TaxTMI Updates e-Newsletter
Aug 18,2026

Challenge to action of the respondent – authorities for confiscation of goods which were seized during transit u/s 129 of the CGST Act - amendment to Sections 129 and 130 of the CGST Act, made effective from 01.01.2022 by virtue of the Finance Act, 2021 - case of petitioner is that the respondents have mechanically invoked Section 130 of the CGST Act for confiscation of goods immediately upon interception u/s 129 of the CGST Act, which is impermissible in law.

HELD THAT:- While we are not inclined to interfere with the impugned judgment(s) and order(s) passed by the High Court [2025 (12) TMI 941 - GUJARAT HIGH COURT], the petitioner will be entitled to challenge the legality and validity of the order passed by the Office of the Deputy Commissioner of State Tax, Mobile Squad, Gujarat State.

We make it clear that we have not expressed any opinion on the matter.

Judicial review of an ongoing tender evaluation process - Prematurity of challenge to a clarification seeking commercial justification of quoted discounts

Maintainability of the challenge to the communication seeking commercial justification for discounts quoted by technically qualified bidders in the tender for supply of branded medicines and surgical consumables - HELD THAT: - The communication was issued to assess the commercial sustainability of quoted discounts and to prevent disruption in medicine supply. As the petitioners had furnished their responses and supporting documents, and no bid had been rejected, no bidder disqualified and no decision taken on the bids, the challenge was premature. The tendering authority was required first to consider the material furnished and reach a reasoned decision. [Paras 31]

The petitions were disposed of as premature, with a direction to consider the bidders' responses and documents, take and communicate a reasoned decision on the bids; an aggrieved bidder was left free to pursue remedies available in law thereafter.

Final Conclusion: The challenge to the interim clarification in the tender evaluation process was held premature. The respondents were directed to take and communicate a reasoned decision on the bids after considering the material furnished by the bidders.

Corporate guarantees as taxable supply between related persons - Valuation of corporate guarantees under Rule 28(2) - Retroactive levy on pre-existing corporate guarantees - Willful suppression for extended-period GST proceedings

Corporate guarantees as taxable supply between related persons - Supply in the course or furtherance of business - Recipient of corporate guarantee service - Actionable claims - Gratuitous corporate guarantees furnished by a holding company for its subsidiary constitute a taxable supply of services - HELD THAT: - A corporate guarantee is a tripartite arrangement comprising the principal contract between the subsidiary and lender, the collateral contract between the lender and holding company, and the implied indemnity arrangement between the holding company and subsidiary. The benefit of credit extended to the subsidiary furnishes consideration for the surety under the Contract Act; in any event, supplies between related persons in the course or furtherance of business are taxable without consideration under Schedule I. Facilitating the subsidiary's borrowing is incidental or ancillary to the holding company's business, and the subsidiary, as the ultimate beneficiary of the guarantee and the party obliged to indemnify the surety, is the recipient of the service. The undertaking is also an agreement to do an act under Schedule II. A corporate guarantee creates only a secondary contingent liability and not a direct transferable claim to debt; it is therefore not an actionable claim excluded by Schedule III. [Paras 40, 46, 48, 49, 55]

Corporate guarantees furnished by holding companies to secure loans for subsidiaries are taxable supplies of services under the GST regime.

Pledge of shares and corporate guarantee - Substance over form in contract interpretation - A share-pledge arrangement executed with a corporate guarantee may itself disclose a contract of guarantee attracting GST - HELD THAT: - The character of an agreement depends upon its operative terms and not its label. Where the pledge arrangement secured the subsidiary's obligations and permitted appropriation of pledged shares upon its default, the arrangement satisfied the features of both pledge and guarantee. The manner in which the guarantor's promise is secured does not displace the taxable supply arising from the corporate guarantee. [Paras 59, 61]

The pledge agreement considered by the Court, read with the corporate guarantee, was held to attract the valuation mechanism applicable to corporate guarantees.

Time of supply of corporate guarantee services - Continuous supply of services - gratuitous corporate guarantee is not a continuous supply of services, though its annual disclosure in the subsidiary's accounts determines the time of supply and the subsisting guaranteed amount for yearly valuation - HELD THAT: - The service is crystallised when the guarantee is executed and the benefit becomes available to the principal debtor; invocation merely fulfils the pre-existing undertaking. As no periodic payment obligation exists in a gratuitous guarantee, it does not fulfil the statutory definition of continuous supply. However, where invoice and payment-based tests do not apply, the subsidiary's disclosure of the guarantee in its books determines the time of supply. Its recurring accounting disclosure permits yearly valuation with reference to the outstanding guaranteed debt. [Paras 63, 64, 67]

Corporate guarantees are not continuous supplies, but their valuation may be determined annually with reference to the subsisting guaranteed liability recorded by the subsidiary.

Constitutional validity of corporate guarantee valuation - Reading down of delegated legislation - Actual consideration for corporate guarantees - Rule 28(2) prescribing valuation of corporate guarantees and the statutory valuation framework - HELD THAT: - The statutory scheme authorises specialised valuation rules for supplies whose value cannot be determined by ordinary transaction-value principles, and the rule was founded on GST Council recommendations. Corporate guarantees present genuine difficulty in identifying open-market comparables. Yet, where actual commission or charge is ascertainable, compelling adoption of a higher deemed one per cent valuation is arbitrary and inconsistent with the statutory valuation architecture. The rule can be preserved by reading down only the expression which mandates the higher of the deemed value and actual consideration. [Paras 72, 74, 108, 110]

Section 15(4) and Rule 28(2) were upheld, subject to reading down the words "whichever is higher"; valuation may be based on actual commission or charge where ascertainable.

Retroactive levy on pre-existing corporate guarantees - GST on guarantees to foreign recipients - GST valuation under Rule 28(2) cannot be imposed on corporate guarantees executed before its introduction, though levy applies from the date of introduction where such guarantees continue - HELD THAT: - Applying the new valuation mechanism to guarantees executed before its introduction imposed a new fiscal burden on completed arrangements and was held harsh, unfair and violative of Articles 14 and 19(1)(g). The levy can operate prospectively from the rule's introduction for continuing guarantees. Further, the guarantee furnished for foreign subsidiaries fell outside Rule 28(2), which applies only where the recipient is located in India. [Paras 114, 115]

The pre-introduction levy was declared invalid, the demand relating to guarantees for foreign subsidiaries was set aside, and continuing guarantees remained taxable from the rule's introduction.

Administrative circulars under GST law - Discrimination in exemption for government guarantees - HELD THAT: - Circulars may operationalise and explain a statutory levy but cannot independently create one or override the governing statutory provisions. Consequently, the circulars and their clarifications must yield to the construction adopted by the Court. Differential treatment for sovereign guarantees and the nil valuation of personal guarantees given by directors was held to rest on permissible and distinct considerations. [Paras 117, 118]

The circulars were set aside to the extent inconsistent with the judgment, with liberty to issue conforming administrative instructions; the discrimination challenge failed.

Willful suppression for extended-period GST proceedings - Penalty for non-payment of GST on corporate guarantees - Proceedings invoking fraud, willful misstatement or suppression for non-payment of GST on corporate guarantees were unsustainable where the dispute arose from a bona fide contest over the statutory scheme - HELD THAT: - Invocation of the extended-period provision requires a deliberate positive act evidencing intent to evade tax; mere failure to declare cannot amount to willful suppression. The controversy involved disputed interpretation of the GST provisions, valuation rule and related enactments, and no fraud, collusion, misconduct or deliberate withholding of material facts was established. Proceedings based on a pre-GST corporate guarantee additionally reflected non-application of mind. [Paras 121]

The order and show-cause notices issued under Section 74, including the consequential penalty action, were quashed.

Final Conclusion: The writ petitions were partly allowed. GST on corporate guarantees was sustained prospectively under Rule 28(2), subject to reading down the higher-of valuation requirement; the pre-introduction levy and proceedings founded on willful suppression were quashed, and inconsistent circular clarifications were set aside.

Invocation of fraud-based GST demand proceedings - Reasoned adjudication and opportunity of hearing - Validity of the GST demand order invoking fraud-based proceedings without disclosing the material or circumstances justifying such invocation and without affording a hearing - HELD THAT: - Proceedings under Section 74 require subjective satisfaction founded on material showing the circumstances warranting its invocation. The adjudication order neither disclosed the material and reasons for invoking that provision nor reflected that the petitioner had been afforded an opportunity of hearing. Being non-speaking, unreasoned and per se without jurisdiction, the order could be examined in writ jurisdiction notwithstanding dismissal of the statutory appeal as time-barred. [Paras 8]

The original demand order and the consequential appellate order were quashed, and the matter was remitted for fresh decision after affording an opportunity of hearing; the merits were left open.

Final Conclusion: The petition was allowed and the matter remitted to the adjudicating authority for reconsideration in accordance with law after hearing the petitioner.

Service of notice through GST portal after cancellation of registration - Opportunity of personal hearing in GST adjudication

Validity of service of the show-cause notice exclusively by uploading it on the GST portal after cancellation of the petitioner's GST registration - HELD THAT: - The Revenue did not dispute that the show-cause notice was presumably served only by uploading it on the GST portal.

The relevant observations, made in the said judgment on the said aspect after taking into consideration the law laid down by in M/s Ahs Steels [2024 (10) TMI 1038 - ALLAHABAD HIGH COURT] and M/s Katyal Industries vs. State of U.P. and others [2024 (2) TMI 1447 - ALLAHABAD HIGH COURT]that once the registration has been cancelled, the assessee cannot be expected to check the GST portal and service must be effected through alternative mode.

Section 75(4) of the CGST Act mandates that an opportunity of hearing shall be granted where a request is received in writing or where an adverse decision is contemplated. This provision embodies the principle of audi alteram partem, the right to be heard before an adverse order is passed. The Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh [2021 (4) TMI 837 - SUPREME COURT]while examining the scheme of GST law, underlined that fiscal adjudications must comply strictly with the principles of natural justice, and failure to afford a hearing renders the proceedings vulnerable

Applying the principle that a person whose registration stands cancelled cannot be expected to monitor the portal and must be served through an alternative permissible mode, the Court held that such portal-based service was invalid. [Paras 6, 7]

The impugned adjudication order was quashed; the Revenue was left at liberty to issue a fresh notice and adjudicate in accordance with law, after affording personal hearing if sought by the petitioner.

Final Conclusion: The writ petition was disposed of by quashing the GST adjudication order for invalid service of notice after cancellation of registration, while permitting fresh proceedings in accordance with law.

