TaxTMI Updates e-Newsletter
Aug 13,2026

Writ jurisdiction where statutory remedies of revocation and appeal are available against cancellation of GST registration

Maintainability of the writ petition challenging cancellation of GST registration on the allegation of wrongful availment of input tax credit - HELD THAT: - The allegations concerning wrongful availment of input tax credit and breach of the applicable registration conditions involved factual issues requiring examination of evidence. There was no challenge to the validity of the statutory provisions invoked, nor was any inherent jurisdictional defect shown in the issue of the show-cause notice. The petitioner had statutory remedies to seek revocation of cancellation or to pursue an appeal; therefore, the Court declined to examine the merits in writ jurisdiction. [Paras 6, 7, 8, 9, 10]

Interference under Article 226 was declined, leaving the factual dispute to the statutory authority and the petitioner to the available remedies.

Final Conclusion: The writ petition was disposed of without adjudicating the merits of the cancellation. If an application for revocation is filed within the stipulated period, it shall be decided by a reasoned and speaking order after hearing the petitioner within the time directed.

Condonation of delay in appeal against GST registration cancellation - Restoration of appellate remedy

Dismissal of the appeal against cancellation of GST registration solely on limitation, despite the petitioner's explanation for non-compliance and delayed appeal - HELD THAT: - The Court found the explanation for the petitioner's non-compliance and consequent delay to be genuine. Cancellation of GST registration had brought the business operations to a standstill, and the petitioner had asserted lack of awareness of the online compliance requirements, show-cause notice and consequential orders while relying on an accountant or local advocate who failed to undertake the required compliances. Following the co-ordinate Bench decisions cited by the petitioner, the Court held that the appeal warranted consideration on merits. [Paras 7, 8, 9]

The appellate order was set aside and the Appellate Authority was directed to entertain and decide the appeal on merits in accordance with law, subject to deposit of applicable late fee, penalty and other statutory deposits.

Final Conclusion: The writ petition was allowed. The petitioner's appeal against cancellation of GST registration must be considered on merits, subject to the applicable statutory deposits.

Limitation for fresh GST proceedings pursuant to court direction - Prejudgment in show cause notice - Limitation for consequential adjudication

Validity and limitation of a fresh notice under Section 74 after an earlier notice under that provision had been quashed with liberty to initiate fresh proceedings - HELD THAT: - The earlier writ order had attained finality and expressly permitted fresh proceedings under Section 74, conditional upon the existence of fraud, wilful misstatement or suppression of facts to evade tax. That direction could not be diluted at the stage of implementation. Though Section 75(3) refers to an order required to be issued pursuant to a court direction, it applied, read with the positive direction in the earlier writ order, to preserve the period of two years from communication of that order for fresh adjudication; a literal construction excluding a case where only the earlier notice was quashed would defeat that binding direction. [Paras 9, 11, 12, 13, 14]

The revenue was not barred from issuing a fresh notice under Section 74 within two years from communication of the earlier writ order; the objection founded on the earlier dropped Section 73 notice and limitation was rejected.

Prejudgment in show cause notice - Neutral adjudication - Sustainability of the impugned notice containing observations accusing the petitioner of misleading the Court - HELD THAT: - The observations were unnecessary and improper in the context of the dispute. They disclosed prejudice on the part of the issuing adjudicating authority, aggravated by the fact that the petitioner had obtained relief in the earlier writ proceedings. A notice issued with that element of prejudice could not be sustained. [Paras 16, 17, 18]

The impugned notice was set aside and the matter remitted for possible issuance of a fresh notice under Section 74 by an officer other than the issuing officer, subject to the existence of jurisdictional facts and the directions for neutral adjudication.

Final Conclusion: The impugned notice was set aside solely because it disclosed prejudice, while the revenue's authority and limitation to commence fresh proceedings pursuant to the earlier writ direction were upheld. Fresh proceedings may be initiated before a different officer in accordance with the directions issued.

Inherent criminal jurisdiction over tax search and seizure - Exercise of inherent criminal jurisdiction to restrain alleged harassment by tax officials in connection with inspection or seizure under the Tamil Nadu Goods and Services Tax Act, 2017 - HELD THAT: - The fact that tax officials exercising search or seizure powers are required to follow the procedure under the Cr.P.C. or BNSS does not, by itself, bring a challenge to their actions within the scope of inherent jurisdiction under Section 482 Cr.P.C. or Section 528 BNSS. The petitioner must pursue the remedies available before the appropriate forum, including a complaint where criminal illegality is alleged. [Paras 2, 3]

The requested direction was declined, while preserving the petitioner's liberty to challenge any action of the tax authorities in accordance with law before the appropriate forum.

Final Conclusion: The Criminal Original Petition was disposed of, leaving the petitioner to avail the appropriate legal remedies against any allegedly unlawful action by the tax authorities.

Cancellation of GST registration for non-operation from registered place of business - Consideration of material evidence in GST registration cancellation proceedings

Validity of cancellation of GST registration and rejection of the revocation application when the impugned orders referred only to an intelligence wing report despite material indicating that business was carried on from the registered place - HELD THAT: - The rental agreements, GPS-map-camera photographs and electricity-payment receipts placed on record indicated operation from the principal place of business. The electricity receipts bore the petitioner's trading name and reflected payment of substantial electricity charges.

As the cancellation order and the order rejecting revocation referred only to the intelligence wing report, the material evidence was not considered. [Paras 5]

Both impugned orders were set aside, with liberty to the respondents to initiate fresh proceedings in accordance with law, if so intended.

Final Conclusion: The writ petition was disposed of by setting aside the cancellation of GST registration and rejection of its revocation, while preserving the respondents' liberty to proceed afresh in accordance with law.

Jurisdiction of proper officer for waiver of interest and penalty - Single waiver application for combined GST demand

Competence of the proper officer who issued a combined order under Section 73 for Chennai and Maharashtra operations to decide the waiver application relating to the Maharashtra operations - HELD THAT: - Although the proper officer for an application in Form GST SPL-02 is the proper officer for recovery under Section 79, neither Section 79 nor Chapter XVIII of the Rules prescribes the basis for identifying that officer. Sections 79 and 128A refer to a specific proper officer, while Rule 164 contemplates one application in Form GST SPL-01 or SPL-02 and not multiple applications. Since the combined order under Section 73 covered both locations, no statutory basis existed for the officer to decline jurisdiction over the waiver claim concerning Maharashtra. [Paras 5, 6]

The rejection of the waiver claim relating to Maharashtra was set aside and the matter remanded for fresh consideration after affording reasonable opportunity to the petitioner.

Final Conclusion: The writ petition was disposed of by setting aside the rejection of the waiver application insofar as it concerned Maharashtra operations and remanding that limited claim for reconsideration.

Duplicate assessment orders for the same return mismatch -mismatch between GSTR-3B and GSTR-1 returns - Opportunity to contest tax proposal on merits

Duplicate assessment orders for the same return mismatch - Sustainability of two assessment orders relating to the same assessment period and the same mismatch between GSTR 3B and GSTR 1 returns - HELD THAT: - On comparison, both orders were found to concern the same return mismatch, and the amounts involved tallied notwithstanding that the later order did not bifurcate the liability between SGST and CGST. [Paras 4]

The later assessment order was quashed as it could not survive alongside the earlier order.

Opportunity to contest tax proposal on merits - HELD THAT: - The earlier order was set aside subject to remittance of the entire tax demand, so that the petitioner may be afforded a reasonable opportunity to contest the tax proposal on merits. [Paras 4]

Subject to payment of the entire tax demand within the stipulated period, the earlier assessment order was set aside and remanded for fresh consideration and a fresh order.

Final Conclusion: The later duplicate assessment order was quashed. The earlier assessment order was remanded for fresh consideration, subject to remittance of the entire tax demand.

GST amnesty waiver for self-assessed tax - Deemed approval of GST amnesty applications - Mandatory time limits under Rule 164 - Validity of void orders in Form GST SPL-05

GST amnesty waiver for self-assessed tax - Competing non obstante clauses - Statutory circular contrary to the enactment - Eligibility for waiver of interest and penalty under Section 128A where proceedings under Section 73 concern unpaid or short-paid self-assessed tax - HELD THAT: - Initiation of proceedings under Section 73 is a sine qua non for an application under Section 128A. Section 75(12) enables direct recovery of unpaid self-assessed tax under Section 79 without determination, but does not exclude such tax from the ambit of Section 73. The wider non obstante clause in Section 128A, read with the absence of an express exclusion for self-assessed tax, precludes any implied exclusion. If the revenue elects direct recovery under Section 79 without invoking Section 73, no waiver application lies; but where liability is determined under Section 73, Section 128A remains available. Circular No.238 cannot curtail the statutory scope of the waiver provision. [Paras 23, 26, 27, 29]

Rejections of waiver applications solely on the ground that they related to self-assessed tax, delayed return filing, delayed reporting of supplies, or interest-only demands were set aside, and the concerned petitioners were held entitled to waiver under Section 128A.

