TaxTMI Updates e-Newsletter
Aug 20,2026

Regular bail in GST input tax credit fraud prosecution - Regular bail for an active partner accused of availing input tax credit from firms whose GST registrations were cancelled ab initio for non-existence or non-operation

HELD THAT: - The investigation had concluded and the complaint had been filed. Having regard to the maximum punishment and the absence of any reasonable ground for continued custody, the Court held that further detention was unwarranted; the Department remained free to pursue appropriate measures otherwise available in law. [Paras 6, 8]

The applicant was enlarged on regular bail subject to the stipulated conditions.

Final Conclusion: The regular-bail application was allowed subject to conditions, without prejudice to the Department's available legal remedies and to the merits at trial.

Seeking release on bail pending trial - role attributed on the accused-applicant - HELD THAT:- Considered that the only role attributed on the accused-applicant is of mediator, who used to refer his clients for the purchase of wood from M/s Shine Enterprises, which is allegedly a non-existent firm, was apparently not within the knowledge of accused-applicant. The charge sheet is submitted. The applicant has no criminal history.

Hence, without touching merit of the case, the bail application is allowed furnishing a personal bond and two sureties each in the like amount to the satisfaction of court concerned in view of observation made in its dictums of Girish Gandhi Vs. State of Uttar Pradesh [2024 (8) TMI 1140 - SUPREME COURT] and Policy Strategy for grant of bail in re[2023 (1) TMI 1544 - SUPREME COURT]

Cancellation of GST registration - defective show-cause notice - Reasoned order and non-application of mind - Alternative remedy - writ jurisdiction in cases of glaring illegality

Cancellation of GST registration - defective show-cause notice - Reasoned order and non-application of mind - Validity of the notice and order cancelling GST registration where the notice alleged fraud, wilful misstatement or suppression of facts without particulars and afforded no sufficient opportunity to respond, while the cancellation order disclosed no ground for cancellation - HELD THAT: - A noticee can furnish an explanation only to facts specifically put to it. A notice merely reproducing allegations of fraud, wilful misstatement or suppression, without their particulars, is ambiguous and does not permit an effective response. The cancellation order, having failed to disclose the ground on which registration was cancelled, reflected complete non-application of mind and disregarded the minimum requirement applicable to an order affecting a registered trader's rights. [Paras 5, 7, 8]

The show-cause notice and the consequential cancellation order were quashed; the respondents were left at liberty to commence fresh proceedings from the show-cause notice stage.

Alternative remedy - writ jurisdiction in cases of glaring illegality - Maintainability of the writ petition despite the statutory alternative remedy against cancellation of GST registration - HELD THAT: - The existence of an alternative remedy does not bar exercise of jurisdiction under Article 226 where the impugned action discloses apparent and glaring illegality. [Paras 6]

The objection based on availability of an alternative remedy was rejected.

Final Conclusion: The writ petition was allowed, and the defective notice and consequential cancellation order were set aside, subject to payment of costs. Fresh proceedings may be initiated from the show-cause notice stage.

Violation of principles of natural justice in GST adjudication - Service of show cause notice through GST portal - no separate intimation, preventing the petitioner from responding

Validity of GST adjudication where the show cause notice was uploaded only under the portal tab 'Additional Notice and Orders' without separate intimation, resulting in the petitioner being unable to submit a reply - HELD THAT: - The Court found a prima facie case that uploading the show cause notice only under the specified portal tab, without separate intimation, had prevented the petitioner from responding. This was held to constitute a violation of the principles of natural justice. As the statutory appeal had been dismissed solely on limitation and not on merits, interference was warranted in the peculiar facts of the case. [Paras 5, 6]

The adjudication order and the appellate order were quashed and set aside; the petitioner was permitted to reply to the show cause notice, which was directed to be decided afresh by a reasoned and speaking order after affording a hearing.

Final Conclusion: The writ petition was disposed of by setting aside the orders passed without an effective opportunity to answer the show cause notice and directing fresh adjudication after receipt of the petitioner's reply.

Conditional remand of GST assessment - De novo adjudication subject to pre-deposit

Challenge to a GST assessment order after expiry of the statutory appellate limitation, coupled with the petitioner's undertaking to deposit part of the disputed tax for fresh adjudication - HELD THAT: - On the petitioner's undertaking to deposit 50% of the disputed tax in cash, the Court considered it appropriate to quash the assessment order and restore the matter for fresh adjudication. The petitioner was required to file a reply with supporting documents, treating the assessment order as an addendum to the show-cause notice. [Paras 7, 8, 9, 10, 11]

The assessment order was quashed and the matter remitted for fresh decision on merits, subject to compliance with the stipulated pre-deposit and filing of reply; on default, recovery proceedings could be pursued in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by quashing the impugned GST assessment and directing de novo adjudication subject to the petitioner's compliance with the prescribed conditions.

Grant of bail in GST offences - Criminal antecedents and bail - Presumption of innocence and pre-trial detention - principle that "Bail is a Rule and jail is exception"

Entitlement to bail in prosecution for alleged fraudulent availment of input tax credit on invoices issued by non-existent firms - HELD THAT: - Criminal antecedents, without material showing a likelihood of tampering with evidence, intimidating witnesses, evading the process of law, or otherwise subverting justice, cannot by themselves justify refusal of bail.

It is settled principle of law that the object of bail is to secure the attendance of accused at the trial. No material particulars or circumstances suggestive of the applicant fleeing from justice or thwarting the course of justice or creating other troubles in the shape of repeating offences or intimidating witnesses and the like have been shown.

Pre-trial detention is not punitive; its object is to secure the accused's attendance at trial. The investigation stood completed, the prosecution was based on documentary material, the offence was triable by a Magistrate and carried a maximum punishment of five years, while the trial was unlikely to conclude within a reasonable time. The absence of proceedings for assessment of the alleged contravention was also relevant, since a finding in such proceedings that no violation occurred could bear upon the criminal prosecution. [Paras 13, 17, 19, 20, 21]

Bail was granted subject to conditions intended to secure attendance at trial and prevent interference with the prosecution.

Final Conclusion: The bail application was allowed, subject to conditions safeguarding the trial and prohibiting interference with evidence or witnesses.

