TaxTMI Updates e-Newsletter
Aug 12,2026

Omission of refund restriction without saving clause - sub-rule (10) of Rule 96 as omitted by Notification No.20/2024 with effect from 08.10.2024 -Continuance of pending proceedings under omitted rule - Refund of integrated tax on exports -

Whether omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 without a saving clause applies to pending proceedings concerning refund of integrated tax on exports? - HELD THAT: - The omission of Rule 96(10), without a saving or sunset clause, brought the restriction to an end in respect of pending proceedings as well. Proceedings under an omitted rule may continue only where a saving provision or a statutory legal fiction permits their continuance. The advisory recommendation of the GST Council for prospective omission did not bind the rule-making authority; the omission was intended to end complications arising from the rule, including in pending matters. [Paras 6, 7]

The omission of Rule 96(10) was held applicable to all pending refund proceedings, without applying the restriction contained in that sub-rule; the appeals were dismissed.

Final Conclusion: The appeals challenging the applicability of the omission to pending proceedings were dismissed. The special leave petitions challenging the vires and validity of Rule 96(10) were dismissed as infructuous.

Consideration of contractor's payment claim - Consideration of the contractor's claim for unpaid amounts under the work order - HELD THAT: - As the parties disputed the amount payable, the claim required factual verification by the concerned authority. The authority was directed to take a reasoned and expeditious decision after considering all pleas raised by the petitioner. [Paras 5]

The concerned authority was directed to verify the claim and render a reasoned decision within two months; the petitioner was permitted to submit an application for that purpose.

Final Conclusion: The writ petition was disposed of with a direction for expeditious factual verification and a reasoned decision on the petitioner's payment claim.

Expiry of provisional attachment of bank accounts - Statutory one-year limit under section 83(2) of the CGST Act - Continuation of provisional attachment of the assessee's bank accounts after expiry of one year from issuance of the attachment order - HELD THAT: - Section 83(2) unequivocally provides that a provisional attachment ceases to have effect upon expiry of one year from its issuance. The attachment cannot remain operative beyond that period; the accounts must therefore be de-frozen unless a fresh attachment order has been validly issued in accordance with law. [Paras 1, 2, 4]

As one year had elapsed from the attachment order and the position was undisputed, the banks were directed to de-freeze the attached accounts. Authorities were directed to specify the one-year operative period in attachment orders, and banks and financial institutions were directed to de-freeze accounts upon its expiry unless served with a valid fresh order.

Final Conclusion: The writ petition was disposed of with directions to de-freeze the bank accounts, and general directions were issued to ensure that provisional attachments do not continue beyond the statutory period of one year.

Finality of adjudicated controversy - Binding precedent and judicial discipline - Validity of the show cause notice concerning the classification of tobacco product already adjudicated under the Advance Ruling and proceedings under section 104 of the CGST/RGST Act - HELD THAT: - The same controversy had already been decided by a Division Bench in Gyankeer Tobacco Products Pvt. Ltd [2026 (4) TMI 1214 - RAJASTHAN HIGH COURT] in relation to the Advance Ruling and the proceedings under section 104 of the CGST/RGST Act. As the issue was no longer res integra, there was no reason to take a view different from the earlier binding decision. [Paras 6, 7]

The writ petition was allowed in the same terms as the earlier Division Bench decision, and the show cause notice was consequently quashed.

Final Conclusion: The writ petition was allowed by following the earlier Division Bench decision on the identical controversy, and the impugned show cause notice was quashed in the same terms.

Refund of unutilised input tax credit under inverted duty structure - Non-application of mind in rejection of refund claim

Validity of rejection of the refund claim for unutilised input tax credit accumulated on account of inverted duty structure, without consideration of the petitioners' reply and supporting documents - HELD THAT: - The Court found a prima facie case for interference and held that the rejection order was palpably wrong, legally infirm, irregular and perverse. As the petitioners were required to establish their status as manufacturers and furnish relevant business and prior-period refund particulars, the merits of eligibility for refund were not adjudicated. [Paras 19, 21]

The rejection order was quashed and set aside; the petitioners were directed to file a comprehensive reply with relevant documents before the refund authority, which was directed to pass a reasoned order after affording opportunity of hearing.

Final Conclusion: The writ petition was disposed of without adjudicating the merits of the refund entitlement, upon quashing the rejection order and directing fresh consideration of the refund claim.

GST on actionable claims arising from online gaming and betting - Retrospective valuation framework for online gaming and casino transactions

HELD THAT: - The Court found that every substantive contention and prayer raised in the writ petition had been considered and decided by the Supreme Court [2026 (5) TMI 1822 - SUPREME COURT]. It therefore held that no issue in the writ petition remained for independent consideration. The petitioners were, however, permitted to reply to the show cause notice within the stipulated period, after which the competent authority was directed to adjudicate in accordance with law and the findings of the Supreme Court. [Paras 4, 6]

The writ petition was dismissed in terms of the Supreme Court judgment; the interim order was vacated, with directions for submission and adjudication of the reply to the show cause notice.

Final Conclusion: The writ petition was dismissed as the challenges stood conclusively determined by the Supreme Court. The petitioners were granted time to respond to the show cause notice, and the competent authority was directed to decide it in accordance with law and the Supreme Court judgment.

Levy of GST on actionable claims arising from betting and gambling transactions - Whether GST on actionable claims arising from online gaming, fantasy sports, betting, gambling and casino transactions, including the statutory valuation framework and the retrospective operation of the 2023 amendments, is valid?

HELD THAT:- Writ petition dismissed in terms of the Supreme Court judgment [2026 (5) TMI 1822 - SUPREME COURT] interim order vacated, with eight weeks to reply to the show cause notice and twelve weeks thereafter for adjudication.

Condonation of delay in appeal against cancellation of GST registration - Failure to file GST returns due to professional default

Maintainability of the delayed appeal against cancellation of GST registration where the proprietor attributed the non-filing of returns and consequent delay to the failure of the accountant or tax consultant engaged for statutory compliance - HELD THAT: - The Court found the explanation for non-compliance within the prescribed period to be genuine. Cancellation of registration had brought the petitioner's business operations to a standstill, and the petitioner had asserted lack of knowledge of the show-cause notice and subsequent orders because the engaged accountant or tax consultant neither informed the petitioner of the requirement of online return filing nor undertook the compliance.

Following the coordinate Bench decisions relied upon, like M/S MOLANA CONSTRUCTION COMPANY [2024 (8) TMI 384 - RAJASTHAN HIGH COURT], MAN SINGH TANWAR [2024 (9) TMI 1232 - RAJASTHAN HIGH COURT] and RPC PSIPL JV [2025 (7) TMI 1998 - RAJASTHAN HIGH COURT] the Court held that the appeal ought to be entertained and decided on merits. [Paras 7, 8, 9]

The appellate order dismissing the appeal as barred by limitation was set aside, and the Appellate Authority was directed to decide the appeal on merits in accordance with law, subject to payment of admissible late fees, penalty and statutory deposits.

Final Conclusion: The writ petition was allowed and the delayed appeal against cancellation of GST registration was restored for decision on merits, subject to the requisite statutory payments.

Service of show-cause notice through Common Portal - Portal-only service and limitation for appeal

HELD THAT: - The Court accepted the unchallenged authoritative pronouncement in Luxmi Traders v. Union Territory of Chandigarh and Others [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] that uploading a show-cause notice on the Common Portal alone does not constitute sufficient service unless its receipt is acknowledged or a reply is filed. Consequently, where portal-only service resulted in ex parte adjudication or dismissal of an appeal as time-barred, the prescribed remedial course is restoration of the proceedings or appeal, as applicable, with opportunity to the assessee to respond or pursue the appeal. [Paras 4]

The writ petitions were disposed of in terms of the governing directions, with liberty to the petitioners to take further steps.

Final Conclusion: The writ petitions were disposed of by applying the portal-service principles laid down in the relied-upon decision, leaving the petitioners at liberty to pursue the consequential remedies.

Service of GST notices and orders through Common Portal - Restoration of ex parte GST adjudication proceedings - Limitation for appeal against portal-served orders

HELD THAT: - The respondents failed to show that the Division Bench ruling in Luxmi Traders [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] relied upon by the petitioners was distinguishable or inapplicable. The Court accordingly followed that ruling, under which mere uploading of a show-cause notice on the Common Portal is not sufficient service unless receipt is acknowledged or a reply is filed; ex parte proceedings arising from such service are to be restored to the show-cause-notice stage. Where an order passed after contest is served only through the portal, limitation for appeal is not triggered; and appellate dismissals on limitation in the stipulated circumstances are liable to be restored for merits adjudication. [Paras 3, 4]

The writ petitions were disposed of on the same terms as the Division Bench ruling followed by the Court.

Final Conclusion: The writ petitions were disposed of by applying the governing principles concerning notices and orders served solely through the Common Portal.

Provisional release of goods seized under GST search - Constitutional challenge to statutory provision

Provisional release of goods seized under GST search - Distinct fields of seizure and tax-determination provisions - construction of the provision for provisional release of goods seized during search vis-a -vis the provision for determination of unpaid or short-paid tax - HELD THAT: - The provisions operate in different and distinct fields. The provision governing search and seizure permits provisional release of seized goods upon execution of bond and furnishing of security, whereas the tax-determination provision concerns determination of tax not paid or short-paid, erroneous refund, or wrongly availed or utilised input tax credit. [Paras 2, 4]

The petitioner's contention that provisional release could be ordered only through tax-determination proceedings was not accepted.

Challenge to the constitutional validity of the statutory provision governing provisional release of seized goods - HELD THAT: - A constitutional challenge to a statutory provision requires the petitioner to establish infringement of a constitutional mandate. [Paras 5]

No basis for entertaining the constitutional challenge was established.

Challenge to GST confiscation show-cause notice - challenge to the show-cause notice proposing confiscation proceedings concerning alleged supply of copper scrap on fraudulent input tax credit - HELD THAT: - The Court did not adjudicate the allegations in the show-cause notice and left the petitioner to submit an appropriate reply and seek dropping of the proceedings. [Paras 7]

The petitioner was relegated to the statutory process for responding to the show-cause notice.

Final Conclusion: The writ petition was disposed of, with the petitioner's construction of the provisions not accepted and liberty reserved to reply to the show-cause notice and seek dropping of the proceedings.

