TaxTMI Updates e-Newsletter
Aug 19,2026

Writ jurisdiction - alternative statutory remedy and laches in challenge to GST assessment

Maintainability of a writ petition challenging an ex parte GST assessment where the statutory appellate remedy was available and the challenge was delayed without cogent explanation - HELD THAT: - The Court found that the petitioner had an efficacious statutory remedy of appeal. It further held that the writ petition suffered from laches, as no cogent explanation was offered for not challenging the assessment order within a reasonable time despite its communication to the petitioner.

The writ petition was dismissed, with liberty to the petitioner to file an appeal accompanied by an application seeking condonation of delay.

Final Conclusion: The writ petition challenging the GST assessment was dismissed on account of the available appellate remedy and unexplained delay.

Recovery of GST demand pending appeal - Attachment of bank account - coercive recovery of the GST demand and continuation of attachment of the proprietor's bank account pending disposal of the statutory appeal - HELD THAT: - The Court found a prima facie case for interim protection, having regard to recovery of more than 10% of the assessed demand and the pre-deposit made for the appeal. The merits of the demand, including the issue of non-availment of input tax credit, were expressly left for determination by the Appellate Authority. [Paras 11, 13, 14, 15]

The respondents were restrained from taking further coercive recovery steps until final disposal of the appeal; the bank attachment was lifted to permit business operations, subject to maintenance of sufficient balance and monitoring by the bank. Recovery in accordance with law was reserved if the appeal is dismissed and the demand upheld.

Final Conclusion: The writ petition was disposed of with interim protection against further recovery pending expeditious disposal of the appeal, without adjudicating the merits of the GST demand.

Anticipatory bail in alleged fraudulent input tax credit claims - Cancellation of supplier registration and entitlement to input tax credit

HELD THAT: - Subsequent cancellation of a supplier's GST registration or closure of its business does not, by itself, disentitle the purchaser to input tax credit; the department must establish collusion between supplier and purchaser.

There was no prima facie material that the suppliers had committed the foundational violations required to attract the alleged offence, and their subsequent non-existence or cancellation of registration was insufficient to establish fraudulent availment of input tax credit. The petitioners had no criminal antecedents, had earlier appeared before the authorities, and undertook to cooperate and produce documents. In these circumstances, custodial interrogation was not warranted merely because the allegations concerned an economic offence. [Paras 7, 8, 14, 15]

Anticipatory bail was granted subject to conditions requiring cooperation with the investigation, appearance when summoned, and compliance with restrictions imposed by the Court.

Final Conclusion: The petition was allowed and the petitioners were directed to be released in the event of arrest in connection with the summons, subject to the stipulated conditions.

Jurisdiction of Deputy Commissioner to issue penalty show-cause notice under UPGST Act - Doctrine of election and statutory appellate remedy

Jurisdiction of Deputy Commissioner to issue penalty show-cause notice under UPGST Act - Competence 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 expressly provided that proceedings under Section 122 were governed by Section 127 and vested the Deputy Commissioner with the relevant authority. They also conferred jurisdiction upon the Deputy Commissioner in cases involving businesses with turnover exceeding the prescribed threshold. The Court therefore found, prima facie, that the officer issuing the notice did not lack jurisdiction. [Paras 8, 11]

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

Doctrine of election and statutory appellate remedy - Maintainability of the writ petition challenging the penalty order after the petitioner participated in the proceedings on merits without objecting to jurisdiction - HELD THAT: - Although a jurisdictional objection may be raised before a constitutional court at any stage, writ jurisdiction is discretionary. The petitioner had appeared before the issuing authority and made submissions on merits without raising the jurisdictional objection, and invoked writ jurisdiction only after the adverse order. The Court held that the petitioner was hit by the doctrine of election and should pursue the statutory appeal. [Paras 9, 10, 11]

The writ petition was disposed of with liberty to avail the statutory appellate remedy; the benefit of Section 14 of the Limitation Act, 1963 was made available for the period of pendency of the writ petition, subject to satisfaction of its requirements.

Final Conclusion: The petitioner was relegated to the statutory appellate remedy, the jurisdictional challenge being found prima facie untenable and the writ petition being barred by the doctrine of election.

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

Condonation of delay in filing an appeal against retrospective cancellation of GST registration - HELD THAT: - The Court followed Ritik Acharya v. The Union of India & Ors. [2026 (4) TMI 1904 - RAJASTHAN HIGH COURT] whose applicability was not opposed by the respondents, and considered it appropriate to condone the delay so that the appeal could be adjudicated on merits. [Paras 4, 5]

The appellate order dismissing the appeal as time-barred was quashed, the delay was condoned, and the Appellate Authority was directed to entertain and decide the appeal on merits.

Final Conclusion: The writ petition was allowed to the extent of setting aside the appellate order dismissing the appeal on limitation. The delay was condoned and the appeal was restored for decision on merits.

Common show cause notice for multiple financial years - Statutory appellate remedy against GST adjudication and appellate orders

Validity of a common show cause notice under Section 74 of the CGST Act covering multiple financial periods - HELD THAT: - The Single Judge's quashing of the proceedings solely on the ground that the show cause notice covered multiple financial periods could not be sustained, as the Co-ordinate Bench had held that a common show cause notice in respect of multiple financial years is permissible.

The order quashing the show cause notice and consequential proceedings was set aside.

Statutory appellate remedy against GST adjudication and appellate orders - Maintainability of the writ petition against the order-in-original and appellate order when an appeal lay before the Goods and Services Tax Appellate Tribunal - HELD THAT: - Where the assessee challenged both the order-in-original and the appellate order, the appropriate remedy was an appeal before the Goods and Services Tax Appellate Tribunal.

The assessee was granted six weeks to file an appeal before the appropriate forum, which was directed to consider it without raising limitation if filed within that period; all contentions were left open.

Final Conclusion: The writ appeal was allowed and the order of the Single Judge was set aside. The assessee may pursue the statutory appellate remedy within the time granted.

Penalty for stock transfer without e-way bill - Tax payable as condition for detention penalty - Intra-firm stock transfer not constituting supply - treating the transaction as “not genuine” merely because e-way bill was not available

Whether the first Appellate Authority is right in confirming the penalty u/s 129 of Central Goods and Services Act / Kerala Goods and Services Act 2017 on the registered person for transport of goods without e-way bill when such transport was undertaken on account of stock transfer? - HELD THAT: - A stock transfer between premises of the same registered person, involving neither two distinct entities nor consideration, does not constitute a supply. It consequently cannot be an intra-State supply attracting the charging provision, and no tax is payable on the goods.

Since penalty u/s 129 is quantified with reference to tax payable on the goods, it cannot be levied where the tax itself is non-existent. The absence of an e-way bill did not, without any allegation or material of fraud, wilful misstatement, suppression or non-genuineness, justify treating the movement as non-genuine.

The Tribunal followed Fabricship Pvt. Ltd. v. Union of India [2024 (6) TMI 1313 - BOMBAY HIGH COURT] and held that a document-related contravention in a movement for reasons other than supply would require recourse to the specific penal provision u/s 122(1)(xiv), not section 129(3). [Paras 6, 8, 9]

Penalty u/s 129 was held not leviable; the appellate order was set aside and the appeals were allowed with consequential relief.

Final Conclusion: The Tribunal held that the intra-firm stock transfer, though unaccompanied by an e-way bill, involved no taxable supply or tax payable and could not attract penalty under section 129. The impugned appellate order was set aside and the appeals were allowed with consequential relief.

Mandatory limitation for penalty order following detention of goods in transit - mandatory seven-day period under Section 129(3) - Jurisdictional validity of delayed penalty order

Validity of the penalty order passed forty-seven days after service of the detention notice under section 129(3) of the CGST/KGST Act - HELD THAT: - The statutory use of "shall" requires the proper officer to pass the penalty order within seven days from service of the notice. This timeline, governing a coercive power of detention and seizure, is mandatory notwithstanding the absence of an express consequence for non-compliance. The dates of the notice and order were undisputed and apparent from the record; consequently, the appellant's reliance on those dates could not be rejected as a new ground at the second appellate stage. The delayed order was beyond the prescribed period and therefore without jurisdiction. Cases followed Mohd Hazzak Lohar & Others vs Commissioner of State Tax, J&K [2026 (7) TMI 1769 - JAMMU AND KASHMIR AND LADAKH HIGH COURT], M/s. Allcargo Logistics Limited vs State of Gujarat [2025 (12) TMI 1732 - GUJARAT HIGH COURT] [Paras 5, 8, 9]

The penalty order and the order-in-appeal were set aside, and the appeals were allowed with consequential release of the bank guarantee.