Grant of bail in GST prosecution - Pre-trial detention and speedy trial - Criminal antecedents in bail adjudication

Grant of bail in GST prosecution - Pre-trial detention and speedy trial - Criminal antecedents in bail adjudication - Entitlement to bail in prosecution for alleged fraudulent availment and passing on of input tax credit through fake invoices. - HELD THAT: - Criminal antecedents alone could not justify refusal of bail where no exceptional circumstance, likelihood of tampering with evidence, intimidation of witnesses, evasion of process, or misuse of liberty was shown. Investigation stood completed and the complaint had been filed; the prosecution was substantially documentary, the offences were triable by a Magistrate and carried a maximum punishment of five years. Continued pre-trial custody, with no immediate prospect of conclusion of trial, would be inconsistent with the presumption of innocence and the principle that detention before conviction is not punitive. [Paras 14, 20, 21, 22, 23]

The applicants were granted bail subject to conditions restraining them from tampering with evidence, influencing witnesses, committing similar offences, leaving India without permission, and requiring their appearance before the trial court.

Final Conclusion: The bail application was allowed, subject to conditions designed to secure the applicants' attendance at trial and preserve the integrity of the proceedings.

Alternative statutory remedy and writ jurisdiction - Jurisdictional error requiring factual adjudication

Maintainability of the writ petition challenging assessment of a registered person under the provision for assessment of unregistered persons, where the assessment concerned pre-registration transactions - HELD THAT: - The law is well-settled that, existence of alternative remedy is not an absolute bar for entertaining or maintaining a writ petition before the high prerogative writ jurisdiction of this Court. It is a self-impose restriction.

Writ interference is warranted only where illegality or want of jurisdiction is ex facie and can be determined without factual inquiry. Whether transactions in the pre-registration period of an existing registered person fall within the provision invoked required factual adjudication. The impugned order could therefore not be held ex facie without jurisdiction in writ proceedings. [Paras 13, 14]

The petitioner was relegated to the statutory appellate remedy, with liberty to file an appeal within six weeks; the appellate authority was directed to consider it in accordance with law, including the question of delay on sufficient cause. The applicability of the assessment provision and all merits were left open.

Final Conclusion: The writ petition was disposed of by relegating the petitioner to the statutory appeal. No opinion was expressed on the applicability of the assessment provision or on the merits of the parties' contentions.

Show-cause notice under extended limitation for fraud, wilful misstatement or suppression - Validity of a show-cause notice issued under Section 74 of the SGST/CGST Act for the tax period 2020-21 without allegations disclosing fraud, wilful misstatement or suppression of material facts with intent to evade tax

HELD THAT: - A notice invoking Section 74 must contain the statutory ingredients of fraud, wilful misstatement or suppression of material facts with intent to evade tax. As the impugned notice did not spell out those ingredients, it could not be sustained. Case relied HCL INFOTECH LTD VERSUS COMMISSIONER, COMMERCIAL TAX AND ANOTHER [2024 (9) TMI 1644 - ALLAHABAD HIGH COURT][Paras 3, 5, 6]

The show-cause notice was quashed, with liberty to the respondent-authorities to issue a fresh notice in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned show-cause notice, while preserving the authorities' liberty to issue a fresh notice in accordance with law.

Alternative statutory remedy and writ jurisdiction - Parallel GST proceedings on the same subject matter

Whether writ jurisdiction should be exercised to determine the objection under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 and challenges to the demand despite an available statutory appeal? - HELD THAT: - The bar against parallel proceedings applies where the proceedings concern the same subject matter; mere involvement of input tax credit or the same financial year is not conclusive. Determination requires comparison of the respective show-cause notices, allegations, transactions, computations, material and liability sought to be determined. As the petitioner had an efficacious appellate remedy and the plea required factual examination of the underlying record, the Court declined to exercise writ jurisdiction. The absence of the objection in the written reply and the petitioner's participation in adjudication were relevant only to the exercise of writ jurisdiction and not a merits determination. [Paras 33, 34, 38, 42, 43]

The writ petition was disposed of, leaving all contentions, including the bar against proceedings on the same subject matter, open for independent consideration by the Appellate Authority.

Final Conclusion: The Court declined to entertain the challenge in writ jurisdiction because the applicability of the prohibition against parallel Central and State GST proceedings required factual comparison best undertaken in statutory appeal. All merits issues were left open to the Appellate Authority.

GST transition in works contracts - Consideration of contractor representations for differential tax

Adjustment of GST consequences arising from the transition from the KVAT regime in respect of works contracts - HELD THAT: - Following the governing directions in the earlier writ petitions [2023 (6) TMI 93 - KARNATAKA HIGH COURT] as modified in appeal, the pre-GST works and payments are to be identified and assessed under the applicable KVAT regime; the balance work after commencement of GST is to be determined after deriving material rates, deducting KVAT and applicable service tax, and adding the applicable GST. The contractor may submit a comprehensive representation to the employer, which must be considered in accordance with those directions. Directions concerning filing of revised returns, waiver of interest, penalty or limitation, and restraint on tax authorities were excluded, having been set aside in appeal. [Paras 4, 5]

The writ petition was allowed in terms of the specified directions governing calculation of the tax consequences and consideration of the petitioner's representation by the employer.

Challenge to GST assessment order - Exclusion of time spent in writ proceedings - Challenge to the GST assessment order impugned in the writ petition - HELD THAT: - The Court did not adjudicate the validity of the assessment order and left the petitioner to pursue the appropriate proceedings. The period spent in prosecuting the writ petition is not to be taken into account by the concerned authorities. [Paras 6]

Liberty was reserved to challenge the assessment order in appropriate proceedings, with exclusion of the time spent in the writ petition.

Final Conclusion: The writ petition was allowed by applying the surviving directions governing GST-transition calculations and representations in works contracts. The challenge to the assessment order was left open for appropriate proceedings, subject to exclusion of the time spent in the writ petition.

GST registration based on legal possession of business premises - GST registration denied on account of a landlord's dispute regarding the applicant's tenancy rights -Landlord-tenant dispute and GST registration

Entitlement of a partnership firm to GST registration for premises occupied through its managing partner, where the landlord disputes the scope of the lease - HELD THAT: - While considering a registration application, the registering authority is required to ascertain whether the applicant is in legal possession of the premises; it cannot undertake a detailed adjudication of disputes concerning the extent of the lessee's rights under the lease, which require determination by the competent civil or rent control court. The lease documents permitted operation of a showroom, the co-lessees authorised the managing partner to form the firm and conduct business, and the proceedings initiated by the landlords themselves indicated the managing partner's lawful possession. These materials prima facie established the firm's legal possession for registration purposes. [Paras 11, 12, 13, 14]

The existing rejection was not interfered with because the requisite supporting documents had not accompanied that application; the petitioners were permitted to file a fresh application with the necessary documents, to be decided in light of the Court's observations.