Alternative statutory remedy and writ jurisdiction - Bar on parallel CGST and SGST proceedings on the same subject matter

Maintainability of the writ petition against the CGST adjudication order where the petitioners alleged a statutory bar arising from subsequent SGST proceedings on overlapping financial years - HELD THAT: - There can be no quarrel with the proposition laid down in Godrej Sara Lee [2023 (2) TMI 64 - SUPREME COURT] wherein has clarified that the availability of an alternative remedy does not render a Writ Petition not maintainable, however, its entertainability remains a matter of judicial discretion.

The CGST show-cause notice was issued before the notices issued by the SGST authorities. Consequently, the bar under Section 6(2)(b), which precludes initiation of CGST proceedings where State GST proceedings on the same subject matter have already been initiated, did not disclose a jurisdictional infirmity warranting exercise of writ jurisdiction despite the available statutory appeal. The earlier order concerning goods seized during search was distinct from the subsequent adjudication following investigation, issuance of notice under Section 74 and consideration of the petitioners' reply; the proceedings could not be regarded as parallel adjudications of the same subject matter. [Paras 12, 13, 14, 16, 17]

The petitioners were relegated to the statutory appeal, with exclusion of the period spent in prosecuting the writ petition for computing limitation.

Final Conclusion: The writ petition was disposed of without interference, as no jurisdictional defect was established and an effective statutory appeal was available. The period spent before the High Court was directed to be excluded for limitation purposes in filing the appeal.

Special procedure for time-barred GST appeals - Applicability of Notification No. 53/2023-Central Taxto an appeal filed after the ordinary limitation period but before the extended cut-off date

HELD THAT: - The Notification covers taxpayers who could not file appeals within the period prescribed under section 107, taxpayers whose delayed appeals were rejected, pending appeals satisfying the stipulated payment condition, and appeals filed within the extended period ending on 31.01.2024.

A taxpayer filing within that extended period and fulfilling the prescribed payment condition cannot be placed below taxpayers whose appeals had already been rejected as time-barred. The appellate authority was required to take cognizance of the Notification, which regulated appeals arising from orders under sections 73 and 74. [Paras 8, 9, 10]

The rejection of the appeal solely on limitation, without considering the Notification, was unsustainable; the matter was remanded to the appellate authority for decision on merits in accordance with law.

Final Conclusion: The writ petition was allowed, and the impugned notice and appellate order were quashed and set aside. The appeal was remanded for a merits decision within the stipulated period.

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

Validity of an ex parte GST assessment made after notices were uploaded on the common portal but without affording personal hearing - HELD THAT: - Although uploading a notice on the portal constitutes valid service, where the taxpayer gives no response despite repeated reminders, the officer must apply mind to service through other modes authorised by section 169 of the GST Act, preferably RPAD, to ensure effective service. Passing an ex parte assessment merely by completing such formalities, without a personal hearing, is liable to result in avoidable litigation. [Paras 9, 10]

The assessment order was set aside and remanded for fresh consideration, subject to payment of 25% of the disputed tax; the taxpayer was permitted to file objections, following which a clear 14 days' notice of personal hearing must be issued and the matter decided on merits. The consequential attachment was lifted.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte assessment for want of effective opportunity and remanding it subject to the stipulated pre-deposit and fresh hearing.

Effect of cancellation of GST registration on pre-cancellation tax liability - Effect on taxpayer's liability for a period preceding cancellation

HELD THAT: - The Court held that cancellation of registration does not extinguish an existing tax liability. The taxpayer had been served with the show-cause notice and statutory forms through the common portal, and was afforded repeated opportunities to reply and attend personal hearing, but did not avail them. No infirmity warranting writ interference with the assessment order was established. [Paras 6, 7]

The challenge to the assessment order was not accepted; however, the taxpayer was granted liberty to pursue the statutory appeal, subject to filing it within the stipulated period and making the statutory pre-deposit.

Final Conclusion: The writ petition was disposed of without interference with the tax and penalty order, while preserving the taxpayer's liberty to file a statutory appeal in accordance with law.

Reassessment on change of opinion - Deduction of interest income from co-operative banks by co-operative societies

Reassessment on change of opinion - Validity of reopening of a completed scrutiny assessment in respect of interest income from co-operative banks already examined while allowing the claimed deduction - HELD THAT: - The interest income and the claim for deduction had been specifically examined during the scrutiny assessment, in which the AO accepted the explanation regarding interest from co-operative banks while making additions only in respect of other income. The subsequent reopening was founded on the same material and the same issue already considered in the original assessment, and therefore constituted a mere change of opinion. [Paras 6, 7]

The reopening notice and consequential reassessment action were quashed as impermissibly based on a change of opinion.

Entitlement of a co-operative society to deduction u/s 80P(2)(d) in respect of interest earned on investments with co-operative banks - HELD THAT: - Following Diamond Jubilee Cooperative Bank Limited vs. Union of India [2025 (12) TMI 299 - GUJARAT HIGH COURT] the Court held that a co-operative society is entitled to deduction u/s 80P(2)(d) for interest income earned on investments with a co-operative bank, which is itself a co-operative society. The basis adopted for denying the deduction was contrary to the settled legal position. [Paras 7]

The proposed denial of deduction in respect of interest from co-operative banks was held unsustainable on merits.

Final Conclusion: The writ petition was allowed and the notice reopening the assessment for A.Y. 2014-15, together with the reassessment action, was quashed.

Deduction u/s 80IAB - Deduction for interest on business funds compulsorily parked in fixed deposits - Disallowance of expenditure relating to exempt income

Eligibility of interest earned on unutilised funds parked with banks for deduction u/s 80-IAB - HELD THAT: - The question was held to be covered by the settled legal position accepted by both sides in NIRMA LTD. [2014 (10) TMI 388 - GUJARAT HIGH COURT]. Interest earned on fixed deposits placed for business purposes, including deposits made at the insistence of financial institutions, was treated as business income and not income from other sources. [Paras 9]

The deduction claim was upheld in favour of the assessee and against the revenue.

Disallowance of expenditure relating to exempt income u/s 14A read with rule 8D - HELD THAT: - The question was held to be governed by the settled position in VISION FINSTOCK LTD [2017 (7) TMI 1277 - GUJARAT HIGH COURT], accepted by revenue counsel, that disallowance of expenditure under section 14A read with rule 8D cannot exceed the exempt income earned. [Paras 12]

The disallowance was rightly restricted to the exempt income, in favour of the assessee and against the revenue.

Final Conclusion: The revenue's appeal was disposed of with both substantial questions answered in favour of the assessee. The cross-objection did not survive in view of the answer to the first question.

Exemption of income in non-resident external account - Unexplained investment from remittances through non-resident external account

Additions for unexplained investment and unexplained cash credits based on funds remitted to the assessee's NRE account by non-resident relatives through banking channels - HELD THAT: - The NRE status of the assessee and the remitters was undisputed, and the remittances were made through banking channels in accordance with RBI guidelines.

Applying the earlier decisions of this Court [2023 (11) TMI 649 - GUJARAT HIGH COURT] and [2024 (10) TMI 1157 - GUJARAT HIGH COURT], the Court held that funds received in NRE accounts were beyond the reach of the authorities as to their foreign source and that income in such accounts was exempt from inclusion in total income. The Tribunal's deletion of the additions consequently gave rise to no question of law, much less a substantial question of law. [Paras 9, 12]

The Revenue's challenge to deletion of the additions under sections 69 and 68 was rejected.

Final Conclusion: The tax appeal was dismissed, as no substantial question of law arose from the Tribunal's deletion of additions relating to remittances received through the assessee's NRE account.

Reassessment based on incorrect factual premise - Escapement of income

Validity of reopening where the alleged payment to a concern during the relevant assessment year was, in fact, an opening ledger balance and no payment was made during that year - HELD THAT: - The reopening proceeded on the premise that the assessee had deposited funds in the bank account of the concern during the year under consideration. The assessee's objection that the stated amount represented an opening balance and that no payment had been made during that year was not disputed. Reassessment founded on an incorrect factual premise is impermissible; in the absence of any such payment, no question of escapement of income arose. [Paras 8]

The notice for reassessment was quashed and set aside.

Final Conclusion: The writ petition was allowed and the reassessment notice for AY 2014-15 was quashed, as it was founded on an undisputedly incorrect factual premise.

Reassessment - absence of taxable income escaping assessment - Educational institution exemption-application of income

Reopening of assessment of an approved educational trust where, even after the proposed disallowances, its application of income remained above the statutory threshold for exemption. - HELD THAT: - The proviso to section 10(23C)(vi) permits accumulation up to 15% of income, subject to application of the balance for the institution's objects. On the undisputed comparative computation, the trust's utilisation remained above 85% even on the Revenue's computation. The Assessing Officer did not address this determinative feature despite the material furnished. Further, section 152(2) enables dropping of reassessment proceedings where the assessee establishes that its assessed liability would not be lower even after accounting for the income alleged to have escaped assessment. Since exclusion of the disputed applications had no impact on taxable income, there was no escapement warranting reassessment. [Paras 15, 19, 20]

The reopening notice and order, and the consequential reassessment order, were quashed and set aside.

Revisionary power over assessment passed in defiance of interim order - Availability of revisionary power to revoke or set aside an assessment order passed contrary to an interim order of the Court. - HELD THAT: - The Commissioner may invoke section 264 to modify, revoke or set aside an assessment order that has been passed in defiance of an interim order, provided the resulting order is not prejudicial to the assessee. The Revenue cannot plead absence of system functionality for withdrawal of such an assessment order as a reason for failing to remedy the breach. [Paras 11]

The Court held that the statutory revisionary power remained available to address an assessment made in contravention of its interim order.

Final Conclusion: The writ petition was allowed. The reopening notice and order and the reassessment order for AY 2017-18 were quashed and set aside.

Property-tax exemption for educational institutions registered under the Income-tax Act - Applicability of charitable registration to a distinct educational institution

Entitlement of the educational institution at Seepat Road, Bilaspur, to property-tax exemption on the strength of a registration certificate issued to another institution - HELD THAT: - Section 136(c) grants complete exemption to an educational institution registered under Section 12A of the Income-tax Act; in its absence, a rebate up to fifty per cent may be allowed. The certificate produced was issued in favour of The President, Madhya Pradesh Jesuits at Kunkuri P.O., Raigarh District, and not to the petitioner-institution at Seepat Road, Bilaspur. The Court held that the two institutions were not the same and that the petitioner could not avail the benefit of that certificate. [Paras 6, 8]

The property-tax demand notice was held reasonable, and no interference was warranted.