Void orders under Rule 164 - Finality of GST amnesty approval orders - Authority to declare an approval order in Form GST SPL-05 void after acceptance of an application under the Amnesty Scheme - HELD THAT: - Rule 164(16) and Rule 164(17) exhaustively identify the circumstances in which a waiver granted through Form GST SPL-05 or Form GST SPL-06 becomes void for failure to make the specified additional payment. In those situations, voidness operates by law and does not require a further order. Outside those specified circumstances, neither the statute nor the Rule authorises the GST authorities to issue a void order, whether by recourse to Section 161 or otherwise. [Paras 16, 17, 38]

Void orders issued after approval in Form GST SPL-05, and consequential orders where applicable, were set aside.

Mandatory time limits for GST amnesty applications - Deemed approval of GST amnesty applications - Substantial compliance with exemption conditions - Whether the time limits prescribed by Rule 164 for filing and disposal of waiver applications are directory, and the consequence of delayed filing or delayed departmental disposal. - HELD THAT: - Rule 164 establishes a time-bound scheme in which the filing deadline triggers the subsequent stages of scrutiny and disposal. The provision for deemed approval where no order is issued within the period stipulated in Rule 164(13) confirms that all prescribed time limits, including the filing period in Rule 164(6), are mandatory. Deemed approval under Rule 164(14) is available only where the substantive conditions of Section 128A are fulfilled. The doctrine of substantial compliance cannot excuse failure to comply with an essential filing deadline, although procedural defects not going to the substance of the scheme may qualify for such consideration. [Paras 31, 33, 34, 37, 38]

Applications rejected after the expiry of the prescribed disposal period were entitled to deemed approval, subject to fulfilment of Section 128A; petitions involving belated applications or belated payment were dismissed.

Final Conclusion: The writ petitions challenging rejection or unauthorised voiding of otherwise eligible waiver applications were allowed. Petitions involving belated applications, belated payment, absence of a waiver application, or a request to consider a belated application were dismissed.

Revocation of cancellation of GST registration for non-filing of returns - Consideration of an application for revocation of GST registration cancelled for continuous non-filing of returns, where the statutory appeal had become time-barred - HELD THAT: - The Court permitted the petitioner to approach the competent authority for revocation of the cancelled registration, recognising that the application could be submitted physically if online submission was not accepted for technical reasons. [Paras 5]

The competent authority was directed to entertain the revocation application and decide it in accordance with law within the stipulated period.

Final Conclusion: The writ petition was disposed of with liberty to seek revocation of the cancelled GST registration before the competent authority, which was directed to consider the application in accordance with law.

Permission to pursue the statutory appellate remedy against the impugned GST order - HELD THAT:- The writ petition was disposed of granting liberty to the petitioner to file a statutory appeal with the prescribed pre-deposit and an application for condonation of delay; the appellate authority was left to consider delay and decide the appeal in accordance with law.

Recovery of GST dues from a distinct legal entity - Liability of legal heirs for GST dues of a deceased taxable person - Failure to consider material statutory circumstances

Recovery of GST dues from a distinct legal entity - Recovery notices in Form GST DRC-13 for dues of a deceased proprietor could be issued against a private limited company distinct from the proprietary concern - HELD THAT: - It was undisputed that the private limited company was different and distinct from the proprietary concern of the deceased registered taxable person. The recovery notices attaching the company's bank account could therefore not be issued for the proprietary concern's liability. [Paras 4]

The recovery notices issued in Form GST DRC-13 against the private limited company were quashed.

Liability of legal heirs for GST dues of a deceased taxable person - Failure to consider material statutory circumstances - Adjudication of GST dues against the family members of a deceased proprietor without examining the applicability of the statutory provisions governing liability upon death of a taxable person - HELD THAT: - The adjudication orders did not examine whether the proceedings could be sustained under Section 93(1)(a) or Section 93(1)(b) of the CGST/KGST Act. This failure to consider material circumstances warranted interference. The contention concerning issuance of two show-cause notices for the same tax period on different issues was left open for consideration upon detailed response. [Paras 6]

The adjudication orders and their summaries were quashed, and the proceedings were restored for fresh consideration after permitting the second and third petitioners to respond to the corresponding show-cause notices on all available grounds.

Final Conclusion: The petition was allowed. Recovery from the distinct private limited company was quashed, and the adjudication proceedings against the family members of the deceased proprietor were restored for fresh consideration.

Discrepancies in declaration of turnover as export of service between Forms GSTR-3B and GSTR-1 - Opportunity to substantiate export turnover - ex parte GST adjudication - petitioner’s appeal is rejected on the ground of limitation observing that the delay beyond 120 days from the date of the Adjudication Order cannot be condoned in law.

HELD THAT: - The Court found that the asserted circumstances for non-participation and the Board Circulars applicable to the relevant period, which envisage an opportunity for a registered taxable person to produce documents establishing the nature of transactions, warranted a further opportunity to explain the mismatch between Forms GSTR-3B and GSTR-1 and substantiate the export turnover. [Paras 4]

The appellate and adjudication orders were quashed, and the proceedings were restored to the first respondent for fresh consideration upon production of documents by the petitioner, followed by a reasoned order.

Final Conclusion: The petition was allowed and the impugned orders were quashed subject to restoration of the proceedings for fresh consideration after permitting the petitioner to produce supporting documents.

Revocation of cancellation of GST registration - Non-consideration of relevant material

Rejection of the application for revocation of cancellation of GST registration despite acknowledged payment of interest demanded in the show-cause notice - HELD THAT: - The sole discrepancy identified in the show-cause notice, namely payment of interest for delayed tax payment, had been complied with and acknowledged through Form GST DRC-04. The competent authority nevertheless rejected the revocation application merely for non-filing of a reply, without considering that material compliance. The rejection therefore suffered from non-consideration of relevant material. [Paras 6, 7]

The rejection order was set aside and the matter remitted for a fresh decision after affording the petitioner an opportunity to file its reply and comply with any further discrepancy or liability identified by the competent authority.

Final Conclusion: The writ petition was disposed of by setting aside the rejection of the revocation application and remitting it for fresh consideration.

Limitation for appeal - communication of adjudication order - Burden of rebutting declared date of communication

Dismissal of an appeal against an assessment/adjudication order as time-barred by treating the date of the order as its date of communication, despite the appellant's asserted later date of receipt - HELD THAT: - This Court finds that the issue involved in the present writ petition stands squarely covered by the law laid down by the Division Bench in Bombino Agro Industries Limited [2025 (12) TMI 1598 - ALLAHABAD HIGH COURT] as well as by this Court in Manoj Kumar, Proprietor of M/s Sai Traders [2026 (5) TMI 1294 - ALLAHABAD HIGH COURT]

Where the dealer declares the date on which the order was communicated, that date is to be treated as the actual date of communication unless the Revenue rebuts it by cogent material. The declared communication date was not so rebutted; consequently, the appellate authority could not dismiss the appeal solely on limitation without reconsidering the matter.

The appellate order was quashed and the matter was remitted to the appellate authority for fresh decision in accordance with law after affording hearing to the parties.

Final Conclusion: The writ petition was allowed; the appellate order dismissing the appeal on limitation was quashed and the appeal was remitted for fresh consideration.

Condonation of delay in appeals by BSNL VRS employees - Exemption of BSNL VRS-2019 compensation as retrenchment compensation

Condonation of delay in appeals by BSNL VRS employees - Condonation of delay in filing appeals claiming exemption for compensation received under BSNL Voluntary Retirement Scheme-2019 - HELD THAT: - In identical cases of BSNL employees, the first appellate authority and Coordinate Benches had condoned comparable delays after considering the explanations tendered. Following the Coordinate Bench decision on parity of facts, the delays in the relevant appeals were held liable to be condoned. [Paras 11]

The delays in filing the appeals before the first appellate authority, wherever applicable, were condoned.

Exemption of BSNL VRS-2019 compensation as retrenchment compensation - Fresh claim of exemption at appellate stage - Eligibility of compensation received by BSNL employees under Voluntary Retirement Scheme-2019 for exemption under section 10(10B), notwithstanding that the exemption was first claimed in appeal. - HELD THAT: - The claims had been rejected on technical grounds without examination on merits. Coordinate Benches had consistently held that ex-gratia compensation under the BSNL VRS-2019 scheme was exempt under section 10(10B). Following those decisions, the compensation received by the assessees was held exempt under that provision. See SHRI SEKAR GNANAPRAKASAM VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2 (1), TRICHY [2026 (5) TMI 1828 - ITAT CHENNAI] and BASAPPA BALARAMA, MURTHY RANGAPPA [2026 (6) TMI 1381 - ITAT BANGALORE] [Paras 13, 15]

The Assessing Officer was directed to verify the claims, allow the exemption under section 10(10B), determine the consequential tax payable or refundable, and grant admissible interest under section 244A.