Proper officer for penalty proceedings under the UPGST Act - Writ jurisdiction and statutory appellate remedy - Doctrine of election

Jurisdiction of the Deputy Commissioner of State Tax to issue a show-cause notice for penalty under Section 122 of the UPGST Act - HELD THAT: - The State circulars clarified that penalty proceedings under Section 122 are governed by the proper-officer mechanism under Section 127, notwithstanding the absence of the expression "proper officer" in Section 122. They vested the Deputy Commissioner with jurisdiction in cases involving businesses above the prescribed turnover threshold. The Court was therefore prima facie satisfied that the issuing authority lacked no jurisdiction. [Paras 8, 11]

The jurisdictional challenge to the show-cause notice was not accepted prima facie.

Writ jurisdiction and statutory appellate remedy - Doctrine of election - Maintainability of the writ petition after the petitioner participated in the penalty proceedings on merits without raising a jurisdictional objection - HELD THAT: - Although a jurisdictional objection may be raised before a Constitutional Court at any stage, exercise of writ jurisdiction is discretionary. Having appeared before the issuing officer and advanced submissions on merits, the petitioner could not, after the adverse order, bypass the statutory appellate remedy by raising the jurisdictional objection in writ proceedings; the Court held the petitioner hit by the doctrine of election. [Paras 9, 10, 11, 12, 13]

The writ petition was disposed of with liberty to pursue the statutory appeal; the petitioner may claim the benefit of Section 14 of the Limitation Act, 1963, subject to satisfying its requirements.

Final Conclusion: The petitioner was relegated to the statutory appellate remedy, the Court being prima facie satisfied that the Deputy Commissioner had jurisdiction to issue the penalty notice and that writ relief ought not to be exercised after participation in the proceedings on merits.

Cash refund of re-credited input tax credit on discontinuance of business

Cash refund of re-credited input tax credit on discontinuance of business - Refund of input tax credit re-credited to the Electronic Credit Ledger where the registered person has permanently discontinued business and the ledger is non-functional. - HELD THAT: - There was no prohibition under the Act against payment in cash of the amount earlier directed to be re-credited as input tax credit. Since the petitioner was no longer carrying on business and the Electronic Credit Ledger had ceased to be functional, re-credit would afford no usable refund. [Paras 4, 5]

The authorities were directed to refund the re-credited amount in cash, with applicable interest, if any, in accordance with the Act.

Final Conclusion: The writ petition was disposed of with a direction for cash refund of the amount re-credited as input tax credit, together with applicable interest, if any, in accordance with the Act.

Pre-deposit in legacy service tax appeals - Utilisation of transitioned CENVAT credit - Electronic Credit Ledger

Validity of discharging the mandatory pre-deposit for a service tax appeal by debiting CENVAT credit transitioned into the Electronic Credit Ledger - HELD THAT: - Section 35F requires deposit of the prescribed part of the disputed duty or penalty as a condition for entertaining an appeal, but does not prescribe cash as the exclusive mode or prohibit use of credit. CENVAT credit validly carried forward under the transitional provision retains its character as a vested credit; its reflection in the Electronic Credit Ledger preserves, rather than extinguishes, the right to utilise it. In the absence of a statutory requirement of payment through the Electronic Cash Ledger, an administrative instruction prescribing a procedure for cash payment cannot curtail utilisation of transitioned credit. Debit of the available transitioned credit, resulting in credit to the Government, satisfies the purpose and requirement of pre-deposit. [Paras 17, 18, 19, 20, 21]

The pre-deposit made by debiting the Electronic Credit Ledger was held to be valid compliance with Section 35F; the Tribunal's contrary order was quashed and it was directed to entertain and decide the appeal on merits.

Final Conclusion: The writ petition was allowed. The transitioned CENVAT credit debited from the Electronic Credit Ledger was declared a valid statutory pre-deposit for the service tax appeal.

Service of show cause notice through common portal - Ex parte GST adjudication - Validity of an ex parte GST adjudication order where the show cause notice was uploaded on the web portal and no reply was filed

HELD THAT: - Following Luxmi Traders v. Union Territory of Chandigarh & Ors. [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] the Court held that mere uploading of the show cause notice on the common portal, without acknowledgement of receipt or a reply by the assessee, was insufficient service for sustaining an ex parte adjudication. The proceedings were therefore required to be restored to the stage of the show cause notice, with opportunity to submit a reply and be heard. [Paras 5, 8]

The impugned ex parte order was remitted for fresh adjudication; the adjudicating authority was directed to consider the petitioner's reply, if any, and pass a fresh order in accordance with law, while remaining at liberty to consider the stated proceedings under the fraud provision.

Final Conclusion: The writ petition was disposed of by remitting the ex parte GST adjudication for fresh decision after affording the petitioner an opportunity to file a reply and be heard.

Delayed appeal against cancellation of GST registration - Restoration of statutory appellate remedy

Restoration of the statutory appeal against cancellation of GST registration after its dismissal on limitation - HELD THAT: - Applying M/s S. Nabad Ali Mustak Ahmed vs. Union of India [2025 (11) TMI 2051 - RAJASTHAN HIGH COURT] the Court held that the present writ petition was governed by the same terms. The underlying merits of the cancellation proceedings were not adjudicated in writ jurisdiction. [Paras 3]

The writ petition was disposed of on the same terms, with the appellate remedy restored for decision on merits without dismissal on limitation.

Final Conclusion: The writ petition was disposed of in terms of the earlier decision, restoring the petitioner's statutory appeal for adjudication on merits without rejection on limitation.

Cancellation of GST registration - opportunity to respond to show cause notice - HELD THAT: - Without expressing any opinion on the merits, the Court considered that the ends of justice required an opportunity to the petitioner to respond to a show cause notice. The competent authority was therefore permitted to issue a fresh notice, consider the reply, afford a hearing if required, and decide the matter by a reasoned and speaking order in accordance with law. [Paras 3, 4]

The matter was directed to be considered afresh upon issuance of a fresh show cause notice and receipt of the petitioner's reply.

Final Conclusion: The writ petition was disposed of without adjudication on merits, with directions for fresh notice, opportunity of reply and hearing, and a reasoned decision by the competent authority.

Service of show-cause notice after cancellation of GST registration - Violation of principles of natural justice

Validity of an assessment order passed under the Uttar Pradesh Goods and Services Tax Act after cancellation of registration, where the show-cause notice was uploaded only on the GST portal - HELD THAT: - After cancellation of registration, the petitioner was not obliged to check the GST portal. A show-cause notice in such circumstances was required to be served through an alternative mode. Portal-only service resulted in denial of an effective opportunity of hearing and violated the principles of natural justice. [Paras 4, 6]

The impugned order was quashed for violation of natural justice, with liberty to the Department to issue a proper notice and proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the assessment order, while preserving the Department's liberty to initiate proceedings upon proper notice.

Withdrawal and reissuance of show cause notice - Permission to withdraw the impugned GST show cause notice and issue a fresh notice. - HELD THAT: - Upon the revenue authorities seeking withdrawal of the impugned notice solely in view of the prescribed limitation period, the petition was disposed of by permitting withdrawal and fresh issuance of notice. [Paras 7]

The respondent authority was permitted to withdraw the impugned show cause notice and issue a fresh notice within two weeks.

Final Conclusion: The writ petition was disposed of by permitting withdrawal of the impugned show cause notice, with liberty to issue a fresh notice within the stipulated period.

Adjudication of transitional VAT input tax credit under GST demand provisions - Validity of initiating adjudication under the GST demand provisions in respect of credits availed under the erstwhile Haryana Value Added Tax law

HELD THAT: - The Court respectfully agreed with the view of the Jharkhand High Court M/S. USHA MARTIN LIMITED [2022 (11) TMI 1266 - JHARKHAND HIGH COURT] on the controversy, which had also been followed in a subsequent decision and whose challenge before the Supreme Court had been dismissed in ‘Steel Authority of India Limited Vs. State of Jharkhand & ors’ [2025 (2) TMI 133 - JHARKHAND HIGH COURT]

On that basis, proceedings under Sections 73 and 74 of the Punjab, Haryana and Central GST enactments in respect of credits availed under the erstwhile Haryana VAT Act could not be adjudicated. The liberty reserved to the Revenue in the earlier decision was protected in accordance with law. [Paras 3, 5]

The petitions were disposed of in terms of the above finding.

Final Conclusion: The petitions were disposed of by holding that the impugned GST demand proceedings concerning credits availed under the erstwhile Haryana VAT Act could not be adjudicated, subject to the Revenue's protected liberty in accordance with law.

Statutory authority for building-plan sanction charges - Labour welfare cess - upfront collection - GST and SGST levied on sanction of a building plan

Statutory authority for building-plan sanction charges - Quid pro quo for regulatory fee - Authority of the Bangalore Development Authority to levy scrutiny fee, ground rent and security deposit for sanction of a building plan - HELD THAT: - The Bangalore Development Authority could exercise the powers of a Municipal Commissioner only upon a State notification. The Bangalore Development Authority Act, 1976 did not itself authorise collection of ground rent, scrutiny fee or security deposit. Since the Municipal Corporation lacked power to impose those charges, the Authority could not demand them merely because such charges had been imposed by the Municipal Corporation. A fee also requires authority of law and a reasonable correlation with the service rendered. [Paras 6, 7]

The demand for scrutiny fee, ground rent and security deposit was quashed, subject to the outcome of the pending writ appeal.

Labour welfare cess - upfront collection - Collection of construction welfare cess - Validity of requiring labour welfare cess upfront as a condition for sanction of the building plan - HELD THAT: - Though labour welfare cess remained payable, its upfront collection before construction was contrary to the statutory scheme. Where construction extends beyond one year, collection must be made in the manner prescribed by Rule 4 of the Building and Other Construction Workers' Welfare Cess Rules, 1998. [Paras 6, 7]

The Authority was directed to raise a fresh demand for labour welfare cess in accordance with Rule 4, and not to collect it upfront.

GST on building-plan sanction - Levy of CGST and SGST on charges for sanction of the building plan - HELD THAT: - Sanction of a building plan involved no supply of goods or provision of services. [Paras 8]

The Authority was held not entitled to collect CGST and SGST on the plan-sanction charges.

Final Conclusion: The petition was partly allowed: the demands for scrutiny fee, ground rent, security deposit and GST were quashed, while labour welfare cess was directed to be collected in the prescribed manner. The relief was made subject to the outcome of the pending writ appeal.

TP Adjustment - Bright Line Test for advertising, marketing and promotion expenses

HELD THAT: - Following its earlier decisions Sony Ericsson [2015 (3) TMI 580 - DELHI HIGH COURT] and Maruti Suzuki [2015 (12) TMI 634 - DELHI HIGH COURT] the Court held that the Bright Line Test is not a method sanctioned by law for the impugned advertising, marketing and promotion adjustment. The pendency of challenges to those decisions before the Supreme Court did not warrant a different result; however, any law subsequently declared in those proceedings would apply mutatis mutandis to the assessee's case. [Paras 6]

The Department's appeals were dismissed, subject to the consequence of any contrary law declared in the pending proceedings concerning the earlier decisions.

