TaxTMI Updates e-Newsletter
Aug 17,2026

Interim protection from arrest after dismissal of anticipatory bail - Communication of arrest authorisation under the CGST Act

Grant of protection from arrest after dismissal of an application for pre-arrest bail as not maintainable - HELD THAT: - Interim relief is ancillary to the main relief and cannot survive where the proceeding itself is dismissed. This principle applies equally to an application for pre-arrest bail: upon its dismissal on the ground of non-maintainability, the High Court or Sessions Court cannot grant or extend protection from arrest that could only operate during pendency of the application. [Paras 11]

The protective direction against arrest was set aside.

Communication of arrest authorisation under the CGST Act - Right to seek anticipatory bail - Communication to the person concerned of the Commissioner's order authorising arrest under Section 69 of the CGST Act - HELD THAT: - An order under Section 69, founded on the Commissioner's reasons to believe, is a sine qua non for seeking anticipatory bail. Non-communication of that order would deny the person concerned an effective opportunity to seek pre-arrest bail or challenge the recorded reasons through judicial review, without advancing the investigation. The order must therefore be communicated through electronic means, in addition to modes permissible under the BNSS and other permissible modes; absent such communication, arrest cannot arise. [Paras 18, 20, 21, 22]

The Commissioner was directed to communicate the Section 69 order to the respondent, who may thereafter pursue remedies available in law.

Final Conclusion: The appeal was disposed of by setting aside the post-dismissal protection from arrest and requiring prior communication of any order authorising arrest under Section 69 of the CGST Act. The investigation was directed to continue uninfluenced by the observations.

Transitional applicability of appellate pre-deposit requirement

Appellate pre-deposit for proceedings initiated before statutory substitution - The pre-deposit requirement for appeals against penalty orders arising from show-cause notices issued before the substitution of the proviso to Section 107(6) of the CGST Act. - HELD THAT: - The applicable appellate pre-deposit provision is determined by the law in force when the adjudicatory proceedings commenced through issuance of the show-cause notice. Since the notices were issued before the substituted proviso took effect, the substituted proviso does not govern the appeals. [Paras 13]

The petitioners were relegated to the statutory appellate remedy, with pre-deposit governed by Section 107(6) as it stood when the respective show-cause notices were issued; the Appellate Authority was also directed to accept a physical appeal where electronic filing is unavailable for want of individual registration or temporary identification.

Final Conclusion: The writ petitions were disposed of by relegating the petitioners to statutory appeals. The merits, including the applicability of Section 122(1) to a person who is not a taxable person, were left open for determination in conformity with the ultimate decision of the Supreme Court.

Service of GST notices after cancellation of registration - Opportunity of personal hearing in GST adjudication

Validity of the adjudication order where the GST registration had been cancelled and the petitioner was not afforded an effective opportunity to respond and be heard - HELD THAT: - The Court held that the undisputed facts were covered by the authorities relied upon M/s Ahs Steels [2024 (10) TMI 1038 - ALLAHABAD HIGH COURT] and M/s Jaipal Singh [2026 (2) TMI 995 - UTTARAKHAND HIGH COURT] which require effective service of notice where registration stands cancelled and mandate personal hearing before an adverse GST adjudication. [Paras 4, 5]

The adjudication order was quashed; the petitioner was permitted to reply to the show-cause notice, and the Department was left free to pass a fresh order in accordance with law after affording personal hearing.

Final Conclusion: The writ petition was disposed of by quashing the adjudication order and permitting fresh adjudication after the petitioner files a reply and is afforded personal hearing.

Alternative statutory remedy under GST law - Medical exigency and ex parte adjudication - Exercise of writ jurisdiction against an ex parte GST adjudication order despite availability of a statutory appeal.

HELD THAT: - Though the statutory appellate remedy was available, the medical documents concerning the partners' medical exigencies and the substantial tax, interest and penalty imposed warranted protective intervention. Relegating the petitioner to the appellate forum without such protection would cause prejudice; the merits of the input tax credit dispute were not adjudicated. [Paras 14, 15, 16, 17, 19]

The petitioner was permitted to file a statutory appeal on payment of the prescribed pre-deposit and the cost imposed, which the appellate authority was directed to entertain and decide independently in accordance with law.

Final Conclusion: The writ petition was disposed of by allowing recourse to the statutory appeal subject to payment of the statutory pre-deposit and cost, without any adjudication on the merits of the input tax credit demand.

Validity of assessment orders passed after the assessee did not respond to portal-issued show cause notices

HELD THAT: - The petitioner consented to deposit a specified sum in instalments and to appear before the assessing authority. The Court therefore quashed the impugned orders and afforded an opportunity to submit replies with supporting documents, treating the impugned orders as an addendum to the respective show-cause notices. [Paras 8, 9, 10, 11]

The matters were remitted for fresh orders on merits, conditional upon the stipulated deposit and filing of replies; on non-compliance, recovery proceedings could be pursued as if the writ petitions had been dismissed in limine.

Final Conclusion: The impugned assessment orders for the relevant tax periods were quashed and the matters remitted for fresh adjudication subject to compliance with the conditions imposed.

De novo adjudication upon verification of tax recovery - Remand of the confirmed tax demand for the relevant tax period upon verification of the disputed tax already recovered and payment of any balance - HELD THAT: - Though the writ petition could not be entertained on its stated averments, the petitioner was granted an opportunity for fresh adjudication, considering its assertion that the disputed tax had been recovered and that it may have a case on merits. The respondent was directed to verify recovery of the entire disputed tax; any unrecovered balance was required to be deposited before the case could be adjudicated afresh. [Paras 6, 7, 8, 9, 10]

The matter was remitted for a final order on merits upon the petitioner verifying or depositing the entire disputed tax and filing its reply with supporting documents; on default, recovery could proceed in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by remitting the demand for fresh adjudication, subject to verification and payment of the disputed tax and submission of a reply to the show cause notice.

Bail pending investigation of allegations of fraudulent availment of input tax credit through fictitious entities and forged invoices - woman accused - completion of material investigation

HELD THAT: - The Court found that the accused had remained in custody, was a woman with a minor child and her husband is also languishing in jail hazot in the said case with certain co-accused had been granted bail, and the material part of the investigation concerning her appeared complete. Balancing these circumstances against the nature and gravity of the allegations, further custodial detention was held unwarranted in the interest of investigation. [Paras 7, 8]

The accused was enlarged on bail subject to furnishing the bond and surety directed by the Court.

Final Conclusion: The bail application was disposed of by granting bail to the accused on the conditions stipulated by the Court.

Service of GST adjudication order through Common Portal - Ex parte GST adjudication following portal-only service of show-cause notice

Service of GST adjudication order through Common Portal - Limitation for statutory appeal - Entitlement to file a statutory appeal where the assessee had participated in adjudication but the demand order was served only by uploading it on the Common Portal - HELD THAT: - Having replied to the show-cause notice, the assessee had acknowledged service thereof and participated in adjudication; consequently, restoration to the show-cause-notice stage was unavailable. However, portal-only uploading of the contested demand order did not trigger limitation for filing the statutory appeal. [Paras 7, 8]

The assessee was permitted to file a statutory appeal within four weeks, which, subject to compliance with other statutory requirements, was directed to be entertained and decided on merits without objection as to limitation.

Ex parte GST adjudication following portal-only service of show-cause notice - Opportunity to reply and personal hearing - Validity of an ex parte demand order where the show-cause notice was served solely through the Common Portal and no reply was filed - HELD THAT: - Where service of the show-cause notice was confined to uploading on the Common Portal, without acknowledgment of receipt or a reply by the assessee, the resulting ex parte adjudication required restoration to the stage of the notice. The assessee was consequently entitled to respond before fresh adjudication after personal hearing. [Paras 9, 10]

The ex parte demand order was set aside and proceedings were restored to the show-cause-notice stage; the assessee was granted four weeks to reply, followed by a personal hearing and a fresh reasoned order in accordance with law.

Final Conclusion: The challenge to the notifications was dismissed as not pressed, leaving their validity undecided. The writ petitions were disposed of by permitting an appeal in the contested adjudication and restoring the ex parte adjudication to the show-cause-notice stage.