Final Conclusion: The penalty proceedings were held barred by the mandatory seven-day limitation under section 129(3), rendering the delayed penalty order without jurisdiction. The order-in-appeal was set aside and consequential relief was granted.

Passing on GST rate-reduction benefit on cinema admission tickets - Profiteering quantification based on pre-rate-reduction base price

Commensurate reduction in cinema ticket prices - Statutory anti-profiteering obligation notwithstanding regulated ticket fares - obligation to pass on the GST rate-reduction benefit on cinema admission tickets where the operator maintained the cum-tax ticket price by increasing the base price, notwithstanding permission to collect proposed fares under orders of the High Court - HELD THAT: - Section 171(1) requires that a tax-rate reduction be reflected through a commensurate reduction in the price payable by the recipient; mere payment of GST at the reduced rate is insufficient. The Respondent increased the pre-tax base prices and retained the existing cum-tax ticket prices, thereby neutralising the benefit of the reduction. The regulatory framework and the permission to collect proposed fares only governed maximum or proposed ticket rates and did not override the independent statutory obligation; moreover, the Respondent did not establish approval of its proposed enhanced rates by the competent authority. [Paras 27, 28, 29, 30, 31]

The Respondent contravened Section 171(1) by failing to pass on the GST rate-reduction benefit through commensurate reduction of cinema admission-ticket prices.

Profiteering computation for cinema admission tickets - sustainability of the profiteering computation based on pre-rate-reduction base prices, reduced GST rate and actual tickets sold - HELD THAT: - The computation retained the pre-rate-reduction base price, applied GST at the reduced rate to determine the commensurate selling price, and calculated the excess collected with reference to the actual ticket sales. This methodology was consistent with Section 171(1), and the Respondent failed to demonstrate any specific error in the base prices, commensurate prices, ticket-sales data or resultant computation. [Paras 37, 38, 39]

The profiteering computation was accepted, and the Respondent was directed to deposit the determined profiteered amount with applicable interest in the Consumer Welfare Funds, as the recipients were unidentifiable.

Final Conclusion: The DGAP report was accepted and the Respondent's objections were rejected. The determined profiteered amount, with applicable interest, was directed to be deposited in the Central and State Consumer Welfare Funds; no penalty was levied for the investigation period.

Anti-profiteering on GST rate reduction for cinema admission tickets - Commensurate reduction in cum-tax ticket prices - Cinema ticket-price regulation and statutory anti-profiteering obligation - Quantification of profiteering

Anti-profiteering on GST rate reduction for cinema admission tickets - Commensurate reduction in cum-tax ticket prices - Liability to pass on the benefit of reduction of GST on cinema admission tickets by commensurate reduction in ticket prices - HELD THAT: - Section 171(1) requires the benefit of a tax-rate reduction to reach recipients through a commensurate reduction in price. Retention of the same cum-tax ticket price by increasing the pre-tax base price defeats that requirement, since charging GST at the reduced rate alone does not satisfy the statutory obligation. The comparison of pre-reduction base prices with post-reduction base prices established that the tax benefit was not passed on to ticket purchasers. [Paras 14, 17, 18, 22, 23]

The Respondent was liable to pass on the GST-rate reduction through commensurate reduction of the admission-ticket prices and had failed to do so.

Cinema ticket-price regulation and statutory anti-profiteering obligation - Effect of the Telangana High Court's directions in Sudarshan Theatre 35MM v. Union of India [2024 (7) TMI 1024 - TELANGANA HIGH COURT] permitting collection of proposed cinema fares on the statutory obligation to pass on GST-rate reduction - HELD THAT: - Directions permitting a theatre operator to collect proposed fares, and representations made to the licensing authority, could not override or create an exception to the independent mandate under Section 171(1). The regulatory framework concerning permissible ticket prices did not authorise retention of the benefit of a GST-rate reduction. Further, the representations produced concerned subsequent limited periods and were unsupported by evidence of approval by the competent authority. [Paras 30, 31, 32, 33, 34]

The High Court's directions and the Respondent's representations did not absolve it from the obligation to reduce ticket prices commensurately.

Quantification of profiteering on cinema admission tickets - Correctness of the profiteering computation based on the pre-rate-reduction base price of cinema admission tickets - HELD THAT: - The computation retained the pre-rate-reduction base price, applied the reduced GST rate to determine the commensurate price, and accounted for the actual ticket quantities sold and excess charged. Transactions at other rates that were verified as correctly accounted for were excluded. In the absence of cogent material showing error in the base price, commensurate price, quantity, or computation, the methodology was consistent with Section 171(1). [Paras 37, 39, 40, 41, 42]

The profiteering amount for the relevant period was correctly determined at Rs. 4,72,038.

Final Conclusion: The DGAP report was accepted and the objections were rejected. The Respondent was directed to deposit the determined profiteered amount with applicable interest in the prescribed Consumer Welfare Funds; no penalty was levied.

Classification of PTFE braided gland packing as articles of plastics - Primacy of tariff notes over trade parlance in HSN classification - HSN 59119090 as a textile article for technical use or under HSN 39209949, and the applicable GST rate.

Classification and applicable GST rate of PTFE braided gland packing manufactured from braided PTFE fibre yarn for industrial stuffing-box sealing - HELD THAT: - The product, being entirely made of PTFE, was held to be an article of plastic. Plastic monofilament having a cross-sectional dimension exceeding 1 mm is excluded from Section XI and directed to Chapter 39; therefore, the product could not qualify as a textile product under heading 5911 merely because it was braided and used as industrial packing.

The residual PTFE sub-heading under heading 3920 was found applicable to PTFE products other than rigid or flexible plain sheets. Statutory tariff headings, Section and Chapter Notes and HSN Explanatory Notes prevail over industry practice or common/trade parlance where they provide clear classification criteria. [Paras 13, 16, 17, 19, 20]

PTFE braided gland packing was classified under HSN 39209949 and, being covered by Entry 121 of Schedule II to Notification No. 09/2025-Central Tax (Rate), was held chargeable to GST at 18%.

Final Conclusion: The application was answered by classifying PTFE braided gland packing under HSN 39209949 as an article of plastic, liable to GST at 18%.

TDS u/s 195 - liability to deduct TDS on payments made to non-residents - ITAT come to conclusion that the payments made to three non-resident Companies do not fall within the meaning of ‘royalty’ as defined in DTAA

HELD THAT:- High Court [2025 (2) TMI 767 - KARNATAKA HIGH COURT] while dismissing the appeal has granted liberty to the Revenue to seek review/restoration of the appeal in the event the Review Petition filed before the Supreme Court in “The Commissioner of Income Tax International Taxation and Anr. Etc. vs. Engineering Analysis Centre of Excellence Private Limited Etc.” [2022 (1) TMI 1388 - SC Order] is allowed in favour of the Revenue.

With the aforesaid, this petition stands disposed of. Pending applications, if any, also stand disposed of.

Set-off and carry forward of losses of Section 10B eligible undertakings - Computation of deduction for export-oriented software units

Set-off of the business loss of a software-export unit eligible for deduction u/s 10B against profits of the assessee's other undertakings - HELD THAT: - Separate computation of export profits of each eligible undertaking is required solely for quantifying the deduction under Section 10B. Such computation does not alter the treatment of the undertaking's profit or loss in computing the assessee's combined income, nor does it exclude the operation of the provisions governing inter-source, inter-head set-off and carry forward of losses. The Supreme Court's affirmation in Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] supports the treatment of losses under the normal set-off and carry-forward provisions. [Paras 19, 20, 21, 22]

The loss of the eligible undertaking was allowable for set-off against the profits of the other undertakings, with any remaining loss eligible for carry forward in accordance with law.

Final Conclusion: The appeal was allowed. The Tribunal's order and the assessment order, insofar as they denied set-off of the eligible unit's loss, were set aside.