Final Conclusion: The writ petition was disposed of with liberty to submit a fresh GST registration application supported by the necessary documents. The registering authority was directed to decide it within the stipulated period.

GST demand based on multiple e-way bills under a single invoice - Failure to determine transportation capacity and sale consideration

HELD THAT: - The finding of under-declaration and short payment of tax rested on the use of the same invoice for multiple e-way bills. However, there was no proper determination whether the invoiced quantity of teak wood could have been transported in one vehicle or required separate vehicles. The adjudication also required verification, on proper records including bank statements, of the quantity transported under each e-way bill and the consideration received on sale. [Paras 10, 11, 12, 13]

The impugned order was quashed and the matter remitted for fresh adjudication on merits after the petitioner furnishes a proper reply and supporting evidence.

Final Conclusion: The writ petition was disposed of by quashing the GST demand order and remitting the matter for fresh determination in accordance with law.

Provisional attachment of bank account during GST investigation - De-freezing of the technology service provider's bank account provisionally attached in connection with investigation into online gaming and betting transactions routed through its platform - HELD THAT: - The Court found from the record that the petitioner had permitted its platform to be used for the gaming and betting activities of its merchant without verifying the merchant's credentials, actual business or supporting invoices. An undertaking obtained from the merchant did not satisfy that obligation. In view of the extensive transactions, continuing analysis of recipient bank accounts and the ongoing investigation, the Court declined to interfere with the attachment. [Paras 7]

The request to de-freeze the attached bank account was rejected.

Final Conclusion: The writ petition was dismissed and the provisional attachment of the petitioner's bank account was not disturbed.

Anti-profiteering - passing on additional input tax credit benefit - Interest on unpassed input tax credit benefit - Penalty for anti-profiteering

Anti-profiteering-passing on additional input tax credit benefit - Contravention of the obligation to pass on additional input tax credit benefit to buyers of the construction project by commensurate reduction in prices. - HELD THAT: - The Respondent accepted the revised investigation report. The invoices and receipts established that substantial input tax credit benefit had been passed on; nevertheless, the revised buyer-wise computation established that the full benefit had not been passed on to the remaining eligible recipients. [Paras 12, 13, 20]

The Respondent was held to have contravened section 171 of the CGST Act to the extent of the input tax credit benefit remaining unpaid to 25 eligible recipients.

Interest on unpassed input tax credit benefit - Liability to pay interest on input tax credit benefit not passed on to eligible recipients. - HELD THAT: - The statutory obligation is to pass on the additional input tax credit benefit at the time of supply; failure to do so deprives recipients of the monetary benefit from that date. The Respondent's proposed differentiation based on waiver or receipt of interest on delayed consideration, and on the timing of final payments, was not accepted. In the case of a disputed allotment, the credit may be adjusted at final settlement with interest; however, where the recipient's separate consumer dispute is pending, payment of the unpassed benefit cannot be withheld or adjusted against the disputed consideration. [Paras 14, 17, 18, 19, 21]

Interest at 18 per cent was directed on the unpassed input tax credit benefit from 01.07.2017.

Penalty for anti-profiteering - Penalty for failure to pass on the entire additional input tax credit benefit after the penalty provision became operative. - HELD THAT: - The contravention continued beyond the commencement of section 171(3A). Penalty therefore attached to profiteering relatable to the period commencing from 01.01.2020, subject to the statutory proviso exempting penalty where the profiteered amount is deposited within the stipulated period. [Paras 15, 17, 22]

The Respondent was held liable to penalty at 10 per cent, subject to exemption upon deposit of the profiteered amount within thirty days as provided by the proviso.

Final Conclusion: The revised investigation report was accepted. The Respondent was directed to pass on the outstanding input tax credit benefit to the eligible recipients with interest, and was held liable to penalty subject to the statutory proviso.

Depreciation on goodwill as an intangible asset - deduction under section 37(1) for Corporate Social Responsibility contributions as business expenditure - computation of market value for supplies between group/related units for deduction u/s 80IA(8) - arm's length / open market principle - valuation of captive power supplies by reference to distribution-company consumer tariff - eligibility of profits from transfer of steam as 'power' for deduction under section 80IA(4) - entertainment of additional or revised claims before appellate authorities without revision of return - application of precedent and principle of consistency in tax appeals

Delay in filling SLP with 739 days - HELD THAT:- We fail to understand as to how the petitioner/Department once having “noted” that order [2024 (1) TMI 1495 - GUJARAT HIGH COURT] was assailed before this Court in SLP [2025 (9) TMI 727 - SC ORDER] and dismissed by this Court on contd.. the ground of 463 days delay, subsequently, in February, 2026, this special leave petition has been filed with 739 days delay against the very same impugned order. This is an instance of unnecessarily burdening this Court with a frivolous special leave petition.

We hope that the Department would take note of the aforesaid observations and be more vigilant in filing cases with exorbitant delay before this Court and repeatedly not file such cases.

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Validity of reassessment notice - Specified authority for sanction - Jurisdiction of Assessing Officer - Notice issued by the Jurisdictional Assessing Officer(s) (JAO) v/s prescribed faceless mechanism or competent Faceless Assessment Officer(s) (FAO) - Effect of subsequent amending legislation on pending reassessment litigation - Insertion of new section 147A - scope of legislative changes introduced to the reassessment framework under Sections 147 to 151 of the IT Act, by the Finance Act, 2021 enacted on 28.03.2021

HELD THAT:- The appeals were disposed of in terms of the earlier order [2026 (5) TMI 54 - SC ORDER (LB)] and remitted to the jurisdictional High Court(s) for decision accordingly.

Draft assessment order and final determination of tax liability - Eligible assessee for draft assessment procedure - Inapplicability of curative provision to substantive assessment defect

Draft assessment order and final determination of tax liability - Validity of demand and penalty proceedings founded on an assessment order expressly issued as a draft order - HELD THAT: - The order unequivocally described itself as a draft order, treated the disallowance of foreign travelling expenses as only proposed, granted the assessee the statutory option to accept the variation or file objections, and expressly stated that no demand or penalty notice was being issued. A demand can be raised only after a final assessment determining the sum payable; no such final assessment order had been passed. [Paras 13, 14, 15]

The demand notice and the notice initiating penalty proceedings, being founded solely on the draft assessment order, were unsustainable.