Final Conclusion: The writ petition challenging the property-tax demand was dismissed, as the petitioner-institution could not rely on the Section 12A registration granted to a different institution.

Unexplained cash credit - discharge of burden of proof - identity, creditworthiness and genuineness - Shift of onus under Section 68 - HELD THAT: - Section 68 requires the assessee to establish the identity of the creditor, creditworthiness and genuineness of the transaction; rejection of the explanation must rest on objective and cogent material, not suspicion or conjecture. The assessee had produced confirmations, bank statements, tax particulars and books reflecting the transactions.

A creditor's non-appearance pursuant to summons was not fatal once this material established the three-fold test, particularly where the creditor had independently confirmed the transaction. Repayment of an unsecured loan earlier advanced by the assessee could not be treated as an unexplained credit.

Upon discharge of the initial onus, the burden shifted to the Revenue, which produced no independent material establishing that the credits represented the assessee's unaccounted income. The doctrines of real income and approbate and reprobate were inapplicable to a Section 68 inquiry and had been invoked without any demonstrated inconsistent stand. [Paras 16, 17, 18, 19, 20]

The assessee had satisfactorily discharged its burden in respect of all the additions; the additions sustained under Section 68 were set aside.

Final Conclusion: The appeal was allowed and the impugned order, insofar as it sustained the additions under Section 68, was set aside.

Capital gains on mortgaged property sold in recovery proceedings - Capital gains liability on sale of an assessee's mortgaged property by the secured creditor, where the entire sale proceeds were appropriated towards another borrower's loan liability -

HELD THAT: - It is well settled, without requirement of expatiation, that when a property is sold for a price higher than it was acquired, it would attract Capital Gain thus to be exigible to income tax; and that for this, the formula involving the fair market value of the base year multiplied by the Cost Inflation Index (CII) stipulated in the Act would have to be applied.

The factum of the property having been sold in distress sale by the State or by any other authority, on the strength of legally enforceable attachments or mortgages, are no longer res integra since, as rightly argued in ATTILI N. RAO [2001 (10) TMI 5 - SUPREME COURT] held that capital gain that the assessee made was on the immovable property that belonged to him. Therefore, it is on the full price realised (less admitted deductions) that the capital gain and the tax thereon has to be computed.

The capital gain arises from the appreciation in value of the immovable property owned by the assessee. Whether the property is voluntarily sold by its owner or sold in distress pursuant to a legally enforceable mortgage or attachment does not affect the computation of capital gains on the full sale consideration, subject to admitted deductions. The assessee's non-receipt of the proceeds, having voluntarily created the mortgage with knowledge of the consequence of default, does not displace that liability. [Paras 6, 7, 9, 10, 11]

The capital gains assessment was rightly sustained; the appropriation of sale proceeds by the bank towards the secured loan did not absolve the assessee of liability.

Final Conclusion: The appeal was dismissed, the Court finding no error in the order sustaining the capital gains assessment.

Fixed place permanent establishment under India-Thailand DTAA - Income deemed to accrue or arise in India - Offshore supplies by non-resident enterprise

Existence of a permanent establishment in India of a Thailand-based supplier of raw materials, capital goods and technical services to an Indian group company - HELD THAT: - The finding of a permanent establishment rested substantially on survey material concerning expatriates working with the Indian group company and receiving part of their remuneration from the Japanese parent. The Tribunal held that no cogent material established that any such employee rendered services for or on behalf of the assessee, that the assessee had deputed employees to India, or that it had a fixed place of business at its disposal in India. The assessee's status as an associated enterprise of the Japanese parent, without evidence that its business was carried on through the Indian entity, could not establish a permanent establishment.

Following the coordinate Bench decisions in the assessee's own case from AYs 2010-11, 2013-14, 2014-15 and 2015-16 [2024 (7) TMI 1329 - ITAT DELHI] on identical facts, the Tribunal held that the assessee had no permanent establishment in India. [Paras 21, 23]

The challenge to the finding of a permanent establishment was allowed for all the assessment years.

Final Conclusion: The assessee was held not to have a permanent establishment in India for the assessment years concerned. The transfer-pricing grounds were consequently rendered infructuous, and the appeals were partly allowed.

Leave encashment exemption for non-government employees - Beneficial and curative tax notification - Exemption of leave encashment received on retirement by a non-government employee under section 10(10AA)(ii), in light of the enhanced limit notified subsequently- HELD THAT: - The enhancement of the ceiling was held not to introduce a new exemption but to rationalise and enlarge an existing benefit, remove disparity with government employees, and mitigate hardship. Being remedial and beneficial, the notification was construed liberally and applied to the pending claim notwithstanding the absence of an express retrospective clause; a contrary view would create an unjust distinction between similarly placed employees retiring before and after the notification. See RAM DEV DAIYA [2026 (2) TMI 1353 - ITAT JAIPUR] wherein the Tribunal has allowed the enhanced deduction of leave encashment in the similar set of facts. [Paras 25, 26, 27, 28, 30]

The assessee was held entitled to exemption up to the enhanced limit; the restriction of the leave encashment claim to the earlier ceiling was set aside and the Assessing Officer was directed to allow the exemption claimed.

Final Conclusion: The appeal was allowed. The delay was condoned and the claimed exemption for retirement leave encashment was directed to be allowed under the enhanced limit.

Disallowance of alleged bogus purchases - Estimation of profit element in unverifiable purchases

HELD THAT: - The Tribunal noted that the assessee's corresponding sales had not been disputed in the lower proceedings and that procurement from unregistered dealers was a possibility. In these circumstances, a total disallowance of the alleged purchases was not warranted; a lump-sum disallowance representing the profit element embedded in such purchases was considered just and proper. [Paras 7]

The addition was restricted to 2% of the alleged bogus purchases, without treating the determination as a precedent.

Final Conclusion: The appeal was partly allowed by restricting the disallowance for alleged bogus purchases to 2% of such purchases; the remaining grounds were not adjudicated as academic.

Tax deduction at source on leave fare concession - Assessee in default - compliance with interim judicial orders

Whether the bank could be treated as an assessee in default and charged interest for non-deduction of tax on leave fare concession payments made while interim judicial directions restrained such deduction or recovery? - HELD THAT: - The subsisting interim directions binding the assessee prohibited deduction of tax from the relevant payments and placed the eventual tax liability upon the employees if the writ proceedings failed. Vacation of an interim order could operate only prospectively and could not retrospectively impose upon the assessee an obligation to recover tax from payments protected by the earlier order.

We also find considerable force in the reliance placed on the judgment of State Bank of India [2025 (11) TMI 1773 - KERALA HIGH COURT] wherein, after considering the very same issue, the Hon'ble High Court categorically held that an employer cannot be treated as an assessee in default under section 201(1) when it had acted in obedience to the interim orders of the Hon'ble Madras High Court. The Hon'ble High Court held that the provisions of section 201(1) become applicable only where the deductor, despite being under a legal obligation to deduct tax, fails to do so.

Further, subsequent judicial protection expressly restrained recovery from employees. Liability under section 201 is not automatic; the Department must ascertain whether the deductees have discharged their tax liability, since the primary charge remains on the recipients of income. [Paras 8, 9, 10, 11, 12]

The assessee, having acted in faithful compliance with binding judicial orders, could not be treated as an assessee in default under sections 201(1) and 201(1A); the demand was deleted.

Final Conclusion: The appeal was allowed and the orders treating the assessee as an assessee in default, together with the consequential interest demand, were set aside.

Tax deduction at source on annual lease rent paid to development authorities - Interest for failure to deduct tax at source - Disallowance of capitalised interest expenditure for delayed tax deduction

Tax deduction at source on annual lease rent paid to development authorities - Interest for failure to deduct tax at source - Liability to deduct tax at source on annual lease rent paid to NOIDA, GNOIDA and YEIDA, and the consequential interest liability - HELD THAT: - The finding that tax was deductible on the annual lease rent was upheld. The assessee accepted the restriction of interest to the period from the date on which tax was deductible until the deductee filed its return. The contention founded on exemption under section 10(20A) was not accepted, that provision being held inapplicable. [Paras 5, 9]

Interest under section 201(1A) was directed to be computed only up to the date of filing of the return by the deductee; the assessee's appeals were partly allowed and the Revenue's appeal was dismissed.

Disallowance of capitalised interest expenditure for delayed tax deduction - Disallowance under section 40(a)(ia) of interest paid without timely tax deduction, where part of the interest was capitalised as work-in-progress and not charged to the profit and loss account - HELD THAT: - Following Saat Rasta Properties Pvt. Ltd.[2024 (10) TMI 1820 - ITAT MUMBAI] and Saltee Properties Pvt. Ltd [2017 (3) TMI 1466 - ITAT KOLKATA] the Tribunal held that disallowance under section 40(a)(ia) does not arise in respect of expenditure not claimed in the profit and loss account. Interest carried to inventory as work-in-progress could therefore not be disallowed on account of delayed deduction of tax. [Paras 13, 14]

The disallowance was deleted and the assessee's appeal was allowed.

Final Conclusion: The assessee remained liable for tax deduction on annual lease rent, with interest confined to the period ending on the deductee's filing of return. The disallowance of interest capitalised as work-in-progress was deleted.

Reassessment notice beyond three years - sanction by specified authority - Reassessment notice beyond three years-escaped income represented in the form of asset below statutory threshold

HELD THAT: - Where more than three years had elapsed, the approval required for the order under section 148A(d) and notice under section 148 had to be granted by the authority specified under section 151(ii); approval by the Principal Commissioner was therefore invalid. Further, section 149(1)(b) permitted notice beyond three years only where the escaped income represented in the form of an asset amounted to or was likely to amount to the prescribed threshold. As the alleged escaped income was below that threshold, the notice could not be issued beyond three years. The Tribunal held the matter covered by Union of India Vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)]. [Paras 10, 12, 13, 14, 15]

The order under section 148A(d), the notice under section 148 and the consequential reassessment order were quashed; the remaining grounds were rendered academic.