Business expenditure on infrastructure projects without corresponding income - Commercial expediency

Allowability of expenditure incurred on road and bridge projects where no corresponding income was offered - HELD THAT: - Expenditure incurred wholly and exclusively for carrying on the assessee's business cannot be disallowed merely because no income was booked against the particular project.

Where the expenditure related to projects undertaken in the ordinary course of the assessee's infrastructure business, the proper course for the Revenue, if income had escaped recognition, was to bring such income to tax; absence of project-wise income did not invalidate the expenditure claim. The Tribunal's identical finding for the earlier assessment year had attained finality, and no legal infirmity was shown in its application to the year in question. [Paras 4, 5, 6]

The deletion of the disallowance of project expenditure was upheld and no substantial question of law arose.

Final Conclusion: The revenue's appeal was dismissed, affirming the allowance of expenditure incurred for the assessee's infrastructure projects notwithstanding the absence of corresponding project-wise income.

Revision u/s 263 - nature of expenditure - contribution to Gujarat Electricity Board (for short ‘GEB’) for augmenting the transmission network and claimed the same as revenue expenditure - facts recorded by the Tribunal that the ownership of the augmented service line remained throughout with GEB, and also GEB has borne the maintenance cost and retained the right to tap the line to supply any other consumer, the assessee did not acquire any tangible right of ownership or possession, hence no capital asset or enduring nature has been created by the assessee and held that the Assessing Officer’s order is neither erroneous nor prejudicial to the interest of revenue in view of the settled legal position.

HELD THAT:- Such expenditure is to be considered as a revenue expenditure to the effect that such expenditure incurred for augmenting the profitability of the assessee, without there being any creation of the tangible asset, is to be considered as a revenue expenditure under Section 37(1) of the Act.

Tribunal has also followed the decision of this Court in case of Sarabhai M. Chemicals Pvt. Ltd. [1980 (7) TMI 77 - GUJARAT HIGH COURT] and decision of Excel Industries Ltd. [1979 (10) TMI 68 - BOMBAY HIGH COURT] wherein in similar facts of contributions to an Electricity Board for service/ supply lines which remained the property of the Board, was held that the expenditure was incurred for augmenting the profitability of the assessee’s existing profit making apparatus and therefore such expenditure was revenue in nature.

We are of the opinion that there is no legal infirmity in the impugned order of the Tribunal. The question of law is, therefore, answered in favour of the assessee and against the revenue.

Final conclusion: ITAT is right as coming to the conclusion that contribution to Gujarat Electricity Board (for short ‘GEB’) for augmenting the transmission network is a revenue expenditure as rightly allowed by AO, hence assessment order does not becomes erroneous so as to prejudicial to the interest of revenue and liable for revision u/s.263 of the Act.

Reassessment beyond four years - failure to disclose material facts - Reassessment additions beyond recorded reasons - Scope of Explanation 3 to section 147

Validity of reassessment initiated beyond four years where no addition was made on either of the recorded reasons and an addition was made on a different issue - HELD THAT: - For a reassessment notice issued beyond four years, failure by the assessee to disclose truly and fully all material facts in relation to the recorded escapement is a jurisdictional condition. Explanation 3 permits assessment of another escaped income that comes to notice during valid reassessment proceedings, but it does not enlarge the substantive jurisdiction under section 147 or preserve proceedings where the very grounds recorded for reopening do not result in any addition. Since no addition was made on either recorded reason, the requisite failure of disclosure was not established and the foundation of reopening did not survive. [Paras 6, 8, 10, 11]

The reassessment was without jurisdiction; the Tribunal's order quashing it was upheld and the Revenue's appeal was dismissed.

Final Conclusion: No substantial question of law arose from the Tribunal's order. The Revenue's appeal was dismissed.

Carry forward and set-off of business losses - No Filing of return for intervening assessment years

HELD THAT: - A business loss can be carried forward only when it has been determined pursuant to a return filed under section 139(3) and quantified by assessment. The absence of valid returns in the intervening assessment years precluded determination and notification of the unabsorbed loss available for further carry forward. The Court agreed with the principle in Commissioner of Income Tax Vs. Haryana Hotels Ltd. [2005 (2) TMI 63 - PUNJAB AND HARYANA HIGH COURT] and held that the earlier loss could not be set off in the years under consideration. [Paras 6, 7, 8]

The disallowance of the claimed set-off of the business loss was upheld.

Final Conclusion: No substantial question of law arose from the orders denying set-off of the brought-forward business loss. Both appeals were dismissed.

Revisional jurisdiction u/s 263 - Erroneous and prejudicial assessment order- inadequate Inquiry by Assessing Officer

Validity of revision of the assessment concerning unsecured loans and trade payables on the ground of inadequate inquiry by the Assessing Officer - HELD THAT: - The Assessing Officer had called for and considered the relevant details relating to unsecured loans and trade payables. Explanation 2 to section 263 does not dispense with the twin requirements that the assessment order must be both erroneous and prejudicial to the interests of the Revenue. The revisional authority relied only on audit objections and did not identify material showing that the alleged absence of further confirmations or inquiry had caused prejudice to the Revenue. Once the Assessing Officer had made inquiry and reached satisfaction, the revisional authority could not substitute its opinion on the assumption that further inquiry would result in an addition under section 68.

As already held by the decision of Malabar Industries Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] as well as Shreeji Prints (Pvt.) Ltd. [2021 (9) TMI 108 - SUPREME COURT] there is twin conditions with regard to the assessment order being erroneous and prejudicial to the interest of the Revenue which is the basis for assuming jurisdiction under Section 263 of the Act and Explanation-2 only provides for deeming fiction when these two conditions are fulfilled and when the Assessing Officer has not made sufficient inquiry then it is is deemed to be erroneous and prejudicial to the interest of the Revenue.[Paras 7, 8]

The Tribunal was justified in quashing the revisional order; no substantial question of law arose.

Final Conclusion: The Tax Appeal was dismissed, as the assessment had been made after inquiry and the requirements for exercise of revisional jurisdiction under section 263 were not established.

Substantial increase in Share Capital treated as unexplained cash credit u/s. 68 - Onus to prove - ITAT deleted addition - HELD THAT:-The appeal was dismissed as no question of law, much less a substantial question of law, arose from the Tribunal's order deleting the addition under section 68.

Deduction of tax at source on cash withdrawals - TDS u/s 194N -Banker's lien without statutory authority - Penalty u/s 271C

Liability for deduction of tax at source on cash withdrawals by a customer of a banking company and the bank's authority to create a lien over the customer's current account for the alleged tax liability - HELD THAT: - Section 194N casts the obligation to deduct tax at source, at the time of payment in cash, upon the banking company making the payment and not upon its customer. Failure to make such deduction attracts the statutory consequence under section 271C against the person responsible for deduction.

The Bank disclosed neither statutory power to create the lien nor any direction from the income-tax authorities authorising it; consequently, it could not retain the amount in the customer's current account on that pretext. [Paras 16, 18, 19, 23, 24]

The Bank was held to have no authority to create the lien; it was directed to release the lien and permit operation of the account upon the petitioner furnishing income-tax returns for the relevant three consecutive years.

Final Conclusion: The writ petition was disposed of with directions for furnishing the relevant returns and release of the lien. The order was confined to the rights and obligations between the petitioner and the Bank and did not preclude action by the income-tax authorities in accordance with law.

Nature of expenditure - Digital advertising and sales-promotion expenditure - Website search optimisation services

Digital advertising and sales-promotion expenditure - Enduring benefit test - revenue v/s capital expenditure - Character of expenditure on digital advertising, media space, SMS broadcasts, search-engine optimisation, campaign content, marketing videos and social-media strategy - HELD THAT: - An outlay is capital where it results in acquisition of an asset or an advantage in the capital field of enduring nature. The impugned services were recurring promotional measures requiring repeated incurrence; they created no business asset and merely facilitated more efficient and profitable promotion of the financial products distributed through the digital platform. The enduring-benefit test could not therefore render the expenditure capital. [Paras 20, 21]

The sales-promotion expenditure was held to be revenue expenditure and its disallowance was rightly deleted.

Website search optimisation services - Revenue or capital expenditure - Character of payment for website and mobile-app search services displaying high-selling products, correcting search terms and facilitating product searches - HELD THAT: - The services enabled customers to search products more easily and assisted generation of sales on the digital platform. They were necessary for efficient conduct of the business and did not result in acquisition of a capital asset or an enduring advantage in the capital field. [Paras 22, 23, 24]

The payment for the search-related software services was held to be revenue expenditure and its disallowance was rightly deleted.