Inapplicability of curative provision to substantive assessment defect - Whether the draft order could be treated as a final assessment order on the ground of an uploading error and cured under the statutory curative provision? - HELD THAT: - The character of the order as a draft order did not result merely from selection of a wrong uploading tab: its heading, operative terms and express reservation of the assessee's right to object consistently showed that it was a draft order. Further, the Revenue neither acknowledged and corrected the asserted mistake through a subsequent order nor passed a final assessment order. The curative provision was consequently inapplicable. [Paras 16, 17, 18]

The Revenue could not deem the draft order to be a final assessment order or validate it by recourse to the curative provision.

Eligible assessee for draft assessment procedure - Competence to issue a draft assessment order where the Transfer Pricing Officer proposed no variation in the assessee's international transactions - HELD THAT: - As the Transfer Pricing Officer found no variance in the return concerning international transactions, the assessee was not an eligible assessee for the draft-assessment procedure. Therefore, there was no occasion or competence to issue a draft assessment order under that procedure. [Paras 19, 20, 21, 22]

The draft assessment order was without authority and was liable to be set aside.

Final Conclusion: The draft assessment order, the consequential demand notice and the notice initiating penalty proceedings were set aside. The petition was allowed.

Revision of assessment u/s 263 - Concurrent findings of fact on undisclosed tanker income

Validity of revision of the block assessment concerning the assessee's claimed unaccounted expenditure, investments in assets and income from a petrol pump - HELD THAT: - The additions arising from the original assessment had already been adjudicated in the appellate proceedings, and the Tribunal's order in those proceedings had attained finality after dismissal of the Revenue's appeals. The Tribunal was therefore justified in setting aside the revisionary proceedings on these matters. [Paras 8, 10]

The revisionary order was rightly set aside insofar as it concerned these issues.

Concurrent findings of fact on undisclosed tanker income - Addition relating to the source of acquisition of tankers and income from their operation - HELD THAT: - The appellate authority and the Tribunal concurrently found, after verification of the records, that no material established that the income from the tankers was unaccounted. In the absence of any legal infirmity in those concurrent factual findings, no interference was warranted. [Paras 9, 10]

Deletion of the addition relating to the tankers was sustained.

Final Conclusion: The substantial questions were answered in favour of the assessee and against the Revenue. The appeals were dismissed.

Penalty u/s. 271(1)(c) for concealment or furnishing inaccurate particulars - Disallowance of deductions u/ss 80HHC and 80IA - HELD THAT: - The quantum additions did not survive before the High Court. Further, the Tribunal had recorded a finding that the assessee had disclosed the relevant particulars and had furnished a plausible, bona fide explanation. A mere disallowance of deductions could not, in those circumstances, establish concealment or furnishing of inaccurate particulars so as to attract penalty by relying upon the decision of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] and Associated Power Structure [2014 (12) TMI 604 - GUJARAT HIGH COURT] [Paras 5, 6]

The deletion of penalty was upheld and the question of law was answered in favour of the assessee.

Final Conclusion: The appeal was dismissed. The Tribunal's deletion of penalty was affirmed since the quantum additions were not sustained and no concealment or furnishing of inaccurate particulars was established.

Condonation of delay for charitable exemption claim - delay in filing Form-10B - Genuine hardship under statutory condonation power - Validity of administrative time limit restricting statutory discretion

HELD THAT: - The statutory power to admit a belated claim for exemption is intended to avoid genuine hardship and must be exercised liberally. Since no specific limitation is prescribed for condonation under the provision, the competent authority must exercise its discretion having regard to the difficulties faced by the assessee; rejection solely because the applications were beyond the time stipulated in an administrative circular was unsustainable. [Paras 7, 8, 9]

The rejection of the condonation applications was set aside; the applications were allowed and the respondents were directed to permit filing of Form-10B with the returns and process them in accordance with law.

Final Conclusion: The writ petitions were allowed. The orders refusing condonation and the consequential demand notice were set aside.

Reassessment notice beyond limitation - First proviso to section 149 and expiry of limitation under the erstwhile reassessment regime

Validity of reassessment proceedings initiated under the amended reassessment regime after expiry of the extended limitation period under the erstwhile regime - HELD THAT: - The first proviso to section 149 restricts issuance of a reassessment notice under the amended regime where the limitation prescribed under the erstwhile regime had already expired. Since the extended six-year period under the erstwhile regime had expired before the issuance of the notice under section 148A(b), the subsequent initiation of reassessment proceedings was barred by limitation. [Paras 5, 6, 7]

The order under section 148A(d) and the consequential notice under section 148 were without jurisdiction and were quashed.

Final Conclusion: The writ petition was allowed and the impugned reassessment order and consequential notice were quashed as time-barred and without jurisdiction.

Service permanent establishment under India-USA DTAA - Dependent agent permanent establishment of Indian distributor - Attribution of profits to permanent establishment at arm's length

Service permanent establishment under India-USA DTAA - Stewardship and auxiliary activities - Exclusion of royalties and fees for included services - Existence of a service PE in India through activities performed by the assessee's personnel for its Indian subsidiary - HELD THAT: - Article 5(2)(l) requires furnishing of services through employees or other personnel, but excludes services falling within Article 12. The undisputed activities of overseeing the subsidiary's operations were stewardship or auxiliary activities. As to training, administrative support, assistance in gathering news and sales support, the departmental authorities neither established that such activities exceeded auxiliary functions nor determined whether they were technical or consultancy services falling within Article 12. A service PE could not be inferred without ascertaining the nature of those services. [Paras 16]

The assessee was not shown to have a service PE in India.

Dependent agent permanent establishment of Indian distributor - Principal-to-principal distribution arrangement - Whether the Indian subsidiary distributing Bloomberg Professional Services constituted a dependent agent PE of the assessee? - HELD THAT: - The conditions in Article 5(4) require authority habitually to conclude contracts, maintenance of stock for regular delivery on behalf of the enterprise, or habitual securing of orders wholly or almost wholly for it. The Indian subsidiary contracted independently with end-customers, raised separate invoices, had no authority to contract for the assessee, and the assessee had no privity with end-customer contracts. Control over standards relating to the licensed products was a normal incident of the parent-subsidiary relationship and did not make the subsidiary a dependent agent. The distribution was on a principal-to-principal basis. [Paras 19, 20]

The Indian subsidiary was not a dependent agent PE of the assessee in India.