Final Conclusion: The appeals were allowed for statistical purposes. The delays were condoned and the assessees' claims for exemption of BSNL VRS-2019 compensation under section 10(10B) were directed to be verified and allowed in accordance with law.

Limitation for disposal of pending settlement applications by Interim Board - Mandatory nature of eighteen-month period for settlement orders - Administrative transfer of settlement application between Interim Boards

Computation and mandatory character of the eighteen-month period for an Interim Board to dispose of a pending settlement application after its transfer from one Interim Board to another - HELD THAT: - The statutory period commences when the pending application is first allotted to, and acted upon by, an Interim Board. A subsequent administrative transfer to another Interim Board does not restart or extend that period; otherwise, repeated transfers could defeat the time-bound statutory scheme. The Interim Board's exercise of power to call for a report established that the application had already been allotted to and was within the jurisdiction of the first Interim Board. The eighteen-month period is mandatory, and an order passed after its expiry is time-barred and a nullity.

We agree with the argument of the petitioner that any interpretation suggesting that the petitioner’s application was first received by an Interim Board, that is, only upon the administrative transfer dated June 13, 2022 would render the entire proceedings undertaken by the IBS-III, Delhi under Section 245D(3) wholly without jurisdiction and would render the time bound manner of settlement of cases redundant.

With regard to the period of 18 months being mandatory, the judgment in R.N.S. Infrastructure Ltd. (Supra) settled the law wherein it is categorically stated that the period of 18 months is mandatory and any order passed beyond 18 months would be time barred and a nullity. This judgment was affirmed by the Division Bench of the Karnataka High Court in CIT v. RNS Infrastructure Ltd.[2022 (2) TMI 229 - KARNATAKA HIGH COURT] and thereafter, the SLP filed before the Hon’ble Supreme Court [2024 (7) TMI 732 - SC ORDER (LB)] was dismissed.[Paras 22, 23, 25, 26, 27]

The settlement order and the consequential rectification order, having been passed beyond the mandatory limitation period, were quashed.

Final Conclusion: The writ petitions were allowed. The settlement order and consequential rectification order were set aside as barred by the mandatory statutory limitation; questions concerning abatement and its consequences were left open.

Reassessment initiation under the amended statutory scheme - Burden of proof where identity theft is pleaded

Reassessment initiation under the amended statutory scheme - Relevancy of material and application of mind - Initiation of reassessment on portal information linked to the assessee's PAN, where the assessee denied the underlying business transactions and pleaded identity theft - HELD THAT: - Under the amended scheme, the assessing authority is required to determine whether it is a fit case to issue notice for reassessment; detailed reasons to believe are not required. The continuing requirements are relevancy of the material and application of mind to the objections. Information concerning transactions linked to the assessee's PAN was relevant material, and the GST communication, in the absence of any conclusive enquiry or finding on identity theft, did not preclude the Income-tax Authorities from conducting an independent enquiry in reassessment. [Paras 10, 11, 12, 13]

The reassessment proceedings were permitted to continue, with the assessee's defence of identity theft left open for examination therein.

Burden of proof where identity theft is pleaded - Primary evidence of disputed transactions - HELD THAT: - Although the plea of identity theft required evidence, documents and enquiry and could not be accepted at the preliminary stage, the Revenue remained obliged to establish by positive primary evidence that the disputed transactions were undertaken by the assessee. Once the assessee substantiates the plea of the negative fact, the onus does not shift to the assessee unless the Revenue first discharges that burden. [Paras 13]

The Revenue must lead primary evidence in reassessment to establish that the assessee, and no other person, performed the transactions giving rise to the alleged escapement of income.

Final Conclusion: The writ petition was disposed of without quashing the reassessment proceedings. The assessee was left free to adduce evidence in defence during reassessment, subject to the Revenue's obligation to establish the disputed transactions by primary evidence.

Addition u/s 56(2)(viib) r/w Section 2(24) - Fair market valuation of shares under section 56(2)(viib) - Discounted Cash Flow method for newly incorporated companies - Recognised valuation method and subsequent statutory notification

Acceptance of the Discounted Cash Flow method for valuation of shares issued by a newly incorporated company before that method was notified in Rule 11UA - HELD THAT: - The Discounted Cash Flow method was a recognised valuation method notwithstanding that it was notified under Rule 11UA only after the issue of shares. Recognition of a method by trade and valuation experts is distinct from its legislative notification. For a newly incorporated company, the explanation that valuation could not appropriately be based on the Net Asset Value method was valid.

Though the prescribed valuation rule used mandatory language, the Assessing Officer was required to identify flaws in the valuation report or its methodology; he could not substitute his own estimate of the expected rate of return or sit in the assessee's position as an economist. Valuation rules being procedural could not defeat substantive rights in the absence of a substantial breach of law. [Paras 33, 34, 36, 38, 39]

The concurrent acceptance of the share valuation based on the Discounted Cash Flow method was upheld, and no interference was warranted.

Final Conclusion: The appeal was dismissed, affirming the deletion of the addition arising from the share premium valuation.

TP Adjustment - Most Appropriate Method (MAM) - Comparable uncontrolled price method vis-a -vis transactional net margin method - Determination of the arm's length price for the project-office transactions under a turnkey power-project contract by applying the internal CUP method instead of TNMM

HELD THAT: - The entire risks and rewards of execution of the contract were recorded at the Indian project office, and no assignment agreement between the head office and the project office was brought on record. Since the entire revenue had been attributed to India and the customer treated the head office and project office as a single entity, the agreement between the head office and the unrelated customer constituted a valid internal CUP satisfying the comparability test. CUP, being a direct and suitable method in the circumstances, was rightly preferred to TNMM; the rejection of the TNMM comparables was also upheld. Case followed Plus India (P.) Ltd. [2011 (2) TMI 268 - ITAT NEW DELHI] [Paras 11, 13, 14, 15]

The concurrent acceptance of the internal CUP method for determining the arm's length price was affirmed, and no substantial question of law arose.

Final Conclusion: The appeals were dismissed as the concurrent findings accepting the internal CUP method and rejecting the transfer-pricing adjustment raised no substantial question of law.

Revisional relief against over-assessment under section 264 - Double taxation of the same income - Tax collection only by authority of law

Exercise of revisional jurisdiction under section 264 where the same income was taxed in two assessment years after the assessee had offered it to tax in a later year and it was subsequently disallowed in an earlier year - HELD THAT: - Section 264 is a beneficial and remedial provision empowering the Commissioner to grant relief against over-assessment, including an error committed by the assessee in its return. The availability of relief does not depend on filing a revised return within time, nor on whether the error originated in the assessee's voluntary act or in a departmental order. Where the cumulative effect of orders for different assessment years subjects the same income to tax twice, the resulting over-assessment is an error amenable to revision; tax so retained would offend the requirement that tax be levied and collected only by authority of law. The revisional authority could not reject the application merely because the intimation, considered in isolation, accepted the returned income, without examining the claim and reconciliations on merits. [Paras 24, 26, 27, 28, 29]

The rejection of the revision application was set aside, and the matter was remanded for fresh consideration of the application under section 264 on merits and in accordance with law.

Final Conclusion: The writ petition was allowed. The impugned revisional order was set aside and the revision application was remanded for fresh decision on merits.

Principles of natural justice in assessment proceedings - Cross-examination of authors of relied-upon official reports - Opportunity to adduce material evidence

Denial of Cross-examination of relied-upon official reports - Violation of principles of natural justice - Denial of an opportunity to examine or cross-examine the Agricultural Officer and Village Officer whose reports were relied upon to reject the explanation that the unaccounted transactions arose from agricultural operations - HELD THAT: - The reports of the Agricultural Officer and Village Officer constituted the basic material for finding that the properties were unsuitable for the claimed agricultural activities. Recitals in title deeds could not conclusively establish the physical character or use of the properties, which required physical inspection. The manner, time and circumstances of such inspection were therefore material for testing the reports. Though cross-examination is not an absolute right in assessment proceedings, it is necessary where, as held in Nishad K.U [2025 (2) TMI 1247 - KERALA HIGH COURT] denial of that opportunity deprives the assessee of a fair hearing. [Paras 18, 19, 20, 21]

The denial of examination or cross-examination violated the principles of natural justice; the assessment orders and consequential penalty orders were quashed and the matters remitted for reconsideration after affording that opportunity.

Opportunity to produce transaction witnesses - Fair opportunity to adduce evidence - Refusal to examine witnesses produced to substantiate the claimed sales of agricultural products merely because they were produced after the asserted extended date - HELD THAT: - The assessee had sought time until 15.03.2024 and produced the remaining witnesses on that date, but no order declining that request or restricting the extension to 14.03.2024 was shown. In the absence of such an order, the witnesses ought to have been examined. Since the assessment was reopened for the separate denial of cross-examination, fairness also required that the assessee be allowed to adduce evidence through those witnesses and further evidence. [Paras 22]

On remand, the Assessing Officer was directed to permit examination of the witnesses and allow the assessee to adduce further evidence before completing the reconsideration.