Final Conclusion: The Department's appeals were dismissed by following the Court's settled position that the Bright Line Test is not sanctioned by law, while preserving the application of any contrary law declared in the pending proceedings before the Supreme Court.

Notice of hearing before the Income-tax Appellate Tribunal - Ex parte disposal without service of notice - Compliance with Rule 20 of the Income-tax (Appellate Tribunal) Rules, 1963

Validity of the Tribunal's ex parte disposal of the appeal on merits without service of notice of the adjourned hearing - HELD THAT: - Rule 20 of the Income-tax (Appellate Tribunal) Rules, 1963 requires the Tribunal to fix the hearing so as to allow parties sufficient time to appear and be heard. Where prior hearings could not proceed because the Tribunal did not function and the matter was adjourned by its office, the Tribunal could not decide the appeal ex parte without first ascertaining whether notice of the adjourned hearing had been issued and served. Such non-compliance constituted a procedural irregularity and a manifest failure of justice. [Paras 9, 10, 12]

The ex parte order was held contrary to law, set aside, and the appeal was restored to the Tribunal for fresh adjudication after intimation of a fresh hearing date to both parties.

Final Conclusion: The appeal was allowed. The Tribunal shall decide the restored appeal afresh in accordance with law, without being influenced by its previous order.

Constitutional immunity of State income from Union taxation - State instrumentality performing sovereign conservation functions - Applicability of the Income-tax Act to a State-controlled conservation society discharging sovereign environmental functions, and validity of attachment of its bank accounts for tax recovery

Whether the BIOSOT being a body constituted and functioning as an instrumentality of the State of Telangana in discharge of sovereign and constitutional obligations under Article 48A of the Constitution, can be subjected to the provisions of the Act in the teeth of the constitutional immunity engrafted under Article 289(1) of the Constitution of India?’ - HELD THAT: - Article 289(1) is a constitutional embargo upon Union taxation of the property and income of a State, to which a taxing statute must yield. The society, being under deep and pervasive State control, chaired and composed by State functionaries, financially and functionally dependent upon the State, and performing statutory conservation obligations referable to Article 48A, was held to be an instrumentality of the State. Its statutory, ring-fenced conservation funds and incidental interest were public funds held in trust, not receipts of an ordinary commercial assessee; hence no charge of tax or consequential recovery jurisdiction could arise under the Act.

BIOSOT being an instrumentality of the State of Telangana within the meaning of Article 12 of the Constitution, discharging sovereign functions under Article 48A thereof, is entitled to the constitutional immunity engrafted under Article 289(1) of the Constitution, and its income / receipts being in the nature of statutory and ring-fenced public funds, cannot be subjected to the charge of tax under the Act. Consequently, the impugned notice dated 05.12.2025 issued by respondent No.5 under Section 226(3) of the Act attaching the BIOSOT’s bank accounts is without jurisdiction and unsustainable in law and the impugned notice of attachment issued under Section 226(3) of the Act against the BIOSOT’s bank accounts is hereby quashed. The question of law framed is therefore answered in favour of the BIOSOT and against the Revenue [Paras 16, 18, 19, 20, 21]

The society was held entitled to immunity under Article 289(1), and the notice under Section 226(3) attaching its bank accounts was quashed as without jurisdiction.

Final Conclusion: Both writ petitions were allowed. The attachment proceedings against the State conservation society's bank accounts were held unsustainable for want of jurisdiction.

Service of show cause notice - Ex parte service tax adjudication

Validity of ex parte service tax proceedings where service of the show cause notice was not established - HELD THAT: - The respondents could not produce postal proof of delivery and admitted that communications had been sent to an email address obtained from the Income Tax Department. As the petitioner denied access to that email address and the respondents failed to establish service either by post or by email, service of the show cause notice was not proved. [Paras 12]

The show cause notices and consequential appellate orders were quashed, and the matters were remanded for issuance of fresh show cause notices and adjudication after affording hearing to the petitioners.

Final Conclusion: The writ petitions were allowed on the ground that service of the show cause notices had not been established. Fresh adjudication was directed after proper service and opportunity of hearing.

Reassessment after scrutiny assessment - Reassessment founded on unexamined amended partnership deed - Deduction for Special Economic Zone export profits

Whether reassessment initiated after scrutiny assessment on the alleged inflation of eligible profits through non-payment of interest on partners' capital and purchases of gold from a sister concern at below-market price was valid? - HELD THAT: - All relevant particulars, including the transactions with the sister concern, were available during the original scrutiny assessment. The Assessing Officer failed to examine the amended partnership deed specifically brought to his notice, under which the clause requiring payment of interest on partners' capital had become inoperative. The reopening was nevertheless founded entirely on the original deed. Further, the explanation concerning the rate and fineness of gold, though specifically raised in the objections, was not considered in the order rejecting those objections. The Court concurred with the Coordinate Bench's observations [2016 (7) TMI 436 - GUJARAT HIGH COURT] on the effect of audit objections and the alleged discrepancy in gold pricing. [Paras 28, 29, 30, 33, 34]

The notice initiating reassessment and the consequential order rejecting the objections were quashed and set aside.

Final Conclusion: The writ petition was allowed and the reassessment notice, together with the consequential order rejecting the objections, was quashed and set aside.

Validity of Reassessment - change of opinion - Reopening after scrutiny assessment of alleged bogus purchases

Validity of reopening of assessment in respect of purchases from entities flagged as high-risk billers after those transactions had been examined in the completed scrutiny assessment - HELD THAT: - The original scrutiny assessment had examined the purchases from high-risk billers, and the assessee had furnished the relevant GST reconciliation, invoices, supplier confirmations, bank-payment proof and allied records.

AO rejected the books and estimated profit on the sales turnover while making additions. As the alleged escaped income forming the basis of the reopening stood subsumed in that assessment and this position was undisputed, the reopening was founded only on a change of opinion. [Paras 9]

The order under Section 148A(3) and the consequential notice under Section 148 were quashed.

Final Conclusion: The writ petition was allowed, as reassessment on matters already scrutinised and subsumed in the completed assessment was impermissible as a change of opinion.

Deduction on net dividend income - Direct nexus between borrowed funds and investments - Taxability of notional interest on security deposits - Revenue expenditure during trial run

Change in method of closing-stock valuation - Excise duty in closing-stock valuation - change from absorption-cost to direct-cost method for closing-stock valuation and the excise-duty component of closing stock - HELD THAT: - The Revenue conceded that both questions had already been answered by an earlier order of the Court M/S. SMITHKLINE BEECHAM CONSUMER HEALTHCARE LTD [2025 (12) TMI 426 - PUNJAB AND HARYANA HIGH COURT]. They were accordingly answered in terms of that order. [Paras 4]

The questions were answered accordingly.

Deduction on net dividend income - Direct nexus between borrowed funds and investments - Deduction in respect of dividend income where only part of the investments in units was shown to have been made from interest-bearing borrowings - HELD THAT: - The authorities had examined each investment against the borrowed funds and found a direct nexus only for a part of the investment. In the absence of evidence connecting the remaining investments with borrowed funds, the entire interest liability could not be deducted from dividend income. The extent of borrowed money relatable to investments was a pure question of fact, raising no substantial question of law. [Paras 5]

The Revenue's challenge to the allowance of deduction without reducing the balance interest liability was dismissed.

Deduction for new industrial undertaking in existing factory premises - Deduction claimed for an industrial undertaking established in the existing factory premises - HELD THAT: - The Tribunal had decided the issue in favour of the assessee in its earlier order for Assessment Year 1989-90 based on the order for Assessment Year 1979-80. The earlier order for Assessment Year 1989-90 had not been challenged owing to low tax effect, and the Court found no substance in the Revenue's contention that the issue should not be decided against it on that basis. [Paras 6]

The Revenue's challenge to the deduction was dismissed.

Taxability of notional interest on security deposits - Taxability of deemed interest on security deposits placed with landlords for leased residential premises used by employees - HELD THAT: - Tax cannot be charged on assumptions or surmises; there must be actual income. The deposits were made in the course of the assessee's business affairs for hiring premises for employees, and no deemed income could be created merely on the supposition that the deposited funds could otherwise have generated business income. [Paras 7]

The deletion of the addition for deemed interest was upheld.

Interest on borrowings for acquisition of machinery - Revenue expenditure during trial run - Character of interest on capital borrowed for new machinery and overhead expenditure incurred during the trial-run period of expansion of the existing business. - HELD THAT: - The Revenue fairly conceded that the issue stood settled against it by the Supreme Court in Core Health Care Ltd [2008 (2) TMI 8 - SUPREME COURT] [Paras 8]

The question was answered against the Revenue.

Final Conclusion: The appeal was disposed of, with the Revenue's challenges on the remaining questions rejected or answered against it.

Deduction under section 80P on enhanced business profits - Entitlement of a cooperative credit society to deduction under section 80P on business income enhanced by an addition sustained under section 69C read with section 115BBE

HELD THAT: - Accepting the alternate claim in the light of CBDT Circular No. 37/2016, the Tribunal held that the addition enhanced the assessee's business profits and that the consequent enhanced income was eligible for deduction under section 80P. [Paras 10]

The assessee was allowed higher deduction under section 80P on the enhanced business profits; the challenge to the addition was consequently left unadjudicated as academic.

Final Conclusion: The appeal was allowed by granting deduction under section 80P on the income enhanced by the addition. The remaining grounds challenging the addition were not adjudicated.

Depreciation on goodwill arising on amalgamation - Deductibility of employee stock option reimbursement expenditure

Allowance of depreciation on goodwill arising from amalgamation of companies into the assessee - HELD THAT: - The claim had consistently been allowed in the assessee's own cases from assessment year 2008-09 onwards, including the immediately preceding years, and the Revenue showed no material change in facts. The decision relied upon by the Revenue concerning an artificial and colourable creation of goodwill was distinguishable, since no comparable finding existed in the present case. [Paras 11, 12, 13, 15, 16]

The deletion of the disallowance of depreciation on goodwill was upheld.

Deduction with respect to ESOP expenses -Deductibility of employee stock option reimbursement expenditure - Consistency in assessee's own case - Allowance of deduction for expenditure incurred towards employee stock options granted to the assessee's employees - HELD THAT: - The appellate authority had followed the Tribunal's decision in the assessee's own case for assessment year 2014-15, which had addressed the Revenue's objections concerning the business purpose, capital character and tax deduction at source of the ESOP expenditure. As the Revenue brought no distinguishing feature on record, that decision was followed. [Paras 18]

The deletion of the ESOP expenditure disallowance was upheld.

Final Conclusion: The Revenue's appeal was dismissed. The appellate order allowing depreciation on goodwill and deduction of ESOP expenditure was sustained.