Communication of grounds of arrest under Article 22(1) - Validity of arrest under the Central Goods and Services Tax Act - Judicial remand following GST arrest

Communication of grounds of arrest - Contradictory arrest timings - Validity of the petitioner's arrest for alleged fraudulent input tax credit availment through bogus suppliers, in light of the written grounds of arrest, differing recorded arrest times, and non-supply of the Commissioner's reasons to believe - HELD THAT: - Article 22(1) requires the grounds of arrest to be communicated in writing within reasonable time and at least two hours before production for remand. The written intimation detailed the petitioner's alleged role, the wrongful input tax credit, the concerned entities and the particulars of the alleged fraudulent availment; it could not be regarded as vague merely because the petitioner refused receipt. The conflicting timings in the arrest-related documents did not invalidate the arrest, since the petitioner was produced before the Magistrate on the same day and no prejudice was shown.

The judgment in Radhika Agarwal’s case [2025 (2) TMI 1162 - SUPREME COURT (LB)] does not expressly lay down that the “reasons to believe” required to be recorded by the Commissioner, are required to be supplied to the accused. [Paras 4, 5, 7, 8]

The arrest was not held illegal on account of the alleged inadequacy of the grounds, discrepancies in the recorded arrest time, or non-supply of the reasons to believe.

Judicial scrutiny of remand - Compliance with arrest safeguards - Validity of the judicial remand on the allegation that the Magistrate mechanically authorised custody without examining the legality of the GST arrest - HELD THAT: - The remand record showed that the petitioner was represented by legal-aid and private counsel, and that the Magistrate considered the submissions of the investigating agency and defence. The Magistrate recorded satisfaction regarding communication of written grounds of arrest, intimation to the petitioner's wife, compliance with the applicable statutory safeguards, and the justification for arrest in an ongoing investigation into serious non-bailable offences. The contention of mechanical authorisation of custody was therefore factually unfounded.

Record shows that upon production before learned Judicial Magistrate Ist Class, it was ensured by the judicial officer that the petitioner is represented by legal aid counsel or defence counsel of his choice. The order of remand was passed only after petitioner was represented by Legal Aid Counsel, Panchkula and another private counsel. Learned Judicial Magistrate Ist Class, Panchkula, after taking note of the submissions made by the Investigating Agency and the defence counsel, observed that grounds of arrest were duly communicated to learned counsels for the accused in writing as mandated by the Apex Court in the case of Mihir Rajesh Shah Vs. State of Maharashtra and Another [2025 (11) TMI 367 - SUPREME COURT]. In Jai Kumar Aggarwal’s case [2026 (2) TMI 893 - ALLAHABAD HIGH COURT] relied upon by the petitioner, the remand order was set aside as it did not mention regarding supplying of grounds of arrest at the time of arrest and before producing him before the remand Magistrate. The remand order was also not found to be in accordance with law. Such is not the position in the case before us.[Paras 9]

The judicial remand was upheld as having been passed after due consideration of the legality and circumstances of the arrest.

Final Conclusion: The criminal writ petition challenging the GST arrest and judicial remand was dismissed. The Court clarified that its observations did not express any opinion on the merits of the underlying case.

Dismissal of statutory appeal for non-appearance - Opportunity of hearing in tax appeal

HELD THAT: - The petitioner established that inability to appear before the Appellate Authority arose from the unavailability of the Chartered Accountant and the petitioner's medical condition. As factual contentions concerning the input tax credit claim were proposed to be urged, it was expedient to afford a further opportunity to prosecute the appeal. [Paras 6, 7]

The appellate dismissal was set aside and the appeal restored for disposal in accordance with law; the consequential garnishee notice was quashed. All merits were kept open.

Final Conclusion: The writ petition was partly allowed by restoring the statutory appeal and quashing the consequential garnishee notice, without adjudicating the merits of the input tax credit dispute.

Assessment against deceased taxable person - Personal hearing in GST assessment - Validity of a GST assessment order passed after the death of the proprietor and without affording the statutory opportunity of personal hearing - HELD THAT: - An assessment order passed against a deceased person has no legal efficacy. The assessment was made after the proprietor's death and was also passed without adverting to the requirement of personal hearing under Section 75(4) of the GST Act. Assessment proceedings may, however, be undertaken afresh by issuing notice to the legal representative or person carrying on the business, and any recovery can be made only from the estate of the deceased to the extent available. See BARATAM SATISH [2026 (1) TMI 50 - ANDHRA PRADESH HIGH COURT] [Paras 8, 10, 11]

The assessment order and the consequential appellate rejection were declared invalid; the authority was permitted to initiate fresh assessment proceedings after notice and due opportunity of hearing to the legal representative.

Final Conclusion: The writ petition was allowed. Fresh assessment proceedings may be initiated upon notice to the legal representative, with the intervening period excluded for limitation.

Deemed withdrawal of best-judgment assessment on furnishing valid return - Effect of furnishing the GSTR-3B return after a best-judgment assessment for non-filing of return - HELD THAT: - Section 62(2) provides that an assessment made under Section 62(1) is deemed withdrawn where the registered person furnishes a valid return within the prescribed period, while liability towards interest and late fee continues. The filing of the relevant return with late fee, additional late fee and interest was undisputed. [Paras 5, 6]

The assessment order for November, 2025 was deemed withdrawn and was set aside.

Final Conclusion: The writ petition was allowed, and the best-judgment assessment stood deemed withdrawn upon filing of the relevant GSTR-3B return with the applicable late fee and interest.

Assessment against deceased sole proprietor - Statutory liability of legal representative under GST law

Validity of assessment proceedings and appellate order concerning a sole proprietorship whose proprietor had died before the assessment order - HELD THAT: - The proprietor had died before the assessment order was passed, and the objection was specifically raised in appeal. The assessment and appellate orders were therefore not valid; the appellate authority ought to have directed the assessing authority to follow the procedure contemplated by Section 93(1)(b) of the CGST Act for proceeding against the legal representative. [Paras 7]

The common appellate order was set aside and the matter was remanded for fresh orders under Section 93(1)(b) of the GST Act after affording the petitioner an opportunity of hearing.

Final Conclusion: The writ petition was allowed. The appellate order was set aside and the matter remanded for fresh action against the legal representative in accordance with Section 93(1)(b) of the GST Act.

Revocation of cancellation of GST registration - Disclosure of material relied upon in cancellation proceedings

Rejection of the application for revocation of cancellation of GST registration without furnishing the field visit report relied upon for cancellation - HELD THAT: - While the proper officer has statutory power to cancel registration, the registered taxpayer is entitled to seek revocation. Since the cancellation was founded on a field visit report which was not shown to have been supplied with the show cause notice, the taxpayer ought to have been afforded an opportunity, at the revocation stage, to respond to that report. [Paras 5]

The rejection of the revocation application was set aside and the proper officer was directed to reconsider it afresh after supplying the field visit report and, if necessary, conducting a further visit to the place of business.

Final Conclusion: The writ petition was disposed of by setting aside the order rejecting revocation of registration and directing fresh consideration after disclosure of the field visit report.

Classification of burial-ground upkeep and maintenance services - Composite supply requirement for municipal-function exemption

General waste collection services - Burial-ground upkeep and maintenance - Classification of services for upkeeping and maintaining burial grounds, involving sweeping, cleaning and daily garbage collection - HELD THAT: - The predominant contractual activities were sweeping, cleaning and collection of garbage from burial grounds. These activities specifically fall within general waste collection services and not under the residuary category of other services not elsewhere specified. [Paras 6]

The services are classifiable under SAC 999424 as General Waste collection services - others not elsewhere specified.

Composite supply of goods and services - Exemption for services relating to municipal functions - Eligibility of burial-ground upkeep and maintenance services for exemption under Entry 3A applicable to composite supplies of goods and services rendered in relation to municipal functions - HELD THAT: - The welfare kits, bins, tools, consumables and equipment were required for execution of the cleaning service at the applicant's cost. As ownership or possession of those items was not transferred to the Corporation, the arrangement did not involve a supply of goods to it. The essential condition of a composite supply of goods and services was therefore not met; all conditions for the exemption had to be satisfied simultaneously. [Paras 6]

The exemption under Entry 3A was denied because the impugned supply was not a composite supply of goods and services.

Final Conclusion: The burial-ground upkeep and maintenance services were classified as general waste collection services. The claimed municipal-function exemption was held inapplicable for want of a composite supply of goods and services.