Final Conclusion: The Revenue's appeals were dismissed, affirming deletion of the disallowances of the digital sales-promotion and website search-service expenditure. The cross-objections, being supportive or alternative to the relief already sustained, were dismissed as infructuous.

Third-party search assessment u/s 153C - Limitation for penalty u/s 271D for cash acceptance in contravention of section 269SS

Initiation of search upon handing over seized material - Section 153C applicability to searches initiated on or after 1 April 2021 - Validity of assessment u/s 153C where seized material belonging to the person other than the searched person was handed over to that person's Assessing Officer after the statutory cut-off - HELD THAT: - For a person other than the searched person, the relevant initiation is when the seized material is handed over to that person's Assessing Officer. Since the material was handed over after 1 April 2021, section 153C was unavailable by reason of section 153C(3); the assessment, if any, could only be pursued under the reassessment provisions. [Paras 5, 7]

The notice issued under section 153C and the consequential assessment were quashed for want of jurisdiction.

Limitation for penalty under section 271D - Penalty for cash acceptance in contravention of section 269SS - HELD THAT: - Where the penalty is not related to the assessment, limitation under section 275(1)(c) commences from the Assessing Officer's letter recommending initiation of penalty proceedings. The applicable period was six months from the end of the month in which that action was initiated, and the penalty order was passed after its expiry. [Paras 13, 14]

The penalty order was held barred by limitation and was quashed.

Final Conclusion: Both appeals were allowed. The assessment under section 153C was quashed for lack of jurisdiction, and the penalty under section 271D was quashed as time-barred.

Deduction of interest expenditure against income from other sources - Nexus between borrowed funds and interest-bearing advances

Allowability of interest expenditure claimed against interest income from unsecured loans advanced to private parties - HELD THAT: - The Assessing Officer's own findings established that the advances yielding interest income had been made out of interest-bearing borrowings from banks and non-banking financial companies. The nexus between the borrowed funds and the interest-bearing advances thus stood proved. Interest paid on such borrowings was directly connected with earning the taxable interest income and was allowable as a deduction under section 57. [Paras 12]

The disallowance of interest expenditure was deleted for Assessment Years 2016-17 and 2017-18.

Final Conclusion: Both appeals were allowed and the additions arising from disallowance of interest expenditure were deleted.

Deduction of business expenditure incorrectly returned as income from other sources - Disallowance of expenditure claimed as a deduction against income from other sources, where the receipts and expenditure were shown to be business receipts and business expenditure incorrectly reported in the return - HELD THAT: - The Tribunal accepted the documentary material comprising the profit and loss account, purchase book, VAT return, sales book and sales evidence. It found that the expenditure disallowed as a deduction under section 57 was, in substance, business expenditure and that the corresponding receipts were business receipts; their reporting under income from other sources was a mistake in the return. [Paras 5]

The disallowance was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition arising from disallowance of the claimed expenditure was deleted.

Penalty u/s. 271DA - cash receipt contravening section 269ST - Consequential penalty upon deletion of quantum addition - Presumption regarding seized material against person from whose possession it is found

Penalty for cash receipt contravening section 269ST - Consequential penalty upon deletion of quantum addition - HELD THAT: - Penalty under section 271DA requires establishment that the assessee received cash in contravention of section 269ST. The quantum proceedings had conclusively found that the alleged transaction was between the producer and co-producer of the film, with no involvement of the assessee. Since the addition forming the sole foundation of the penalty stood deleted and that deletion had not been stayed or reversed, no cash receipt by the assessee remained on which the penalty could be founded. The Tribunal applied the principle in K.C. Builders & Anr. [2004 (1) TMI 7 - SUPREME COURT] that a penalty wholly consequential upon a quantum addition cannot survive its deletion. [Paras 15, 16, 19]

The deletion of penalty under section 271DA was upheld.

Presumption available u/s. 132(4A) and sec.292C - Applicability of the statutory presumption concerning the WhatsApp screenshot and seized material to the assessee -Presumption regarding seized material against person from whose possession it is found - HELD THAT: - The presumption under sections 132(4A) and 292C operates against the person from whose possession or control the material is found. As the material was recovered from the premises of the producer entity, did not bear the assessee's name, and contained no admission by the assessee of any cash receipt, it could not be invoked against him. Mahabir Prasad Rungta [2014 (1) TMI 660 - JHARKHAND HIGH COURT] did not assist the Revenue, since any presumption could operate only against the person from whose possession the material was recovered. [Paras 17]

The statutory presumption was held inapplicable against the assessee.

Final Conclusion: The Revenue's appeal was dismissed. The penalty for the alleged cash receipt was unsustainable because the underlying addition had been deleted and the seized material could not attract the statutory presumption against the assessee.

Exemption u/s 54F - Capital gains exemption for post-purchase reconstruction of residential house - Cost of new asset under Section 54F

Eligibility of expenditure incurred after purchase of a residential house on its reconstruction, alterations and improvements for inclusion in the cost of the new asset while computing exemption under Section 54F - HELD THAT: - Section 54F permits investment through purchase or construction, and the expression does not exclude a combination of both. The cost of the new asset may include bona fide construction, reconstruction, alteration and improvement expenditure incurred after purchase, where such expenditure forms part of making the residential house fit for residence.

The fact that the acquired house was habitable, or that reconstruction expenditure exceeded its purchase cost, does not by itself disentitle the assessee; the statute prescribes no ceiling based on the quality of construction or amenities. Expenditure on independent items of comfort, however, does not constitute construction cost. Since the genuineness of the reconstruction expenditure was not disputed and it was not alleged to relate to such excluded items, the aggregate purchase and reconstruction cost was includible as the cost of the new asset. [Paras 18, 22, 24, 25, 27]

The claimed exemption under Section 54F was allowable on the aggregate cost of purchase and reconstruction/renovation of the residential house; the partial disallowance was deleted.

Final Conclusion: The appeal was allowed and the restriction of exemption under Section 54F in respect of bona fide reconstruction and renovation expenditure was deleted.

Confiscation of Indian currency as sale proceeds under Section 121 of the Customs Act, 1962 - statement recorded under Section 108 admissible as substantive evidence - retraction of earlier statement treated as afterthought and rejected - penalty under Section 112 for possession of smuggled goods - burden under Section 123 to prove goods were not smuggled

HELD THAT:- We find no good ground to interfere with the common impugned order passed by the High Court of Judicature at Bombay in Customs Appeal [2010 (9) TMI 331 - BOMBAY HIGH COURT]

Provisional release of goods seized under customs law - statutory mechanism pending customs adjudication - seeking provisional release of seized areca nuts and the connected vehicle pending customs adjudication - HELD THAT: - The statutory mechanism under Section 110A permits provisional release of goods seized under Section 110 pending adjudication. As the investigation was complete, a show-cause notice had been issued, and the application for provisional release was pending before the competent Adjudicating Authority, the disputed questions concerning valuation and the correctness of the invoice were required to be determined by that authority and not in writ jurisdiction. [Paras 11, 12, 13, 14, 16]

The competent Adjudicating Authority was directed to decide the application for provisional release in accordance with law, upon such bond, security and conditions as considered appropriate, and to pass a reasoned order on valuation; the merits of the customs allegations, origin, invoice and actual valuation were left open.

Final Conclusion: The writ petition was allowed and disposed of with a direction for expeditious consideration of the pending application for provisional release of the seized goods and vehicle.

Seizure of currency as "things" relevant to customs proceedings - Inapplicability of notice period for evidentiary seizure

Applicability of the notice period for return of seized Indian currency where the currency was seized as evidence during investigation into fraudulent claims under the Amnesty Scheme and suspected hawala transactions - HELD THAT: - The statutory notice period applies to goods seized for confiscation under Section 110(1). Documents or things seized under Section 110(3), being useful or relevant to proceedings under the Customs Act, are not subject to that period and may be retained during the proceedings. Currency is to be treated as goods when it is itself the subject of a customs violation, such as undeclared cross-border carriage; but currency seized during investigation into fraud, illegal gratification and related offences is a "thing" under Section 110(3). The seized currency was therefore not liable to release merely because no notice had been issued within six months. [Paras 16, 18, 19, 20]

The order directing return of the seized currency was set aside; the Department was permitted to continue the investigation and directed to deposit the seized currency in an interest-earning scheme of a nationalised bank pending completion of investigation.

