evidence was adduced to establish their commercial use. Further, the work orders were indivisible contracts in which the values of materials and services could not be vivisected.

We find that the contracts entered by the appellants/ work order issued to the appellants are of indivisible nature; the value of material and service cannot be vivisected and therefore, in terms of the Hon’ble Supreme Court’s decision in the L & T Ltd.[2007 (5) TMI 1 - SUPREME COURT] demand could not have been raised under the Head “Commercial or Industrial Construction Service”.[Paras 7]

The demand under Commercial or Industrial Construction Service was held unsustainable on both absence of established commercial use and the indivisible nature of the works contracts.

Small-scale service-tax exemption for renting of immovable property - Availability of small-scale exemption for consideration received from renting of immovable property after exclusion of the unsustainable construction-service demand - HELD THAT: - Once the construction-service demand was held unsustainable, there was no allegation or proof of any other taxable service whose value could be included for determining eligibility for the small-scale exemption. The renting receipts were therefore eligible for exemption under Notification No. 06/2005-ST. [Paras 8]

Small-scale exemption was available for the renting of immovable property, with the result that no part of the demand survived.

Final Conclusion: The appeal was allowed. The construction-service demand and the residual demand on renting of immovable property were held unsustainable; the questions concerning limitation and adequacy of the show-cause notices were not examined.

Supply of tangible goods service - Lease of railway wagons-transfer of possession and effective control - Deemed sale-verification of VAT liability

Supply of tangible goods service - Lease of railway wagons-transfer of possession and effective control - Leasing of wagons to the Railways under the Own Your Wagon Scheme, where possession and effective control stand transferred to the Railways, is not taxable as supply of tangible goods service - HELD THAT: - Applying the Larger Bench ruling in M/s Rashtriya Chemicals & Fertilizers Limited [2024 (3) TMI 1341 - CESTAT MUMBAI] which considered Commissioner of Central Excise and Customs vs. M/s MSPL Limited [2023 (2) TMI 1096 - SC ORDER] the Tribunal held that a lease transferring possession and effective control of the wagons to the Railways cannot attract service tax under the taxable category of supply of tangible goods service. [Paras 6, 7]

The service-tax demand cannot be sustained if the lease transaction is established to have been treated as a deemed sale with due discharge of sales tax or VAT.

Deemed sale-verification of VAT liability - Whether VAT or sales tax was discharged on lease rentals from the wagons, treating the transaction as a deemed sale, required factual verification? - HELD THAT: - The certificate tendered before the Tribunal to establish payment of VAT was undated and had not been produced before the original authority. Since the factual claim regarding payment of VAT or sales tax required verification at the original stage, the matter required fresh examination. [Paras 7]

The matter was remanded to the original authority to verify payment of sales tax or VAT; if such liability is found to have been discharged, the proceedings and demand are to be dropped.

Final Conclusion: The impugned order was set aside and the appeals were allowed by remand for verification of VAT or sales-tax payment on the lease rentals. Subject to such verification, the lease of wagons transferring possession and effective control to the Railways is not liable to service tax.

Acquittal for cheque dishonour u/s 138 of the Negotiable Instruments Act, 1881 - Presumptions as to consideration and legally enforceable debt under dishonoured cheque - Rebuttal of cheque presumptions by preponderance of probabilities

Entitlement of the complainant to the statutory presumptions in respect of a cheque dishonoured on account of stop-payment instructions, and sufficiency of the accused's defence of repayment - HELD THAT: - The accused admitted the borrowing and issuance of the signed cheque, while asserting that the liability had been discharged. Though a bank entry evidenced part repayment, no cogent evidence supported the asserted repayment of the balance. Keeping the loan amount at home was not inherently improbable in the absence of evidence establishing such improbability; nor did use of different inks for the signature and cheque particulars invalidate or render execution doubtful.

A probable defence rebuts the presumptions only when established on the standard of preponderance of probabilities. The complainant had discharged the initial burden, whereas the defence of full discharge remained unproved. [Paras 17, 18, 19]

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

Final Conclusion: The appeal was allowed, the acquittal was reversed, and the accused was convicted and sentenced under Section 138 of the Negotiable Instruments Act.

Acquittal for dishonour of cheque - Legally enforceable debt or liability for dishonoured cheque - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Interference with acquittal

Legally enforceable debt or liability for dishonoured cheque - Rebuttal of statutory presumptions under the Negotiable Instruments Act - Personal liability of a former trustee under Section 138 of the Negotiable Instruments Act for a cheque issued towards alleged trust liabilities - HELD THAT: - The documentary evidence, including the memorandum transferring management and liabilities of the trust to newly inducted trustees, and rent receipts acknowledging payment by the trust's management, showed that the alleged dues were liabilities of the trust and not of the accused personally. The complainant failed to establish the alleged advances, including the amount claimed on behalf of his wife, by corroborative evidence. The circumstances constituted a probable defence and displaced the statutory presumption, leaving no legally enforceable debt against the accused proved beyond reasonable doubt. [Paras 25, 31, 35, 44, 45]

The acquittal was sustained, as the ingredients of an offence under Section 138 were not established against the accused.

Interference with acquittal - Interference in an appeal against the appellate acquittal of the accused - HELD THAT: - An appellate court may review and reappreciate evidence, but acquittal reinforces the presumption of innocence; where two reasonable views are possible, interference is unwarranted unless the finding is perverse, manifestly illegal, or unsupported by evidence. The appellate acquittal rested on a detailed appraisal of the oral and documentary evidence and disclosed no such infirmity. [Paras 36, 37, 38, 39, 45]

No ground was made out to interfere with the acquittal.

Final Conclusion: The appeal was dismissed and the appellate acquittal under Section 138 of the Negotiable Instruments Act was confirmed. The complainant failed to prove a legally enforceable personal liability of the accused, and no perversity was shown in the acquittal.

Cancellation of NBFC registration for failure to maintain Net Owned Fund - Pending amalgamation and regulatory eligibility - Judicial review of regulatory cancellation

Validity of cancellation of an NBFI's registration for failure to maintain the prescribed Net Owned Fund, despite pendency of its application for approval of an amalgamation scheme - HELD THAT: - The petitioner admittedly did not meet the prescribed Net Owned Fund threshold when the second show-cause notice was issued and throughout the relevant period. Pendency of the amalgamation application did not confer a right to treat the threshold as satisfied, since approval and implementation of the scheme, and actual attainment of the requisite Net Owned Fund thereafter, remained contingent.

The amalgamation application was ultimately rejected after opportunity of hearing, and its rejection was not independently challenged. In judicial review, the Court would examine legality of the procedure and compliance with natural justice, not re-appreciate the regulatory material; no procedural flaw, patent illegality or jurisdictional defect was found in the cancellation or the appellate order.

It is an admitted position that even if the cancellation of registration is set aside, the petitioner no. 1-Company is at present unable to meet the currently subsisting NOF requirement of Rs.1000 Crore, which was introduced by the RBI vide Notification dated April 29, 2026. Thus, for all practical purposes, the challenge preferred in the writ petition has been rendered infructuous, and it would merely be an exercise in futility if the cancellation of the certificate of registration is now set aside, as it would immediately have to be followed by a surrender of the certificate by the petitioner no. 1-company. [Paras 52, 55, 57, 58, 59, 60]

The cancellation of registration was upheld; the writ petition challenging it was dismissed.

Final Conclusion: The writ petition was dismissed. Failure to maintain the prescribed Net Owned Fund validly sustained cancellation of the registration, and the pending amalgamation proposal afforded no basis to invalidate that action.