Assessment pursuant to requisition under section 132A - Invalid reassessment after expiry of limitation for search assessment - Consequential penalty

Assessment pursuant to requisition under section 132A - Invalid reassessment after expiry of limitation for search assessment - Validity of reassessment proceedings initiated under sections 148A and 148 following a requisition under section 132A made before 1 April 2021 - HELD THAT: - At the time of the requisition, section 153A was the mandatory and exclusive procedure for assessment or reassessment pursuant to section 132A. The statutory limitation for initiating and completing that assessment had expired; the subsequently introduced provisions of sections 148A and 148 could not revive the Assessing Officer's lapsed power. The Explanation to section 148 was inapplicable, as it concerned searches or requisitions conducted on or after 1 April 2021. The objection under section 124(3) was irrelevant because the challenge concerned the impermissible procedure adopted, not the Assessing Officer's territorial jurisdiction. [Paras 5]

The proceedings under sections 148A and 148, including the notice issued under section 148, were held invalid and quashed, thereby vitiating the reassessment order.

Consequential penalty u/s 271(1)(c) upon the reassessment order - HELD THAT: - Since the reassessment proceedings and the reassessment order were quashed, the penalty founded on that order could not survive. [Paras 8]

The consequential penalty was deleted.

Final Conclusion: Both appeals were allowed. The reassessment was quashed as invalid, and the consequential penalty was deleted.

Separate addition on amounts already assessed substantively - Protective addition

Validity of reassessment notice - Assumption of reassessment jurisdiction - Validity of reassessment notices and consequential reassessments for Assessment Years 2017-18 and 2018-19 - HELD THAT: - The reassessment proceedings were initiated after recording reasons to believe and in accordance with the prescribed statutory procedure. No infirmity was found in the Assessing Officer's assumption of jurisdiction. [Paras 9]

The challenge to the reassessment notices and consequential reassessments was rejected.

Unexplained expenditure based on seized ledger entries - Duplicate substantive addition - Additions for alleged unexplained income and expenditure based on entries in the seized "Jitu Healthcare" ledger for Assessment Years 2017-18, 2018-19 and 2021-22. - HELD THAT: - The seized ledgers had been maintained by a family member, who owned the entire amounts recorded therein; those amounts had already been assessed and confirmed in that person's hands. As the same amounts stood substantively brought to tax there, no separate addition could be made in the assessee's hands. [Paras 11]

The additions in the assessee's hands were deleted, and the Revenue's challenge to deletion of the corresponding additions for Assessment Year 2021-22 was dismissed.

Protective addition consequent upon deletion of substantive addition - Protective additions in the case of the company where the corresponding substantive additions in the individual's case had been deleted - HELD THAT: - Since the substantive additions in the individual's case had been deleted on merits and that deletion was upheld, the protective additions could not survive. [Paras 14]

The deletion of the protective additions was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The reassessment jurisdiction was sustained, but the additions based on the seized ledger entries were deleted because the same amounts had already been substantively assessed in another person's hands. The Revenue's appeals, including that against deletion of protective additions, were dismissed.

Unexplained cash credits - Capital contribution by partners - addition in hands of partnership firm - Addition of cash capital contributed by partners as unexplained cash credits in the hands of the partnership firm

HELD THAT: - Following Nova Medicare Vs. Income Tax Officer [2023 (3) TMI 218 - TELANGANA HIGH COURT] Tribunal held that a partnership firm receiving capital contribution from its partners is not required to explain the partners' source of income for such contribution. Any unexplained credit is assessable, if at all, in the individual assessments of the partners and not in the firm's hands. [Paras 7]

The addition sustained towards the partners' cash capital contribution under section 68 was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition for cash capital introduced by the partners was deleted.

Revision of assessment u/s 263 - erroneous and prejudicial order - Revision of reassessment concerning alleged bogus purchases - Change of opinion in revisional jurisdiction

Validity of revision of the reassessment order on the ground that the AO had inadequately examined transactions treated as alleged bogus purchases- HELD THAT: - The reassessment had been reopened on information concerning the impugned transactions, and the Assessing Officer called for and considered details of purchases and sales before making an addition in respect of the alleged bogus purchases. The issue could therefore not be regarded as wholly unexamined. Where the Assessing Officer has made enquiries and adopted a possible view on the available material, revision cannot be founded merely on the revisional authority's preference for a different approach or further enquiry. The inconsistent direction to treat the transaction as sales while also considering the corresponding amount as bogus purchases did not establish a specific error causing prejudice to the Revenue. The Tribunal further noted the statutory limitation upon revision insofar as the overlapping subject matter was pending in appeal. [Paras 6]

As the assessment order was neither shown to be erroneous nor prejudicial to the interests of the Revenue, the revision order was set aside and the reassessment order was restored.

Final Conclusion: The assessee's appeal was allowed. The order revising the reassessment was set aside and the reassessment order was restored.

Taxation of anonymous donations received by charitable trusts - Anonymous donations not assessable as unexplained cash credits

Whether Anonymous donations received by a trust registered under section 12A and claiming exemption u/s 11, on which tax was paid under section 115BBC, could be treated as unexplained cash credits for want of donors' identity particulars? - HELD THAT: - Section 115BBC specifically governs anonymous donations received by eligible trusts and institutions. Since sub-section (3) does not require maintenance of records establishing the identity, name or address of anonymous donors, the absence of such particulars could not support assessment of those donations as unexplained cash credits under section 68. [Paras 7]

The addition as unexplained cash credits was deleted, and the Assessing Officer was directed to compute tax on the anonymous donations at the prescribed rate under section 115BBC.

Final Conclusion: The appeal was allowed. Anonymous donations of the registered trust were held taxable only in accordance with section 115BBC and not as unexplained cash credits.

Assessment based on third-party search material - Regular assessment u/s 143(3), instead of proceeding u/s 153C - Unexplained money - on-money receipt from sale of flat

Validity of an addition for alleged on-money received on sale of a flat, made u/s 143(3) on the basis of material found during search proceedings in the case of a third party - HELD THAT: - The addition was admittedly founded on information and documents arising from the search of the purchaser's group. Where material found in a third-party search is relied upon for assessing another person, the Assessing Officer must proceed under section 153C in accordance with its prescribed procedure, including recording satisfaction. An assessment under section 143(3) cannot sustain an addition founded on such third-party search material.

This legal principle is supported by the decision Md. Ahmed Ejaz in [2025 (3) TMI 1845 - ITAT VISAKHAPATNAM]. Similar view has been held in the case of PCIT Vs. VSL Mining Company (P.) Ltd. [2024 (9) TMI 1383 - KARNATAKA HIGH COURT] [Paras 7]

The addition under section 69A was deleted and the assessee's appeal was allowed.

Final Conclusion: The assessment under section 143(3), insofar as it rested on material found in a third-party search, could not sustain the addition. The impugned addition was deleted.

Customs Broker obligations and unauthorised use of another broker's credentials - Proportionality of revocation of Customs Broker licence

Customs Broker obligations and unauthorised use of another broker's credentials - Due diligence in clearance of prohibited goods - Whether a Customs Broker that undertook clearance-related activities using another Customs Broker's credentials, without authorisation from the importer in its own name, contravened its statutory obligations in relation to goods prohibited from import. - HELD THAT: - Consent or a mutual understanding with the licence-holder did not entitle the Appellant to perform Customs Broker functions under another broker's credentials. Having actually undertaken the transaction, the Appellant was bound by the obligations under the CBLR to obtain proper authorisation, advise the importer on applicable import restrictions, report non-compliance to Customs authorities, and maintain and produce transaction records. The relief granted to the other Customs Broker in separate proceedings could not efface the Appellant's independently established conduct. [Paras 28, 29, 30, 31, 32]

The findings of contravention of Regulations 10(a), 10(d), 10(e), 10(f) and 10(k) of the CBLR were sustained.

Proportionality of revocation of Customs Broker licence - Whether revocation of the Customs Broker licence, forfeiture of security deposit and penalty were disproportionate despite absence of prior violations and the period of suspension. - HELD THAT: - While revocation must bear a reasonable relationship to the gravity of the violation, the Appellant's conscious use of another broker's credentials concealed the identity of the broker actually handling a transaction involving prohibited goods and undermined the regulatory framework. The violations were substantive rather than technical, and interim suspension could not substitute the final consequence following adjudicated violations. [Paras 35, 36, 37, 38, 39]

The revocation, forfeiture of security deposit and penalty were not shockingly or manifestly disproportionate and warranted no interference.

Final Conclusion: No substantial question of law arose. The appeal was dismissed, and the revocation of the Customs Broker licence with consequential forfeiture and penalty was upheld.

Rejection of declared export transaction value for alleged overvaluation - Dual penalty on partnership firm and partner for same infraction

Rejection of declared export transaction value for alleged overvaluation - Redemption fine for exported goods - Rejection of the declared value of Gate/Door Leaves and Gate/Door Wheels exported under the disputed shipping bill on the basis of parallel invoices relating to other consignments - HELD THAT: - The parallel/pro-forma invoices relied on did not concern the disputed consignment and had no nexus with it. The Department neither established contemporaneous export prices of identical goods nor conducted market inquiry, and there was no evidence of financial flow-back from the foreign buyer. The declared transaction value could not therefore be discarded on extraneous invoices without contemporaneous data or cogent proof of manipulation. [Paras 7, 11]

The charge of overvaluation failed; consequently, the redemption fine was set aside as the goods had been exported and were unavailable for confiscation.

Dual penalty on partnership firm and partner for same infraction - Penalty for attempted export overvaluation - Sustainability of penalties on the partnership firm and its partner for the same alleged export overvaluation - HELD THAT: - A partnership firm is not a legal entity distinct from its partners for this purpose; penalty on both the firm and its partner for the same infraction would amount to impermissible double punishment. Although the evidence did not establish overvaluation of the disputed consignment, the record showed generation of parallel/pro-forma invoices in the past. This justified retention of the original penalty on the firm, but not the enhanced penalties imposed under Section 114AA.

We place reliance upon the judgment of Vinod Kumar Gupta [2012 (5) TMI 173 - PUNJAB AND HARYANA HIGH COURT] wherein the Hon’ble High Court held that a partnership firm is not a distinct legal entity separate from its partners under the law, and once the firm has already been penalized then imposing a separate penalty on the partner for the same infraction amounts to double jeopardy and is legally impermissible.[Paras 8, 9, 10]

The original penalty on the firm under Section 114 was upheld, while the enhanced penalty under Section 114AA on the firm and all penalties on the partner were set aside.

Final Conclusion: The appeal of the firm was partly allowed by retaining only the original penalty under Section 114, while its enhanced penalty and the redemption fine were set aside. The partner's appeal was allowed and all penalties imposed on the partner were deleted.