Final Conclusion: The assessment orders for the relevant assessment years and the consequential penalty orders were quashed for breach of natural justice and remitted for fresh consideration after affording the specified evidentiary opportunities.

Charitable registration u/s 12AB - predominant purpose and genuineness of activities - Approval for donations-extension of filing deadline

Charitable objects and incidental fees - Genuineness of charitable activities at registration stage - Entitlement to registration u/s 12AB where charitable objects were treated as commercial because the facilities were not stated to be free of cost, and activities were doubted on account of rent paid to a trustee's related person for premises also used as a residence - HELD THAT: - The objects concerning public facilities, medical relief, relief to the poor, education and skill development were not inherently commercial, and no object permitted distribution of profits for members' personal benefit. The possibility of charging a fee does not establish a business purpose; the determinative considerations are the predominant purpose, the manner in which the activity is carried on and application of income. Further, acknowledged charitable activities could not be treated as non-genuine merely because rent was paid to a related person and the premises had mixed residential use, absent material that the rent was fictitious, excessive or represented a return of funds. Questions concerning reasonableness of expenditure and compliance with sections 11 to 13 are ordinarily for assessment, unless the material shows that activities are a camouflage, non-genuine or contrary to the objects. [Paras 31, 32, 33, 34, 35]

The rejection of regular registration and cancellation of provisional registration were set aside, and registration under section 12AB was directed to be granted for the period permissible in law, without restricting assessment scrutiny of statutory compliance.

Approval for donations - extended filing deadline - Subsequent relaxation during pendency of appeal - Entitlement to approval under section 80G where the application was rejected following denial of section 12AB registration and as time-barred under the prescribed filing period - HELD THAT: - The objection founded on denial of registration under section 12AB did not survive upon the direction to grant that registration. CBDT Circular No. 7/2024 extended the filing due date for Form No. 10AB up to 30.06.2024 in mitigation of genuine hardship. Since the application had been filed before that extended deadline, the subsequent relaxation applied while the correctness of the impugned order remained in appeal and the application could not be regarded as time-barred. [Paras 37, 38, 39, 40]

The rejection of approval and cancellation of provisional approval were set aside, and approval under section 80G was directed to be granted for the period permissible in law.

Final Conclusion: Both appeals were allowed. Registration under section 12AB and approval under section 80G were directed to be granted in accordance with law.

Disallowance of expenditure relating to exempt income u/s 14A - Recording of satisfaction before applying prescribed disallowance method - assessee had made a suo motu disallowance

HELD THAT: - The Assessing Officer rejected the assessee's suo motu disallowance merely as not being in accordance with the prescribed method, without making a specific reference to the assessee's accounts or recording why the disallowance offered was incorrect. The statutory condition requiring satisfaction, having regard to the accounts, as to the incorrectness of the assessee's claim was therefore not fulfilled before invoking the prescribed method.

We find that in Godrej Boyce Mfg. Co. Ltd. [2023 (2) TMI 868 - BOMBAY HIGH COURT] and Tata Capital Ltd. [2024 (4) TMI 407 - BOMBAY HIGH COURT] held that where AO had not recorded his satisfaction as to why he was not satisfied with claim of assessee in respect of expenditure in relation to exempt income, the disallowance made under section 14A by applying Rule 8D was to be deleted. [Paras 7]

The additional disallowance made by applying the prescribed method was deleted; the remaining contention concerning exclusion of growth-option debt mutual funds was left academic.

Final Conclusion: The assessee's appeal was allowed and the additional disallowance under section 14A read with the prescribed method was deleted for want of the requisite recorded satisfaction.

MAT book-profit adjustments for expenditure relatable to exempt income - MAT book-profit adjustments for demerger expenditure disallowed in regular assessment

MAT book-profit adjustments for expenditure relatable to exempt income - Disallowance u/s 14A in computation of book profit - Addition to book profit of expenditure disallowed u/s 14A as relatable to exempt income - HELD THAT: - The Special Bench decision in Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] was held to cover the issue and to establish that a disallowance under section 14A cannot be added back in computing book profit under section 115JB. [Paras 12]

The deletion of the section 14A disallowance from the computation of book profit was sustained.

MAT book-profit adjustments for demerger expenditure disallowed in regular assessment - Exhaustive statutory adjustments to book profit - Addition to book profit of demerger expenditure disallowed under section 35DD in the regular assessment - HELD THAT: - Explanation 1 to section 115JB(2) contains an exhaustive list of additions to book profit and does not include a deduction or disallowance under section 35DD. A disallowance in the regular computation could therefore not be added back to book profit on that basis. [Paras 13]

The deletion of the section 35DD disallowance from the computation of book profit was sustained.

Final Conclusion: The Revenue's appeal was dismissed. The disallowances under sections 14A and 35DD were held not liable to be added back in computing book profit under section 115JB.

Deduction for CSR donations u/s 80G - Dividend distribution tax under India-UK tax treaty

Deduction for CSR donations u/s 80G - Deduction u/s 80G for donations forming part of mandatory corporate social responsibility expenditure, other than contributions to Swachh Bharat Kosh and Clean Ganga Fund - HELD THAT: - Explanation 2 to section 37(1) disallows CSR expenditure as business expenditure, but does not create a general embargo against deduction under other provisions. Section 80G specifically excludes CSR contributions only to Swachh Bharat Kosh and Clean Ganga Fund; no corresponding restriction applies to donations to other eligible institutions. The statutory CSR obligation does not deprive a contribution of its character as a donation where the company voluntarily chooses an eligible mode of discharging that obligation. [Paras 7]

The deduction under section 80G was allowed, as the donations were not made to Swachh Bharat Kosh or Clean Ganga Fund.

Dividend distribution tax under India-UK tax treaty - Refund of dividend distribution tax paid in excess of the beneficial rate applicable to dividends distributed to the UK holding company under the India-UK Tax Treaty - HELD THAT: - Following the jurisdictional High Court's decision in the assessee's own case for A.Yrs. 2016-17 to A.Y. 2019-20 [2025 (12) TMI 677 - BOMBAY HIGH COURT] the Tribunal held that dividend distribution tax on dividends paid to the UK holding company was restrictable to the treaty rate under Article 11. Retention of tax collected beyond that rate was held to be contrary to law. [Paras 11]

The Revenue authorities were directed to refund dividend distribution tax paid in excess of 10% on the dividends distributed to the UK holding company.

Final Conclusion: The assessee's appeal was allowed. The claimed deduction for eligible CSR donations under section 80G and refund of excess dividend distribution tax were granted.

Tax deduction at source on leave travel concession paid during subsistence of judicial interim directions - Assessee in default for non-deduction of tax at source

Liability of the employer-bank to be treated as an assessee in default, with consequential interest, for non-deduction of tax on foreign-travel leave fare concession paid to an employee while interim directions restrained such deduction - HELD THAT: - The Tribunal followed the case of State Bank of India Agra [2025 (4) TMI 44 - ITAT AGRA] we are of the considered opinion that the impugned order dated 30.03.2023 passed by the Assessing Officer (TDS) u/s 201(1)/ 201(1A) of the IT Act treating the assessee as an assessee in default is not justified, since the assessee was prevented by sufficient & reasonable cause in not deducting the TDS. In this regard, judgement passed in the case of State Bank of India vs. Commissioner of Income-tax [2025 (11) TMI 1773 - KERALA HIGH COURT] is also relevant wherein Hon’ble Court in the case of State Bank of India Poovar Branch held that the appellant-assessee was justified in not having deducted the tax

Since the bank had sufficient and reasonable cause and could not lawfully deduct tax contrary to those directions, the conditions for treating it as an assessee in default and levying consequential interest were not attracted. [Paras 7, 8]

The order treating the assessee as an assessee in default under sections 201(1) and 201(1A) and the consequential demand were cancelled.

Final Conclusion: The appeal was allowed. The bank could not be treated as an assessee in default or subjected to consequential interest for the impugned non-deduction of tax on leave fare concession.

Validity of reassessment notice for want of statutory sanction - reassessment notice issued after expiry of four years from the end of the relevant assessment year on approval of the Additional Commissioner of Income-tax - HELD THAT: - The additional legal ground was admitted as it could be decided on the material already on record. Under section 151 as applicable, where the notice under section 148 was issued after four years from the end of the relevant assessment year, sanction was mandatorily required from the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner. Approval obtained from the Additional Commissioner of Income-tax was therefore not a valid statutory sanction. Case followed J M Financial and Investment Consultancy Services Private Limited [2022 (4) TMI 1446 - BOMBAY HIGH COURT] [Paras 6, 9]

The notice under section 148 was quashed, consequently vitiating the reassessment order; the remaining grounds were not adjudicated.

Final Conclusion: The appeal was allowed by quashing the reassessment notice and the consequential reassessment for want of sanction from the authority mandated by section 151.