Final Conclusion: The writ appeal was allowed and the direction for return of the seized currency was set aside. The Department may continue its investigation, subject to depositing the currency in an interest-earning scheme of a nationalised bank until its completion.

Unjust enrichment in customs-duty refund - Burden of proof of non-passing of duty incidence - Chartered Accountant certificate and corroborative sales evidence

Whether the assessees established that the incidence of excess customs duty paid on bunker oil had not been passed on, so as to overcome the bar of unjust enrichment for refund under Section 27(2) of the Customs Act, 1962? - HELD THAT: - The importer discharged its burden by producing the Chartered Accountant certificate together with Bills of Entry and sales invoices demonstrating that the bunker oil was sold below the import value on which duty had been assessed. The certificate was required to be considered as an authentic document. Once this material established that even the import cost had not been recovered, the burden shifted to Revenue to adduce tangible evidence that the duty incidence had been passed on; no such evidence was produced. Mere debit of the duty as expenditure in the Profit and Loss Account did not establish that its incidence had been passed to buyers.

Rejection of the refund claim by the department relying upon the decision of Mafatlal Industries Versus Union Of India [1996 (12) TMI 50 - SUPREME COURT] would not be justified as held by the CESTAT by recording finding of fact that it is emerging from the record that as the bunker oil has been sold less than the import cost, there was no question of passing of the duty to the buyer or any other person and as such, the decision relied on behalf of the appellant is not applicable in facts of the case so as to give rise to any question of law much-less any substantial question of law from the impugned order of the CESTAT. [Paras 31, 32, 33, 34, 35]

The bar of unjust enrichment was inapplicable, and the refund claims were rightly allowed.

Final Conclusion: The appeals were dismissed. No substantial question of law arose from the finding that the importer had not passed on the incidence of duty and was entitled to refund.

Customs seizure-detention synonymous with seizure - Extension of time for show-cause notice - expiry of original limitation period

Computation of the six-month period for issuance of notice in respect of detained imported goods and validity of a subsequent extension of that period - HELD THAT: - Once imported goods are brought under the control and custody of Customs authorities and cannot be cleared without their permission, detention is synonymous with seizure; a formal seizure memo is merely a subsequent procedural step. The six-month period therefore runs from the initial detention. The statutory extension must be made and communicated before expiry of that original period; an extension granted thereafter is without jurisdiction. [Paras 13, 14, 15]

The extension communication was quashed as time-barred, and the petitioner became entitled to return of the seized goods, subject to execution of an indemnity bond and proof that any sale is only for animal-feed use.

Final Conclusion: The goods were directed to be released subject to the stipulated safeguards. Classification, duty liability and the question whether the goods are animal feed or broken cashew nuts were left open for adjudication in accordance with law.

Detention of imported goods without seizure - Provisional release pending customs assessment - safeguards under the Customs Act - Statutory Limit on Retention of Seized Goods - Seeking Release of imported betel nut products retained pending classification assessment without seizure under the Customs Act

HELD THAT: - Detention of goods without compliance with the requirements governing seizure and issuance of notice was held arbitrary and without authority of law. Even assuming that the goods were prohibited, the authorities retained discretion to permit their release on appropriate conditions; the respondents themselves sought release on bond and bank guarantee. [Paras 7, 8, 9, 10]

The goods were directed to be released on an indemnity bond for their value and a bank guarantee for 25% of the differential duty, subject to ensuring their fitness for human consumption. The customs authorities may continue adjudication in accordance with law.

Final Conclusion: The writ petitions were disposed of by directing conditional release of the imported goods, while preserving the authorities' power to complete adjudication. The request for waiver of demurrage was left for consideration by the appropriate authority on a representation by the petitioner.

Limitation for customs show cause notice adjudication - Unreasonable delay in adjudication - Retrospective procedural limitation and dead claims - scope of the expression "where it is possible to do so”

Validity of the customs adjudication order passed after prolonged delay from the issuance of the show cause notice - HELD THAT: - Limitation goes to jurisdiction and an order passed beyond limitation is a nullity. Under the unamended provision, adjudication within one year was mandatory unless completion within that period was shown to be impracticable; the expression "where it is possible to do so" did not permit the authority to keep the proceedings pending indefinitely or for an unreasonable period.

When proceedings were initiated, respondent authority was under a mandate to pass an order within a period of one year from the date of notice in respect of cases falling under sub section (4), “where it is possible to do so”. The expression “where it is possible to do so”, would indicate that it is incumbent on the officer concerned to demonstrate that it was not practicable to complete the adjudication within the stipulated period i.e., one year from the date of issuance of notice.

The 2018 amendment, though procedural and ordinarily retrospective, could not revive a claim which had become stale; even if applied from its commencement, the adjudication was not completed within the extended period contemplated by the amendment. No material substantiated the asserted Call Book justification. The delay in adjudication was therefore unreasonable, arbitrary and violative of Article 14. [Paras 7]

The impugned order was set aside as barred by limitation and as the product of unreasonable delay in adjudication.

Final Conclusion: The writ petition was allowed and the customs adjudication order was set aside as time-barred, the prolonged delay in deciding the show cause notice being unreasonable and arbitrary.

Preferential customs duty exemption on Country of Origin Certificates - Rejection of declared transaction value - Penalty for misdeclaration and undervaluation

Preferential customs duty exemption on Country of Origin Certificates - Authenticity of Country of Origin Certificates - Entitlement to preferential customs duty exemption for stainless steel coils, sheets and circles imported from Malaysia on the strength of Country of Origin Certificates - HELD THAT: - The certificates had been examined and accepted at the time of assessment, and the consignments were cleared after verification by Customs. Of the 38 certificates furnished by the appellant, only one appeared in the Malaysian authority's list of unauthentic certificates; the appellant had already foregone the exemption and paid duty in respect thereof. The remaining 37 certificates could not be rejected merely because of a subsequent communication, particularly when they had not been cancelled or revoked and there was no material establishing the appellant's collusion in any irregularity. [Paras 9]

The remaining 37 Country of Origin Certificates were held authentic and acceptable, and the appellant was held entitled to the exemption under Notification No. 46/2011-Cus for the corresponding consignments; no further differential customs duty was payable.

Rejection of declared transaction value - Enhancement based on contemporary imports - Validity of enhancement of the declared transaction value of imported stainless steel products on the basis of contemporary imports - HELD THAT: - The adjudicating authority had not followed the prescribed valuation rule for enhancement, and there was no evidence that the appellant paid any amount over and above the declared invoice prices. In the absence of such material, the declared transaction value could not legally be rejected.

We find that this view has been held in the case of Eicher Tractor Ltd. [2000 (11) TMI 139 - SUPREME COURT] and South India Television P. Ltd.[2007 (7) TMI 9 - SUPREME COURT] [Paras 10]

The enhanced value re-determined by the Revenue was set aside and the values declared in the bills of entry were accepted.

Penalty for misdeclaration of Country of Origin Certificates and undervaluation - Imposition of penalty for alleged misdeclaration of Country of Origin Certificates and undervaluation of imported stainless steel products - HELD THAT: - As the allegations concerning non-genuine Country of Origin Certificates and undervaluation were not sustained, suppression of facts with intent to evade duty was not established. [Paras 11]

The penalties imposed on the appellant were set aside.

Final Conclusion: The appeal was disposed of by allowing the preferential exemption for the consignments covered by the 37 authentic Country of Origin Certificates, accepting the declared transaction values, and setting aside the penalties.

Reasonable belief for invoking statutory presumption in respect of seized gold - Burden of proving smuggled character of gold -Admissibility and corroboration of statements recorded under the Customs Act - Confiscation of currency as sale proceeds of smuggled goods

Reasonable belief for invoking statutory presumption in respect of seized gold - Burden of proving smuggled character of gold - Invocation of the statutory presumption in respect of gold seized in a town interception without foreign markings, and the sufficiency of the claimant's domestic purchase and accounting records - HELD THAT: - The statutory presumption can arise only where seizure is founded on an objectively supportable reasonable belief that the goods are smuggled; suspicion, quantity of gold, or its purity cannot substitute that foundational requirement. The absence of foreign markings, foreign-source indicators, or scientific material linking the gold to illegal import, coupled with commercial records supporting domestic procurement and accounting, precluded the presumption. Even assuming an initial shift of burden, the documentary evidence discharged it, and the Revenue failed to establish that the records were fabricated or that the gold was connected with illegal importation. [Paras 20]

The statutory presumption was inapplicable and the Revenue failed to prove that the seized gold was smuggled; confiscation of the gold was therefore unsustainable.