Final Conclusion: The appeal was allowed and the reassessment proceedings for Assessment Year 2016-2017 were quashed as the requisite sanction was not obtained from the specified authority and the statutory condition for issuance of notice beyond three years was not satisfied.

Transfer pricing adjustment on interest paid to associated enterprise - Revenue neutrality of domestic related-party transactions

Transfer pricing adjustment on interest paid on a loan to an associated enterprise where the assessee was taxable at a lower concessional rate than the associated enterprise - HELD THAT: - As decided in GLAXO SMITHKLINE ASIA (P) LTD. [2010 (10) TMI 21 - SUPREME COURT] in cases involving domestic related party transactions, under-invoicing of sales or over invoicing of expenditure would ordinarily be revenue neutral except in two situations, namely, where profits are shifted from a profit-making concern to a loss-making concern or where profits are diverted from an entity chargeable to tax at a higher rate to another entity chargeable to tax at a lower rate.

The assessee was taxable at 15% whereas the associated enterprise was taxable at 22%; consequently, any profit shift would be from the lower-taxed entity to the higher-taxed entity and would confer no tax advantage. The authorities had, however, proceeded on the premise that the transaction was an international transaction despite material indicating that the associated enterprise was a domestic company. The nature of the transaction therefore required verification. [Paras 8, 9]

The matter was restored to the Assessing Officer/Transfer Pricing Officer to verify whether the loan transaction was a specified domestic transaction between domestic entities; if so verified, the transfer pricing adjustment was directed to be deleted.

Final Conclusion: The appeal was allowed for statistical purposes, with a direction to verify the domestic character of the transaction and to delete the interest adjustment if it is found to be a specified domestic transaction between domestic entities.

Binding nature of Board instructions on filing of appeals - Monetary threshold for filing appeals before CESTAT - Section 131BA - power to issue instructions regulating filing of appeals - Withdrawal of pending appeals below prescribed limit - Low tax effect as ground for non-maintainability of departmental appeal

HELD THAT:- These appeals are reported to be beyond time by 684 and 661 days respectively. Besides the amount involved is below the threshold specified in Circular dated 2nd November, 2023 issued by Central Board of Indirect Taxes & Customs (CBIC), Department of Revenue, Ministry of Finance, Government of India. In such circumstances, we do not deem it appropriate to entertain these appeals. Besides there is no satisfactory explanation for the delay.

The appeals are dismissed on the ground of delay.

Classification of imported goods - girls trousers or girls pyjamas - determination of classification of the goods under the Customs Tariff by expert - Import of readymade garments - Importer classified them as "Polyester knitted Girl’s/kids leggings" - confiscation - penalties.

HELD THAT:- There is an inordinate delay in filing the appeals which has not been satisfactorily explained.

We find no good ground to interfere with the impugned order(s) passed by the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi.[2024 (7) TMI 326 - CESTAT NEW DELHI]

The appeals are, therefore, dismissed on the ground of delay as well as merits.

Non-compliance earlier order directing disposal of the petitioner's SEIS-related claim

HELD THAT:- The petition alleging non-compliance was disposed of after the Court found that its earlier order had been duly complied with, while reserving liberty to challenge any decision of the respondents in accordance with law.

Non Compliance with judicial directions - Video recording of customs proceedings - willful disobedience of the order

Effect of Non-compliance with the direction to video record the petitioner's statement in the customs proceedings - HELD THAT: - The failure to video record the statement was acknowledged as inadvertent and an unconditional apology was tendered. While accepting the apology, the Court held that ignorance of a judicial direction was no explanation for a government department having legal and record-keeping support, and cautioned the respondents to comply scrupulously with court directions. [Paras 19, 21, 22, 23, 24]

The respondents were bound to video record the personal hearing and the contempt petition was disposed of upon acceptance of the unconditional apology, subject to the caution issued.

Final Conclusion: The Court accepted the respondents' unconditional apology for the inadvertent lapse, while directing that the personal hearing be video recorded and cautioning the Customs Department against any future non-compliance with judicial directions.

IGST refund on exports to Bhutan - Penalty for procedural lapse in export documentation

Penalty for non-filing of shipping bills for exports to Bhutan - Penalty for failure to file shipping bills for exports to Bhutan where the consignments were documented, sealed and permitted to cross the border by departmental authorities - HELD THAT: - Although the appellant did not follow the newly prescribed procedure requiring shipping bills, the tax invoices, Bhutan invoices, sealing endorsement, border clearance and Bhutan import declarations established the exports. The departmental officials neither objected to the absence of shipping bills nor guided the appellant to follow the revised procedure; consequently, the lapse was equally attributable to the CGST and Customs authorities. [Paras 7]

The penalty was held unjustified and was set aside.

IGST refund on documented exports to Bhutan without shipping bills - HELD THAT: - Payment of IGST was undisputed, and the documentary evidence for each consignment established export of the goods. In the circumstances, non-filing of shipping bills did not justify denial of the refund claim. [Paras 8, 9]

The appellant was held eligible for refund of the IGST paid with applicable interest, including interest from three months after filing the refund claim until payment.

Final Conclusion: The impugned order was set aside. The appeal was allowed with direction to grant the IGST refund with applicable interest and with deletion of the penalty.

Preferential customs duty exemption on country-of-origin certificate - Rejection of transaction value of imported textile goods

SAFTA preferential tariff treatment - Country-of-origin certificate - Classification mismatch - Entitlement of textile goods imported from Bangladesh to preferential customs duty under the SAFTA country-of-origin certificate despite a mismatch in the six-digit tariff classification. - HELD THAT: - There was no misdeclaration of the description or dispute as to the country of origin. The re-determined tariff headings also remained covered by the exemption notification. A classification mismatch in the certificate could not by itself invalidate the country-of-origin certificate, particularly when none of the specified grounds for denial of preferential treatment was established and the applicable origin rules required verification and consultation in case of a dispute. [Paras 6]

The denial of preferential exemption was unsustainable; consequently, the differential duty, interest and penalty were set aside, as were confiscation and redemption fine for want of established misdeclaration.

Transaction value of imported textile goods - NIDB-based valuation - Branded goods valuation - Validity of enhancement of the declared transaction value of imported textile goods by adopting NIDB prices of similar branded goods - HELD THAT: - Although some goods bore brand names, no intellectual-property infringement was found and there was no basis to treat them as comparable branded goods. The enhancement rested only on NIDB data without investigation into whether the goods were counterfeit, without evidence that the supplier's invoice or declared value was not genuine, and without accounting for fabric quality and other characteristics material to textile valuation. The valuation was therefore arbitrary and contrary to the prescribed valuation procedure. [Paras 7]

The declared transaction value could not be rejected and the re-determined value was set aside.

Final Conclusion: The appeal was allowed. The preferential exemption and declared transaction value were restored, and the consequential duty demand, interest, penalty, confiscation, redemption fine and provisional-release bank guarantee were set aside or directed to be released.

Interest on delayed customs-duty refund of amount deposited during investigation - Rate of interest on delayed refund

Entitlement to interest on the delayed refund of differential customs duty where the importer had pursued reassessment and refund claims - HELD THAT: - The Commissioner (Appeals), having considered the factual circumstances in which reassessment and refund claims had remained pending, rightly directed payment of interest. The grant of interest was consistent with the principles of natural justice, and the subsequent implementation of that direction did not warrant interference. [Paras 9, 10, 11]

The Revenue's challenge to the direction for payment of interest was rejected.

Rate of interest on delayed refund of amount deposited during investigation - Binding precedent of jurisdictional High Court - Rate and period of interest payable on the delayed refund of differential customs duty - HELD THAT: - The decisions relied upon were held applicable to refund of an amount deposited during investigation. Following the view of the jurisdictional High Court in M/S RIBA TEXTILES LIMITED [2022 (3) TMI 693 - PUNJAB & HARYANA HIGH COURT] as followed SANDVIK ASIA LIMITED [2006 (1) TMI 55 - SUPREME COURT] as applied by the Tribunal in the cited decision, interest was payable at 12 per cent per annum; however, the importer could not enlarge the period for which interest had been allowed by the Commissioner (Appeals), since the Revenue had not challenged that period. Also see M/S. BERGER PAINST INDIA LIMITED [2026 (7) TMI 1565 - CESTAT KOLKATA] [Paras 13, 14, 15, 16]

Interest was enhanced from 6 per cent to 12 per cent for the unchanged period of three months from 30.01.2009 until refund of duty, with payment of the balance directed within eight weeks.

Final Conclusion: The Revenue's appeal was dismissed. The cross-objection was disposed of by enhancing interest on the delayed refund to 12 per cent per annum for the period already allowed.

Acceptance of enhanced customs value under protest - goods imported as Polyester Quilt Covers - Classification of imported goods in their condition as imported - Rejection of declared transaction value - Confiscation for misdeclaration of imported goods - Penalty for misclassification and undervaluation

Acceptance of enhanced customs value under protest - No estoppel in taxation matters - Maintainability of the appeal after acceptance of the enhanced customs value for clearance of the imported goods - HELD THAT: - Acceptance of the enhancement to avoid accumulating demurrage did not establish acceptance of the assessment. In taxation matters there is no estoppel, and the filing of the appeal itself showed that the enhancement had not been accepted. [Paras 5]

The preliminary objection to the maintainability of the appeal was rejected.

Classification of imported goods in their condition as imported - Made-up textile articles - Classification of folded and stitched Polyester Woven Printed Quilt Covers capable of being converted into bed sheets by removal of stitches - HELD THAT: - Imported goods must be classified in the condition in which they are presented, and not according to a hypothetical product obtainable after further processing. The folded and stitched articles were ready-for-use made-up articles; de-stitching could not be equated with separation by cutting dividing threads. The expert opinion identifying similar goods as Polyester Woven Printed Quilt Covers was also ignored by the adjudicating authority.

We find that a similar issue came up before this Tribunal in the case of Indra Fab [2024 (7) TMI 1800 - CESTAT KOLKATA] wherein this Tribunal upheld the classification of the goods under the CTH 6302. Also see Terrytex [2000 (7) TMI 140 - CEGAT, CHENNAI] and Non-Woven (India) Pvt. Ltd. [1999 (2) TMI 122 - CEGAT, NEW DELHI] [Paras 7]

The goods were held classifiable as Polyester Woven Printed Quilt Covers under CTH 6302.