Attribution of profits to permanent establishment at arm's length - Attribution of further profit to the Indian subsidiary assuming it constituted a dependent agent PE - HELD THAT: - The transfer pricing officer had found the transactions between the assessee and the Indian subsidiary to be at arm's length. Therefore, even if the subsidiary were regarded as a dependent agent PE, no further profit could be attributed to it. [Paras 20]

Further profit attribution was held untenable.

Final Conclusion: The assessee had neither a service PE nor a dependent agent PE in India through its Indian subsidiary. The profit attribution made to the alleged PE was consequently deleted, and the income returned by the assessee was directed to be accepted.

Approval u/s 80G for trusts commencing activities - Retrospective application of amended approval provisions- Application under amended clause (iv)(B)

Rejection of an application for regular approval under section 80G solely as time-barred under the erstwhile clause (iii) regime, despite the subsequent insertion of clause (iv) permitting an eligible trust which has commenced activities to apply after such commencement - HELD THAT: - Following the co-ordinate Bench decision in M/s. Hirawat Foundation [2026 (8) TMI 446 - ITAT CHENNAI] the Tribunal held that amended clause (iv) of the first proviso to section 80G(5), effective from 01.10.2024, independently permits a trust which has commenced activities to apply at any time after commencement. Since the rejection was made after the amendment came into force, the application could not be rejected as non-maintainable merely for non-compliance with the time limit under the earlier clause (iii) regime. The grant of registration under section 12AB also indicated that the trust's activities were genuine. [Paras 8]

The rejection order was set aside and the application was restored to the Commissioner for consideration under the amended clause (iv)(B) regime, in accordance with law and after affording reasonable opportunity of hearing.

Final Conclusion: The appeal was partly allowed for statistical purposes. The application for approval under section 80G was remanded for fresh decision under the amended statutory regime.

Addition for excess share premium u/s 56(2) - Safe harbour for fair market value of unquoted shares - issue price exceeds the value determined under Rule 11UA by less than 10%

HELD THAT: - The Tribunal held that, where the difference between the share issue price and the value adopted under Rule 11UA does not exceed 10 per cent, the issue price is deemed to be the fair market value. Following Sakshi Fincap (P) Ltd. [2024 (5) TMI 1232 - ITAT DELHI] and the curative safe-harbour amendment introduced by the CBDT notification, the variation in the present case being within that limit, the addition was unsustainable. [Paras 6]

The addition under section 56(2)(viib) was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition for share premium received within the permissible safe-harbour variation was deleted.

Fees for included services - make available condition - Standard SaaS subscription receipts - India-USA Double Taxation Avoidance Agreement

Fees for included services - make available condition - Standard SaaS subscription receipts - Automated facility versus technical services - Taxability of receipts from Indian customers for subscription-based software development kit and dashboard products as fees for included services under the India-USA DTAA - HELD THAT: - The standard published terms, uniform product architecture and customer materials established that the assessee supplied a standard, non-customised SaaS facility, with customers themselves integrating the software development kit and generating reports through the dashboard. Variations in outputs based on customer data did not convert the automated facility into a customised service. More importantly, use of a product embodying technology does not satisfy the make available requirement: the underlying algorithms, source code and processes remained with the assessee, and customers acquired neither technology nor knowledge capable of independent application after expiry of the subscription. Incidental technical account management, premium support and pre-sale demonstrations did not alter the predominant character of the transaction or amount to transfer of technology. The same reasoning was held mutatis mutandis applicable for Assessment Year 2022-23. [Paras 13, 19]

The SaaS subscription receipts did not constitute fees for included services under Article 12(4) of the DTAA, and the addition was deleted for both assessment years.

Grant of credit for tax deducted at source claimed by the assessee - HELD THAT: - The claim required verification by the Assessing Officer before credit could be allowed in accordance with law. [Paras 14]

The matter was restored to the Assessing Officer for verification and grant of eligible tax deducted at source credit.

Maintainability of the challenge to initiation of penalty proceedings for alleged under-reporting of income - HELD THAT: - The challenge was held premature at the stage of initiation of penalty proceedings. [Paras 16]

The ground challenging initiation of penalty proceedings was dismissed as premature.

Final Conclusion: Both appeals were partly allowed. The additions treating SaaS subscription receipts as fees for included services were deleted, while the claim for tax deducted at source credit was remanded for verification and the penalty-initiation challenge was dismissed as premature.

Penalty u/s 271AAB for undisclosed income under search provisions - Land advances as application of funds - land/other advances recorded as uncorroborated notings in a seized diary and surrendered during search - Strict construction of penal provisions - HELD THAT: - The existence of undisclosed income as exhaustively defined in the Explanation to section 271AAB is the jurisdictional foundation for penalty; a surrender in a statement under section 132(4) does not by itself establish that character. An advance is an outflow or application of funds, whereas the definition contemplates an unrecorded inflow of income; nor could the deeming provisions relating to unexplained investments be automatically imported into this self-contained penal provision. The bare diary notings, lacking verifiable particulars and corroborative material, could not independently establish real transactions or undisclosed income. The Assessing Officer had also accepted the amount as current-year business income without invoking the provisions for unexplained income and had not recorded the requisite statutory finding. [Paras 17, 19, 20, 22, 23]

The land and other advances did not constitute undisclosed income within the Explanation to section 271AAB, and deletion of the penalty relating thereto was upheld.

Final Conclusion: The Revenue's appeal was dismissed, and the deletion of penalty on the surrendered land and other advances was sustained.

Interest disallowance on interest-free business advances u/s 36(1)(iii) -VAT-inclusive valuation of opening and closing stock - Cessation or remission of trading liability

Interest disallowance on interest-free business advances - Nexus between borrowed funds and non-business advances - interest disallowance u/s 36(1)(iii) - Disallowance of interest on advances treated as interest-free loans, including an advance to a supplier for purchase of goods - HELD THAT: - The advance to the supplier had been made in an earlier financial year for procurement of goods and was rightly excluded from interest-free loans and advances. Disallowance of interest on borrowed capital requires material establishing a nexus between interest-bearing borrowings and interest-free advances used for non-business purposes. No such nexus or non-business use was shown by the AO. [Paras 6]

Deletion of the interest disallowance was upheld.