Admissibility of investigation statements - Corroboration of disputed statements - Consequential customs penalties - Reliance on disputed statements recorded during investigation for establishing the smuggled character of gold and sustaining confiscation and penalties - HELD THAT: - Statements recorded during investigation are not automatically substantive evidence. Before reliance upon them, the safeguards governing admissibility, including examination of the maker and opportunity for cross-examination, must be observed. Where voluntariness was seriously disputed and the statements lacked independent corroboration, they could not displace the respondents' documentary evidence or establish smuggling. Since goods liable to confiscation were not proved, penalties consequential upon confiscability could not survive; nor was deliberate falsity in the documents established for penal action based on false declarations or documents. [Paras 21]

The untested and uncorroborated statements could not sustain the allegations, and the setting aside of confiscation and all penalties was upheld.

Confiscation of currency as sale proceeds of smuggled goods - Nexus between seized currency and smuggling - Confiscation of seized Indian currency on the allegation that it represented sale proceeds of smuggled gold - HELD THAT: - Confiscation of currency as sale proceeds requires cogent, legally admissible evidence establishing its nexus with smuggling. As the allegation of smuggling of gold itself failed and no independent investigation established the source of the currency or its connection with any smuggling activity, suspicion could not justify its retention or confiscation. [Paras 22]

The seized currency was directed to be released with applicable interest.

Final Conclusion: The Revenue appeals were dismissed. The order setting aside confiscation of the gold and penalties was upheld, and release of the seized currency with applicable interest was directed.

Social Welfare Surcharge on imports under MEIS/SEIS duty-credit scrips - Actual collection of basic customs duty as basis for surcharge - distinction between the assessment or notional quantification of duty and its actual collection

Whether Social Welfare Surcharge is leviable where Basic Customs Duty is exempted under Notification Nos. 24/2015-CUS and 25/2015-CUS and the corresponding amount is debited in MEIS/SEIS duty-credit scrips? - HELD THAT: - Social Welfare Surcharge is computed as a percentage of customs duties levied and collected; it is not an independent levy having an assessable base unrelated to those duties. The MEIS/SEIS notifications exempted the goods from the whole of basic customs duty, and debit in duty-credit scrips was merely a mechanism under the exemption scheme, not actual realization of duty by the exchequer. Consequently, the statutory computational base for the surcharge was nil. The Board circular was clarificatory of this position and applied to pending disputes concerning earlier periods. The contention that surcharge remained payable because it was not specifically exempted confused an independent exemption from surcharge with the absence of its statutory base. The decisions concerning warehoused goods and education cesses arose under distinct statutory settings and did not govern the computation of surcharge under the applicable provision. [Paras 17, 18, 19, 20, 21]

Debit of the basic customs duty amount in MEIS/SEIS duty-credit scrips could not be treated as actual collection of such duty for levy of Social Welfare Surcharge; the appellant was not liable to pay the surcharge and was entitled to consequential relief in accordance with law.

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

Seizure and absolute confiscation of four gold biscuits weighing 400 gm each and Indian currency - Burden of proof for notified gold - Documentary evidence of lawful domestic procurement - Confiscation of currency as sale proceeds of smuggled goods - Penalty for dealing with smuggled goods

Validity of the initial seizure of foreign-marked gold from the business premises on the basis of intelligence arising from a connected seizure - Reason to believe for seizure of gold - HELD THAT: - At the stage of seizure, reason to believe may rest on credible intelligence and surrounding circumstances and does not require conclusive proof of an offence. Intelligence connecting the business premises with a person from whom gold had been seized, followed by recovery of foreign-marked gold, furnished sufficient prima facie material; however, such reasonable belief could not substitute the proof required for final confiscation. [Paras 25, 42]

The initial search and seizure were not void, but their validity did not establish the goods' liability to confiscation.

Burden of proof for notified gold - Documentary evidence of lawful domestic procurement - Reliability of retracted customs statements - Confiscation of foreign-marked gold where the claimants produced supplier invoice, bank-payment evidence and GST records evidencing domestic procurement - HELD THAT: - Though gold is notified goods and the initial burden lay upon the claimants, the invoice, bank-payment record and GST return constituted verifiable evidence capable of proving lawful acquisition. The department was required to verify and rebut that evidence through enquiry with the supplier, bank and GST authorities; it could not reject the documents merely because they were produced after the search. The statements relied upon were disputed or withdrawn and lacked independent corroboration. The unconditional release of gold in the connected Kolkata proceedings did not operate as res judicata, but substantially weakened the evidentiary value of the statement that triggered the present investigation. Foreign markings were relevant to suspicion but did not conclusively establish smuggling of the particular gold. [Paras 34, 35, 38, 39, 42]

The claimants discharged their burden by producing a verifiable chain of domestic procurement, which the department failed to rebut; confiscation of the gold was unsustainable.

Confiscation of currency as sale proceeds of smuggled goods - Confiscation of Indian currency allegedly representing sale proceeds of smuggled gold - HELD THAT: - The statutory burden applicable to notified gold did not extend to Indian currency. For confiscation, the department had to establish a proximate and identifiable link between the seized currency and the sale of specified smuggled gold by a person knowing or having reason to believe the goods were smuggled. Unaccounted cash, deficient book entries or its recovery with foreign-marked gold could not establish that link. The record did not identify the alleged smuggled gold sold, the sales, purchasers, consideration or connection with the seized currency. [Paras 36, 37, 42]

The statutory requirements for confiscation of the currency were not established, and its confiscation was unsustainable.

Penalty for dealing with smuggled goods - HELD THAT: - Penalty could not survive where the department failed to establish that the goods were liable to confiscation or that the persons concerned knowingly dealt with smuggled goods. The documentary evidence of lawful procurement remained undisproved, while the alleged connection with smuggled activity rested principally on unreliable statements. [Paras 40, 41, 43]

The penalties were set aside.

Final Conclusion: The impugned order was set aside. Confiscation of the gold and currency, and the penalties imposed, were held unsustainable; the appeals were allowed with consequential relief in accordance with law.

Burden of proof for seized foreign-origin gold - Confiscation of smuggled gold - Penalty for dealing with confiscation-liable gold

Burden of proof for seized foreign-origin gold - Confiscation of smuggled gold - Confiscation of foreign-origin gold bars seized from an Angadia firm and claimed by the appellant, where lawful import was not established - HELD THAT: - Gold is expressly covered by the statutory burden-of-proof provision. Once seized under a reasonable belief of smuggling, the claimant-owner was required to establish that the gold had been lawfully imported. The foreign markings on the gold bars, coupled with the failure to produce evidence establishing lawful import and correlation of the claimed purchase documents with the seized gold, justified the conclusion that the burden had not been discharged. The authorities were therefore justified in treating the gold as liable to confiscation. [Paras 4]

The confiscation of the gold bars, with redemption on payment of the adjudged fine, was upheld.

Penalty for dealing with confiscation-liable gold - Penalty on the appellant for its role in handling, transporting and possessing gold held liable to confiscation - HELD THAT: - The appellant was found to have knowingly handled, transported and possessed the gold that was held liable to confiscation. The statutory penalty provision covers a person acquiring possession of, or otherwise dealing with, goods known or reasonably believed to be liable to confiscation. [Paras 4]

The penalty imposed on the appellant was held justified and not excessive.

Final Conclusion: The appeal was dismissed. The confiscation and redemption fine in respect of the seized gold bars, and the penalty imposed on the appellant, were sustained.