Rejection of declared transaction value - Comparable imports for customs valuation - Rejection of the declared transaction value of Polyester Quilt Covers and enhancement based on imports of bed sheets - HELD THAT: - The imports relied upon by the Revenue were not shown to be comparable in respect of manufacturer, quality, fabric characteristics, brand, finish, commercial level or quantity. Rejection of transaction value under the Valuation Rules required reasonable doubt founded on objective evidence, whereas there was no evidence of additional remittance, relationship, fabricated invoices or falsity of the declared price. Mere comparison with unrelated bed-sheet imports did not satisfy the requirements for adopting the value of similar goods. Cases followed Eicher Tractors Ltd. [2000 (11) TMI 139 - SUPREME COURT], Mirah Exports Pvt. Ltd. [1998 (2) TMI 124 - SUPREME COURT], Mahindra & Mahindra Ltd. [1995 (3) TMI 88 - SUPREME COURT], Spices Trading Corporation [1998 (6) TMI 184 - CEGAT, MADRAS], Pride of India Pvt. Ltd. [1995 (9) TMI 146 - CEGAT, NEW DELHI] and Sippy Promod Steel Alloys Pvt. Ltd. [1989 (9) TMI 221 - CEGAT, NEW DELHI] [Paras 8]

The declared transaction value could not be rejected.

Confiscation for misdeclaration of imported goods - Redemption fine without market-price determination - Confiscation and redemption fine in respect of the imported Polyester Quilt Covers after the allegations of misclassification and undervaluation failed - HELD THAT: - With misclassification and undervaluation not established, there was no basis for confiscation under Section 111(m). Consequently, redemption fine in lieu of confiscation could not survive; independently, no market enquiry had been conducted despite the requirement of determining market price for fixation of redemption fine. [Paras 9]

The confiscation order and redemption fine were set aside.

Penalty for misclassification and undervaluation - Penalty on the importer for alleged misclassification and undervaluation of Polyester Quilt Covers. - HELD THAT: - As the allegations of misclassification and undervaluation were not established, the statutory ingredients for penalty under Section 112(a) were absent. [Paras 10]

The penalty was set aside.

Final Conclusion: The impugned orders were set aside and the appeals were allowed with consequential relief in accordance with law.

Classification of LED modules - Specific tariff entry over residuary heading - Essential character at the time of importation

Classification of LED modules imported for manufacture of LED lights and fixtures - whether classifiable as light-emitting diode lamps under CTH 8539 or as lamps and lighting fittings or parts thereof under CTH 9405? - HELD THAT: - The chapter heading for 8539 covers the light emitting diode (LED lamps), the light from which is produced by one or more LEDs circuitry to rectify AC power and to convert voltage to a level usable by LED and a base for fixing lamp holder with a heat sink. Since the product in question is LED module i.e. a combination of various light emitting diodes on a panel having a PCB, the heat sink etc. except for the circuitry the modules were imported admittedly for the manufacture of street lights/lamps. Though the street lights are covered under CTH 9405 but the usage/utility of the imported goods is not relevant for deciding classification as has been held by Hon’ble Apex Court in Welkin Food [2026 (1) TMI 348 - SUPREME COURT] decision, though relied upon by the department. Also CTH 9405 covers only such lamps and lightening fittings and parts thereof which are not elsewhere specified or included as already observed above that LED lamps are specifically covered under CTH 8539.

The impugned goods being capable of performing as lamp but for the electric circuitry, this Tribunal in Britco foods Company Ltd. [2000 (10) TMI 76 - CEGAT, MUMBAI] has held that residuary heading i.e. “not elsewhere specified” means not specified elsewhere in the entire tariff. The Hon’ble Apex Court in Pioneer Embroideries Ltd. [2015 (8) TMI 1048 - SUPREME COURT] has held that the essential character of imported goods to be determined for classification with reference to their state at the time of importation and not with reference to purpose of import. The impugned goods without being assembled into these street light assemble as being manufactured by the appellant can still act as a LED lamp provided the electric supply is connected. We hold that the impugned goods cannot be classified as street lamp/ search light of CTH 9405.

Classification is governed sequentially by the General Rules for Interpretation, with primacy to the tariff headings and relevant Section and Chapter Notes; recourse to the rules for competing headings arises only where the earlier rules do not yield a classification. The imported LED modules comprised multiple LEDs mounted on a panel with PCB and heat sink, but lacked the driver or control circuitry necessary for operation. Although not classifiable as a single LED under CTH 8541, they possessed the essential character of LED lamps and were specifically covered by CTH 8539. CTH 9405 applies only to lamps, lighting fittings and parts not elsewhere specified or included; the intended use in manufacture of street lights could not displace the specific coverage under CTH 8539. Classification had to be determined from the condition and essential character of the goods at importation, not their intended use. [Paras 14, 16, 17, 18, 19]

The LED modules were classifiable under CTH 8539, not under CTH 9405; consequently, no short-payment of customs duty arose.

Final Conclusion: The orders confirming differential duty and related consequences were set aside. The departmental appeal was dismissed and the importer's appeal was allowed.

IGST rate on Active Pharmaceutical Ingredients - Specific entry for drugs prevailing over general chemical entries - Meaning of drugs and medicines

Whether bulk drugs/Active Pharmaceutical Ingredients imported for manufacture of formulations, testing, examination, analysis, clinical research, clinical trials, bioavailability studies or bioequivalence studies qualify as drugs under Serial No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and attract IGST at 5%? - HELD THAT: - The expression "drugs" being undefined in the rate notification, its meaning was determined with reference to the statutory framework governing drugs. APIs, being substances used as components of drugs and regulated as drugs under the Drugs and Cosmetics Act, 1940, fall within the inclusive statutory meaning of that expression. The definitions of bulk drug, clinical trial, bioavailability study and bioequivalence study, together with the licensing framework for imports for manufacture, testing and clinical purposes, establish that the intended use at import does not alter the essential statutory character of APIs as drugs. Serial No. 226 is description-based, applies to goods under Chapter 30 or any Chapter, and its separate reference to formulations manufactured from bulk drugs cannot restrict "All Drugs and medicines" to finished dosage forms. As a specific entry for drugs, it prevails over the general entries for inorganic and organic chemicals under Chapters 28 and 29.

If the phrase "All drugs and medicines" were to be construed as being confined solely to finished dosage forms ready for retail consumption, the subsequent and specific reference to "formulations manufactured from bulk drugs" would be rendered redundant and superfluous. It is a settled canon of statutory interpretation that an entry must be construed in a manner that gives meaning and effect to every word used therein and avoids any interpretation that would render a part of the provision otiose.

The entry applies to goods falling under "Chapter 30 or any Chapter." The deliberate use of the expression "or any Chapter" manifests a clear legislative intent to extend the scope of coverage beyond Chapter 30, thereby encompassing drugs and drug substances classifiable under other Chapters, including Active Pharmaceutical Ingredients (APIs) falling under Chapters 28 and 29.

In view of the above discussion as well as on conjoint reading of definition of API as mentioned in Drugs (Price Control) Order, 2013 and reading of the definitions of "bioavailability study". "bioequivalence study" and "clinical trial" as mentioned in New Drugs and Clinical Trials Rules, 2019 read with Section 3(b) of the Drugs and Cosmetics Act that defines drugs, it can be safely concluded that the bulk drugs/APIs falls within the statutory meaning of "drug" and are drugs only.

Whether APIs imported for Clinical Trials / Bioequivalence Studies are excluded? - Once a product is recognised as a drug or pharmaceutical substance under the applicable provisions of the Drugs and Cosmetics Act, 1940 and the rules framed thereunder, its character for classification and rate purposes cannot be determined solely on the basis of the immediate purpose for which it is imported. The fact that an API is imported for clinical evaluation, testing or regulatory studies does not detract from its identity as a pharmaceutical ingredient used in the manufacture, development or evaluation of drugs.

Accordingly, find no basis to conclude that APIs imported for clinical trials, bioavailability studies or bioequivalence studies stand excluded from the scope of SI. No. 226 of Schedule I of Notification No. 09/2025-Integrated Tax (Rate) dated 17.09.2025 solely on account of such intended use. The applicability of the entry is required to be determined on the basis of the nature and identity of the goods as pharmaceutical ingredients and the relevant statutory provisions governing such products.

Whether APIs imported under Form 11 for examination, test or analysis are excluded? - APIs/Bulk Drugs imported under Form 11 for examination, test or analysis continue to retain their character as drugs under the Drugs and Cosmetics Act, 1940. The intended use for examination, test or analysis does not detract from their identity as drugs and consequently does not exclude them from the scope of SI. No. 226 of Notification No. 09/2025- Integrated Tax (Rate).

Specific Entry vis-à-vis General Entry - It is a well-settled principle of classification that when a product is covered by both a general entry and a specific entry; the specific entry shall prevail over the general entry (generalia specialibus non derogant). Accordingly, Active Pharmaceutical Ingredients (APIs), though classifiable under Chapters 28 or 29 for tariff purposes, when they satisfy the description of "drugs", are appropriately classifiable under SI. No. 226 for the purpose of determination of applicable rate of tax. The SI. No. 226 entry is a specific entry which will prevail over the general entry of "all organic chemicals other than gibberellic acid"

Ruling:- Bulk drugs/Active Pharmaceutical Ingredients (APIs), whether imported for manufacture of formulations or for testing, examination, analysis, clinical research, clinical trials, bioavailability or bioequivalence studies, qualify as "All Drugs" under SI. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025, provided they are not covered under SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate).

Final Conclusion: The application was answered in favour of the applicant. APIs or bulk drugs covered by the ruling are liable to IGST at 5% under Serial No. 226 of Schedule I, subject to their not falling under the specified NIL-rated entry.

Void non-convertible debentures - Approbation and reprobation - Dealings with non-convertible debentures after acceptance of the regulatory order declaring them void

HELD THAT: - Having expressly declined to press the appeal on merits and confined their request to time for repayment and reduction of interest, the appellants accepted the regulatory order. The non-convertible debentures consequently stood void and could not be transferred to, or acquired by, third-party entities.

The appellant company was required to repay the monies collected from its own sources; it could not resile from its accepted position by arranging transactions in void debentures through third parties. A party cannot approbate and reprobate at its discretion. [Paras 11, 13, 14]

The third-party acquisition and dealing in the void debentures were held impermissible in law, and the appeal was dismissed.