VAT-inclusive valuation of opening and closing stock - Tax-neutral stock valuation adjustment - Addition to closing stock for non-inclusion of VAT where the assessee consistently excluded VAT from both opening and closing stock - HELD THAT: - A change requiring VAT to be included in closing stock would necessarily require corresponding adjustment to opening stock and would also affect the opening stock of the succeeding year. Since the assessee consistently excluded VAT from both opening and closing stock, the proposed adjustment was tax neutral. [Paras 8]

Deletion of the closing-stock addition was upheld.

Cessation or remission of trading liability - Old creditors and subsisting liability - Addition of old outstanding creditor balances as cessation of trading liability - HELD THAT: - There was no cessation of liability during the year: transactions with certain creditors continued, while balances of other creditors were settled in the succeeding year by adjustment against debtors. An addition for remission or cessation of a trading liability also requires that an allowance or deduction in respect of the liability had been made in an earlier assessment; the AO produced no material showing such prior allowance or deduction. [Paras 14, 15]

Deletion of the addition for alleged cessation of creditor liabilities was upheld.

Final Conclusion: Revenue's appeal was dismissed. The deletions of the interest disallowance, the VAT-related closing-stock addition, and the addition for alleged cessation of creditor liabilities were sustained.

Revision for erroneous and prejudicial assessment - Failure to apply deeming provisions and special tax rate - Non-initiation of applicable penalty proceedings

Validity of revision of the assessment where additions for undisclosed investment and unexplained cash were made without invoking the applicable deeming provisions, applying the special tax rate, or initiating the applicable penalty proceedings - HELD THAT: - When an order can be said to be erroneous has been defined by the Hon'ble Delhi High Court in the case of CIT vs. Leisure Wear Exports Ltd. [2010 (9) TMI 351 - DELHI HIGH COURT] that if an order is based on incorrect assumption of facts or on incorrect application of law or without applying the principle of natural justice and without application of mind, it would be treated as 'erroneous'

Further, what is prejudicial to the interest of the revenue has been defined in the case of Dawjee Dadabhoy & Co. vs. S. P. Jain [1956 (12) TMI 40 - CALCUTTA HIGH COURT] that the words "prejudicial to the interests of the Revenue" must mean that the orders or assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realized or cannot be realised. It can mean nothing else.

The Hon'ble Supreme Court in the case of Gita Devi Aggarwal [1969 (7) TMI 5 - SUPREME COURT] regarding Opportunity of being heard to be given, have held that provision merely requires that an opportunity of being heard should be given to the assessee and the stringent requirement of service of notice u/s 147 cannot be applied to a proceeding u/s 263. Also, in the case of CIT vs. Electro House [1971 (9) TMI 10 - SUPREME COURT] have held that the jurisdiction of the Commissioner to proceed u/s 263 was not dependant on the fulfilment of any condition precedent.

An assessment is erroneous and prejudicial to the interests of the Revenue where the Assessing Officer omits to apply the correct statutory provisions, resulting in non-application of the special tax rate and consequent loss of lawful revenue. Failure to initiate penalty proceedings under the applicable provision also reflected non-application of mind. The revisional authority was consequently competent to set aside the assessment and direct necessary inquiry and reassessment under the correct provisions. [Paras 9]

The revisionary order was upheld and the assessee's appeal was dismissed.

Final Conclusion: The assessment having omitted application of the correct provisions governing the additions, special tax rate and penalty proceedings, it was rightly held to be erroneous and prejudicial to the interests of the Revenue. The revisionary order was sustained.

Protective assessment of unexplained jewellery - Protective addition without independent evidence of ownership

Sustainability of a protective addition for seized gold jewellery in the hands of a person found in physical possession when the Revenue had substantively assessed the same jewellery in the hands of the company claiming ownership - HELD THAT: - A protective assessment is contingent and serves to safeguard the Revenue where there is genuine uncertainty regarding the person liable to be assessed. Once the Revenue substantively assessed the identical jewellery in the hands of the company whose Director claimed ownership, the protective addition could survive only upon independent material establishing that the assessee was its actual or beneficial owner.

Physical possession and the assessee's inability to document ownership in another person did not displace the Revenue's own substantive treatment, particularly when the assessee consistently denied ownership and no positive material established ownership by him. Non-prosecution of the first appeal could not supply the missing evidentiary basis or convert a protective addition into a substantive charge. [Paras 10, 11, 12, 13]

The protective addition under section 69A was deleted and the finding sustaining it was set aside.

Final Conclusion: The appeal was allowed. The protective addition for the seized jewellery was deleted; consequential interest was directed to be recomputed.

Condonation of delay of 968 days in filing customs appeals sufficient cause- substantial question of law

Whether any perversity or a substantial question of law disclosed under Section 130 of the Customs Act, 1962? - HELD THAT: - The expression ‘sufficient cause’ is required to receive a liberal and justice-oriented construction, however, such approach does not dispense with the requirement of bona fides, diligence and a satisfactory explanation for the delay. In Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy[2015 (1) TMI 1053 - SUPREME COURT]the Hon’ble Supreme Court, while summarising the principles governing condonation of delay, recognised that a liberal approach is warranted where the explanation discloses bona fide circumstances, but cautioned against condoning delay where there is gross negligence, lack of due diligence or want of bona fides.

Condonation requires a bona fide and satisfactory explanation for the entire period of delay; a liberal approach cannot extend to gross negligence, want of diligence or prolonged inaction. The Tribunal's conclusion rested on the appellants' participation in adjudication through counsel, communication of the order to that counsel, the Department's efforts to communicate the order, and the absence of any enquiry regarding the outcome for nearly three years. The subsequent receipt of a copy of the order did not explain the preceding inaction. In an appeal under Section 130, the High Court cannot re-appreciate such factual findings or substitute its discretion unless perversity, disregard of material evidence, or legal error is established. [Paras 45, 46, 47, 49, 50]

No sufficient cause for the delay was established, and the Tribunal's refusal to condone it disclosed no perversity or substantial question of law warranting interference.

Final Conclusion: The customs appeals were dismissed, the High Court holding that the Tribunal's refusal to condone the prolonged delay was founded on relevant material and raised no substantial question of law.

Limitation for refund of Special Additional Duty - Subordinate legislation and substantive limitation - Applicability of the one-year limitation, prescribed by Notification No. 93/2008-Cus., for claiming refund of Special Additional Duty under Notification No. 102/2007-Cus. - HELD THAT: - Section 27 of the Customs Act does not cover Special Additional Duty paid at import. Consequently, the notification could not, without statutory amendment, impose a one-year limitation from payment of such duty, since this would regulate a substantive right to refund through subordinate legislation. [Paras 5]

The Tribunal rightly held that the one-year period did not apply from the date of payment of Special Additional Duty, and no substantial question of law arose.