Overvaluation of export goods and rejection of declared FOB value - Drawback claims based on declared export value

Sustainability of rejection of declared FOB value, denial of drawback and penalties in respect of readymade garments exported under 63 shipping bills, where the proceedings rested entirely on an investigation relating to separate shipping bills - HELD THAT: - The earlier decision concerning the investigation into the March 2017 exports had held that the declared FOB value could not be rejected where export remittances equivalent to that value had been received and the departmental costing material did not establish overvaluation.

Since no independent enquiry was undertaken for the 63 shipping bills and the present proceedings rested solely on that same investigation, the basis of the impugned demand did not survive. [Paras 19]

The demand, rejection of FOB value and penalties were held legally unsustainable; the impugned order was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The appeal was allowed because the proceedings concerning the subject exports were founded exclusively on an investigation whose basis had already been rejected in the earlier inter-parties decision.

Supplementary show cause notice - impermissible fresh grounds and breach of natural justice - Preferential customs exemption - authenticity of certificates of origin - Tariff classification of decorative stainless steel wall panels and profiles - Rejection of transaction value - evidentiary burden - Penalty for misdeclaration and undervaluation - suppression not established

Supplementary show cause notice - Principles of natural justice - Validity of the supplementary show cause notice and corrigenda introducing denial of preferential exemption, rejection of declared value and an enhanced duty demand - HELD THAT: - A supplementary notice must remain within the permissible scope of the original notice and be issued within the prescribed limitation. The supplementary notice introduced fresh substantive grounds not contained in the original notice, while the corrigenda were issued immediately before adjudication without adequate opportunity to the appellant. [Paras 10]

The supplementary notice and corrigenda were held void ab initio, and the demand, interest and penalties founded on the fresh proposals were set aside for limitation and breach of natural justice.

Certificates of origin - Preferential customs exemption - Entitlement to preferential exemption for stainless steel goods imported from Malaysia on the basis of certificates of origin - HELD THAT: - The sole certificate reported as unauthentic did not correspond with the certificate actually submitted for the relevant import; the discrepancy resulted from an erroneous recording of its number. There was no independent evidence that the remaining certificates were unauthentic, nor had the issuing authority cancelled or revoked them. Certificates authenticated at import and accepted upon verification could not be rejected merely on a later communication lacking particulars of any contravention. [Paras 12]

The certificates of origin were held authentic and acceptable, and the appellant was held entitled to the claimed preferential exemption for all consignments.

Classification of decorative stainless steel wall panels and profiles - Burden of proof for reclassification - Classification of decorative and design stainless steel wall-panel sheets and profiles-whether classifiable as articles of stainless steel under CTH 7326 or as cold-rolled stainless steel products under CTH 7219 - HELD THAT: - The imported PVD-coated goods had undergone further working and had acquired the character of decorative wall-panel articles and profiles rather than mere flat-rolled sheets. As no representative samples were drawn, no test report or technical expert evidence was produced, and the retracted statements could not be relied upon without compliance with the statutory safeguards, the Revenue failed to discharge its burden to establish reclassification. [Paras 13]

The Revenue's proposed classification under CTH 7219 was rejected, and the goods were held classifiable under CTH 73269060 as declared.

Transaction value of imported goods - Customs valuation - Validity of rejection of the declared transaction value and enhancement based on contemporary imports - HELD THAT: - The adjudicating authority did not follow the prescribed valuation procedure and there was no evidence that the appellant paid any amount over and above the declared invoice prices. In the absence of documentary evidence justifying rejection of transaction value, enhancement of value was unsustainable. [Paras 14]

The declared transaction value was accepted and the enhanced value was set aside.

Penalty for misdeclaration and undervaluation - Suppression with intent to evade duty - Imposition of penalties for alleged misdeclaration and undervaluation of the imported goods - HELD THAT: - The findings of misdeclaration and undervaluation did not survive. Consequently, suppression of facts with intent to evade duty was not established. [Paras 15]

The penalties imposed on the appellant were set aside.

Final Conclusion: The appeal was disposed of in favour of the appellant. The demand, valuation enhancement, reclassification, denial of preferential exemption and penalties were held unsustainable.

DGFT clarification binding on Customs in respect of ITC restrictions - Ship stores forming part of vessel during coastal run

Applicability of DGFT import restrictions to duty-paid ship stores consumed by the crew while vessels are converted from foreign run to coastal run - HELD THAT: - A clarification issued by the DGFT is binding on Customs in relation to ITC restrictions.

Following the Tribunal's earlier decision in A.G. Enterprise[2014 (8) TMI 44 - CESTAT AHMEDABAD] ship stores accompanying a vessel and meant for crew consumption during coastal run were held to be part of the vessel rather than normal imports; consequently, DGFT restrictions did not apply. [Paras 5]

The demand, confiscation, fine and penalty sustained by the impugned order were set aside and the appeals were allowed.

Final Conclusion: The impugned appellate order was set aside and all the appeals were allowed with consequential relief.

Conditional assent to a scheme of compromise and arrangement - Judicial scrutiny of revival schemes

Conditional votes cast for a revival scheme - Statutory safeguards for sanction of a scheme of arrangement - Sanction of the Revival Scheme despite votes cast "for, with modification" and without examination of the modifications, individual objections and adequacy of disclosure to stakeholders - HELD THAT: - The statutory majority required for sanction must have assented to the arrangement ultimately placed before the Court. Votes cast subject to substantive modifications affecting the allottees' contractual and financial rights could not be aggregated with unconditional votes as unqualified approval without determining the legal effect of the attached conditions. Commercial wisdom of the majority applies only after statutory assent, informed decision-making and fairness to the class as a whole have been established. The learned Single Judge also did not substantively examine the individual allottees' objections or whether sufficient material had been furnished to enable an informed decision. [Paras 38, 52, 57, 62, 76]

The sanction order was set aside and the matter remanded for fresh consideration of the legal effect of conditional votes, the attached modifications, objections of stakeholders and compliance with the statutory procedure, including fresh meetings where required.

Final Conclusion: The appeals were allowed and the order sanctioning the Revival Scheme was set aside. The matter was remanded for fresh consideration in accordance with the statutory safeguards governing schemes of compromise and arrangement.

Fraudulent misrepresentation of financial statements - Genuineness of real-estate bulk-sale memoranda - Statutory definition of associate company prevailing over accounting standards - Related-party transaction disclosures - Inordinate delay in securities-enforcement proceedings

Fraudulent misrepresentation of financial statements - Genuineness of real-estate bulk-sale memoranda - Lifting ofCorporate veil - Alleged fraudulent scheme to inflate the listed developer's real-estate revenue and profits through bulk-sale memoranda with a group company - HELD THAT: - The majority held that the real-estate projects and ultimate sales were genuine and that the evidence did not establish that the memoranda were sham or non-genuine. Similar arrangements had been entered into with unrelated parties; the trader had previously sold flats under comparable arrangements; and its common office, personnel, directors, or weak net worth did not, without more, establish illegality.

Differences in the accounting treatment of a developer and a real-estate trader did not warrant an inference that the memoranda were fictitious. Nor was the shareholding reduction a device to evade a subsequently enacted statutory requirement; the veil was lifted without findings establishing control and impropriety.

The majority further found no evidence of market-price impact, promoter offloading, or unlawful gain. The dissenting Presiding Officer held that the group company's cross-holdings, financial incapacity, funding arrangements, refunds and deferred payments demonstrated that it was an extended arm of the developer and that the memoranda were non-genuine arrangements used to book artificial revenue and profits. [Paras 43, 44, 46, 48, 50]

By the majority view, the alleged fraudulent scheme and violation of the PFUTP Regulations were not established; the dissent would have sustained the violations.

Consolidation of financial statements of an associate company - Statutory provisions and accounting standards - Requirement to consolidate the financial statements of the group company as an associate of the listed developer - HELD THAT: - The majority held that the express statutory definition of significant influence under the Companies Act governed the determination of associate status. Since the listed developer held less than the prescribed voting threshold and no agreement establishing control of or participation in the group company's business decisions was shown, the group company was not an associate. Accounting Standards, being subordinate norms, could supplement but could not supplant or override the statute; their illustrative indicators could not displace the statutory definition. The dissent considered the alleged artificial revenue recognition sufficient to sustain the violations and found it unnecessary to examine the accounting-standard contentions further. [Paras 13, 49, 50]

By the majority view, consolidation of the group company's financial statements was not required; the dissent would have dismissed the challenge to the findings.

Related-party transaction disclosures - Significant influence - Related-party status of the group company for FY 2014-15 to FY 2016-17 and consequential disclosure liability - HELD THAT: - The majority found that the materiality of transactions alone did not demonstrate control or significant influence over the financial or operating decisions of the group company. As it was neither an associate under the Companies Act nor a related party under the statutory definition adopted by the LODR Regulations, it could not be treated as a related party for the relevant financial years. Conflicting accounting-standard criteria could not prevail over the express statutory provisions. The dissent's view that the underlying financial misstatements and violations stood established would have sustained the consequential liability. [Paras 15, 55]

By the majority view, the group company was not a related party for FY 2014-15 to FY 2016-17 and the related disclosure contravention failed; the dissent would have upheld the penalties.

Inordinate delay in initiation of securities-enforcement proceedings - Validity of enforcement action initiated years after the disclosed transactions and shareholding reduction - HELD THAT: - The majority held that the regulator had been in possession of the relevant quarterly and annual disclosures since the material events, yet initiated action only after a prolonged interval upon receipt of a complaint. The contention that the violation was single and continuous was rejected because the shareholding reduction and execution of the memoranda had concluded by March 2014 and no subsequent chargeable act was identified. No reasonable cause for the delay was shown. [Paras 16]

The majority held that the proceedings had been initiated after inordinate delay without reasonable cause.

Final Conclusion: By majority, the appeals were allowed, the impugned orders and penalties were set aside, and any penalty paid was directed to be refunded. The intervention application was dismissed; the Presiding Officer dissented and would have dismissed the appeals.

Benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - one-day delay reflected in the payment record - Manual processing of SVLDRS declaration

HELD THAT: - Following the jurisdictional High Court decisions in RR Housing (India) Pvt. Ltd. [2023 (11) TMI 900 - MADRAS HIGH COURT] and SSGN Engineering Services Pvt. Ltd. [2024 (10) TMI 1742 - MADRAS HIGH COURT] Tribunal held that the benefit of the Scheme could not be denied merely because the Commissionerate's report reflected a one-day delay in payment. The matter was procedural and, consistently with Aurofood Pvt. Ltd. [2024 (5) TMI 66 - CESTAT CHENNAI] required manual examination and processing of the declaration. [Paras 6, 8]

The Commissioner was directed to manually examine and process the appellant's request for issuance of the discharge certificate within four weeks of receipt of the order.

Final Conclusion: The appeal was disposed of with a direction for manual processing of the appellant's SVLDRS request and issuance of the discharge certificate in accordance with law.