Validity of reassessment based on search-related information and independent enquiry - Estimation of profit element in unverifiable purchases where sales are accepted

Reassessment based on information from search and independent enquiry - Approval for reassessment notice - Validity of reassessment notice issued on information concerning accommodation entries and related enquiry, instead of proceedings based solely on the search - HELD THAT: - The information before the Assessing Officer was not confined to the search action but also concerned enquiries regarding transactions with an entry provider. This justified invocation of reassessment provisions rather than proceedings applicable solely to search-related material. The approval obtained was held to be in accordance with the prescribed procedure and not mechanical.

Decision of Hon’ble Madras High Court IDFC Ltd. [2023 (10) TMI 275 - MADRAS HIGH COURT] will not be applicable in assessee’s case as the information is not only on the search and seizure but also about the enquiry ascertained through Shri Deepak Jain who was an entry provider. [Paras 9]

The challenge to the reassessment proceedings, including the objections to the notice and approval, was rejected.

Profit estimation on purchases from an accommodation - entry provider - Accepted sales and unverifiable purchases - HELD THAT: - Though the purchases were not fully established and the supplier was found to be an entry provider, the statement relied upon had been retracted and the corresponding sales stood accepted. The entire purchases could therefore not be disallowed; the addition had to be restricted to a profit element consistent with the assessee's gross-profit details.

The decision of Vrajendra Jagjivandas Thakkar [2023 (9) TMI 623 - GUJARAT HIGH COURT] appears to be more applicable in assessee’s case and thus the addition to the extent of 6% of bogus purchase be confirmed. [Paras 10]

The addition was restricted to 6% of the alleged bogus purchases.

Final Conclusion: The reassessment was sustained, but the disallowance of purchases was reduced to the profit element of 6%. The assessee's appeal was partly allowed.

Penalty u/s 271D and 271E - Reasonable cause - violation of provisions of Section 269SS and 269T -cash receipts and repayments connected with proposed agricultural-land purchase

Levy of penalties for accepting and repaying in cash amounts received from farmers towards a proposed purchase of agricultural land which could not be completed following the death of the assessee's father - HELD THAT: - The documentary material, including the bank records, death certificate, affidavits and land records of the farmers, established a reasonable cause for the cash transactions. The proposed agricultural-land transaction could not be completed, and the amounts were returned in cash after six months. [Paras 9, 11]

The penalties imposed for contravention of the provisions governing cash acceptance and repayment of loans or deposits were deleted.

Final Conclusion: The appeals were allowed and the impugned penalty orders were set aside on the ground that the assessee had established reasonable cause for the cash transactions.

Penalty for deficiency in manifested imported goods - Steamer agent as person-in-charge of conveyance - Import General Manifest declaration - definition of ‘’person-in-charge’’ defined under Section 2[31] of the Customs Act - Liability of a steamer agent for penalty for failure to account for imported steel scrap declared in the Import General Manifest, where the containers substantially contained broken roof tiles

Whether penalty u/s 116 of the Act is leviable against the 1st respondent herein, for not accounting for the goods as per the Import General Manifest? - HELD THAT: - The Hon’ble Supreme Court, in the case of British Airways PLC Vs. Union of India and Others [2001 (11) TMI 81 - SUPREME COURT] considered the definition of "person-in-charge" defined under Section 2[31] of the Customs Act and discussed the inter-play of Sections 42, 116 and 148 of the Customs Act wherein held 'Person-in-charge means the person responsible for the conveyance (such as the aircraft or vessel) and for ensuring that the cargo is properly unloaded at the declared destination. Under Section 116, liability may also extend to a person representing or acting on behalf of the person-in-charge before Customs'.

A person representing the person-in-charge of a conveyance and accepted by Customs for dealing with cargo may be subjected to liability for cargo deficiency. The respondent had lodged the Import General Manifest, subscribed to the truth of its contents and acted as agent of the Master of the vessel; it was consequently a person-in-charge for the relevant purpose. Lodgment of the Import General Manifest is not merely intimation of arrival but a verified declaration, and contractual stipulations in the Bills of Lading cannot override the statutory obligation.

We are bound by the judgment of the Apex Court in British Airways case [supra]which was also followed by a coordinate Bench of this Court and therefore, the contention of the 1st respondent that he cannot be construed as a ‘’person-in-charge’’, as defined under Section 2[31] of the Act, cannot be accepted.

One more aspect which will bring the 1st respondent within the ambit of ‘’a person-in-charge’’ as defined under Section 2[31] of the Act, is the lodgment of the IGM by the 1st respondent. The importance and significance of the IGM was succinctly explained by the Division Bench of this Court in Carvel’s case [2016 (6) TMI 626 - MADRAS HIGH COURT] as held 'whoever lodges the import manifest with the proper officer of the Customs, acts as such, as an agent of the Master of the vessel'

As the respondent failed to satisfactorily explain the substantial deficiency in the manifested goods, the penalty was attracted. [Paras 22, 24, 25, 26]

The questions of law were answered in favour of the Revenue; the steamer agent was held liable to penalty under Section 116 of the Customs Act.

Final Conclusion: The appeal was allowed, the Tribunal's order was set aside, and the order imposing penalty on the steamer agent was restored.

Prospective operation of exemption notifications - Provisional release of imported digital multifunction print and copying machines

Consideration of provisional release of imported reconditioned and second-hand digital multifunction print and copying machines in light of a subsequently effective exemption amendment - HELD THAT: - Unless a statutory notification expressly operates retrospectively, it applies prospectively. The amendment invoked by the respondents could not govern imports covered by bills of lading issued before its commencement and could not be a ground to refuse consideration of provisional release. The Court also found no distinguishing feature from its earlier common order concerning provisional release of similar goods passed in Taanish Enterprises, M/s. Maruti Enterprises, M/s. Best Mega International And Others [2025 (7) TMI 1350 - MADRAS HIGH COURT] etc. [Paras 6, 7]

The respondents were directed to consider the request for provisional release under Section 110A, impose lawful conditions, and release the goods upon compliance; the release remains subject to independent adjudication on merits.

Final Conclusion: The writ petition was disposed of with directions to consider and, upon compliance with lawful conditions, provisionally release the imported goods, without affecting the merits of the adjudication proceedings.

Prospective operation of exemption notification - Provisional release of imported goods - Consideration of provisional release of imported digital multifunction print and copying machines where the respondents relied on an exemption-notification amendment brought into force after the Bill of Lading - HELD THAT: - A statutory notification operates prospectively unless it expressly provides for retrospective operation. Since the Bill of Lading preceded commencement of the amendment, that amendment could not govern the import or be invoked to decline consideration of provisional release. The Court also noted that provisional release of similar imported goods had already been considered in the common order in M/S. TAANISH ENTERPRISES [2025 (7) TMI 1350 - MADRAS HIGH COURT] batch, and no distinguishing feature was shown. [Paras 5, 6]

The respondents were directed to consider the request for provisional release under the Customs Act, impose lawful conditions as necessary, and release the goods upon compliance, subject to the outcome of the adjudication proceedings.

Final Conclusion: The writ petition was disposed of with directions for consideration and, upon compliance with conditions imposed, provisional release of the imported goods, without prejudice to independent adjudication on merits.

Provisional release of seized imported goods - Executive circular vis-a -vis statutory power of provisional release - Statutory discretion under Section 110A of the Customs Act

Entitlement to provisional release of imported plastic spare parts despite pending investigation, alleged misdeclaration and disputed tariff classification - HELD THAT: - The Division Bench of this Court, in Commissioner of Customs, Tuticorin v. Empire Exports, [2013 (3) TMI 28 - MADRAS HIGH COURT] following the decision of the Hon’ble Supreme Court in Navshakti Industries Pvt. Ltd. & Anr. [2011 (5) TMI 149 - Supreme Court] directed provisional release of the goods subject to payment of the duty declared by the importer, payment of 30% of the differential duty and execution of a personal bond for the balance 70% of the differential duty.

Executive instructions may supplement, but cannot override or replace, the statutory provision for provisional release. The pending investigation, alleged import-policy violation, misdeclaration, and classification dispute were matters for adjudication and could not by themselves justify continued detention. Revenue interests could adequately be secured through appropriate conditions pending adjudication. [Paras 5, 8, 9, 14, 15]

The rejection of provisional release was set aside and the goods were directed to be released on payment of duty at the departmental rate, execution of a personal bond for the balance differential duty, and without prejudice to investigation and adjudication.

Final Conclusion: The writ petition was allowed, and provisional release was ordered subject to safeguards for the Revenue. The classification, alleged misdeclaration, import-policy compliance and final duty liability were left for adjudication.