Judicial review of Look Out Circulars - Look Out Circular - detriment to economic interests of India

Judicial review of Look Out Circulars - Subjective satisfaction of originating authority - Scope of judicial review over a Look Out Circular issued on the originating authority's satisfaction that departure of the person concerned would be detrimental to the economic interests of India - HELD THAT: - Judicial review is available to ensure that executive action remains within constitutional and legal limits, but does not permit the Court to sit in appeal over the originating authority's subjective satisfaction. Under the amended executive instructions, the satisfaction regarding detriment to the economic interests of India is that of the issuing authority. The Court cannot assess the qualitative or quantitative sufficiency of the material, save where there is no material, or the material is merely speculative or so insubstantial that no reasonable authority could have acted upon it. [Paras 74, 76, 77, 78, 79]

The learned Single Judge erred in subjectively evaluating the sufficiency and magnitude of the material supporting the Look Out Circular.

Look Out Circular - detriment to economic interests of India - Material supporting restriction on foreign travel - Validity of the Look Out Circular issued against the respondent in relation to allegations of trade-based money laundering, hawala transactions, over-invoiced exports, bogus purchases, fraudulent export incentives and undisclosed foreign investment - HELD THAT: - The material placed by the Income Tax authorities was not confined to the alleged foreign shareholding. It included material concerning alleged hawala transactions, exports to entities allegedly involved in money laundering, over-invoiced exports, fraudulent export incentives, bogus purchases and fake invoices. The official file was found to bear out the assertions in the counter-affidavit. Without pronouncing on the merits or ultimate outcome of the investigations, the Court held that the decision to prevent departure could not be regarded as founded on irrelevant, inadmissible or insubstantial material. [Paras 83, 84, 85, 86, 87]

No case for quashing the Look Out Circular was made out in judicial review.

Final Conclusion: The appeal was allowed, the judgment quashing the Look Out Circular was set aside, and the writ petition challenging the Look Out Circular was dismissed.

Revisionary jurisdiction where appellate remedy has become time-barred - Maintainability of a revision petition against an assessment order where the statutory period for filing an appeal had expired- HELD THAT: - Section 264(4) precludes exercise of revisional power where an appeal lies but has not been filed within the subsisting appellate period, or where the assessee has not waived the right of appeal in the specified cases. As the limitation for appeal had expired, no appeal or application for condonation was pending, and waiver was not in issue, the Revisional Authority was not justified in refusing to entertain the revision. Having treated the revision as non-maintainable, its observations on merits were affected by that erroneous premise. [Paras 8, 9, 10, 11]

The impugned order was set aside and the revision petition was restored for fresh decision on merits in accordance with law, uninfluenced by the earlier merits observations; all merits contentions were kept open.

Final Conclusion: The petition was disposed of by setting aside the order rejecting the revision as non-maintainable and remitting the revision for fresh adjudication on merits in accordance with law.

Condonation of delay for correction of clerical error in return of income - Genuine hardship and substantial justice under Section 119(2)(b)- original return was timely filed and the correction was confined to the nomenclature of the partnership firm

HELD THAT: - Section 119(2)(b) is intended to advance substantial justice where genuine hardship would otherwise result and cannot be applied hyper-technically to defeat a legitimate claim on account of a procedural lapse. The original return was filed within time; the proposed correction neither altered the declared income, tax liability nor any substantive claim, and caused no prejudice to the Revenue. The omission was purely clerical and the explanation for the delay was bona fide. [Paras 10, 11, 12, 14]

The rejection of condonation was quashed; the delay in filing the corrected return was condoned, and the corrected return was directed to be treated as validly filed and processed in accordance with law.

Final Conclusion: The writ petition was allowed. The corrected return was to be processed in accordance with law, uninfluenced by the impugned order.

Validity of reopening of assessment - contravention to the statutory scheme u/s 151A of the Act read with “E-Assessment of Income Escaping Assessment Scheme, 2022 - whether the JAO would have the jurisdiction to initiate reassessment proceedings under Section 148 of the Act, we may proceed to decide them together?

Concurrent jurisdiction of Faceless Assessing Officer and Jurisdictional Assessing Officer - Effect of subsequent legislative amendment on reassessment notice challenge - As decided by HC issue which falls for consideration is covered in terms of the judgment of this Court in the case TKS Builders Pvt. Ltd. [2024 (10) TMI 1586 - DELHI HIGH COURT]wherein this Court has held that both the jurisdictional Assessing Officer and the faceless Assessment Officer shall have the competence to initiate proceedings.

Applications have been filed by the petitioners under Order VI Rule 17 read with Section 151 of the Code of Civil Procedure, 1908, seeking permission to amend the writ petitions in terms of orders/judgment passed by Hon’ble the Supreme Court in SLP(C) [2026 (5) TMI 54 - SC ORDER (LB)]

HELD THAT:- For the reasons stated in the applications, the amendments as prayed by the petitioners, are allowed. Amendment writ petitions filed by the petitioners along with the applications are taken on record. The respondents may file their replies within a period of two weeks.

Status-quo in relation to recovery and penalty proceedings shall be maintained till then.

Locus standi of complainant at whose instance reassessment proceedings were initiated - application has been filed by the applicant, claiming himself to be a person at whose behest, the Income Tax Department has sprung into action and re-assessment proceedings/proceedings under Section 148 of the Income Tax Act, 1961, were initiated - HELD THAT:- We are of the view that the applicant is nothing more than a complainant and he has no locus to intermingle in the proceedings.

The petitioner has challenged the action taken by the respondent/Assessing Officer and it is the AO, who has to defend the action taken by him.

TP Adjustment - benchmarking analysis - permissible mode for determination of arms length price

HELD THAT:- Appeal is admitted to be heard on the following substantial questions of law:-

“1. In view of the language employed in Section 92 of Income Tax Act r/w Rule 10A(d) of Income Tax Rules, whether bench marking analysis, applying the TNMM method, can be employed for aggregating closely linked transactions for the purpose of determining arms length price by combining activities that include both, domestic and international transactions, at entity level?

2. When domestic manufacturing is a direct down stream consequence of import of material/technology to AE, whether, entity level TNMM would be permissible mode for determination of arms length price under Section 92C of the Act of 1961?

3. Whether the Judgment and Order dated 3rd March 2017 is vitiated by perversity?”

Issue notice returnable after eight weeks. Let the matter be listed for hearing in due course

Transfer pricing comparability analysis - Functional comparability of packaging companies - Absence of segmental data - Exclusion of Bilcare Ltd. and Karur KCP Packaging Ltd. as comparables for benchmarking the assessee's packaging business using aseptic technology

HELD THAT: - The Tribunal's exclusion of Bilcare Ltd. was founded on its diversified operations, absence of segmental data for the relevant year, and the difference between its pharmaceutical packaging products and the assessee's paper-based aseptic packaging for food and drink products.

Karur KCP Packaging Ltd. manufactured kraft paper and polypropylene bags principally used by the cement industry; its products were materially different from those manufactured by the assessee. The comparability determination was fact-driven, and the Tribunal's factual findings were neither shown to be incorrect nor perverse. Availability of segmental details in an earlier year could not justify inclusion for the current year when such data was unavailable. [Paras 4, 5, 7, 8]

No substantial question of law arose from the Tribunal's exclusion of the two companies as comparables.

Final Conclusion: The Revenue's appeal was dismissed, as the transfer-pricing comparability findings were factual and disclosed no perversity or substantial question of law. The question concerning grounds in a separate Revenue appeal before the Tribunal was left open.

Refund claim - inordinate delay in not granting refund or in not even responding to the repeated Applications for implementation of the refund order - HELD THAT:- The petitioner was permitted to submit its computation of balance interest to the Assessing Officer, who was directed to examine it and pay any interest found due within the stipulated period.

Condonation of delay in statutory appeal - 570-day delay in filing the appeal before the CIT(A) - Failure to consider explanation for delayed appeal

Dismissal of the assessee's appeal as time-barred despite the explanation that the assessment order was not served and came to notice only upon recovery proceedings - HELD THAT: - The appellate authority had not adequately considered the explanation for the delay and had dismissed the appeal on technical grounds. The record also disclosed a prima facie challenge to the legality of the reassessment initiation and to assessment on total turnover rather than taxable income, neither of which had been examined because the appeal was rejected on limitation alone. The ends of justice therefore required an opportunity to contest the appeal on merits, subject to terms for the substantial delay. [Paras 11, 13, 14, 15]

The delay was condoned subject to payment of costs; the orders dismissing the appeal as barred by limitation were set aside, and the appeal was restored for independent decision on merits without rejection on limitation.