Classification of Outdoor catering service-on-board pantry car operations - Extended period of limitation - suppression of facts and intent to evade service tax

Classification of food and beverage supplies by an IRCTC pantry-car licensee as outdoor catering service or as mere sales liable to VAT - HELD THAT: - The Member (Technical) held that the licence embodied a commercial catering arrangement under which the appellant performed IRCTC's catering obligation, subject to prescribed standards concerning menu, quality, pricing, staffing and passenger service. The dominant character of the arrangement was held to be catering service, with the supply of food being incidental; payment of VAT did not exclude service tax on the service aspect. The Member (Judicial), however, held that the show cause notice and adjudication order had not established the precise taxable service, its recipient, the consideration attributable to it, or the relevant contractual terms. A subsequent Railway Board circular could not supply the missing statutory and factual foundation, and the demand was therefore unsustainable on merits. [Paras 55, 56, 60, 61, 69]

The Members reached opposite conclusions: the Member (Technical) sustained classification as outdoor catering service, whereas the Member (Judicial) held that taxability had not been established on the material forming part of the proceedings.

Extended period of limitation-suppression of facts and intent to evade service tax - Validity of invocation of the extended limitation period for non-payment and non-disclosure of service tax on the on-board catering activity - HELD THAT: - The Member (Technical) held that the appellant had not demonstrated any contemporaneous legal ambiguity or bona fide basis for stopping payment of tax, and that non-payment coupled with non-disclosure in returns amounted to suppression justifying the extended period. The Member (Judicial) held that the appellant had disclosed the nature of its activity and its legal position in departmental correspondence, furnished particulars sought during enquiry, and that the demand itself was quantified from those disclosures. Mere non-payment or a classification dispute, without deliberate suppression accompanied by intent to evade, could not attract the extended period; nor had Revenue shown that any part of the demand survived within the normal period. [Paras 36, 38, 39, 44, 45]

The Member (Technical) upheld invocation of the extended period and the consequential demand and penalties; the Member (Judicial) held the demand barred by limitation.

Final Conclusion: The Division Bench recorded a difference of opinion on both taxability and limitation. The matter was directed to be placed before the President for determination by a Third Member; no final majority outcome was rendered.

Service tax on corporate guarantees - Consideration as an essential element of taxable service - Notional valuation of services

Levy of service tax on corporate guarantees issued for subsidiaries and associate entities without charging commission or interest - HELD THAT: - A taxable service requires a provider, recipient, taxable service and consideration. Where no consideration is received for issuing corporate guarantees, no service tax can be levied; non-monetary benefits relevant to valuation cannot establish the prior requirement of consideration for a taxable service. The established decisions on corporate guarantees, which exclude imposition of a notional value where consideration is absent, governed the dispute. The Revenue's relied-upon decision was held inapplicable on the facts. [Paras 6, 7, 8, 10, 11]

The demands, interest and penalties founded on the corporate guarantees were set aside, and both appeals were allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal held that corporate guarantees issued without consideration were not liable to service tax and set aside both impugned orders with consequential relief.

Service tax on sharing of rent for residential premises - Renting of immovable property service - amounts received by the appellant as its share of rent from associate entities for residential premises used by their common employees/directors

Liability to service tax on amounts received as a share of rent from associate entities for residential premises used by common employees and directors - HELD THAT: - The appellant was neither the owner of the premises nor shown to have sublet them to its associate entities. The material established that the premises were residential, taken on lease or rent from landlords, and used for residential purposes; the associate entities merely shared the rent.

Tribunal in the case of M/s Haldiram Marketing Pvt. Ltd. [2023 (2) TMI 783 - CESTAT NEW DELHI] and also in the case of M/s Historic Resort Hotels (Pvt.) Ltd. [2017 (9) TMI 1066 - CESTAT NEW DELHI] has held that sharing of rent is not liable to service tax and in the present case it is merely the sharing of the rent between the appellant and its associate entities and purely used for residential purposes and nothing has been brought by the Department on record that the disputed properties have been used for Commerce or Business; therefore, in the absence of use of the residential property for commerce or business, we are of the opinion that no tax can be demanded on the amount received by the appellant.

We find that the levy itself was in dispute and it was held ultravires in the case of M/s Home Solutions Retail India Ltd. [2009 (4) TMI 14 - DELHI HIGH COURT] and subsequent amendment was made and was applicable retrospective date but the issue is still pending, therefore, the appellant is justified to have bonafied belief that no tax is payable on the same.

As the Department produced no material showing use of the premises for commerce or business, the arrangement was only sharing of residential rent and did not attract service tax under renting of immovable property service. [Paras 6, 7]

The service-tax demand on the shared rent was held unsustainable and was set aside.

Final Conclusion: The appeal was allowed on merits and the demand of service tax on rent shared for residential premises was set aside.

Service tax on corporate guarantees without consideration - Notional consideration for taxable services

Leviability of service tax on corporate guarantees extended to associated enterprises without consideration - HELD THAT: - Service tax is chargeable on consideration received for rendering a taxable service. Where no commission, fee or other consideration was received for extending corporate guarantees, a notional amount based on prevailing bank-guarantee rates could not constitute taxable consideration. The Revenue precedent concerning a corporate guarantee for which consideration was paid was inapplicable. [Paras 6, 8]

The dropping of the demand of service tax on the corporate guarantees was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The appeal of the Revenue was dismissed, affirming the order dropping the demand on corporate guarantees provided without consideration. The cross-objection was disposed of accordingly.

Service tax on sale of plots - Pre-notice payment of service tax and interest - Penalty under Section 78

Service tax on sale of plots - Sale of immovable property - Service taxability of amounts received as advances towards sale of villa plots and returned to buyers - HELD THAT: - The amounts were received against sale of plots and were returned owing to non-viability of construction of residential towers. Since they were not consideration for taxable services, no service tax was payable. Independently, amounts received in connection with sale of immovable property were excluded from service tax under Section 65B(44)(a)(i) of the Finance Act, 1994. [Paras 12]

The service tax demand relating to the plot-sale receipts was set aside.

Pre-notice payment of service tax and interest - Penalty for construction of residential complex service - Penalty on service tax paid with interest before issuance of the show cause notice for construction of residential complex service - HELD THAT: - The Department had admitted that service tax and interest on the receipts for construction of residential flats had been paid before issuance of the show cause notice. Under Section 73 of the Finance Act, 1994, where the payable service tax and interest are paid before issue of notice, no notice is required for recovery; consequently, the penalty imposed in relation to that liability was unsustainable. [Paras 13]

The tax and interest already paid were confirmed, but the penalty was set aside.

Final Conclusion: The appeal was disposed of by setting aside the demand on plot-sale receipts and the penalty on the liability already discharged with interest before issuance of the show cause notice.

Finality of discharge certificate under Sabka Vishwas (Legacy Dispute Resolution) Scheme - Extended limitation where prior show cause notices disclose departmental knowledge

Maintainability of the Departmental appeal after issuance of a discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT: - A discharge certificate, issued after acceptance of the declaration and payment of the amount determined under the Scheme, is conclusive as to the matter and period covered. The statutory bar against reopening proceedings gives full and final quietus to the tax dispute, save for exceptions specifically provided by the statute. Continuation of the Departmental appeal concerning the settled matter would defeat the object of the Scheme. [Paras 16, 17, 18, 22, 23]

The Departmental appeal was not maintainable and was dismissed.

Extended limitation where prior show cause notices disclose departmental knowledge - Invocation of the extended period in the fifth show cause notice concerning service tax on insurance coverage charges collected from customers - HELD THAT: - Where earlier show cause notices on substantially identical facts had already been adjudicated, the Department was aware of the assessee's accounting method, collection of insurance charges and service tax position. Such prior knowledge negated suppression of facts and precluded invocation of the extended period. [Paras 19, 20, 21]

The restriction of the demand to the normal period and dropping of the demand for the extended period were upheld.

Final Conclusion: The discharge certificate under the Scheme conclusively settled the dispute and barred continuation of the Departmental appeal. Independently, the extended-period demand was unsustainable because the Department had prior knowledge through earlier notices on identical facts.

Service-tax demand on composite construction contracts under construction of complex service - Taxability of construction services after introduction of negative-list regime - Extended limitation for suppression of service tax liability - Penalty for non-payment of service tax and delayed returns

Composite construction contracts - Construction of complex service - Works contract service - Service tax demand under construction of complex and commercial or industrial construction services on composite agreements for sale of residential flats for the period before 01.07.2012 - HELD THAT: - The agreements involved construction-linked payments for flats and were composite contracts involving transfer of property in goods. Applying the principle stated in Larsen & Toubro Ltd. [2015 (3) TMI 748 - CESTAT NEW DELHI (LB)] the Tribunal held that a composite contract could not be subjected to service tax under construction of complex or commercial or industrial construction service as a service simpliciter. [Paras 12]

The demand for the period before 01.07.2012 was set aside.

Declared service relating to construction of residential complexes - Works contract service after 01.07.2012 - Service tax liability on construction-linked receipts from flat buyers for the period from July 2012 to March 2015 - HELD THAT: - After introduction of the negative-list regime, the classification of the activity as composite service or service simpliciter was immaterial where the activity was neither in the negative list nor exempt. Construction undertaken by the developer under contracts with flat buyers before issuance of a completion certificate constituted works contract service, and the construction activity was specifically taxable as a declared service. As no valid completion certificate was produced, the appellant remained liable to pay service tax on the impugned activity. [Paras 14]

The service tax demand for the period from July 2012 to March 2015 was upheld.

Extended limitation for suppression of service tax liability - Penalty for non-payment of service tax and delayed returns - Invocation of the extended limitation period and imposition of penalties for failure to obtain registration, deposit collected service tax and file returns within time - HELD THAT: - The appellant was aware of its service tax liability, collected service tax from flat buyers, but did not obtain registration until investigation commenced and did not deposit the tax collected. These facts established suppression of material facts with intent to evade payment of tax, justifying invocation of the extended period. The deliberate default also warranted penalties on the company and the concerned officers, including penalty for delayed filing of returns and non-payment of late fee. [Paras 5, 6, 14]

The extended period of limitation and the penalties for the surviving demand were upheld; the appeals of the company officers were dismissed.

Final Conclusion: The company's appeal was partly allowed by setting aside the demand before 01.07.2012. The demand thereafter, along with the extended limitation and penalties, was sustained, and the appeals of the company officers were dismissed.