Vital Wheat Gluten entitlement to the benefit of exemption from payment of Basic Customs Duty under the Duty Free Import Authorisation (DFIA) Scheme - Reason to believe for customs seizure

DFIA exemption for Vital Wheat Gluten - Wheat gluten as wheat flour - Vital Wheat Gluten imported under an authorisation permitting wheat flour was covered by the description of wheat flour for the DFIA Scheme - HELD THAT: - The binding decisions of the CESTAT in Uni Colloids Impex Pvt. Ltd. [2014 (5) TMI 525 - CESTAT AHMEDABAD] and Unibourne Food Ingredients LLP [2022 (3) TMI 1002 - CESTAT AHMEDABAD] as affirmed by the Coordinate Bench, had settled that wheat gluten is wheat flour with specified technical characteristics for DFIA purposes. Exact correspondence of the ITC (HS) Code was not required where the description, quantity and value conditions were met; commercial or duty-rate differences were immaterial. [Paras 12, 13, 14, 21]

The imported Vital Wheat Gluten was entitled to be treated as wheat flour under the DFIA Scheme.

Reason to believe for customs seizure - Seizure founded on suspended public notice - seizure of Vital Wheat Gluten for alleged ineligibility to DFIA exemption - HELD THAT: - Although interference with seizure is ordinarily limited, the statutory belief must rest on relevant and legally sustainable material. The respondents proceeded contrary to binding decisions on the DFIA description and relied principally on a Public Notice that had been suspended before the import; the departmental Circular also did not require technical correlation in such cases. The assumption of jurisdiction for seizure was therefore unsustainable.

It is also not in dispute that the original exporter, had validly transferred the DFIA authorisation in favour of the petitioner. The transferred authorisation specifically permitted import of, inter alia, wheat flour (ITC HS Code 11010000).[Paras 18, 19, 20, 22, 24]

The seizure memo was quashed, and the bank guarantee and indemnity bond were directed to be returned and discharged.

Final Conclusion: The writ petition was allowed and the seizure memo was quashed for want of legally sustainable material supporting the belief that the imported goods were liable to confiscation.

Classification of automotive electronic control units - Body Control Module and Integrated Body Unit - Burden of proof in tariff reclassification

Classification of body control and integrated body units - Judicial discipline - Classification of Unit Assy - BCM and Unit Assy - I.B.U. as electronic automatic regulators under Tariff Item 9032 8910 or as motor-vehicle parts under Tariff Item 8708 9900 - HELD THAT: - The classification of the BCM and IBU stood covered by the Tribunal's earlier final order in the appellant's own case [2025 (8) TMI 511 - CESTAT CHENNAI]. As Revenue produced no order of a superior judicial forum staying, reversing, modifying or setting aside that order, judicial discipline required its adoption. [Paras 5]

BCM and IBU were held classifiable under Tariff Item 9032 8910.

Classification of tyre pressure monitoring system - Burden of proof in tariff reclassification - Classification of the Tyre Pressure Monitoring System as an electronic automatic regulator under Tariff Item 9032 8910 OR as a motor-vehicle part under Tariff Item 8708 9900 - HELD THAT: - Neither the show cause notice nor the impugned order established the functional characteristics of the TPMS necessary to support its proposed reclassification. An ECU is a generic description, and each ECU must be classified with reference to its distinct functions. Since classification under a heading different from that claimed requires Revenue to adduce proper evidence and discharge the burden of proof, the proposed classification under Tariff Item 8708 9900 could not be sustained. See HPL CHEMICALS LTD. VERSUS CCE, CHANDIGARH [2006 (4) TMI 1 - SUPREME COURT][Paras 6]

The appellant's classification of TPMS under Tariff Item 9032 8910 was accepted, and the consequential demand with interest was set aside.

Final Conclusion: The impugned reclassification was set aside. The appeal was allowed with consequential relief in accordance with law.

Preventive suspension of Customs Cargo Service Provider approval - Immediate necessity under Regulation 11(2) of HCCAR, 2009 - Indefinite suspension and procedural safeguards

Sustianiability of open-ended continuation of suspension of a Customs Cargo Service Provider approval under Regulation 11(2) of the Handling of Cargo in Customs Areas Regulations, 2009 - HELD THAT: - Regulation 11(2) is an exceptional, preventive power, exercisable only upon an independent and explicit satisfaction that immediate action is necessary to stop a real and continuing threat to revenue or customs-area security. It cannot be founded merely on allegations capable of supporting proceedings under Regulation 11(1), nor can pendency of a DRI investigation substitute for the statutory inquiry contemplated by Regulation 12. A suspension initially justified by urgency becomes de facto punitive when it is continued indefinitely without verification of the alleged deficiencies, fresh material showing a subsisting threat, commencement of statutory inquiry, or reasonable despatch by the Department.

On the material available, the clearance of containers during suspension without additional safeguards, prior official inspection records, the corrective measures adopted, and the availability of enhanced supervision and conditions showed that continued total suspension was disproportionate and not warranted as a preventive measure. [Paras 46, 47, 48, 51, 52]

The open-ended continuation of suspension was set aside and the licensing authority was directed to restore the approval, subject to such conditions as may safeguard revenue and to the operator's continued adherence to corrective measures. The Department remains free to initiate proceedings under Regulation 11(1) after a proper inquiry in accordance with Regulation 12.

Final Conclusion: The appeal was allowed. The continued suspension under Regulation 11(2) was held unsustainable as an indefinite preventive measure and the approval was directed to be restored, without prejudice to regular proceedings under Regulation 11(1).

Mandatory post-decisional hearing in Customs Broker licence suspension - Statutory timelines for continuation of suspension

Validity of continuation of suspension of a Customs Broker licence where the post-decisional hearing was held beyond the prescribed period - HELD THAT: - The power of immediate suspension is exceptional and is balanced by the mandatory safeguard of a post-decisional hearing within fifteen days. The statutory period cannot be enlarged by administrative action. Since the hearing was postponed by the licensing authority and held beyond that period, the mandatory requirement was breached, rendering the continued suspension without legal sanction. [Paras 17, 19, 21]

The order continuing suspension was set aside and the continuation of suspension of the Customs Broker licence was revoked; the merits of the allegations were left open for proceedings in accordance with law.

Final Conclusion: The appeal was allowed, as continuation of the licence suspension after a post-decisional hearing conducted beyond the mandatory statutory period was unsustainable.

Intervention in disposed writ proceedings - Functus officio - Necessary and proper parties - Leave to appeal

Leave to appeal - Person aggrieved - Requirement of leave to appeal against an order rejecting the appellants' applications for intervention in the writ proceedings - HELD THAT: - The appellants were applicants before the writ court and parties to the impugned order passed on their own intervention applications. The principle governing leave to appeal by strangers to an order, stated in H. Anjanappa & Ors vs. A. Prabhakar & Ors [2025 (4) TMI 1850 - CALCUTTA HIGH COURT] was therefore inapplicable; they were not required to seek leave to challenge that order. [Paras 31, 32]

The appeals were maintainable without an application for leave to appeal.

Intervention in disposed writ proceedings - Functus officio - Necessary and proper parties - Maintainability of intervention applications by erstwhile directors in disposed writ petitions concerning defreezing of the company's bank accounts - HELD THAT: - The appellants showed only apprehensions and no tangible subsisting right establishing that they were necessary or proper parties to the writ proceedings. Pending disputes between the parties did not justify intervention or recall in a disposed writ petition. Further, upon final disposal of the writ petitions, the writ court was functus officio; the doctrine, as explained in Orissa Administrative Tribunal Bar Assn. v. Union of India [2023 (3) TMI 1490 - SUPREME COURT] fixes the endpoint of adjudication and precludes endless revisiting of decisions. [Paras 33, 34, 35]

There was no scope for intervention in the disposed writ petitions, and rejection of the intervention applications was upheld.

Final Conclusion: The intra-court appeals and pending applications were dismissed. The dismissal does not preclude the appellants from pursuing any available remedy against the final writ order in an appropriate proceeding before the appropriate forum, in accordance with law.

Restrictions on transfer of shares in a private company - Pre-emptive rights under articles of association - Transfer of shares contrary to articles of association

Validity of transfers of shares held by individual shareholders and the Trust to outsiders without compliance with Article 15 of the Articles of Association - HELD THAT: - Article 15 required the selling member to give written notice to the Board, constituted the Board as agent for sale to existing members, and required determination of the agreed or auditor-certified fair value. None of these requirements was followed. The Articles bound the Company, its directors and shareholders; consequently, transfers made in complete breach of the prescribed procedure and in disregard of existing shareholders' pre-emptive rights were ultra vires and void. The same legal requirements applied to shares held by individual shareholders and by the Trust, and no distinction could be drawn between them. Acquiescence could not be inferred so as to waive rights where the mandatory procedure under Article 15 had not been adopted. [Paras 7]

The transfers of shares by both the individual shareholders and the Trust were set aside. The Company was directed to rectify its registers and make consequential statutory declarations, while remaining at liberty to revisit the sale by following Article 15 and respecting existing shareholders' pre-emptive rights; directors appointed solely on the basis of the cancelled transfers were to cease unless otherwise qualified.