Final Conclusion: The appeal was dismissed, as the prescribed limitation for refund of Special Additional Duty could not operate from the date of payment of that duty.

Classification of fire-damaged motor cars as scrap - Confiscation for unauthorised unloading of imported goods - Confiscation of conveyance carrying non-confiscable goods

Classification of fire-damaged motor cars as scrap - Import licensing requirement for automobile vehicles - Whether extensively fire-damaged automobiles brought with a vessel for ship-breaking retained their character as restricted commercial and passenger automobile vehicles requiring an import licence? - HELD THAT: - The Tribunal's factual findings, which were undisputed, established that the automobiles had been so extensively damaged by fire that they had lost their identity and utility as motor vehicles and could not be removed without scrapping the vessel. The salvage and sale arrangements confined their disposal to scrap or demolition. Such burnt automobiles could not be treated as commercial or passenger automobile vehicles under the Negative List, or as usable second-hand goods. [Paras 7]

The burnt automobiles were scrap and not prohibited imports; confiscation u/s 111(d) was not attracted.

Confiscation for unauthorised unloading of imported goods - Physical removal of cargo as unloading - Confiscation of conveyance carrying non-confiscable goods - Whether bringing the vessel carrying burnt automobile scrap to the notified ship-breaking area constituted unauthorised unloading, rendering the cargo and vessel liable to confiscation? - HELD THAT: - Unloading under the relevant customs provisions means physical removal of cargo from the vessel; bringing or berthing a vessel at the port does not amount to unloading. The cargo was removed only after seizure during the breaking of the vessel and not by the respondents. Talaja had been notified for ship-breaking, and no specific customs permission was required merely for a vessel carrying cargo to enter a notified customs port. Since the cargo was not liable to confiscation and no statutory contravention was established, the vessel was not liable to confiscation. [Paras 7]

Confiscation of the cargo under Section 111(h) and of the vessel under Section 115, as well as consequential penalties, was unsustainable.

Final Conclusion: The substantial questions concerning confiscation of the burnt automobile cargo and vessel were answered in favour of the assessee and against the Revenue. The question concerning reference was declined as academic, and the appeals were disposed of.

Post-export amendment of shipping bills - Prospective operation of limitation for shipping bill conversion

Post-export amendment of shipping bills - Validity of circular-imposed limitation - Prospective operation of shipping bill conversion regulations - Conversion of free shipping bills filed for exports made before the 2022 Regulations into EPCG shipping bills could not be rejected solely as time-barred. - HELD THAT: - The three-month period stipulated by the Board Circular was ultra vires Section 149 and had no application. The one-year period introduced by the 2022 Regulations operated prospectively and could not govern shipping bills relating to earlier exports. Section 149 permitted post-export amendment upon contemporaneous documentary evidence; consequently, delay alone could not defeat the conversion request. [Paras 16, 17, 26]

The rejection founded solely on limitation was set aside.

Conversion of free shipping bills to EPCG shipping bills - Substantive export benefits and procedural lapse - Contemporaneous documentary evidence - The omission to mention EPCG authorisation particulars in free shipping bills did not preclude their conversion where contemporaneous export documents established the exported goods and realisation of export proceeds. - HELD THAT: - Although the free shipping bills had not undergone physical examination, the export duty payment, invoices and bank realisation documents corroborated the goods exported and were available from the time of export. A curable procedural lapse could not deny substantive export-scheme benefits when the statutory requirement of contemporaneous documentary evidence was satisfied. [Paras 20, 22, 25, 26]

The Revenue was directed to consider the documentary evidence and complete conversion of the free shipping bills into EPCG shipping bills within eight weeks.

Final Conclusion: The appeal was allowed. The limitation-based rejection was set aside, and the Revenue was directed to process conversion of the free shipping bills into EPCG shipping bills on verification of the contemporaneous documentary evidence.

Interest on delayed customs refund - Rate of interest on delayed refund

Commencement of interest on refund of excess customs duty paid on import of Yellow/Green peas after reassessment of Bills of Entry - HELD THAT: - The importer had pursued reassessment and refund from 2018, while the Revenue did not act on the reassessment request for several years. Applying the principle that liability for interest commences upon expiry of three months from receipt of the refund application, and not from the subsequent refund or reassessment order, the Tribunal held that the delay was attributable to the Revenue. [Paras 10, 11, 13]

Interest was payable from 20.02.2019 until the date of refund; the Revenue's appeal seeking interest only from the reassessment date was dismissed.

Rate of interest on delayed refund - Rate of interest payable on delayed refund of excess customs duty paid on import of Yellow/Green peas - HELD THAT: - Tribunal found the authorities supporting interest at 12 per cent applicable to the facts. As the refund had been withheld after prolonged inaction by the Revenue and the period of entitlement had already been correctly determined, interest at 12 per cent, rather than 6 per cent, was held payable for that period. [Paras 15, 17]

The importer was held entitled to interest at 12 per cent from 20.02.2019 until refund of duty, with the Revenue directed to pay the balance interest within eight weeks.

Final Conclusion: The Revenue's appeal was dismissed and the importer's appeal was allowed. Interest on the delayed customs refund was held payable at 12 per cent from 20.02.2019 until the date of refund.

Finalization of provisional assessment of the exported iron ore fines - Export valuation based on transaction value - Rejection of declared transaction value - enhancing the assessable value of the basis CRCL analysis - Final invoice and Bank Realization Certificate - Laboratory report as basis for enhancement

Whether, for the purpose of finalization of provisional assessment of the exported iron ore fines, the authorities were justified in enhancing the assessable value of the basis CRCL analysis, notwithstanding the contractual price final and settled with the foreign buyer and the amount actually realized by the appellant? - HELD THAT: - Transaction value is the primary basis of export valuation. In the absence of any finding that the buyer and seller were related, that price was not the sole consideration, or that the exporter received consideration beyond that disclosed in the final invoice and Bank Realization Certificate, the declared value could not be replaced by a notional value merely because the departmental report showed a higher iron content. The contractual mechanism itself contemplated final price adjustment according to quality parameters. A laboratory result may establish quality, but cannot by itself justify rejection of transaction value without a legally sustainable basis. The ratio in V.G.M Exports [2013 (11) TMI 701 - CESTAT MUMBAI] applied directly. Further, material forming the basis of an adverse assessment ought to have been disclosed and an opportunity afforded to meet it; selective adoption of different reports for different quality parameters was unsupported. [Paras 11, 12, 13, 14, 15]

The enhancement of assessable value was held unsustainable, and the provisional assessments were directed to be finalised on the genuine final transaction value actually realised, subject to verification of the final invoice, Bank Realization Certificate and relevant export documents.