Final Conclusion: The appeal was dismissed because, after accepting the regulatory order and declining to contest it on merits, the appellants could not deal with the void non-convertible debentures through third-party entities.

Limitation for debtor-initiated personal insolvency applications - Resolution Professional appointment at the maintainability stage - Abuse of personal insolvency process to obstruct recovery auction

Limitation for applications under Section 94 of the Insolvency and Bankruptcy Code - Applicability of limitation to a personal guarantor's application for initiation of insolvency under Section 94 of the Code - HELD THAT: - The Appellate Tribunal noted that its earlier decision in Suyog Jain [2026 (2) TMI 737 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI (LB)] had held the Limitation Act applicable to proceedings under Section 94 and that the said decision had not been stayed. The application was founded on a guarantee invoked in 2016 and was therefore rejected as barred by limitation. [Paras 38, 49]

The rejection of the Section 94 application as barred by limitation was upheld.

Rejection of non-maintainable Section 94 application without appointment of Resolution Professional - Requirement of appointment of a Resolution Professional before rejection of a debtor-initiated application under Section 94 of the Code - HELD THAT: - It is relevant to note that the proceedings before the Hon'ble Supreme Court in Dilip Jiwrajka [2024 (1) TMI 33 - SUPREME COURT] arose out of an application filed by a creditor under Section 95 of the Insolvency and Bankruptcy Code, 2016. The Hon'ble Supreme Court was considering the constitutional validity of the provisions relating to insolvency proceedings against personal guarantors and the procedure prescribed under Sections 95 to 100 of the Code. The observations made regarding the appointment of the Resolution Professional and submission of the report under Section 99 were, therefore, made in the context of proceedings initiated by a creditor under Section 95.

The decision concerning the appointment of a Resolution Professional in creditor-initiated proceedings under Section 95 was held inapplicable. Where admitted facts and applicable law establish that a Section 94 application is not maintainable, the Adjudicating Authority may reject it before appointing a Resolution Professional; absence of such appointment does not by itself invalidate the order. [Paras 40, 41, 43, 44, 45]

The Adjudicating Authority was competent to reject the application at the maintainability stage without appointing a Resolution Professional.

Bona fide invocation of personal insolvency process - Personal insolvency application after concluded recovery auction - Maintainability of a personal guarantor's Section 94 application filed after recovery proceedings had substantially progressed and an auction purchaser had deposited part sale consideration - HELD THAT: - This Appellate Tribunal, in Ashwani Kumar Oberoi v. State Bank of India & Ors. [2026 (5) TMI 651 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] held that where an application under Section 94 is instituted after recovery proceedings have substantially progressed, particularly after the auction has been concluded and third-party rights have been created, the timing of the application and the conduct of the personal guarantor are relevant considerations in determining whether the insolvency process has been invoked for its intended purpose of resolution or merely to stall lawful recovery proceedings

The timing and surrounding circumstances showed that, despite awareness of the recovery proceedings and earlier liberty to file a fresh application, the application was instituted only after the auction had concluded and third-party rights had begun to arise. Applying the earlier Appellate Tribunal decision on comparable facts, the application was found to have been invoked to impede completion of recovery proceedings rather than for the intended purpose of insolvency resolution. [Paras 46, 47, 48, 49]

The application was rightly rejected and no interference with the impugned order was warranted.

Final Conclusion: The appeal was dismissed. The rejection of the personal guarantor's Section 94 application, being time-barred and instituted after substantial progress of recovery proceedings, was affirmed.

Definition of "service" under Section 65B(44) - levy of service tax u/s 66B - declared service under Section 66E(e) - agreement to do or refrain from an act - distinction between assignment/transfer of copyright and provision of a service - consideration for an activity and its role in constituting a taxable service

HELD THAT:- As no good ground to interfere with the impugned order passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai.[2026 (1) TMI 1519 - CESTAT MUMBAI]

The Civil Appeal is, accordingly, dismissed.

Business Support Service - outsourcing of business functions - Transfer of right to use multi-function printers - deemed sale - Exemption for goods and materials sold during taxable service - Advertising agency service - mere display of customer's logo - Service tax demand under repealed positive-list provisions - Extended limitation - departmental knowledge from audit

Business Support Service - outsourcing of business functions - Reimbursement of employee costs - Taxability of operating-cost reimbursements received from group companies for employees working with them under Business Support Service - HELD THAT: - Business Support Service covers outsourced services. The group companies had not outsourced any business function to the appellant; they merely reimbursed the operating costs of employees working for them. Such sharing or reimbursement of employee expenditure did not constitute a taxable service. [Paras 13]

The demand on reimbursement of employee costs under Business Support Service was set aside.

Transfer of right to use multi-function printers - deemed sale - Exemption for goods and materials sold during taxable service - Taxability of consideration from installation and use of multi-function printers, including supply of spare parts, toner and consumables - HELD THAT: - The printers remained in customers' possession for their use throughout the contractual period, constituting transfer of the right to use goods and therefore a deemed sale outside service-tax levy. Further, documentary evidence established VAT payment on spare parts, toner and consumables transferred during maintenance; their value was consequently exempt under the notification for goods and materials sold. [Paras 14]

The service-tax demand on print services was held unsustainable.

Commercial training or coaching service - sale of course material - Exemption for course material sold - Taxability of course material supplied to independent service providers operating career development centres as Commercial Training or Coaching Service - HELD THAT: - Students enrolled with and paid the independent service providers, while the appellant only sold course material to those providers. It was therefore not providing commercial training or coaching. In any event, separately documented goods sold in the course of such service were excludible under the notification, and an administrative circular could not restrict that statutory exemption. [Paras 15]

The demand on the value of course material was set aside.

Advertising agency service - mere display of customer's logo - Taxability of amounts received under the Intel Inside programme for displaying Intel's logo on computers as Advertising Agency Service. - HELD THAT: - Mere printing or display of Intel's logo, supplied by Intel, without conceptualising, visualising or designing an advertisement, did not amount to advertising agency service. The appellant had not undertaken any activity relating to the creation or design of the advertisement. [Paras 16]

The demand on amounts received under the Intel Inside programme was set aside.

Exemption for goods and materials sold during comprehensive maintenance service - Service component of maintenance contract - Availability of exemption for toner, developer, spare parts and consumables supplied during comprehensive service and maintenance contracts - HELD THAT: - The appellant supplied goods during maintenance, paid VAT or sales tax thereon, furnished supporting invoices and certificate, and had not availed Cenvat credit on those goods. Having fulfilled the notification conditions, it was liable to service tax only on the service component and not on the value of goods sold or deemed sold. [Paras 17]

The appellant was held entitled to the notification benefit and the demand on comprehensive service and maintenance contracts was set aside.

Extended limitation - departmental knowledge from audit - Validity of invoking the extended period for service-tax demand where the departmental case was based on a prior special audit - HELD THAT: - The relevant documents and information had been available to the Department since the special audit, conducted substantially before issuance of the show-cause notice. The delayed notice could not sustain invocation of the extended period. [Paras 18]

The demand up to September 2014 was held barred by limitation and was set aside on that ground also.

Service tax demand under repealed positive-list provisions - Validity of service-tax demand for the post-negative-list period when the show-cause notice and order invoked service categories under the former positive-list provision - HELD THAT: - After introduction of the negative-list regime, a demand could not be raised and confirmed under the non-existent service categories contained in the former positive-list provision. The demand for the relevant post-negative-list period was consequently unsustainable. See M/S SANJAY ELECTRICALS (VICE-VERSA) [2024 (1) TMI 891 - CESTAT NEW DELHI], M/S HINDUSTAN ZINC LTD [2022 (10) TMI 959 - CESTAT NEW DELHI] and M/S FRISCO FOODS PRIVATE LIMITED [2021 (11) TMI 428 - CESTAT NEW DELHI] [Paras 19]

The demand from 1.7.2012 to September 2013, raised by invoking a non-existent provision, was set aside.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. As the service-tax demands did not survive, the related interest and penalties were also set aside.

Refund of accumulated CENVAT credit on exported services - Quarterly filing of Rule 5 refund claims - Limitation for refund of reverse-charge service tax - Adjudication beyond the show cause notice

Quarterly filing of Rule 5 refund claims - Carry-forward of accumulated CENVAT credit - Strict quarterly filing does not preclude refund of accumulated CENVAT credit of an earlier period in a subsequent quarter. - HELD THAT: - Notification No. 5/2006-CE (NT) does not impose a bar against claiming credit of an earlier period in a later quarter. The Board clarification permits carry-forward of such credit; in the case of a service provider exporting all its services, refund is available irrespective of when the credit was taken, if the claim is otherwise in order.

Both Members concurred that Notification No. 5/2006‑CE (NT) does not bar refund of accumulated credit of an earlier period in a subsequent quarter; refund claims are not defeated merely for not being filed strictly quarter‑wise.

The claim could not be rejected merely because it was not filed strictly for the quarter in which the credit was availed, subject to limitation.

Limitation for refund of reverse-charge service tax - The relevant date for a refund claim concerning service tax paid belatedly under reverse charge is the actual date of payment of tax. - HELD THAT: - The reference in the application to an earlier period was treated as a clerical error in light of the ST-3 return produced for April-September 2011. Since the department did not dispute that the reverse-charge tax was paid in September 2011, the claim filed thereafter was held to be within time.

Both Members agreed that the relevant date for refund of reverse‑charge service tax is the actual date of payment; hence the claim filed after September 2011 was within time.

The limitation objection was rejected.

Adjudication beyond the show cause notice - Scope of refund adjudication - Remand versus sanction of refund - The Members differed on whether the refund rejection could be sustained on grounds beyond the show cause notice and on the consequential course to be adopted. - HELD THAT: - The Member (Judicial) held that the impugned order travelled beyond the show cause notice and was liable to be set aside on that ground. He further held that, where CENVAT credit had been availed without challenge, its nexus with exported output services could not be re-examined at the refund stage, and that remand would unnecessarily prolong the dispute; he would allow refund with interest. The Member (Technical) held that the issues concerning accumulated credit, belated reverse-charge payment, use of services at unregistered premises and limitation required verification by the original authority. He considered a limited remand appropriate, with consequential relief, if any, to be determined in accordance with law; he also distinguished the authorities concerning interest on delayed refunds. [Paras 26, 49, 50, 60, 61]

The impugned order was set aside by both Members, but the divergent questions whether the matter should be remanded or the refund sanctioned with interest were referred to the President for appropriate action.