Final Conclusion: The appeal was allowed conditionally, with restoration of the statutory appeal before the appellate authority for adjudication on all available grounds. All merits contentions were left open.

Limitation for search-related reassessment - Computation of extended ten-year assessment period - Validity, on limitation, of the reassessment notice for Assessment Year 2014-15 following the search conducted during Financial Year 2023-24 - HELD THAT: - Section 153A prescribes distinct computational regimes: the six-year block comprises assessment years immediately preceding the assessment year relevant to the previous year of search, whereas the extended ten-year period under Explanation 1 is reckoned from the end of that assessment year.

The different statutory language necessarily includes the search assessment year as the first year in the ten-year reckoning; applying the exclusion applicable to the six-year block would render the expression "from the end of the assessment year" redundant. [Paras 8, 9]

The search assessment year being Assessment Year 2024-25, the permissible ten-year period extended only to Assessment Year 2015-16; consequently, the notice for Assessment Year 2014-15 was barred by limitation and was quashed.

Final Conclusion: The reassessment notice issued for Assessment Year 2014-15 was held time-barred and quashed.

Denial of registration u/s 12A - reliance on unpleaded and unproved charitable activities - relevance of activities during the financial years in question

Denial of registration u/s 12A - reliance on unpleaded and unproved charitable activities - HELD THAT: - The Tribunal set aside the rejection of registration primarily on assertions regarding implementation of the ECHO project, assistance to prisoners suffering from liver diseases and free distribution of diagnostic kits. No evidence supporting those assertions was placed before it, nor was any application for additional evidence made. Reliance on such unpleaded and unproved oral submissions was legally impermissible and, the revenue not having received formal notice of those pleas, violated natural justice. [Paras 11]

The Tribunal's order and the order rejecting registration were set aside, and the matter was remitted to the CIT(E) for a fresh decision after considering the existing record and any legally admissible additional evidence.

Section 12A registration-assessment of activities for relevant financial years - Effect of registration granted under Section 12A for subsequent financial years on the claim for registration for the financial years in question. - HELD THAT: - Registration for subsequent financial years could not justify registration for the financial years in question, since entitlement under Section 12A had to be determined with reference to the society's activities during the relevant financial years. [Paras 12]

The CIT(E) was directed to determine entitlement to registration afresh for the financial years in question.

Final Conclusion: The appeal was disposed of by setting aside the Tribunal's order and the order of the CIT(E), and remitting the claim for Section 12A registration for fresh consideration in accordance with law.

Compounding of offence for delayed remittance of tax deducted at source- initiation of proceedings under Sections 276B read with Section 278B of the Income Tax Act -Extension of time for payment of compounding charges

Validity of rejection of the compounding application for failure to pay the stipulated compounding charges within time, despite subsequent deposit of the entire amount - HELD THAT: - The Court found the petitioners' reasons for non-payment within the stipulated period, namely financial difficulties and subsequent liquidation of the company, to be bona fide. Since the entire compounding amount had thereafter been deposited pursuant to the Court's direction, the time for payment was extended until the date of that deposit. [Paras 8, 9]

The rejection orders were set aside and the earlier compounding order was made absolute up to the date of deposit, subject to payment of additional costs to the Department; consequently, a second compounding application was held unnecessary.

Final Conclusion: The writ petitions were disposed of by restoring the benefit of compounding upon the stipulated additional payment and permitting the Department to seek withdrawal of the deposited compounding charges.

Annual election between Income-tax Act and tax treaty - Change in option in selecting beneficial provisions for each year (different years) - Carry forward of capital losses where capital gains are exempt under India-Mauritius DTAA

Carry forward of earlier short-term capital losses without their set-off against capital gains exempt under the India-Mauritius DTAA - HELD THAT: - Every assessment year is an independent unit, and the assessee may choose the provisions of the Act or the applicable DTAA according to what is more beneficial; there is no specific bar against such annual election.

Where the assessee has elected treaty treatment and the capital gains are not taxable in India, brought-forward capital losses validly allowed in earlier years are not required to be set off against those exempt gains. The Revenue neither distinguished the judicial precedents supporting this position nor produced any contrary precedent. [Paras 11, 12, 13, 14]

The order allowing further carry forward of the brought-forward short-term capital losses was affirmed and the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal was dismissed on merits. The assessee's cross-objection challenging the reassessment was dismissed as infructuous.

Offshore supply of equipment and designs - Fixed place permanent establishment - Supervisory permanent establishment - Force of attraction rule - Royalty and fees for technical services

Offshore supply of equipment and designs - Fixed place permanent establishment - Force of attraction rule - Taxability in India of profits from offshore supply of blast-furnace equipment, integrated designs and spares under the India-Italy DTAA - HELD THAT: - The equipment and integrated designs were manufactured outside India, supplied on FOB terms, and paid for outside India through foreign-currency remittances or letters of credit. Title passed when the goods were loaded for shipment outside India. Retention of part consideration, acceptance testing, warranty obligations and the purchaser's right to reject defective goods did not postpone passage of title, particularly when they did not permit repudiation of the supply contract. The related Indian entity was not the assessee's subsidiary, and no evidence established that it procured or concluded contracts or otherwise performed functions constituting a fixed place PE. Nor was there evidence that the customer sites were at the assessee's disposal or under its dominant control.

The admitted supervisory PE had no role in the offshore supplies, which were completed before supervisory activity commenced. Article 7 and its force of attraction rule could apply only where the enterprise carried on business through a PE in India; it could not bring offshore supply profits to tax where no fixed place PE existed and the supervisory PE was not connected with those supplies. [Paras 9, 11]

The deletion of the attribution of offshore supply profits was upheld and the Revenue's appeals for 2010-11, 2012-13, 2013-14 and 2014-15 were dismissed.

Supervisory permanent establishment - Business profits from supervisory services - Characterisation of receipts from onshore supervision of engineering, manufacture, erection and commissioning as business profits or fees for technical services - HELD THAT: - The assessee's supervisory activities in India exceeded the six-month threshold under Article 5(2)(j) of the India-Italy DTAA, resulting in a supervisory PE. The supervisory receipts were directly connected with that PE. Consequently, notwithstanding that the services could otherwise answer the description of technical services, Article 13 did not govern their taxation on a gross basis; the receipts were taxable as business profits under Article 7 on a net basis. The broader wording of the India-Italy DTAA concerning the duration of supervisory activities supported this conclusion. [Paras 18, 26, 34, 39, 46]

The enhancement treating supervisory receipts as fees for technical services was deleted for all years under appeal, and the receipts were held taxable as business profits under Article 7.

Supply of imported designs and drawings - Copyrighted article - Royalty and fees for technical services - Characterisation of receipts from offshore designs for indigenous equipment and civil works as royalty or fees for technical services - HELD THAT: - The designs and drawings were supplied for the purchasers' internal use in completing, operating and maintaining blast-furnace plants; no right to commercially exploit the intellectual property embedded in them was transferred. Their supply was a sale of a product or copyrighted article, rather than consideration for use of a design or for technical services. The receipts therefore constituted business income and could not be classified either as royalty or fees for technical services. [Paras 25, 33, 38, 45]

The characterisation of the receipts from designs for indigenous equipment and civil works as royalty or fees for technical services was reversed for 2012-13 to 2015-16.

Interest for default in payment of advance tax - Levy of interest for default in payment of advance tax by the non-resident for 2012-13 - HELD THAT: - For the period before the statutory amendment applicable from financial year 2012-13, a non-resident was entitled to reduce from its advance-tax computation tax deductible or collectible at source. Interest for default in payment of advance tax therefore could not be charged for 2012-13. [Paras 29]

The Assessing Officer was directed not to levy interest under section 234B for 2012-13.

Interest for delay in furnishing return - Credit for tax deducted at source - Verification of the assessee's claims concerning interest for delay in furnishing return and credit for tax deducted at source - HELD THAT: - The claims concerning interest for delay in furnishing the return and credit of tax deducted at source required factual verification. Where the return for 2014-15 was filed within the prescribed due date, interest for delay in furnishing the return would not be leviable. [Paras 35, 42, 47, 49]

The matters were remitted to the Assessing Officer for verification and consequential action in accordance with law; the issue of interest under section 234C was left open as academic.