Final Conclusion: All four appeals were disposed of by modifying the impugned order and setting aside every impugned share transfer. The Company may undertake any fresh transfer only in conformity with Article 15 of its Articles of Association.

Mitigating factors in adjudging securities - reduction of penalty below the statutory minimum prescribed for a specific violation - market penalties - Statutory minimum penalty for fraudulent and unfair trade practices - Natural justice in adjudication proceedings

Mitigating factors in adjudging securities-market penalties - Statutory minimum penalty for fraudulent and unfair trade practices - Reduction of penalty below the statutory minimum prescribed for fraudulent and unfair trade practices by applying the mitigating factors u/s 15J of the SEBI Act - HELD THAT: - The Presiding Officer held that, following the amendment to section 15HA, the statutory minimum could not be reduced by reference to section 15J; the Tribunal, being a statutory body, could not depart from the prescribed minimum. The majority, however, held that section 15J mandatorily requires due regard to mitigating factors and, in the absence of an overriding clause in section 15HA, the provisions must be harmoniously construed. The majority further held that the cited Supreme Court rulings did not decide whether section 15J could reduce a penalty below the minimum stipulated in a specific penal provision. [Paras 36, 38, 40, 41, 48]

By the majority view, penalty may be reduced below the minimum prescribed in the specific provision by considering the mitigating factors under section 15J.

Natural justice in adjudication proceedings - Service of show-cause notice - Validity of penalty proceedings against appellants who asserted want of knowledge of the proceedings owing to defective service of the show-cause notice - HELD THAT: - The majority found no evidence of proper service of the show-cause notice upon one appellant and noted the absence of any reply denying the respective explanations concerning lack of knowledge of the proceedings. The orders were therefore found unsustainable for breach of natural justice. [Paras 42, 48]

The impugned orders in the two appeals were set aside and the appeals were allowed for want of natural justice.

Fraudulent reversal trades in illiquid stock options - Opportunity of hearing in penalty adjudication - Challenge to the penalty for non-genuine reversal trades in an illiquid stock-options contract where the notice and hearing opportunities had been duly served - HELD THAT: - The Tribunal found that the appellant had failed to furnish a cogent explanation for non-compliance with duly served notices and hearing opportunities. It held that the appellant had been a beneficiary of the device of fraudulent trading in illiquid stocks. [Paras 46, 48]

The appeal was dismissed.

Final Conclusion: By majority, the Tribunal held that mitigating factors under section 15J may warrant penalty below the statutory minimum. Two appeals were allowed for breach of natural justice, while the appeal concerning fraudulent reversal trades was dismissed.

Default bail on filing of supplementary complaint - Bail under the Prevention of Money Laundering Act - Twin conditions for bail

Default bail on filing of supplementary complaint - Entitlement to default bail where the supplementary complaint was filed within the prescribed period but returned for compliance - HELD THAT: - The supplementary complaint had been filed within the prescribed period. Its subsequent return for compliance did not, by itself, confer an indefeasible right to bail in the circumstances of the case. [Paras 9]

The claim for default bail was rejected.

Bail under the Prevention of Money Laundering Act - Twin conditions for bail - Grant of bail to an accused alleged to have interfered with investigation and auction of properties attached under the Prevention of Money Laundering Act - HELD THAT: - The material prima facie indicated the petitioner's involvement in activities connected with the proceeds of crime, including alleged interference with the attached-properties auction. The Court was not satisfied that there were reasonable grounds to believe that the petitioner was not guilty or that he was unlikely to commit an offence while on bail.

Judgment of V. Senthil Balaji vs. Deputy Director of Enforcement [2024 (9) TMI 1497 - SUPREME COURT] was distinguished on facts. [Paras 9, 10, 11]

The statutory conditions for bail were not satisfied and bail was refused.

Final Conclusion: The criminal petition seeking bail was dismissed, as neither default bail nor release under the statutory bail conditions was made out.

Refund of service tax paid under mistake of law - Limitation for refund of tax collected without authority of law - Unjust enrichment in refund claim by service recipient - Appellate jurisdiction to grant refund

Classification of floating rigs as supply of tangible goods service - Refund by service recipient - Mistake of law - Entitlement of the service recipient to refund of service tax erroneously paid on supply and operation of floating rigs under Mining Service, although the service provider had not challenged the assessment - HELD THAT: - Supply of floating rigs was classifiable as Supply of Tangible Goods Service, which became taxable only from 16.05.2008, and not as Mining Service.

The Bombay High Court, in the case of Indian National Shipowners Association (INSA) vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT] later confirmed by the Hon’ble Supreme Court [2010 (12) TMI 12 - SUPREME COURT] has held that the supply of floating rigs is to be classified as “Supply of Tangible Goods Service” and not as “Mining services.” The floating rigs are directly involved in the mining activities. M/s.CPCL., with whom the assessee had entered into production sharing contract, certified that floating rigs is directly involved in the mining of crude oil.

The tax collected from the respondent and remitted by the service provider pursuant to an erroneous classification was without legal authority; its retention would offend Article 265 of the Constitution. The absence of a challenge by the service provider to its assessment did not defeat the service recipient's claim for refund of the tax burden borne by it. [Paras 20, 21]

The respondent was held entitled to refund of the service tax erroneously paid under Mining Service.

Limitation for refund claim based on mistake of law - Article 265 of the Constitution - Applicability of the statutory limitation for refund where service tax had been paid under a mistake of law owing to erroneous classification of floating-rig services - HELD THAT: - The Court held that the statutory limitation could not justify retention of tax collected without authority of law. Where payment resulted from ignorance or mistake of law arising from misclassification, the rigour of the refund limitation did not apply, since retention of the amount would be contrary to Article 265 of the Constitution. [Paras 21]

The limitation objection was rejected.

Unjust enrichment in refund of service tax - Burden of service tax borne by service recipient - Whether the respondent had established that refund of service tax paid for floating-rig services would not result in unjust enrichment? - HELD THAT: - The Appellate Authority and the Tribunal had concurrently found, on the service provider's certificate and the certificate concerning use of the floating rigs, that the service tax burden had been passed on to and borne by the respondent. The relevant certificate had not been challenged before either authority, and its validity presented a question of fact not open to suspicion at this stage. [Paras 21]

The concurrent finding that refund to the respondent would not amount to unjust enrichment was sustained.

Jurisdiction of appellate authorities to order refund - Refund of tax paid under mistake of law - Jurisdiction of the appellate authorities and the Tribunal to grant refund of service tax paid under mistake of law instead of requiring recourse to a civil suit or writ petition - HELD THAT: - Since the tax payment resulted from a mistaken classification, and the classification and passing of the tax burden stood factually established, relegating the respondent to a civil suit or writ petition would serve no purpose. The Court held that the appellate authorities and the Tribunal could correct the classification error and grant refund in a case of tax paid under mistake of law. [Paras 21]

The appellate authorities and the Tribunal were held to have jurisdiction to grant the refund.

Final Conclusion: The departmental appeal was dismissed. The respondent's refund claim was sustained, the tax having been collected under an erroneous classification and retained without authority of law.

Appellate jurisdiction in service tax classification and taxability disputes - Classification as a question relating to rate of duty

Maintainability of an appeal to the High Court against a Tribunal order determining the taxability and classification of services rendered under secondment arrangements - HELD THAT: - The substantial questions proposed by the appellant disclosed that the dispute principally concerned classification of the services and their taxability. A classification dispute bears a direct and proximate relation to the rate of duty for assessment. Further, the statutory inclusion of taxability within questions relating to rate of duty was held clarificatory of the existing appellate scheme and operative retrospectively; consequently, such matters fall within the appellate jurisdiction of the Supreme Court and are excluded from the High Court's jurisdiction.

This Court had in M/s. Zoom Technologies [2026 (4) TMI 1593 - TELANGANA HIGH COURT] rejected the appeal preferred by the Central Tax and Customs holding that the appeal is not one which is maintainable under Section 35G but is one which would otherwise needs to be filed under Section 35L before the Hon’ble Supreme Court.[Paras 15, 16, 17]

The appeal under Section 35G was held not maintainable and was dismissed, leaving the appellant to pursue the statutory appeal before the Supreme Court under Section 35L.

Final Conclusion: The High Court dismissed the appeal as not maintainable, holding that the dispute concerning classification and taxability of the services lay within the Supreme Court's appellate jurisdiction.

Statutory appellate remedy before the CESTAT - HELD THAT:- Writ petition was dismissed as withdrawn with liberty to pursue the statutory appeal before the CESTAT with an application for condonation of delay; limited protection against coercive action was granted subject to the stated conditions.

Practice of adjournments sought mechanically - HELD THAT:- The appeal was dismissed for non-prosecution after repeated adjournments sought by the appellant exceeded the statutory limit.