Final Conclusion: The Members concurred that quarterly filing was not a bar and that the claim was within limitation. As they differed on remand, sanction of refund and interest, the matter was referred to the President for resolution by a Third Member.

Service of adjudication order by speed post with proof of delivery - Limitation for appeal from date of receipt of order

Validity of treating the appeal against the service-tax adjudication order as time-barred when the department established dispatch by speed post but not its delivery to the assessee - HELD THAT: - Dispatch of an order by speed post, without proof of its delivery, does not establish proper service. Service under the applicable statutory scheme requires delivery to the intended person or authorised agent under proof of acknowledgement. The requirement extends to service-tax proceedings through the application of the Central Excise service provision. In the absence of evidence of receipt of the dispatched order, the date on which its copy was admittedly supplied to the assessee had to be treated as the date of receipt for computing limitation.

We find that that Apex Court in the case of Collector Land Acquisition Anantnag And Another Vs. Mst. Katiji And Others [1987 (2) TMI 61 - SUPREME COURT] has held that no one shall prefer to cause prejudice to himself by a belated appeal. We are also conscious of the Apex Court judgment in the case of N. Balakrlshna Vs. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT] Reason for the delay has primacy over length of delay.[Paras 6, 7, 8, 9]

The appeal before the Commissioner (Appeals) was filed within the statutory two-month period from receipt of the order and was not barred by limitation; the impugned order was set aside and the matter remanded for a decision on merits after affording hearing.

Final Conclusion: The order dismissing the appeal as delayed was set aside. The matter was remanded to the Commissioner (Appeals) for disposal on merits within the stipulated period after granting adequate hearing.

Business Auxiliary Service - dealer incentives and accounting receipts - Reverse charge liability for Goods Transport Agency service - Reverse charge liability for manpower supply and security services - Extended limitation - wilful suppression and intent to evade tax

Business Auxiliary Service - dealer incentives and accounting receipts - Point of taxation - prohibition against double taxation - Taxability under Business Auxiliary Service of dealer incentives, reimbursements, miscellaneous receipts, accounting regroupings and receivable entries of an authorised motor-vehicle dealer - HELD THAT: - Incentives and reimbursements received from the manufacturer under a principal-to-principal dealership arrangement were intrinsically connected with sale and distribution of vehicles and could not be treated as consideration for promotion or marketing services merely from their ledger description. Except for amounts already admitted and discharged as tax, the Department produced no evidence that miscellaneous receipts represented taxable services; accounting regrouping did not establish fresh consideration. Further, the Point of Taxation Rules determine the time of taxation of an otherwise taxable service and cannot permit taxation again of invoiced transactions merely because corresponding amounts remained reflected as receivables. [Paras 10, 11, 12, 13, 14]

The demand under Business Auxiliary Service was set aside.

Reverse charge liability for Goods Transport Agency service - Consignment note - essential attribute of Goods Transport Agency - Reverse charge liability on freight for purchase of motor vehicles, towing charges and carriage inward expenses claimed as Goods Transport Agency service - HELD THAT: - Reverse charge liability arises upon the person who pays or is liable to pay freight to the Goods Transport Agency. As the manufacturer arranged vehicle transportation, was liable for freight and had discharged the corresponding liability, the same freight could not be taxed again in the dealer's hands. Towing activity could not be classified as GTA service without foundational proof, including issuance of a consignment note, and the exemption plea had not been examined. Likewise, ledger nomenclature describing expenditure as carriage inward could not establish receipt of GTA service; the Department remained obliged to prove the taxable service through cogent evidence. [Paras 15, 16]

The reverse charge demand for Goods Transport Agency service was set aside.

Reverse charge liability for manpower supply and security services - Service-provider status as body corporate - HELD THAT: - During the relevant period, reverse charge for manpower supply and security services applied only where the provider was an individual, Hindu undivided family, partnership firm or association of persons supplying services to a body corporate. The material produced indicated that the providers were private limited companies, and the Department neither disputed nor verified that status despite possessing the necessary particulars. Rejection on perceived documentary deficiencies could not substitute a finding on the statutory condition governing applicability of reverse charge. [Paras 17, 18]

The reverse charge demand for manpower supply and security services was set aside.

Extended limitation - wilful suppression and intent to evade tax - Validity of invocation of the extended period for service tax demands founded on audited financial statements, books of account and statutory returns - HELD THAT: - The extended period requires a specific act of fraud, collusion, wilful misstatement or suppression with intent to evade tax; reproduction of statutory language is insufficient. Where the demands were computed from records voluntarily maintained and disclosed during audit, the Department could not allege suppression of those very facts. An interpretational dispute concerning classification, taxability and reverse charge, with primary facts disclosed, did not justify extended limitation. [Paras 19, 20]

Invocation of the extended period was held unsustainable, independently rendering the demands time-barred.

Final Conclusion: The appeal was allowed. The impugned order was set aside to the extent challenged, along with consequential interest and penalties.

Appeal against rejection of VCES declaration - Pre-declaration payment towards VCES tax dues

Maintainability of an appeal against rejection of a declaration filed under the Voluntary Compliance Encouragement Scheme - HELD THAT: - The High Court decision in M/S BARNALA BUILDERS & PROPERTY CONSULTANTS [2013 (12) TMI 568 - PUNJAB AND HARYANA HIGH COURT] holding such an appeal maintainable continued to operate, there being no stay of its operation notwithstanding the subsequent recall by the Supreme Court of its earlier disposal of the departmental appeal. The Tribunal also noted that other High Courts had taken the same view. [Paras 6]

An appeal against rejection of a declaration filed under VCES is maintainable.

Pre-declaration payment towards VCES tax dues - Consideration of amounts deposited before filing the VCES declaration towards the tax dues required to be paid under the Scheme - HELD THAT: - The Tribunal noted the Gujarat High Court ruling in Sadguru Construction Co. [2014 (5) TMI 219 - GUJARAT HIGH COURT] that a deposit made before filing the declaration must also be considered towards settlement under VCES. As the Commissioner (Appeals) had not recorded a finding on whether the pre-declaration deposit related to the case sought to be settled, the matter required reconsideration. [Paras 6, 7]

The matter was remanded to the Commissioner (Appeals) to allow the application upon being satisfied that the pre-declaration deposit related to the case declared in Form VCES-1.

Final Conclusion: The appeal was held maintainable. The impugned order was set aside and the matter remanded to the Commissioner (Appeals) for reconsideration of the VCES declaration after verifying the nexus of the pre-declaration deposit with the declared case.

Refund of accumulated CENVAT credit on exported services - Undisputed availment of CENVAT credit - Nexus between input services and exported output services - Defective input invoices -

HELD THAT: - Where the Department had not invoked recovery provisions to challenge availment of CENVAT credit and had raised no specific objection either to export of the output services or to compliance with the conditions and procedure under Rule 5, refund could not subsequently be denied on the grounds of absence of nexus between input and exported output services or non-mention of the service provider's PAN-based registration number in invoices. Rule 5 governs refund by reference to its stipulated conditions and prescribed procedure, and not by reopening undisputed credit at the refund stage. See M/s Parthenon India Pvt. Ltd. Vs. Commissioner of CGST, Mumbai South [2023 (5) TMI 511 - CESTAT MUMBAI] [Paras 3, 5]

The rejection of the refund claim was held unsustainable; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the refund of accumulated CENVAT credit on exported services could not be denied by questioning undisputed credit on nexus and invoice-registration grounds.

Goods transport agency service - consignment note requirement - Director's remuneration - employer-employee relationship - Manpower supply service - supervision and control test

Goods transport agency service - consignment note requirement - Transportation of goods by road - negative list - Liability under reverse charge for transportation of goods by road where no consignment note was issued - HELD THAT: - A goods transport agency must both provide transportation-related services by road and issue a consignment note. The Department produced no consignment note, while the undisputed facts showed that the appellant was not registered under the Carriage by Road Act and charged only agreed freight. Mere transportation of goods by road, without issuance of a consignment note, fell within the negative list and could not be treated as taxable GTA service. [Paras 4]

The service-tax demand under reverse charge on the transportation activity was set aside.

Director's remuneration - employer-employee relationship - Exclusion of employee services from taxable service - Liability under reverse charge on remuneration paid to directors who were employees of the company - HELD THAT: - The undisputed deduction of tax as salary, disclosure of the remuneration as salary in income-tax returns, and provident-fund contributions established an employer-employee relationship. A whole-time director functioning under the control and supervision prescribed by the company's articles was held to be an employee; remuneration paid in that capacity was excluded from the definition of service. [Paras 4]

The demand of service tax under reverse charge on directors' remuneration was set aside.

Manpower supply service - supervision and control test - Contract manufacturing - independent contractor's labour - Liability under reverse charge for labour engaged under contract-manufacturing arrangements where the contractor retained supervision and control - HELD THAT: - Manpower supply requires that the supplied labour work under the superintendence or control of the service recipient. Under the agreements, the contractor was responsible for managing and paying labour, labour-law compliances, safety and production defects; the labour remained under the contractor's supervision and control. The arrangement was therefore not manpower supply service. [Paras 4]

No reverse-charge liability arose on the contract-manufacturing arrangement.

Final Conclusion: The appeal was allowed. The service-tax demands under reverse charge on road transportation, directors' remuneration and the contract-manufacturing labour arrangement were held unsustainable.

Requirement to declare Maximum Retail Price (MRP) under the Standards of Weights and Measures (Packaged Commodities) Rules - Meaning of 'Institutional Consumer' and 'Industrial Consumer' in the Explanation to Rule 2A(b) of the SWM Rules - Exclusion from Chapter II of the SWM Rules for packaged commodities sold to industrial or institutional consumers - Applicability of section 4A of the Central Excise Act - assessable value determined on MRP minus abatement

HELD THAT:- We find no good ground to interfere with the impugned orders passed by the Customs, Excise & Service Tax Appellate Tribunal.[2014 (7) TMI 575 - CESTAT NEW DELHI]

The Civil Appeals are, accordingly, dismissed.