Final Conclusion: The Revenue's appeals concerning attribution of offshore supply profits were dismissed. The assessee succeeded on the characterisation of supervisory receipts and offshore design receipts, subject to verification directions concerning interest and tax-deduction credit.

TP Adjustment - Arm's length price of Preform Silica imports-Comparable Uncontrolled Price method - Functional comparability of optical fibre manufacturer under TNMM

Selection of most appropriate method for Preform Silica imports - Consistency in transfer-pricing benchmarking - Arm's length benchmarking of the assessee's purchase of Preform Silica from its associated enterprise by CUP instead of TNMM - HELD THAT: - Where sufficient internal and external CUP data concerning the very same raw material were available, CUP was the most appropriate method for determining the arm's length price. The external customs data and internal uncontrolled purchases supported that the associated-enterprise purchase price was not higher than uncontrolled prices. Further, in the absence of any change in the nature of transactions, parties or asset base, TPO could not depart from the consistently accepted CUP method without justification. [Paras 15, 16, 19]

The rejection of CUP and adoption of TNMM were set aside; the arm's length price determined by the assessee under CUP was accepted.

Functional comparability under TNMM - Segmental data of diversified comparable - Selection of a diversified manufacturer and service provider as a comparable for the assessee manufacturing only optical fibre under TNMM - HELD THAT: - Even assuming TNMM were applicable, the selected comparable was functionally unsuitable. It manufactured optical fibre cables, fibre reinforced plastic rods and other products, besides rendering services, whereas the assessee manufactured only optical fibre; no segmental revenue or margin data for the respective activities were available. Functional similarity and reliable segmental data are prerequisites for retaining such a comparable. [Paras 20, 21, 22]

The selected comparable was rejected and the transfer-pricing adjustment founded on TNMM was deleted.

Final Conclusion: The appeal was partly allowed. The transfer-pricing adjustment based on rejection of CUP and adoption of TNMM was deleted.

Penalty proceedings for concealment under section 271(1) -Recording of satisfaction and direction for penalty - Deeming fiction under section 271(1B)

Validity of penalty proceedings for concealment where reassessment accepted the income returned u/s 148 without any addition or disallowance and the assessment order stated that penalty proceedings would be initiated separately - HELD THAT: - Satisfaction reached during the assessment proceedings is a condition precedent to assumption of jurisdiction for penalty; issuance of notice is consequential and cannot substitute such satisfaction.

Admittedly, the legislature has consciously used the word "may" in the substantive provision of Section 271(1) so far as the decision to impose penalty is concerned. The usage of the words ‘may’ negates the theory of the Revenue that, in search assessments, where additional income was offered to tax in the returns of income filed u/s 148 of the Act, would lead to automatic initiation and imposition of penalty. The term 'may' vests the AO with discretionary power to impose penalties, which discretion must be exercised fairly, and not arbitrarily, justly and not fancifully.

The deeming fiction under section 271(1B), being strictly construed, applies only where an addition or disallowance is made and the assessment order contains a direction for initiation of penalty. Neither condition existed here. The expression that penalty proceedings "will be initiated separately" conveyed only a future intention, not a clear and unambiguous direction or a positive step for initiation. The belated issue of notices after completion of assessment reinforced that no penalty proceedings had been initiated during assessment. Explanation 5A may deem concealment for imposition of penalty in the stated circumstances, but cannot cure the anterior jurisdictional defect of absence of satisfaction and valid initiation; nor does it make penalty automatic. [Paras 19, 20, 21, 24, 25]

The deletion of penalties was upheld because the initiation of penalty proceedings was invalid; the merits of the penalty were left open.

Final Conclusion: The Revenue's appeals for all the assessment years were dismissed, as were the assessee's cross-objections as infructuous. The penalties could not survive for want of valid initiation during the assessment proceedings.

Refund of customs duty - FOB as cum-duty value - application of CBEC Circular dated 10-11-2008 - finality of assessment and non-challenge - correction under Section 154 of the Customs Act - reassessment under Section 17(4) of the Customs Act - HELD THAT:- As no good ground to interfere with the impugned Orders passed by the Customs, Excise and Service Tax Appellate Tribunal, Regional Bench at Hyderabad [2018 (8) TMI 1532 - CESTAT HYDERABAD]

Exclusion of time under principles underlying Section 14 of the Limitation Act - Statutory extension of limitation for customs appeals - Limitation for appeal against Bill of Entry assessment

Limitation for appeals against the assessments of pressure relief valves where refund applications were pursued under the then binding jurisdictional law before the requirement of modification of assessment was declared - HELD THAT: - The appellant had invoked the refund remedy within its prescribed limitation under the binding jurisdictional position then prevailing and, after the subsequent change in law, promptly sought amendment of the Bills of Entry and pursued the refund proceedings. The period before institution of the refund application was not excluded merely as time spent in an original proceeding; however, it could not be treated as ordinary inaction where the refund remedy was then independently available. The period spent thereafter in pursuing the refund remedy and seeking amendment was liable to exclusion on the principles underlying Section 14. On such computation, the statutory relaxation of time for compliance applied to the appeals filed within the extended period. [Paras 19, 20, 21, 22, 23]

The appeals before the Commissioner (Appeals) were held to be within limitation; the orders dismissing them as time-barred were set aside and the appeals were restored for decision on merits without reopening limitation.

Limitation for appeal against Bill of Entry assessment - Limitation for the appeal challenging the assessment of the Bill of Entry where the statutory appeal had been filed within twenty-eight days - HELD THAT: - The underlying appeal had been instituted within the period prescribed u/s 128 of the Customs Act. Its dismissal as barred by limitation was therefore manifestly erroneous. [Paras 24]

The dismissal on limitation was set aside and the customs appeal was restored to the CESTAT for adjudication on merits.

Final Conclusion: The appeals were allowed to the extent indicated. The restored appeals shall be decided on merits, while the classification of the pressure relief valves was left open.

Alternate statutory remedy under the Customs Act - Release of attached bank accounts upon furnishing security

Maintainability of the writ petition challenging the orders-in-original when an appellate remedy under the Customs Act, 1962 was available - HELD THAT: - As other parties covered by the same orders-in-original had been relegated to the statutory appellate remedy, the petitioners were likewise required to pursue that remedy. The Court also condoned delay in filing the appeal against one of the orders-in-original, provided it was filed within the stipulated period. [Paras 2, 4]

The writ petition was not entertained on the merits and the petitioners were relegated to the appellate remedy, subject to the stated condonation of delay.

Release of attached bank accounts upon furnishing security - Statutory pre-deposit for customs appeal - Continuation of attachment of the petitioners' bank accounts pending the statutory appeal against the order-in-original - HELD THAT: - The Court found it fair and reasonable to secure the Revenue by permitting appropriation of the statutory pre-deposit from the attached accounts and requiring an unconditional bank guarantee for the balance demand, while enabling the petitioners to operate their accounts and continue their business. [Paras 6, 7, 8, 9]

Upon appropriation of the pre-deposit and furnishing of the bank guarantee, the attached bank accounts were directed to be released; on failure to file the appeal or to comply with either condition, the Customs Department could appropriate the entire amount due.

Final Conclusion: The writ petition was disposed of by relegating the petitioners to the statutory appellate remedy and granting conditional release of the attached bank accounts upon securing the Revenue.

Mandatory pre-deposit by employer on behalf of appellants - Compliance with pre-deposit requirement in customs appeals - ICEGATE portal payment restrictions -

Whether mandatory pre-deposit for maintaining customs appeals was complied with where the amount was paid by the appellants' employer through the ICEGATE mechanism? - HELD THAT: - Although the statutory requirement contemplates deposit by the appellant and the Tribunal has no inherent power to dispense with it, the appellants could not access the ICEGATE voluntary-payment facility in their own capacity without the requisite IEC, PAN and Indian mobile number. The challans recorded the respective appellants as making the pre-deposit for appeals against the impugned order, and the employer had executed indemnity bonds undertaking liability for penalties, litigation costs and related losses. These peculiar circumstances established substantive compliance with the pre-deposit requirement. [Paras 6, 7, 8]

The employer's payments were treated as pre-deposits made by the appellants; the pre-deposit defects were removed and the applications were allowed.