Works contract service - transfer of property in goods under the same contract - Service simpliciter for erection, commissioning and installation - Valuation-free supplies by service recipient

Works contract service - transfer of property in goods under the same contract - Service simpliciter for erection, commissioning and installation - Classification of the separately executed erection, commissioning and installation contract, where the supply of goods was governed by another contract and materials were supplied free by the recipient - HELD THAT: - A works contract requires transfer of property in goods in execution of the contract itself. The appellant produced no evidence of transfer of materials while performing the service contract; payment of works contract tax did not establish payment of VAT in respect of that separate service contract. The separate supply contract could not be treated as part of the service contract, and free supplies by the recipient did not constitute the requisite transfer of property. [Paras 5, 6]

The second contract was held to be a service simpliciter contract for erection, commissioning and installation, and not a composite works contract; consequently, works-contract abatement was unavailable.

Valuation-free supplies by service recipient - Inclusion of the value of materials supplied free of cost by the service recipient in the assessable value of the erection, commissioning and installation service - HELD THAT: - Free materials supplied by the service recipient neither establish transfer of property in goods by the service provider nor form part of the assessable value. [Paras 5, 6]

The impugned order was upheld except insofar as it included, if any, the value of free supplies.

Final Conclusion: The appeal was dismissed, with the impugned order sustained subject to exclusion of the value of free supplies, if any, from the assessable value.

Intermediary services - Place of provision of consultancy services - concept of an 'Intermediary'

Whether Consultancy and guidance rendered to a foreign client for its dealings with Indian Railways were not intermediary services? - HELD THAT: - The agreement required the respondent to advise and guide the foreign client in relation to its business in India. The respondent neither had a contractual relationship with Indian Railways nor acted as a go-between arranging or facilitating a supply between the foreign client and Indian Railways. Intermediary service requires three parties, with the intermediary performing a subsidiary role of arranging or facilitating the main supply; advisory or consultancy supplied on the provider's own account to its client remains a two-party service.

See M/S. CUBE HIGHWAYS AND TRANSPORTATION ASSETS ADVISOR PRIVATE LIMITED [2023 (8) TMI 980 - DELHI HIGH COURT] wherein held implicit in the concept of an 'Intermediary' that there are three parties, namely, the supplier of principal service; the recipient of the principal service and an intermediary facilitating or arranging the said supply. Where a party renders advisory or consultancy services on its own account and does not merely arrange it from another supplier or facilitate such supply, there are only two entities, namely, service provider and the service recipient. In such a case, rendering of consultancy services cannot be considered as 'Intermediary Services' or services as an 'Intermediary'. [Paras 9, 10]

The respondent did not render intermediary services; consequently, the proceedings seeking service tax, interest and penalties were correctly dropped.

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

Exemption for outdoor catering services-substantial and satisfying meal - Composite catering contracts-service tax on sale and service components - Extended limitation-suppression in interpretational disputes

Exemption for outdoor catering services-substantial and satisfying meal - Eligibility of organised pantry and catering services supplying beverages, sandwiches and refreshments for the exemption available to outdoor caterers - HELD THAT: - The notification neither confines a substantial and satisfying meal to lunch or dinner nor prescribes quantitative or qualitative standards. The expression must receive its ordinary commercial meaning in the context of the catering arrangement as a whole; the Department could not deny the exemption by isolating individual menu items. The vending-machine decision relied on by the Department concerned a materially different contractual arrangement and did not determine the scope of the exemption condition. [Paras 12, 14, 15, 16, 17]

The exemption could not be denied merely because beverages and light refreshments formed part of the catering menu.

Composite catering contracts-taxable service component - Levy of service tax on the entire consideration under composite catering contracts where VAT had been paid on the food and beverages supplied - HELD THAT: - A composite contract may contain sale and service elements taxable in their respective fields. Once transfer of property in food and beverages attracting VAT was accepted, the Department was required to identify the taxable service component with reference to the contractual terms and valuation provisions. The demand, having been raised without undertaking that exercise, rested on assumption rather than a proper determination of taxable value. [Paras 20, 21, 22, 23, 24]

The demand could not be sustained without excluding the value attributable to the sale component and determining the taxable service component.

Extended limitation - interpretational dispute without suppression - Invocation of the extended period for a demand concerning the appellant's claimed catering-service exemption, and the consequential interest and penalties - HELD THAT: - The appellant was registered, filed returns, paid tax after availing the exemption, and maintained agreements, invoices and VAT records that formed the basis of the proceedings. The dispute arose solely from competing interpretations of the exemption condition, with all primary facts available to the Department. Mere rejection of the appellant's legal interpretation did not establish suppression or wilful misstatement with intent to evade tax, and the extended period was consequently unavailable. [Paras 26, 27, 28, 29, 30]

The entire demand was barred by the normal limitation period; the consequential interest and penalties could not survive.

Final Conclusion: The impugned order was set aside and the appeal allowed. The exemption was held available, the demand was unsustainable on merits and was in any event barred by limitation, with consequential interest and penalties also set aside.

Classification of composite works contracts after introduction of Works Contract Service - Reconciliation of service-tax payments and reasoned adjudication - Extended limitation for suppression of facts

Classification of composite works contracts after introduction of Works Contract Service - Re-quantification of service-tax liability - Validity of the demand on composite contracts involving supply of materials and labour, following their examination under Works Contract Service after 01.06.2007 - HELD THAT: - Composite indivisible works contracts after introduction of the specific taxable entry for Works Contract Service could not be assessed under the pre-existing entry for Erection, Commissioning or Installation Service. Although the de novo authority recognised the revised classification, it failed to reconcile taxable value and tax payments with the books of account, challans, CENVAT records and other contemporaneous material, or to disclose the basis of the surviving quantified demand. Reclassification without corresponding re-quantification in accordance with the applicable statutory provisions did not fulfil the remand directions. [Paras 12, 13, 14, 15, 16]

The demand relating to Erection, Commissioning or Installation Service/Works Contract Service was held unsustainable.

Reconciliation of GTA service-tax payments under reverse charge - Appropriation of tax payments and CENVAT credit - Validity of quantification of service tax on Goods Transport Agency service where the assessee claimed prior discharge through cash payments and CENVAT credit - HELD THAT: - Though liability under the reverse-charge mechanism was not disputed, the departmental computation based on differences between balance-sheet figures and ST-3 returns required reconciliation with the assessee's explanation and supporting records. The de novo order neither identified payments accepted or rejected nor gave reasons for the appropriations and balance allegedly recoverable. A general assertion of verification could not substitute the specific reconciliation mandated by the earlier remand order. [Paras 19, 20, 21, 22, 23]

The quantified demand under Goods Transport Agency service was held unsustainable.

Extended limitation for suppression of facts - Consequential interest and penalties - Availability of the extended period for service-tax demand arising from classification, reconciliation of accounts and admissibility of CENVAT credit - HELD THAT: - The proceedings arose from scrutiny of balance sheets, books of account and ST-3 returns, while the dispute concerned classification and reconciliation of disclosed records. In the absence of independent evidence of deliberate suppression, parallel accounts or unaccounted receipts, audit discrepancies alone could not establish fraud, wilful misstatement or suppression with intent to evade tax. The extended period was therefore unavailable. [Paras 25, 26, 27]

The demand beyond the normal period was barred by limitation, and the consequential interest and penalties could not survive.

Final Conclusion: The impugned order affirming the de novo adjudication was set aside and the appeal was allowed with consequential relief.

Small service provider exemption under Notification No. 33/2012-ST dated 20.06.2012 - Proof of preceding financial year's aggregate taxable turnover - Form 26AS as evidence of taxable turnover -

HELD THAT: - The case was founded on payments reflected in Form 26AS, and no material established that the appellant had rendered taxable services during FY 2012-2013. In the absence of other documentary evidence, Form 26AS for that year was a reasonable basis for determining the appellant's turnover.

As no preceding-year turnover was on record and the admitted value of taxable services in FY 2013-2014 was below the prescribed threshold, the conditions for exemption under Notification No. 33/2012-ST stood satisfied. [Paras 8, 9]

The appellant was held entitled to the exemption; consequently, the service-tax demand, interest and penalties were set aside.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Pre-deposit requirement in second-round appellate proceedings - Prospective applicability of mandatory pre-deposit

Rejection of the appeal for non-compliance with pre-deposit where the original appeal had been filed before introduction of the mandatory pre-deposit requirement and the matter was in its second round before the appellate authorities - HELD THAT: - The mandatory pre-deposit requirement was inapplicable because the original appeal had been filed before the specified date. Further, the appellant had already made the pre-deposit required in the first round, and the proceedings had returned for fresh adjudication pursuant to the earlier remand. The Commissioner (Appeals) could not reject the appeal again by revisiting pre-deposit. [Paras 7, 8, 9]

The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) for decision on merits without further examination of pre-deposit.

Final Conclusion: The appeal was allowed by way of remand. The Commissioner (Appeals) was directed to decide the appeal on merits without requiring any further pre-deposit.

Assessable value of body-built motor vehicles manufactured on job work - Extended limitation for wilful suppression under Central Excise law - Supreme Court appellate jurisdiction in valuation disputes

Supreme Court appellate jurisdiction in valuation disputes - Maintainability of the appeals before the Supreme Court where invocation of the extended limitation period arose from alleged undervaluation of body-built motor vehicles - HELD THAT: - Though the dispute concerned limitation, it was inextricably linked with the value of goods for assessment, since the alleged suppression related to valuation of the body-built vehicle. The valuation issue formed the core of the show cause notice; hence, the appeals were entertained under Section 35L rather than relegated to the jurisdictional High Court. [Paras 4]

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

Assessable value of body-built motor vehicles manufactured on job work - Inclusion of Rule 8 valuation margin in job-work assessable value - Assessable value of a body-built motor vehicle cleared by a job worker where the chassis supplied by the manufacturer had been valued at 110% of its manufacturing cost under Rule 8 of the Valuation Rules - HELD THAT: - The value of the chassis for which duty had been paid by the manufacturer included the additional 10% prescribed under Rule 8. On clearance of the completed vehicle by the job worker on a deemed sale basis, that component necessarily formed part of the cost of the vehicle, together with the job worker's material cost, expenses and profit. The manufacturer's anticipated profit on subsequent sale of the completed vehicle and post-receipt expenses remained excluded. The governing principle in M/s Ujagar Prints and Others (III) [1989 (1) TMI 124 - SUPREME COURT] applied directly; the issue was not unsettled. [Paras 11, 12]

The assessee was liable to include the additional 10% comprised in the chassis valuation while determining the assessable value of the body-built motor vehicle.

Extended limitation for wilful suppression under Central Excise law - Departmental knowledge of material facts - Invocation of the extended limitation period for non-inclusion of the additional 10% in the assessable value of body-built motor vehicles - HELD THAT: - Fraud, collusion, wilful misstatement, wilful suppression or contravention with intent to evade duty is necessary for invoking the proviso to Section 11A. Where the manufacturer had cleared the chassis at 110% of manufacturing cost and that fact was known to the Department, non-inclusion of the additional component by the job worker could not constitute wilful suppression. The Department ought to have proceeded within the ordinary limitation period. [Paras 14, 15, 16, 17]

The extended period was unavailable; the show cause notice having been issued beyond the one-year period was time-barred, and the orders sustaining the demand and penalty were set aside.