Extended limitation for inadmissible CENVAT credit - Suppression of material facts in availing CENVAT credit

Invocation of the extended period for recovery of CENVAT credit availed on input-service invoices received during the area-based exemption period - HELD THAT: - Though the appellant had intimated the Department of its proposed availment of CENVAT credit after expiry of the exemption, it did not disclose that credit would also be taken on input-service invoices pertaining to the exemption period. The credit on such pre-cut-off invoices was availed in returns for November 2016 to June 2017 rather than being disclosed in the return for November 2016 despite the invoices being available. This was rightly treated as a deliberate and wilful act of suppression, and not a bona fide mistake.

The earlier Single Member decision in the appellant's own case titled as M/s. LG Balakrishnan was not accepted, since the material fact concerning credit on input services received before the cut-off date was not considered therein. [Paras 9, 10]

The conditions for invocation of the extended period stood satisfied; the demand was not time-barred.

Final Conclusion: The impugned order was affirmed and the appeal was dismissed.

Area-based excise exemption - Procedural delay in filing refund statements

Recovery of refund/self-credit under the area-based exemption notification solely because the prescribed monthly duty-paid statements were filed belatedly - HELD THAT: - The requirement to file the prescribed statement within the stipulated time was held to be procedural. Where the manufacturer was otherwise eligible for the exemption, delayed filing of the statement could not defeat the substantive benefit or justify denial of the self-credit already sanctioned.

We also note that the decision of the Tribunal in M/s Saraswati Agro Chemicals India Ltd [2018 (3) TMI 263 - CESTAT CHANDIGARH] has been subsequently followed by the Tribunal in numerous cases as relied upon by the learned Consultant for the Appellant [Paras 7, 8, 9]

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

Final Conclusion: Belated submission of the monthly statements, being a procedural lapse, did not warrant recovery of the refund/self-credit otherwise available under the exemption notification. The appeals were allowed.

CENVAT credit on inputs - proof of non-receipt - Vehicle particulars from VAHAN portal - evidentiary value - Extended period of limitation - absence of suppression

CENVAT credit on inputs - proof of non-receipt - Vehicle particulars from VAHAN portal - evidentiary value - CENVAT credit on goods transport agency service - Denial of CENVAT credit on sponge iron, M.S. billets, M.S. ingots, TMT cuttings and corresponding goods transport agency service on the allegation that the inputs were not received in the factory, founded on vehicle-related discrepancies - HELD THAT: - The Revenue was required to establish alleged non-receipt of duty-paid inputs by positive, cogent and convincing evidence; suspicion could not substitute proof. VAHAN portal data, particularly where it indicated incorrect or non-digitised vehicle particulars, and unverified communications from only a few vehicle owners obtained years after the transactions, could not by themselves prove non-receipt. The Revenue neither investigated the suppliers or transporters nor found stock discrepancies, diversion of inputs, fabrication of the appellant's contemporaneous records, or an alternative source for the raw materials required for undisputed manufacture and duty-paid clearance of finished goods. Procedural deficiencies in consignment notes, without corroborative evidence that the transactions were fictitious, were insufficient to deny substantive credit. [Paras 13, 14, 16, 17, 18]

The denial of CENVAT credit on the inputs and the consequential denial of credit on goods transport agency service were set aside; the associated interest and penalties, including the penalty on the Authorized Signatory, consequently could not survive.

Extended period of limitation - absence of suppression - Invocation of the extended period for recovery of CENVAT credit disclosed in statutory returns and supported by contemporaneous business and statutory records - HELD THAT: - Regular statutory returns reflected the availment of credit and the appellant maintained contemporaneous transport, purchase, payment and statutory records. Those records negated fraud, collusion, wilful misstatement or suppression with intent to evade duty, and the essential conditions for invoking the extended period were absent. [Paras 19]

The demand was independently held barred by limitation, with consequential interest and penalties liable to be set aside.

Final Conclusion: The impugned order was set aside and both appeals were allowed with consequential relief. The demand was unsustainable both for want of proof of non-receipt of inputs and as barred by limitation.

Vagueness of show cause notice - Inclusion of freight and transit insurance in assessable value - Place of removal - Extended period of limitation

Vagueness of show cause notice - Hypothetical computation of duty demand - Validity of the demand founded on a show cause notice which computed freight on assumed proportions and rates without identifying the actual freight or insurance attributable to clearances - HELD THAT: - The notice adopted different assumed freight rates for stated proportions of clearances without disclosing their basis, did not determine the actual freight or insurance proposed for inclusion, and did not clarify whether the quantities concerned represented factory-to-depot or depot-to-customer movements. It also failed to consider the price declarations showing that freight and insurance were not claimed as deductions and that the prices were inclusive of freight. A vague and factually inaccurate notice deprives the noticee of a proper opportunity to meet the case and cannot sustain the demand. [Paras 6]

The demand was set aside as unsustainable on account of the vague show cause notice and its hypothetical methodology of computation.

Inclusion of freight and transit insurance in assessable value - Place of removal - Inclusion of freight and insurance in the assessable value of goods sold at an all-inclusive price, on the footing that the buyer's premises constituted the place of removal - HELD THAT: - The appellant had paid duty on an all-inclusive price and no additional freight or insurance was shown to have been collected from customers; the burden to establish such additional collection lay on the Department. Transit insurance cannot by itself establish retention of ownership. The place of removal refers to a place from which the manufacturer sells the goods and not to the buyer's place of delivery; the buyer's premises cannot constitute the place of removal. The factory or depot from which the goods were sold accordingly remained the place of removal. Cases followed Aditya Birla Insulators Ltd. [2008 (4) TMI 48 - CESTAT, KOLKATA], Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] and Escorts JCB Ltd [2002 (10) TMI 96 - SUPREME COURT] [Paras 8]

Freight and insurance were not includible in the assessable value, and the demand based on their inclusion was set aside on merits.

Extended period of limitation - Suppression of facts - Invocation of the extended period for the demand relating to valuation of goods where the appellant had disclosed its freight-inclusive pricing in price lists and correspondence - HELD THAT: - No fraud, collusion, suppression, or wilful misstatement was established. The appellant had informed the Department from September 1996 onwards that it was not claiming freight deduction and had disclosed the relevant valuation practice in subsequent correspondence. [Paras 9]

The demand raised by invoking the extended period of limitation was held unsustainable.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. The tax demand failed both on merits and limitation; interest and penalty, being consequential, were also set aside.

CENVAT credit on inputs received under registered dealer invoices - Admissibility of investigation statements under Section 9D - Vahan portal vehicle-data discrepancies - Extended limitation for fraudulent CENVAT credit availment

CENVAT credit on inputs received under registered dealer invoices - Burden to establish non-receipt of inputs - Denial of CENVAT credit on MS Scrap received under invoices issued by a registered dealer on the allegation that the inputs were not physically received - HELD THAT: - Valid invoices issued by a registered first-stage dealer, payments through banking channels, statutory records, payment of transportation-related service tax and evidence of consumption supported the appellant's case. As manufacture and clearance of finished goods were undisputed, the Revenue was required to establish by affirmative evidence that the invoiced inputs were not received and to identify the alternative source of raw materials; suspicion and incomplete investigation could not discharge that burden. [Paras 9, 12]

The denial of CENVAT credit for alleged non-receipt of inputs was held unsustainable on merits.

Admissibility of investigation statements u/s 9D - Corroboration of contradictory statements - Reliance on investigation statements to sustain denial of CENVAT credit for alleged paper transactions - HELD THAT: - No authorised representative of the appellant had admitted non-receipt of the inputs. The dealer's statement was internally inconsistent and was not independently corroborated. Further, statements recorded during investigation could not, by themselves, sustain denial of credit without compliance with the statutory safeguards under Section 9D, including examination of their makers subject to the recognised exceptions. [Paras 10]

The statements were held insufficient and legally unsatisfactory to sustain the demand.

Vahan portal vehicle-data discrepancies - Corroboration of alleged non-transportation of inputs - Denial of CENVAT credit on the basis of Vahan portal particulars showing discrepancies in a limited number of vehicles said to have transported MS Scrap - HELD THAT: - Discrepancies relating to a few vehicle registrations among the consignments could not establish that the entire chain of transactions was fictitious. The Revenue had neither examined the concerned vehicle owners nor gathered corroborative evidence that the vehicles had not transported the disputed goods. Vehicle particulars obtained from the Vahan portal, without a complete investigation and independent corroboration, could not be the sole basis for denying credit. [Paras 11]

The Vahan portal details were held incapable, by themselves, of proving fraudulent availment of CENVAT credit.

Extended limitation for fraudulent CENVAT credit availment - Suppression with intent to evade duty - Invocation of the extended period for recovery of CENVAT credit availed during July, 2014 to February, 2015 - HELD THAT: - The disputed credit was reflected in statutory returns, books, stock records and contemporaneous documents, and the Revenue did not displace the assertion that the records had undergone departmental audit scrutiny. In the absence of independent evidence of fraud, collusion, wilful misstatement or suppression with intent to evade duty, the jurisdictional conditions for invoking the extended period were not established. [Paras 13]

The show cause notice, having been issued beyond the normal limitation period, was also held barred by limitation.

Final Conclusion: The appeals were allowed. The demand for reversal of CENVAT credit, consequential interest and penalties were set aside on merits and, independently, as barred by limitation.

Right of accused to be heard in proceedings for remand after refusal of cognizance - Criminal proceedings as a means of recovery of money

Right of accused to be heard in proceedings for remand after refusal of cognizance - Setting aside an order refusing cognizance and remanding the complaint for reconsideration without hearing the person against whom allegations are made - HELD THAT: - Although a person accused has no right of hearing at the pre-cognizance stage, an order setting aside refusal of cognizance and directing remand necessarily prejudices that person. The High Court ought therefore to have afforded an opportunity of hearing before passing such an order. [Paras 6]

The High Court's order was unsustainable for having been passed without hearing the appellant.

Criminal proceedings as a means of recovery of money - Maintainability of a criminal complaint founded on an alleged money transaction and non-refund of the amount paid towards a proposed flat sale - HELD THAT: - A claim for return of money arising from a money transaction is to be pursued through the appropriate civil remedy. Criminal proceedings cannot be used to recover money or to convert a civil dispute into criminal prosecution as a coercive measure against the accused. [Paras 7]

The complaint, being an impermissible attempt to employ criminal process for recovery of money, was liable to remain dismissed.

Final Conclusion: The appeal was allowed, the High Court's order was set aside, and the orders refusing cognizance and dismissing the complaint were restored.