Final Conclusion: The pre-deposit requirement was held satisfied in the peculiar circumstances of the appeals, and the registry was directed to list the matters for regular hearing after removal of the defects.

Warehousing of imported goods - unauthorised diversion from designated bonded warehouse - Confiscation for removal contrary to warehousing permission - Importer's liability for acts of authorised agent - Procedural irregularities in search and corroborative electronic evidence - Redemption fine following provisional release of confiscable goods - Penalty for failure to comply with warehousing obligations

Warehousing of imported goods - unauthorised diversion from designated bonded warehouse - Confiscation for removal contrary to warehousing permission - Importer's liability for acts of authorised agent - Diversion of imported manganese ore, permitted to be warehoused in a specified public bonded warehouse, to an unauthorised private yard constituted breach of the warehousing permission and attracted confiscation - HELD THAT: - Permission to warehouse goods is confined to the warehouse specified by the proper officer and requires their direct deposit there. Warehousing is a statutory concession subject to continuous customs control; storage at another premises cannot constitute substantial compliance merely because it was managed by the same operator. The warehouse operator acted within the authority entrusted by the importer, and the statutory presumption attributing an authorised agent's acts to the importer was not rebutted. Actual duty evasion, clandestine clearance or mens rea was not necessary for confiscation once removal contrary to the permission was established. [Paras 36, 38, 39, 40, 41]

The goods were rightly held liable to confiscation for diversion from the designated bonded warehouse to the unauthorised private yard.

Procedural irregularities in search and corroborative electronic evidence - Statements recorded under the Customs Act as substantive evidence - objections concerning the authorisation of the search and admissibility of electronic communications did not vitiate the confiscation proceedings - HELD THAT: - The findings did not rest solely on the search or electronic communications. Statements recorded under the Customs Act were substantive evidence and were corroborated by transportation, gate and warehouse records, as well as the admitted non-deposit of the goods in the designated warehouse. The electronic communications were only corroborative; hence, any asserted procedural defect in the search or exclusion of that material could not invalidate proceedings independently supported by reliable evidence. [Paras 32, 33, 34]

The evidentiary and procedural objections were rejected.

Redemption fine following provisional release of confiscable goods - Provisional release of the confiscable imported goods under bond and bank guarantee did not preclude imposition of redemption fine - HELD THAT: - Provisional release does not extinguish the adjudicating authority's jurisdiction to determine confiscability and impose redemption fine. The bond merely secures production of the goods or recovery of their value and does not waive the statutory consequences of confiscation. No material established that the discretion exercised in fixing the fine was arbitrary or perverse. [Paras 42, 43, 44]

The redemption fine was sustained.

Penalty for failure to comply with warehousing obligations - Importer's liability for acts of authorised agent - Penalty was leviable on the importer for failure to ensure deposit of the imported manganese ore in the designated public bonded warehouse - HELD THAT: - The importer's omission to ensure transport and deposit of the goods in accordance with the warehousing permission directly rendered them liable to confiscation. The provision governing penalty covers both acts and omissions resulting in confiscability. The physical diversion by the authorised warehouse operator did not exonerate the importer, which failed to rebut the statutory attribution of the agent's acts. [Paras 45, 46, 47, 48]

The penalty imposed on the importer was legally sustainable.

Final Conclusion: The appeal was dismissed. The confiscation of the diverted warehoused goods, redemption fine and penalty were upheld.

IGST rate on imported bulk drugs and Active Pharmaceutical Ingredients - Specific description-based rate entry prevailing over general Chapter-based entry

Whether imports of bulk drugs or active pharmaceutical ingredients, classifiable under Chapters 28 or 29, attract IGST at 5% under Sl. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025? - HELD THAT: - The definition of "drug" under the Drugs and Cosmetics Act includes substances intended for use as components of a drug, while the Drugs (Price Control) Order defines bulk drugs/APIs as pharmaceutical or chemical substances used as such or as ingredients in formulations. On their conjoint reading, APIs are drugs. Their character does not change because of import for testing or research. Sl. No. 226 is a description-based entry extending to goods of "Chapter 30 or any Chapter"; the semicolon separates its coverage of drugs and medicines from formulations manufactured from bulk drugs. Consequently, the specific entry for drugs prevails over the general Chapter 28 and 29 entries for inorganic and organic chemicals. [Paras 5]

IGST is leviable at 5% under Sl. No. 226 on such bulk drugs/APIs, provided the goods are not covered by the nil-rated entry for drugs or medicines listed in Annexure I.

Final Conclusion: The application was allowed. Bulk drugs/APIs imported by the applicant were held eligible for IGST at 5% under the specific rate entry, subject to their not falling under the specified nil-rated entry.

Mandatory disclosure of material events by listed entities - Adequacy and prominence of disclosure of termination of a share purchase agreement

Adequacy of the listed entity's disclosure of termination of the share purchase agreement under the LODR Regulations - HELD THAT: - The listed entity had conspicuously disclosed its approval of the acquisition under the share purchase agreement. Its termination, however, was not disclosed in the principal board-meeting communication and was merely mentioned in small print in a note appended to the unaudited financial results. Since investors' assessment of a company's prospects depends on disclosures concerning its financial position, proposed ventures and collaborations, such a concealed reference was held to be no disclosure at all. The complaints on the SCORES and Market Intelligence platforms had not been considered in the proper perspective. [Paras 14, 15]

The communication dismissing the complaint was set aside, and SEBI and the stock exchange were directed to re-examine the subject matter of mandatory disclosure under the LODR Regulations and pass appropriate orders within four weeks.

Final Conclusion: The appeal was allowed. The complaint-dismissal communication was set aside and the matter was directed to be re-examined in relation to mandatory disclosure of the termination of the share purchase agreement.

GST classification of insolvency and receivership services - Forward charge liability of Advocates acting as Insolvency Professionals - Specific service classification prevailing over general legal services

GST mechanism applicable to services rendered by an Advocate in the capacity of an Interim Resolution Professional under the Insolvency and Bankruptcy Code - HELD THAT: - GST liability depends upon the nature and classification of the service rendered, and not upon the service-provider's underlying professional qualification. Though legal services rendered by Advocates are covered by reverse charge, Insolvency Professionals form a distinct statutory class regulated under the Insolvency and Bankruptcy Code and the IBBI Regulations. Insolvency and receivership services are specifically classified separately from legal services; applying the principle that the specific description prevails over the general description, such services cannot be subsumed within legal services merely because the Insolvency Professional is enrolled as an Advocate. Since these services are not among the notified reverse-charge categories, the default forward-charge mechanism applies. [Paras 108, 109, 110, 112, 113]

An Advocate acting as an Insolvency Professional is liable under the forward charge mechanism and must obtain GST registration and comply with consequential requirements for such services; reverse charge continues to apply only to legal services rendered in the capacity of an Advocate. The challenge to the IBBI communication was rejected, and GST-compliant invoices were directed to be furnished for the Interim Resolution Professional services.

Final Conclusion: The petition was disposed of by upholding the IBBI's position that services rendered by an Advocate as an Insolvency Professional attract GST under the forward charge mechanism. The reverse charge mechanism remains confined to legal services rendered by Advocates in that capacity.

Continuing personal guarantee - Guarantor's liability for renewed credit facilities

Whether the personal guarantee covered the renewed credit facility and whether the guarantor's liability was confined to the stipulated principal cap without interest? - HELD THAT: - The guarantee was continuing until payment of the dues. The appellant had also signed the renewal of the credit facility. Further, the guarantee provided for interest at the stipulated or subsequently notified rate from demand; consequently, the contractual liability was not confined to the principal cap alone. [Paras 7, 9]

The challenge to the applicability of the guarantee to the renewed facility and to liability beyond the principal cap with contracted interest was rejected.

Final Conclusion: The appeal was dismissed, and the admission of the personal insolvency resolution process against the guarantor was upheld.