Classification of compound and standardised vegetable extracts - product described as "Keranat"- Essential character of composite goods - Residual food-preparation heading

Classification of Keranat, comprising millet and wheat extracts standardised with sunflower seed oil and containing rosemary extract, as vegetable extracts under Heading 1302 or as a food preparation under Heading 2106 - HELD THAT: - Heading 1302 and the HSN Explanatory Notes cover compound extracts obtained by mixing plant extracts and standardised extracts containing substances added for handling or standard strength. Keranat was imported in bulk as a raw material, not as a finished nutraceutical for direct consumption. The millet and wheat extracts gave the goods their substantive botanical identity; sunflower seed oil functioned as a carrier, diluent and standardising medium, while rosemary extract functioned as an antioxidant. These additions did not confer the character of a food preparation, medicament or another specifically covered product. Since Heading 1302 specifically covered the goods, recourse to the residual food-preparation Heading 2106 was unwarranted; even on application of the essential-character test, the result remained the same. [Paras 6]

Keranat was held classifiable as a compound and standardised vegetable extract under Heading 1302, and not as a food preparation under Heading 2106.

Residual tariff item for other vegetable extracts - Applicable tariff item within Heading 1302 for Keranat, which was not covered by any specifically enumerated extract entry. - HELD THAT: - After tariff restructuring, the product did not correspond to any named extract tariff item under sub-heading 1302 19. As it remained classifiable as a vegetable extract, the residual entry within the specific extracts branch prevailed over the residual food-preparation heading. [Paras 6]

Keranat was classified under CTI 1302 19 39 as "Other" extracts.

Final Conclusion: The advance ruling held that Keranat retains the character of a compound and standardised vegetable extract and is classifiable under CTI 1302 19 39. The proposed classification under CTI 2106 90 99 was rejected.

Review Petition -Delay and laches in oppression and mismanagement proceedings - Tribunal's jurisdiction to examine fraud and forgery - Acquiescence and estoppel - Perversity of findings under Section 10F - Preponderance of Probabilities - Additional evidence in appeal - Appointment of special auditor - Clean hands doctrine - application filed under Order XLI, Rule 27 of the CPC

HELD THAT:- The application for open-court listing was rejected and the review petition was dismissed, no error apparent on the face of the record or other ground warranting reconsideration being found in order [2026 (5) TMI 1845 - SC ORDER]

Offence of “front running” - Special law prevailing over general penal law - correct procedure for filing the complaint in respect of an offence under the Special Act i.e. the SEBI Act - Statutory bar on cognizance of securities-market offences

Maintainability of an investor's FIR alleging front running through the disclosure and use of non-public information, in view of the statutory requirement that offences under the SEBI Act be prosecuted on a complaint by the Board - HELD THAT: - Correct procedure for filing the complaint in respect of an offence under the Special Act i.e. the SEBI Act is that, the complaint is filed by the Board in accordance with section 26 with the concerned Court. It is the SEBI who has to take steps to initiate the proceedings. The SEBI being authorized under the SEBI Act, is entrusted with the responsibility of regulating the market and safeguarding the investors and the security market would have the expertise to analyze the allegations for offences under the SEBI Act.

The FIR, read as a whole, primarily alleged front running, namely the use of non-public information concerning impending substantial securities transactions for obtaining wrongful gains. Front running is an offence under the SEBI Act and the express bar under section 26 permits cognizance only upon a complaint made by SEBI. The special statutory regime consequently prevails over the general penal law; permitting an FIR alleging the same SEBI offence to proceed would circumvent that regime. Whether independent offences under the IPC/BNS are made out was expressly left open. [Paras 21, 22, 30, 31, 37]

The FIR was quashed as not maintainable in its existing form, without precluding SEBI from independently considering criminal action under the SEBI Act or the employer from pursuing any independent remedy available in law.

Final Conclusion: The criminal application was allowed and the FIR was quashed because the allegations essentially concerned front running under the SEBI Act, for which cognizance can be taken only on SEBI's complaint. SEBI and the employer were left free to take appropriate action in accordance with law.

Twin conditions for bail u/s 45 - definition of "proceeds of crime" - presumption u/s 24(b) - predicate offence requirement for PMLA proceedings - prima facie assessment on broad probabilities at bail stage - disclosure u/s 66

HELD THAT:- Delay condoned and notice issued, with dasti service permitted.

Interim release of frozen alleged proceeds of crime for liabilities of another company - propriety of permitting funds frozen as alleged proceeds of crime in the respondent's hands to be used for payment of salaries and statutory dues of another company stated to be the primary accused - HELD THAT: - The Court noted that the respondent's frozen funds were alleged to constitute proceeds of crime and that the liabilities proposed to be discharged under the interim arrangement were not those of the respondent but of another company. The Court was not inclined to accept that the interim direction could be sustained on the basis of the asserted arrangement between the two companies. [Paras 8, 9, 10]

The interim order was set aside, without prejudice to adjudication of the respondent's appeal by the Tribunal on its own merits.

Final Conclusion: The appeal was allowed and the Tribunal's interim direction permitting use of frozen funds for another company's employee salaries and statutory dues was set aside. The Tribunal was directed to decide the pending appeal expeditiously and independently on merits.

Interest on refund of amount paid by mistake of fact - Deposit Distinguished From Tax - Interest on Delayed Refund

Whether interest is payable at 12% per annum on refund of an amount paid by mistake of fact, and the period for which such interest is payable? - HELD THAT: - The earlier appellate order had accepted that the amount was paid by mistake of fact. Such payment was consequently a deposit and not tax, and its refund carried interest.

The same view has been taken in the case of M/s Meenu Builders [2025 (5) TMI 574 - CESTAT NEW DELHI]. We also find that the same view has been taken by the Tribunal, Kolkata in the case of M/s Berger Paints India Limited [2026 (7) TMI 1565 - CESTAT KOLKATA] wherein, by relying upon the decision of Madura Courts Private Ltd. [2012 (7) TMI 512 - CALCUTTA HIGH COURT] it was held that 12% interest is payable in such cases [Paras 8, 9, 10]

The appellant was held entitled to interest at 12 per cent from the date of deposit until payment of the refund.

Final Conclusion: The appeal was disposed of by allowing interest at 12 per cent on the refunded amount from the date of deposit until its payment.

Exemption for sanitation conservancy services provided to a Governmental Authority - Extended limitation for service tax demand

Sanitation conservancy services - Governmental Authority - Small service provider exemption - Eligibility of sanitation conservancy services supplied to Noida Authority for exemption under entry 25 of Notification No. 25/2012, and of the remaining service amount for small service provider exemption - HELD THAT: - The work order showed that sweepers were supplied for cleaning purposes, bringing the service within sanitation conservancy. Noida Authority, being an authority set up under a State enactment, fell within the definition of Governmental Authority in the notification. There can be no doubt that Noida Authority falls in the definition of `Governmental Authority’. We therefore, hold that Appellant was eligible for exemption under entry 25 of Notification No.25/2012 dated 2006-2012.

The Tribunal further held that the remaining service amount qualified for the small service provider exemption under Notification No.33/2012 dated 20-06-2012. [Paras 8, 11]

The appellant was entitled to exemption under entry 25 of Notification No. 25/2012 for the sanitation conservancy services and to the small service provider exemption on the remaining service amount.

Extended period of limitation - Bona fide claim of service tax exemption - Validity of invoking the extended period of limitation for service tax on services for which the appellant had claimed exemption in regularly filed ST-3 returns - HELD THAT: - The appellant had regularly filed ST-3 returns and bona fide believed that its services were exempt under entry 25 of Notification No. 25/2012. Following G. D. Goenka Pvt. Ltd. [2023 (8) TMI 995 - CESTAT NEW DELHI] the Tribunal held that the extended period could not be invoked in these circumstances. [Paras 11]

The service tax demand could not be raised by invoking the extended period of limitation; consequently, the penalties under Sections 78 and 77(1)(d) were also set aside.

Final Conclusion: The appeal was allowed with consequential relief. The service tax demand and the associated penalties were set aside.

Sale of space for advertisement- Taxable Service - Renting of immovable property for commercial use - Extended period of limitation - willful suppression

Sale of space for advertisement - Taxability of municipal allotment of space for advertising hoardings prior to 01.07.2012 - HELD THAT: - Providing space for hoardings used for advertisement falls within the statutory description of sale of space or time for advertisement. The activity was therefore taxable notwithstanding that the consideration was described as licence fee for use of land. [Paras 5]

The demand under Sale of Space or Time for Advertisement Services for the period prior to 01.07.2012 was upheld.