Photography services - exclusion of value of goods sold - Extended limitation - absence of suppression of facts

Photography services - separate sale of cinematographic film and printing service - Exclusion of goods component from taxable value - Mutual Exclusivity of VAT and Service Tax - Inclusion of the value of unexposed positive films and consumables separately sold to customers in the taxable value of photography services - HELD THAT: - The appellant had separately charged and discharged VAT on the sale component of cinematographic films and consumables, while paying service tax on the printing component. Where the goods component is separable and liable to VAT, its value cannot be included in the value of photography service for service-tax levy. The entire consideration was accordingly covered either by VAT on sales or service tax on services.

This issue had reached the Madhya Pradesh High Court in the case of M/s Agrawal Colour Advance Photo System, M/s Agrawal Colour Quick System, M/s Agrawal Colour Photo Industry [2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT] wherein 'it is held that part of processing and supplying of photographs, photo prints and negatives, which have “goods” component exigible to sales tax is constitutionally valid, it is held that value of photography service has to be determined in isolation of cost of goods such as photography paper, consumables and chemicals with which image is printed, negatives and other material which has “goods” component liable to sales tax'.[Paras 6, 7, 9, 10, 11]

The confirmed service-tax demand on the value of the goods sold was held legally unsustainable and was set aside.

Invocation of the extended period for demanding service tax on the separately billed sale component of photography contracts - HELD THAT: - The appellant was registered, filed ST-3 returns, paid VAT on the sale portion and service tax on the service portion, and furnished documents sought during audit. In the absence of evidence of suppression or concealment with intent to evade tax, the extended period could not be invoked. [Paras 12, 13, 14]

The demand raised for the extended period was also set aside as time-barred.

Final Conclusion: The appeal was allowed and the service-tax demand, interest and penalties were set aside, with consequential relief in accordance with law.

Product-specific excise exemption - clearance of Nitrous Oxide I.P. to traders - impermissible importation of end-use condition - concessional rate under Sl. No. 17 of Notification No. 2/2011-CE

Eligibility of Nitrous Oxide I.P. cleared to licensed drug traders for the concessional rate applicable to anaesthetics under Sl. No. 17 of Notification No. 2/2011-CE - HELD THAT: - The notification describes the exempt goods as "Anaesthetics" falling under the specified Chapters and contains neither an end-use requirement nor a requirement of certification or verification of such use. The character of Nitrous Oxide I.P. as an anaesthetic is determined by its pharmacopoeial character and therapeutic function at manufacture and clearance, not by the identity of the purchaser or its subsequent use. An unconditional, product-specific exemption must be applied according to its plain terms and no end-use condition may be implied.

The decision in Solgen Energy Pvt. Ltd. [2024 (5) TMI 1063 - CESTAT BANGALORE] was distinguishable, as there was no ambiguity in the present notification. Further, Revenue did not rebut the trader's declaration that the IP-grade goods were sold only for medical purposes, and failed to establish diversion for a non-exempt use. [Paras 7, 8, 9, 10, 11]

The concessional rate could not be denied for clearances to traders on the ground that their downstream end-use as anaesthetics was not established; the impugned orders were set aside.

Final Conclusion: The appeals were allowed and the impugned orders denying the concessional rate on trader clearances of Nitrous Oxide I.P. were set aside, with consequential relief in accordance with law.

Interest on refund of statutory pre-deposit - Prescribed rate of interest under section 35FF

Whether interest on refund of a pre-deposit made for filing an appeal is payable at 12% per annum rather than 6% per annum? - HELD THAT: - The refund concerned a statutory pre-deposit. Notification No. 24/2014-C.E.(N.T.) fixed interest under section 35FF at six per cent per annum, and the statutory mechanism provided for such interest from the date of deposit until refund. The claim for interest at twelve per cent was therefore inconsistent with the notified rate applicable to refund of the pre-deposit. [Paras 8, 9]

The grant of interest at six per cent per annum was upheld, and the claim for interest at twelve per cent was rejected.

Final Conclusion: The appeal was rejected and the interest payable on the refunded statutory pre-deposit was maintained at six per cent per annum.

Reversal of CENVAT credit on imported coal removed as such - Extended limitation - disclosure in statutory returns

Reversal of CENVAT credit on imported coal removed as such - Reversal of CENVAT credit on coal removed as such where the Revenue treated the entire clearance as domestically procured coal - HELD THAT: - The purchase orders and sale invoices identified the coal cleared as being of South African origin, and the duty paid under those invoices was reflected in the ER-1 returns. In the absence of corroborative evidence for treating all clearances as domestic coal, the Revenue's basis for requiring reversal at the higher rate was not sustainable. [Paras 7, 8, 10]

The confirmed demand was set aside on merits.

Extended limitation - disclosure in statutory returns - Invocation of the extended period for alleged short reversal of CENVAT credit on coal removed as such despite disclosure in ER-1 and ER-6 returns - HELD THAT: - The appellant had furnished transaction details when called upon and had reflected the clearances in the statutory returns. These disclosures negatived suppression, and the Revenue consequently failed to establish a basis for invoking the extended period. [Paras 11, 13]

The demand was also held time-barred and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The demand for alleged short reversal of CENVAT credit was set aside both on merits and as barred by limitation. The appeal was allowed with consequential relief in accordance with law.

Penalty for non-accompaniment of Form 38 with exempt sugar - Levy of penalty under the U.P. Value Added Tax Act

Imposition of penalty under the U.P. Value Added Tax Act for import of sugar without Form 38, where sugar was exempt under that Act but taxable under the Entry Tax Act - HELD THAT: - Sugar was exempt under the U.P. Value Added Tax Act and no tax was levied on the goods under that Act in assessment; tax was instead levied under the Entry Tax Act. The Court held that, once sugar was exempt under the U.P. Value Added Tax Act, Form 38 was not required to accompany its transit from Maharashtra to Uttar Pradesh. While the rate or levy of tax may furnish a ground for seizure, penalty requires justification of the levy under the Act pursuant to which it is imposed; such levy is determinable at assessment. [Paras 8]

The penalty orders under the U.P. Value Added Tax Act were unsustainable and were set aside.

Final Conclusion: The revision was allowed, the impugned orders were set aside, and the substantial question of law was answered in favour of the revisionist.

Validity of unsigned and unserved tax assessment order - Territorial jurisdiction over works contract executed outside the State

Validity of unsigned and unserved tax assessment order - Sustainability of the tax order where the record indicated that it had been uploaded before it was signed and had not been duly served or dispatched to the petitioner - HELD THAT: - The departmental record showed that the order was uploaded on the portal before the date on which it was signed. The Court found it difficult to accept that the order could have been uploaded before it was passed, and held that it appeared to have been issued without due service, issuance or dispatch to the petitioner. [Paras 5]

The impugned order was held unsustainable on account of its defective issuance and service.

Territorial jurisdiction over works contract executed outside the State - Consideration of tax liability in Telangana in respect of works stated to have been executed in Punjab - HELD THAT: - The authorities had not properly examined the claimed Punjab turnover, whether tax had been paid thereon in Punjab, or whether Telangana authorities possessed jurisdiction to levy tax on a transaction executed in Punjab. These matters required verification and consideration before any demand could be sustained. [Paras 6]

The impugned order was set aside, leaving the authorities free to take appropriate recourse in accordance with law.

Final Conclusion: The writ petition was allowed and the impugned tax order was set aside, without prejudice to lawful action by the authorities after proper consideration of the relevant matters.

Defects in framing of criminal charge - De novo criminal trial

Substantial compliance with charge-framing requirements - Curable irregularity in criminal charge - Failure of justice - effect of the unsigned formal charge where the accused had been informed of the accusations and had participated fully in the trial - HELD THAT: - The object of a charge is to give clear notice of the accusation and a fair opportunity of defence, not to insist upon ritualistic formalities. The contemporaneous record established that the charges were read over and explained in the presence of all accused, who thereafter extensively cross-examined prosecution witnesses and pursued their defence without objection. Under Sections 215 and 464 Cr.P.C., the decisive test is whether the accused were misled and whether a failure of justice resulted. The omission of a signature on the charge, in the circumstances, was a procedural irregularity and not a jurisdictional illegality. [Paras 14, 15]

There was substantial compliance with the requirement of framing charges; the defect was curable and did not invalidate the trial, no prejudice or failure of justice having been shown.

Exceptional power to order retrial - Prejudice from de novo trial - Whether a fresh trial could be directed after substantial progress of the trial and recording of prosecution evidence? - HELD THAT: - A retrial is an exceptional measure, permissible only where the earlier proceedings are so fundamentally flawed that a failure of justice cannot otherwise be averted. The trial had advanced substantially, the accused had cross-examined the prosecution witnesses, and no finding showed that the charge defect had misled them or caused a failure of justice. Ordering the trial afresh would also irretrievably prejudice the prosecution because crucial eyewitnesses had died. [Paras 16]

The direction for a de novo trial was unwarranted; the trial was directed to continue from the stage at which it stood before the impugned order.

Final Conclusion: The appeal was allowed, the direction for a fresh trial was set aside, and the trial court's order to proceed on the evidence already recorded was restored.