Finality of unchallenged personal insolvency resolution orders - Bankruptcy proceedings consequent upon closure of personal insolvency resolution process - Limitation for invocation of personal guarantee

Natural justice in bankruptcy proceedings against personal guarantor - Service of bankruptcy petition - personal guarantor's entitlement to a fresh notice and hearing before initiation of bankruptcy following closure of the personal insolvency resolution process - HELD THAT: - A personal guarantor who was validly proceeded against ex parte in the main personal insolvency resolution process, and did not challenge that order, could not claim a fresh right to notice at the consequential bankruptcy stage. Section 121 does not require prior notice before a bankruptcy order, and the record also established service of both the closure application and the bankruptcy petition. The challenge to findings in the unappealed closure order could not be reopened in the bankruptcy appeal. [Paras 38, 39, 40, 41, 42]

No violation of natural justice was established; the bankruptcy order was not rendered invalid for want of notice or opportunity.

Limitation for personal insolvency application against guarantor - Invocation of personal guarantee - limitation challenge founded on the earlier SARFAESI demand and alleged prior invocation of the personal guarantee - HELD THAT: - The unchallenged admission order had determined that the SARFAESI notice was issued for enforcement of security interest and did not invoke the personal guarantee; invocation first occurred through the subsequent demand notice under the Code. The personal insolvency application, having been filed within three years of that invocation, was within limitation. That determination had attained finality and could not be collaterally assailed in an appeal from the consequential bankruptcy order. [Paras 43]

The plea of limitation was rejected.

Collateral challenge to final insolvency orders - Separate proceedings against personal guarantors - New pleas in appeal - effect of dismissal of the connected insolvency petition against another guarantor and the permissibility of raising unurged grounds in appeal - HELD THAT: - Each insolvency petition against a personal guarantor is an independent proceeding to be determined on its own record. Dismissal of the connected petition against another guarantor did not affect the validity of the unchallenged admission order concerning the appellant. Further, grounds not urged before the Adjudicating Authority could not be raised for the first time in appeal; nondisclosure of material orders dismissing the appellant's recall and rectification applications also impaired the credibility of the appeal. [Paras 44, 45, 46]

The alleged inconsistency and the new appellate grounds were not accepted.

Final Conclusion: The appeal was dismissed and the bankruptcy order was affirmed, the challenge being an impermissible attempt to reopen final orders in the personal insolvency resolution process. Costs were imposed for withholding material facts and pursuing the challenge.

Scope of provisional attachment u/s 5(1) - offence of money laundering - definitions of “attachment” and “proceeds of crime” u/s 2(1)(d) and 2(1)(u) - Continuing offence of money laundering - HELD THAT:- The Special Leave Petition was dismissed, with no interference in the impugned order[2026 (3) TMI 1078 - DELHI HIGH COURT].

Entitlement to bail in proceedings concerning alleged money-laundering offences

As alleged that petitioner collected amounts from hundreds of home buyers and investors were induced to part with substantial amounts on the false assurance of allotment and delivery of flats which were never delivered. There are number of victims who gave statements against the petitioner.

HELD THAT:- At this stage, it can be observed that he is not entitled for bail.

As petitioner requested the Court to grant bail on health grounds, whereas, it is seen that the medical certificate verified by the respondent is found to be negative. Furthermore, the Doctor who has purportedly issued medical certificate was examined by the respondent authorities under Section 50 of PMLA, and he clearly denied the issuance of said certificates which shows the conduct of petitioner. It is obvious to observe that if the petitioner suffers with any health issues, the jail authorities will take care of the same. In view of the gravity of allegations, magnitude of proceeds of crime, and the petitioner’s conduct, there are no merits in the petition.

Accordingly, the Criminal Petition is dismissed.

Proceeds of crime - attachment of properties acquired from funds generated through money-laundering activities - Beneficial ownership of tainted property

Whether the movable and immovable properties held by the appellants were liable to attachment as proceeds of crime notwithstanding the claim that the funds represented brokerage commission and a bank loan? - HELD THAT: - The Tribunal found that the appellant was not a mere commission agent but an active participant in the MLM operations of the Shine City Group, having knowingly assisted activities connected with the generation of proceeds of crime.

Funds received from the group were traceable to the acquisition of the attached properties, and the appellants failed to establish a complete legitimate source for their acquisition. The other appellant had no independent income; the loan availed for booking a property did not explain the source of its repayment, while the balance funds came from her husband.

The continued receipt of rent from a property standing in another person's name established that the ostensible transferee was a name-lender and that the appellants retained beneficial enjoyment of the tainted property. [Paras 34, 36, 37, 38, 39]

The attached properties were held to be proceeds of crime, and the challenge to their provisional attachment was not accepted.

Final Conclusion: The Tribunal found that the appellants had acquired and beneficially enjoyed the attached properties from proceeds of crime. The confirmation of the provisional attachment was accordingly sustained.

Statutory pre-deposit as condition precedent to appeal - Prospective operation of amended pre-deposit requirement - Natural justice in disposal of stay application

Validity of dismissal of the appeal for non-compliance with a conditional pre-deposit order where the appellant's request for adjournment was declined - HELD THAT: - The Commissioner (Appeals) had afforded a hearing, considered the request for adjournment and recorded reasons for declining it in view of the requirement of expeditious disposal. The stay order also disclosed reasons for directing pre-deposit. A request for adjournment creates no indefeasible right to its grant; in the absence of procedural illegality or perversity, the reasoned exercise of discretion did not offend natural justice. [Paras 16, 17, 21]

No breach of natural justice was established in the passing of the conditional pre-deposit order.

Statutory pre-deposit as condition precedent to appeal - Prospective operation of amended pre-deposit requirement - Effect of subsequent deposit under the amended 10% pre-deposit requirement on dismissal of an appeal for non-compliance with pre-deposit ordered under the unamended provision - HELD THAT: - The amended provision prescribing mandatory pre-deposit of 10% came into force prospectively after the impugned dismissal. The appeal remained governed by the unamended provision, under which the appellate authority was competent to impose a suitable pre-deposit condition. Since the statutory right of appeal was subject to that condition, non-compliance entitled the appellate authority to reject the appeal; subsequent compliance with the amended requirement could not retrospectively cure the earlier default. [Paras 18, 19, 20, 22, 23]

The dismissal for non-compliance with the conditional pre-deposit was upheld.

Final Conclusion: The appeal was dismissed, the Tribunal holding that the conditional pre-deposit order was reasoned and procedurally fair, and that subsequent compliance with the amended pre-deposit requirement could not validate the appeal.

Service tax exemption for sub-contractors executing irrigation works - Cum-tax valuation of service receipts - Reverse charge mechanism-verification of service tax liability

Service tax exemption for sub-contractors executing irrigation works - Eligibility of services rendered as a sub-contractor for construction of an earth dam forming part of a Government reservoir and irrigation project for exemption from service tax - HELD THAT: - Although the appellant rendered the services through the main contractor and not directly to the Government, the services were provided for the reservoir project. The rationale that exemption available for irrigation-system works extends to a sub-contractor was held applicable to the notification exemption for construction of dams and irrigation works. [Paras 10]

The sub-contracted services for the reservoir project were held exempt from service tax.

Cum-tax valuation of service receipts - Entitlement to compute service tax by treating the receipts as inclusive of tax - HELD THAT: - The impugned order had denied the statutory benefit of treating the amounts received as cum-tax receipts. The appellant was entitled to valuation on that basis. [Paras 12]

Cum-tax benefit was allowed, with consequential computation to be undertaken by the original authority.

Reverse charge mechanism - verification of service tax liability - Proportionate reduction of penalty for reduced service tax demand - Verification of the applicability of reverse charge to the appellant's services and consequential recomputation of tax, interest and penalty - HELD THAT: - Where the services were taxable under the reverse charge mechanism, the service tax demand against the appellant had to be reduced proportionately. The record required verification as to whether reverse charge had been correctly applied. As the penalty under section 78 corresponded to the tax short-paid, it was liable to proportionate reduction upon recomputation. [Paras 13, 14]

The matter was remanded only for verification of reverse charge applicability and recalculation of service tax, interest and penalties, after extending cum-tax benefit.

Final Conclusion: The appeal was partly allowed. The exemption for the reservoir-project services and cum-tax benefit were granted, and the matter was remanded solely for consequential verification and computation.