Final Conclusion: While affirming the assessee's substantive valuation liability, the Court held the demand barred by limitation because the Department knew the material valuation facts and could not invoke the extended period. The appeals were allowed and the orders sustaining the demand and penalty were set aside.

CENVAT credit on structural steel used in manufacture of capital goods - Extended limitation for CENVAT credit demand

CENVAT credit on structural steel used in manufacture of capital goods - CENVAT credit on welding electrodes and oxygen - Eligibility to CENVAT credit on MS channels, angles and other structural materials, welding electrodes and oxygen used for manufacture and maintenance of capital goods and machinery within the factory - HELD THAT: - The Chartered Engineer's certificate established that the disputed goods were used within the factory for manufacture of capital goods and machines. Materials used in fabrication of machinery and capital goods are not denied credit merely because structural items are involved; the exclusion applies where such goods are used for construction of factory buildings, foundations or support structures. [Paras 10, 13]

The confirmed demand was set aside on merits and the appeal was allowed.

Extended limitation for CENVAT credit demand - Bona fide belief on admissibility of CENVAT credit - Validity of the extended period for recovery of CENVAT credit disclosed in statutory records and ER-1 returns - HELD THAT: - As the credits were recorded in RG23A Part I and Part II and disclosed through ER-1 returns, and the admissibility of such credit was subject to differing judicial interpretations, the appellant's belief in eligibility was bona fide. There was no suppression warranting invocation of the extended period. [Paras 14, 15]

The demand was independently held time-barred and the impugned order was set aside.

Final Conclusion: The appeal was allowed, the demand having been held unsustainable both on merits and as barred by limitation, with consequential relief in accordance with law.

Manual processing of SVLDRS declaration - Issuance of SVLDRS discharge certificate

Issuance of discharge certificate under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, where payment declared as payable had been remitted but Form SVLDRS-4 had not been issued - HELD THAT: - The Tribunal found from Forms SVLDRS-1 and SVLDRS-3 and the bank statement that the differential duty stood remitted, which was undisputed by the Revenue. Treating the matter as procedural and following Aurofood Pvt. Ltd. [2024 (5) TMI 66 - CESTAT CHENNAI] the Tribunal held that the request required manual examination and processing. [Paras 4, 6]

The Commissioner was directed to examine the matter manually and process the appellant's request for issuance of the discharge certificate within four weeks of receipt of the order.

Final Conclusion: The appeal was disposed of with a direction for manual processing of the SVLDRS request and issuance of the discharge certificate upon examination.

Cenvat credit on input services invoiced to head office - Input Service Distributor registration - Procedural irregularity in availing Cenvat credit

Cenvat credit on telephone services - Invoices in the name of head office - Absence of Input Service Distributor registration - Entitlement to Cenvat credit on telephone services where the invoices were issued in the name of the head office, which was not registered as an Input Service Distributor - HELD THAT: - The Tribunal held that the issue stood covered by the decisions in Samita Conductors Ltd. and Doshion Ltd [2012 (11) TMI 432 - CESTAT, AHMEDABAD]. Absence of Input Service Distributor registration, in the circumstances considered, was only a procedural irregularity and did not warrant denial of credit availed on input-service invoices issued to the head office. [Paras 8]

The denial of Cenvat credit was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The impugned order denying Cenvat credit on telephone services was set aside. The appeal was allowed with consequential relief in accordance with law.

CENVAT credit on outward transportation from the place of removal - Extended limitation in absence of suppression

CENVAT credit on outward freight from factory - Input service for clearance from the place of removal - Eligibility to CENVAT credit of service tax paid on outward freight for dispatch of final products from the factory, being the place of removal - HELD THAT: - For the period before 31.03.2008, the definition of input service covered services used for clearance of final products from the place of removal. As the goods were dispatched from the appellant's factory, which was undisputedly the place of removal, outward transportation from the factory was covered by the expression and qualified for credit. [Paras 8, 11]

The denial of CENVAT credit on outward freight was set aside and the appeal was allowed on merits.

Validity of invocation of the extended period for recovery of CENVAT credit on outward freight disclosed in ER-1 returns - HELD THAT: - The credit was taken during a period in which the governing definition itself permitted credit for services used from the place of removal, and the particulars of the credit had been disclosed in ER-1 returns. In the absence of suppression, the extended period could not be invoked. [Paras 12]

The confirmed demand for the extended period was held time-barred and set aside.

Final Conclusion: The appeal was allowed both on merits and on limitation, with consequential relief in accordance with law.

Power to exempt under delegated legislation - classification and intelligible differentia under Article 14 - withdrawing/excluding specific goods from exemption - retrospective exemption by notification - interaction between exemption notifications and rate notifications - composition scheme under VAT and its impact on entry tax liability

HELD THAT:- Found no good ground to interfere with the impugned Order passed by the High Court of Madhya Pradesh at Jabalpur [2010 (8) TMI 844 - MADHYA PRADESH HIGH COURT]

The Appeal is, accordingly, dismissed.

Rectification of mistakes apparent from record - Recall of concluded proceedings through rectification

Whether a rectification application could be used to secure adjudication on issues allegedly left undecided by the original revision order and to restore the concluded revision application? - HELD THAT: - The statutory rectification power is confined to a mistake of fact apparent from the record. The trader's application sought a rehearing on merits of issues not decided in the original revision order; it therefore travelled beyond rectification. The Tribunal erred in entertaining that application and recalling the order disposing of the revision application instead of relegating the parties to appropriate proceedings. [Paras 5, 9]

The orders passed on the rectification applications, including the orders restoring and subsequently deciding the revision application, were quashed and set aside. Both parties were left at liberty to challenge the original revision order before the appropriate forum, and any proceeding instituted within three months was directed to be considered on merits without rejection on the ground of delay.

Final Conclusion: The petitions were allowed to the extent of quashing the rectification-related orders. All contentions on the underlying merits were expressly left open.

Writ petition against contractual dispute concerning termination and forfeiture of security deposits - respondents (Northern Coalfields) submits, the writ petition is not maintainable as it is a matter of contract containing arbitration agreement

HELD THAT:- The writ petition was disposed of with liberty to the petitioner to pursue commercial remedies, while permitting disbursement of the admitted amount upon application.

Ratification of unauthorised acceptance of resignation - Effectiveness and withdrawal of resignation under statutory service rules - Discretion to refuse withdrawal of accepted resignation

Ratification of unauthorised acceptance of resignation - Relation-back of ratification - Approbation and reprobation - Validity of the employee's resignation from the University where its initial acceptance by the officer holding additional charge of Vice-Chancellor was subsequently ratified by the Board of Management - HELD THAT: - The Board of Management, being competent to appoint, was also competent to accept resignation; the initial acceptance by the officer holding additional charge was therefore unauthorised. However, ratification by the competent authority validates an act which it could originally have performed and operates retrospectively from the date of the unauthorised act. Further, the employee had sought waiver of notice, accepted the consequential benefits and experience certificate, and acted upon the completed separation by securing fresh employment. He could not thereafter impugn the completed transaction on the technical ground of defective initial acceptance. [Paras 19, 22, 23, 24, 25]

The Board's ratification related back to the initial acceptance; the resignation had become final and could not be withdrawn after the employee had ceased to be in service. The direction for reinstatement was set aside.

Effectiveness of accepted resignation - Statutory condition for resignation - Whether the employee's resignation from the National Institute of Technology became effective upon acceptance by the appointing authority notwithstanding later communication of acceptance and a notice period before actual relieving? - HELD THAT: - The applicable Statute expressly made resignation effective on its acceptance by the appointing authority, without requiring communication of acceptance or expiry of the notice period as conditions of efficacy. The notice period regulated the date of actual relieving alone and did not defer the legal effect of acceptance. The request for withdrawal was thus made after the resignation had already taken effect. [Paras 27]

The acceptance of resignation was valid and effective from its acceptance by the competent authority; the resignation was not available for withdrawal on the ground that communication or relieving was pending.

Withdrawal of accepted resignation - Administrative discretion to refuse withdrawal - Judicial review of discretionary service decisions - Validity of refusal to permit withdrawal of the accepted resignation from the National Institute of Technology before actual relieving - HELD THAT: - While withdrawal before actual relieving was the normal rule under the applicable Office Memorandum, the competent authority retained discretion to refuse it upon recording and communicating reasons. The authority's conclusion that the request was opportunistic and did not reflect a genuine intention to continue in service was rational on the material before it. In the absence of mala fides, perversity or violation of law, judicial review could not substitute its assessment for that of the competent authority. [Paras 28, 29, 30]

The refusal to permit withdrawal and the consequential denial of reinstatement were upheld; no claim for back wages survived.

Final Conclusion: The University's appeal against reinstatement was allowed and the employee's appeal for back wages was dismissed. The challenge to the National Institute of Technology's acceptance of resignation and refusal to permit its withdrawal was also dismissed.

Vicarious liability of Directors for dishonour of company cheques - Specific averments for liability under Section 141 of the Negotiable Instruments Act - Resignation of Director before issuance of cheques - HELD THAT: - Section 141 does not create deemed vicarious liability merely by reason of directorship. The complaint must contain specific assertions showing that the individual was in charge of and responsible for the conduct of the company's business when the offence was committed, or that it was committed with his consent, connivance or neglect. General assertions were insufficient, particularly when the petitioner had not signed any cheque and statutory records incontrovertibly established that he had ceased to be a Director before the cheques were issued and dishonoured. [Paras 10, 11, 12, 13, 14]

The summoning orders and the complaints were quashed qua the petitioner, as their continuance would be vexatious and an abuse of process.

Final Conclusion: The petitions were allowed, and the summoning orders and cheque-dishonour complaints were quashed qua the petitioner.

Pre-institution mediation in commercial suits - Urgent interim relief and attachment before judgment

Pre-institution mediation in commercial suits - Attachment before judgment - Compliance with the pre-institution mediation requirement where the plaintiff sought urgent interim relief by attachment before judgment - HELD THAT: - A plaintiff seeking exemption from pre-institution mediation on the ground of urgent interim relief is not required to file a separate application for referring the parties to mediation.

Commercial Court conflated the question of dispensation from pre-institution mediation with the distinct conditions governing attachment before judgment under Order XXXVIII Rule 5 of the Code of Civil Procedure. In any event, the parties had been referred to mediation by the Court and the mediation had failed; hence, no impediment remained to consideration of the application for attachment before judgment. [Paras 5, 7, 8]

The Commercial Court was directed to expeditiously decide the application for attachment before judgment and to number the commercial suit if otherwise in order.

Final Conclusion: The revision petition was disposed of after the failure of court-referred mediation, leaving the application for attachment before judgment to be decided expeditiously by the Commercial Court.