Renting of immovable property for commercial use - Services by local authority to business entities - Taxability of rent and licence fee received by a municipality for vacant land and other immovable property made available for commercial use - HELD THAT: - Vacant land made available for market places and commercial use did not fall within the exclusions from renting of immovable property. The expression "any other person" in the pre-negative-list taxable-service provision meant a person other than the recipient and did not require that the provider be someone other than the owner. After 01.07.2012, renting of property and land for flea markets for consideration was a service supplied to traders and business entities; such discretionary commercial activity of a local authority was not immune as a statutory or sovereign function. [Paras 6]

The renting activity was held taxable for both the pre- and post-negative-list periods.

Extended period of limitation - willful suppression - Penalty for non-payment of service tax - Invocation of the extended period for recovery of service tax from a municipal authority for taxable advertising-space and renting activities - HELD THAT: - The Department produced no evidence of a positive act of deliberate non-disclosure or suppression with intent to evade tax. Mere failure to declare or pay tax did not constitute wilful suppression, particularly where the provider was a government authority and no mala fide intent was established. [Paras 6, 7]

The demand beyond the normal period was set aside; the demand for the normal period was confirmed with proportionate reduction of penalty.

Final Conclusion: The appeal was partly allowed. Service tax liability on both activities was sustained for the normal period, while the demand for the extended period and the penalty were correspondingly reduced.

Classification of composite construction contracts - Works contract service and construction of complex service - Judicial discipline in remand proceedings

Service-tax demand on composite construction of residential houses, involving supply of materials and services, under construction of complex service instead of works contract service - HELD THAT: - As decided in M/S. LARSEN & TOUBRO LIMITED & ANOTHER VERSUS STATE OF KARNATAKA & ANOTHER [2013 (9) TMI 853 - SUPREME COURT] CICS and CCS, as defined under clauses (zzq) and (zzzh), respectively, of sub section (105) of the section 65 would cover only pure service contracts, without any transfer of property in goods.

The construction activity had already been held in the earlier remand order to be composite in nature, subject to verification. Construction of complex service covers only pure service contracts and cannot extend to the value of property transferred in goods; the statutory mechanism for exclusion of such value became available with the separate levy on works contract service. A demand proposed under construction of complex service could not be confirmed under a different taxable category, and the adjudicating authority was bound to follow the remand directions. Confirmation of the demand under construction of complex service therefore violated judicial protocol. [Paras 8, 9]

The impugned demands on the composite construction activity were set aside and all three appeals were allowed.

Final Conclusion: The service-tax demands confirmed under construction of complex service on composite construction contracts were unsustainable. The impugned orders were set aside and the appeals were allowed.

Practice of adjournments sought mechanically - Adjourning the matter beyond three times

HELD THAT:- The appeal was dismissed for non-prosecution after repeated absence and adjournment requests by the appellant. No justification for adjourning the matter beyond three times which is the maximum number statutorily provided.

Refund of CENVAT credit reversed under protest - Time-barred excise demand

Entitlement to refund of CENVAT credit reversed under protest pursuant to a show-cause notice whose demand was set aside as barred by limitation - HELD THAT: - The appellant was not liable to pay the demand after the show-cause notice was set aside on account of the inapplicability of the extended period of limitation. It was immaterial whether the demand failed on limitation or on merits, since the decisive fact was that no liability to pay the demand survived. The authorities below therefore erred in applying India Cements Ltd. [1984 (7) TMI 361 - CEGAT NEW DELHI] and the amount reversed under protest was rightly refunded. [Paras 7, 9]

The substantial questions of law were answered in favour of the assessee; the refund sanctioned by the Deputy Commissioner was held justified.

Final Conclusion: The appeal was allowed and the questions of law were answered in favour of the assessee and against the Revenue. The refund of CENVAT credit reversed under protest was sustained.

Clandestine manufacture and removal - requirement of corroborative evidence - Undervaluation based on statutory-return discrepancies - Extended limitation - prior knowledge of disclosed facts

Clandestine manufacture and removal - requirement of corroborative evidence - Input-output ratio based demand - Demand for alleged clandestine manufacture and clearance of Sponge Iron, Ferro Alloys and Billets founded on mismatches in ER-4, ER-6, ER-1 and Trial Balance figures and input-output ratios - HELD THAT: - Quantification based upon return mismatches and input-output ratios was held to be flawed, there being no scientific basis to assume actual production. The appellant's reconciliations were supported by documentary evidence, whereas the Revenue produced no corroboration through evidence of excess procurement or consumption of inputs, electricity or labour, transportation, purchasers, cash transactions or removal of the alleged goods. Clandestine removal, being a serious charge, cannot rest on presumptions and assumptions without cogent corroborative evidence. [Paras 6, 8, 9, 11]

The demand for alleged clandestine manufacture and clearance was set aside on merits.

Undervaluation - ER-4 and ER-1 return comparison - Demand for alleged undervaluation of Sponge Iron, Ferro Alloys and Pellets based on differences between ER-4 and ER-1 figures - HELD THAT: - ER-4 reflected auto-generated values derived by adjusting opening stock, production value and closing stock and did not by itself represent actual sale value. The appellant furnished reconciliations, while the Revenue adduced no cogent evidence of realization of any differential value, including evidence from company officials or purchasers. The alleged undervaluation was therefore unproved. [Paras 7, 8, 11]

The demand for alleged undervaluation was set aside on merits.

Extended limitation - prior knowledge of disclosed facts - Invocation of the extended period for demands founded on statutory returns and Trial Balance figures after prior proceedings on the same issue - HELD THAT: - The relevant particulars were disclosed in ER-1, ER-4, ER-6 and the Trial Balance, and earlier proceedings on the same issue had already been initiated against the appellant. In these circumstances, suppression could not be alleged again for invoking the extended period. [Paras 12, 13]

The confirmed demand was independently held barred by limitation for the extended period.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief. The demands failed both on merits for want of corroborative evidence and, independently, insofar as the extended period was invoked.

Clandestine manufacture and removal-requirement of corroborative evidence - Undervaluation-ER-4 accounting figures vis-a -vis transaction-wise clearance value

Clandestine manufacture and removal-requirement of corroborative evidence - Input-output ratio-based production estimation - Demand for alleged clandestine manufacture and clearance of Ferro Silico Manganese, Iron Ore Pellets and M.S. Billets based on mismatches in ER-4, ER-6, ER-1 and trial balance figures and an input-output ratio - HELD THAT: - Quantification founded merely on raw-material/output ratios and return mismatches had no scientific basis, particularly when manufacture involved several raw materials and consumables in varying proportions. The appellant's documentary reconciliation answered the alleged mismatches, while the Revenue produced no corroboration through evidence of excess procurement or consumption of inputs, electricity usage, labour, transport, buyers, cash transactions or unaccounted sale proceeds. A charge of clandestine removal cannot rest on assumptions and presumptions without cogent corroborative evidence. [Paras 6, 8, 9, 11]

The demand for clandestine manufacture and clearance was set aside on merits.

Undervaluation-ER-4 accounting figures vis-a -vis transaction-wise clearance value - Proof of additional consideration - Demand for undervaluation of Ferro Silico Manganese, Iron Ore Pellets, M.S. Billets and Sponge Iron founded on comparison of ER-4 sale figures with ER-1 clearance values. - HELD THAT: - The ER-4 sale value was an auto-generated accounting figure derived from opening inventory, production value and closing inventory; it did not represent the actual transaction value of clearances. The appellant furnished reconciliation documents, and the Revenue adduced no cogent evidence of realization of any differential value, including statements of company officials or buyers. The comparison of ER-4 and ER-1 figures alone could not establish undervaluation. [Paras 7, 8, 11]

The demand for undervaluation was set aside on merits.

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

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

HELD THAT: - Writ jurisdiction ought to be exercised with exceptional care in bank-recovery and SARFAESI matters, particularly where disputed questions of fact arise. Entertaining a writ petition by bypassing the efficacious statutory appellate remedy would frustrate the scheme and legislative intent of the special enactment. [Paras 3, 4, 5]

The writ petition was disposed of, granting the petitioner liberty to avail the alternate efficacious remedy within 30 days; any subsisting interim protection was continued for that period.

Final Conclusion: The petition challenging SARFAESI proceedings was disposed of with liberty to pursue the statutory alternate remedy, while preserving any interim protection for 30 days.