Delayed filing of EXP-3 returns and alleged non-submission of documents - Exemption notification denied - procedural compliance -Service tax on overseas commission agency services

Entitlement to exemption for overseas commission agency services despite delayed filing of EXP-3 returns and the alleged non-submission of supporting documents with EXP-4 - HELD THAT: - Delayed submission of EXP-3 returns did not constitute breach of a mandatory condition so as to deny the exemption. The finding that supporting documents had not been submitted was self-contradictory when the same order found them unauthenticated; moreover, a common declaration/composite certificate covering the shipping bills had been furnished. Substantive benefit could not be denied for the procedural lapse. [Paras 5, 7]

The appellant was held eligible for the notification benefit.

Service tax on overseas commission agency services - Liability to service tax in respect of commission allegedly payable on the four disputed shipping bills - HELD THAT: - The Revenue failed to establish that commission had been paid in respect of the disputed shipping bills. The original authority had examined the relevant material and found the demand unsustainable. [Paras 5, 6]

The service tax demand, with interest and penalty, was not sustainable.

Final Conclusion: The appeal was allowed with consequential relief in accordance with law.

Exercise of option for reversal of proportionate CENVAT credit - Substantial compliance with Rule 6 of the CENVAT Credit Rules - Interference with factual findings under section 35G of the Central Excise Act

Exercise of option for reversal of proportionate CENVAT credit - Substantial compliance with Rule 6 of the CENVAT Credit Rules - Entitlement of a manufacturer of dutiable and exempted biscuits using common inputs and input services to reverse proportionate credit under Rule 6(3A), despite procedural lapses in disclosure and intimation - HELD THAT: - The option between the mechanisms under Rule 6(3) belongs exclusively to the assessee; the Department cannot, on alleging an incorrect application of Rule 6(3A), compel adoption of the percentage-based payment option under Rule 6(3)(i). Its remedy is to disallow wrongly availed credit or determine the correct reversal under the chosen mechanism. The object of Rule 6 is to prevent retention of credit attributable to exempted goods. Documentary material and the Tribunal's findings established proportionate reversal; consequently, technical defects in ER-1 disclosures or intimations could not defeat substantial compliance or justify a disproportionate demand. [Paras 28, 29, 30]

The respondent's proportionate reversal was upheld, and the percentage-based demand under Rule 6(3)(i) was held unsustainable.

Interference with factual findings under section 35G of the Central Excise Act - Maintainability of the Revenue's challenge to the Tribunal's factual finding that the disputed credit was not availed or had been proportionately reversed - HELD THAT: - Compliance with Rule 6, as found by the Tribunal upon examination of the records, was a factual determination. In the absence of perversity in that finding, no substantial question of law arose for consideration under section 35G. [Paras 31]

The Tribunal's order was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The appeal was dismissed, as the respondent had substantially complied with the proportionate credit-reversal mechanism and the Tribunal's factual findings disclosed no perversity giving rise to a substantial question of law.

Failure to exercise jurisdiction by final fact-finding authority - Non-consideration of material submissions on CENVAT credit and penalty

Whether the Tribunal's failure to adjudicate the assessee's claim for CENVAT credit on construction services and the consequential penalty warranted fresh consideration? - HELD THAT: - The CESTAT, as the final fact-finding authority, was required to adjudicate all issues arising from the record. The assessee had raised its claim that part of the disputed credit related to construction services rather than GTA services, and had also raised the question of penalty; yet the CESTAT confined its consideration to GTA services and rendered no finding on those matters. This constituted a failure to exercise the jurisdiction vested in it. [Paras 8, 10, 11, 12]

The impugned order was set aside insofar as it denied the construction-service CENVAT credit and imposed consequential interest and penalty, and the matter was remanded to the CESTAT for fresh consideration after permitting all grounds available in law and hearing both sides, with all contentions kept open.

Final Conclusion: The appeal was disposed of by setting aside the impugned order to the limited extent of the unadjudicated CENVAT credit claim and its consequential interest and penalty, and remanding those matters for fresh consideration by the CESTAT.

Classification of electronic assemblies used in industrial robots - Requirement of show cause notice for classification determination

Necessity of a fresh show cause notice before the appellate authority could accept the classification of electronic assemblies as parts of industrial robots, instead of parts of grass-cutting machines - HELD THAT: - The Original Authority had itself examined the documents, afforded personal hearing, and reclassified the goods from the classification claimed by the assessee. Since classification had thus been determined after inquiry and opportunity to the assessee, the appellate authority, on considering the relevant material, could accept the assessee's claimed classification without issuance of a fresh show cause notice. [Paras 8]

The acceptance of the assessee's classification by the appellate authority was upheld; no fresh show cause notice or remand was required.

Final Conclusion: The Revenue's appeal was dismissed and the order allowing rebate on the exported goods was upheld.

Conditional excise-duty refund pending challenge to exemption notifications - Refund on alleged fictitious clearances contingent on prior appeal

Survival of Revenue's appeal against refund credit allowed subject to the outcome of challenges to Notifications No.19/2008 and 34/2008 - HELD THAT: - The refund sanction had expressly been made subject to the outcome of the writ proceedings and the Revenue's counter-petitions. Since the controversy before the High Court stood settled by the Supreme Court in M/s VVF Ltd. [2020 (4) TMI 669 - SUPREME COURT] the appeal before the Tribunal served no purpose. The Revenue remained at liberty to take action in accordance with that decision and the pending show-cause notices, while being obliged to consider the respondent's submissions consistently with natural justice. [Paras 5]

The appeal on this aspect was held not to survive, subject to the Revenue's lawful action in the pending proceedings.

Refund on alleged fictitious clearances contingent on prior appeal - Survival of Revenue's appeal concerning differential-duty refund granted for alleged non-existing and fictitious clearances subject to the outcome of [2018 (11) TMI 612 - CESTAT CHANDIGARH] - HELD THAT: - The impugned refund had been granted expressly subject to the decision in Appeal No. E/1888/2011. As that appeal had already been decided by the Tribunal, no controversy survived for adjudication in the present appeal. [Paras 6]

The appeal on this count was held not to survive.

Final Conclusion: The Revenue's appeal was disposed of as infructuous: the first refund controversy stood governed by the Supreme Court decision, and the second was contingent on an appeal already decided by the Tribunal.

Entry tax on Hydraulic Oil as petroleum product - Scope of the expression "and others" in petroleum-products entry -Requirements for reassessment u/s 6(1)

Classification of Hydraulic Oil as petroleum product - Hydraulic Oil as consumable and not raw material - Liability of Hydraulic Oil brought into the local area for use in manufacturing Hydraulic Cylinders to entry tax under Entry 67 of the First Schedule and the notification governing petroleum products - HELD THAT: - The expression "and others" following the specified petroleum products was held to encompass petroleum products not expressly enumerated; the exclusion of particular products reinforces that legislative intent. Hydraulic Oil, being a petroleum product, falls within that expression. Its use in hydraulic systems makes it a consumable, not a raw material, since no finished product emerges from its use. The rulings concerning different commodities, including base oil used in manufacture of grease, were rightly distinguished. [Paras 19, 20, 21, 22, 23]

Hydraulic Oil is covered by Entry 67 and the relevant notification and is liable to entry tax when brought into the local area for consumption, use or sale.

Validity of initiation of reassessment proceedings for levy of entry tax on Hydraulic Oil under Section 6(1) of the KTEG Act - HELD THAT: - The Tribunal had found that the statutory conditions for reassessment were satisfied. No jurisdictional infirmity or patent illegality in that finding was shown to warrant revisional interference. [Paras 12]

The finding that the requirements of Section 6(1) were fulfilled was sustained.

Final Conclusion: The revision petitions were dismissed and the orders affirming the levy of entry tax on Hydraulic Oil were confirmed.

Alternative statutory remedy under the SARFAESI Act - Maintainability of writ petition against SARFAESI measures

HELD THAT: - A person aggrieved by measures taken under the SARFAESI Act has statutory remedies to raise objections and to approach the Debt Recovery Tribunal under section 17. Article 226 is not intended to bypass a statutory procedure providing an efficacious remedy, except where that remedy is inadequate to meet an extraordinary situation. The Court found that the petitioner was not without a remedy before the Tribunal. [Paras 5, 6, 7]

The writ petition was dismissed, leaving the petitioner at liberty to approach the appropriate statutory forum, if so advised and if permissible in law.

Final Conclusion: The writ petition challenging the SARFAESI demand notice and possession proceedings was dismissed for availability of an efficacious statutory remedy before the Debt Recovery Tribunal.