Final Conclusion: The impugned appellate order was set aside and the appeal allowed with consequential relief. The provisional assessments must be finalised on the final transaction value actually realised, subject to verification of the relevant export documents.

Special Additional Duty refund limitation - Limitation prescribed by customs exemption notification

Refund of Special Additional Duty on imported goods rejected solely for breach of the one-year period stipulated in the amending customs notification - HELD THAT: - The Tribunal followed the Delhi High Court view [2014 (4) TMI 870 - DELHI HIGH COURT] that the notification imposing a limitation period for Special Additional Duty refunds had to be read down. Limitation affecting substantive refund rights could not be introduced through subordinate legislation without the parent enactment making the statutory refund limitation applicable. The contrary Bombay High Court [2017 (1) TMI 786 - BOMBAY HIGH COURT] view was noted, but the Tribunal held that the appellant's claim was covered by the decisions relied on by it. [Paras 6, 8]

The rejection of the refund claim on limitation was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The appeal was allowed. The impugned order rejecting the Special Additional Duty refund as time-barred was set aside, with consequential relief in accordance with law.

Classification of imported parts of electric ride-on toys - Essential character of complete goods in CKD/SKD condition - Concessional customs-duty exemption for manufacture from imported toy parts - Applicability of Toys Quality Control Order to toy parts

Classification of imported parts of electric ride-on toys - Essential character of complete goods in CKD/SKD condition - Concessional customs-duty exemption for manufacture from imported toy parts - Classification as parts under CTH 95030091 or as complete electric ride-on toys in CKD/SKD condition under CTH 95030010, and entitlement to the concessional-duty exemptio - HELD THAT: - The imported consignments comprised only 60 to 65 per cent of the components required to complete a toy car, while essential components remained absent. The imported parts, together with locally procured and manufactured components, underwent assembly and testing to emerge as electric ride-on toys having a distinct character and use. The Tribunal held that the imports did not possess the essential character of complete toys; the completion process amounted to manufacture under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. [Paras 10, 12, 13]

The goods were held classifiable as parts of toys under CTH 95030091 and eligible for the exemption under Notification No. 50/2017-Cus.

Applicability of the Toys (Quality Control) Order, 2020 to imported parts of electric ride-on toys - HELD THAT: - The BIS clarification established that certification was not applicable to parts of toys. As the imported components could not independently be regarded as toys and did not constitute complete electric ride-on toys, the Quality Control Order did not apply. [Paras 11, 12, 13]

The Toys (Quality Control) Order, 2020 was held inapplicable to the imported toy parts.

Final Conclusion: The Revenue's appeal was rejected and the order classifying the imports as toy parts, allowing the claimed concessional-duty exemption, and holding the Toys (Quality Control) Order, 2020 inapplicable was upheld.

Rejection of declared transaction value - Consent to reassessment - Speaking order on reassessment - Burden of Proof for Undervaluation

Enhancement of the declared transaction value of imported aluminium scrap and stainless steel scrap 'Zurik' solely on the importer's written consent, without adherence to the prescribed valuation procedure - HELD THAT: - The proper officer, on entertaining doubt as to the declared value, must proceed in accordance with Rule 12 by forming reasonable and cogent grounds, seeking requisite information and, where requested, communicating the grounds for doubt and affording opportunity of hearing. Written acceptance of reassessment may dispense with a speaking order under Section 17(5), but does not convert the enhanced value into the declared transaction value, absolve the proper officer from compliance with the valuation rules, or bar the importer from challenging the final assessment. The view that consent constituted waiver of these statutory requirements was inconsistent with the principles stated in Niraj Silk Milks [2024 (11) TMI 1361 - DELHI HIGH COURT] [Paras 4]

The impugned order was set aside and the matter remanded to the adjudicating authority for a fresh order under Section 17(5), after compliance with Rule 12, the Customs Act and the principles of natural justice.

Final Conclusion: The appeal was allowed by way of remand. The adjudicating authority shall freshly determine the reassessment after following the statutory valuation procedure and principles of natural justice.

Requisitioned extraordinary general meeting - Tribunal intervention in internal management - Impracticability of convening company meeting

Requisitioned extraordinary general meeting - Alternative remedies for convening meeting - Availability of the Tribunal's jurisdiction to convene a requisitioned extraordinary general meeting without first resorting to the requisitioning member's power to convene it - HELD THAT: - The requisitioning member's statutory power to call and hold an extraordinary general meeting upon the Board's default is an additional and absolute right. Invocation of the Tribunal's jurisdiction is not conditional upon prior exhaustion of that remedy; the two modes of convening the meeting operate independently. [Paras 7, 8]

The petition under the Tribunal's meeting-convening jurisdiction was maintainable without prior recourse to the requisitioning member's statutory power.

Impracticability of convening company meeting - Non-interference in internal management - Exercise of the Tribunal's exceptional power to direct convening of an extraordinary general meeting where the Board had declined the requisition - HELD THAT: - The Tribunal's power is exceptional and may be exercised sparingly only upon a reasonable factual showing that it is impracticable to convene the meeting in the ordinary statutory or articles-based manner. Board division and rejection of the requisition, without foundational facts demonstrating such impracticability, do not justify displacement of corporate internal management. The requisitioning member neither established difficulty in convening the meeting among the shareholders nor attempted to exercise the statutory power available to him. [Paras 8, 9, 10]

As impracticability was not established, the direction to convene the extraordinary general meeting was set aside.

Final Conclusion: The appeal was allowed and the order directing convening of the extraordinary general meeting was set aside, since the requisite factual basis for Tribunal intervention had not been established.

Committee of Creditors' commercial wisdom in rejection of resolution plan - Reconsideration of resolution plan before approval by Adjudicating Authority

Validity of the Committee of Creditors' rejection of the proposed resolution plan after its remand for consideration of statutory stakeholder claims and the resolution applicant's failure to revise the plan - HELD THAT: - The directions requiring the resolution applicant to address provident fund, gratuity and other stakeholder claims, and the subsequent remand of the plan to the Committee of Creditors, had attained finality as they were not challenged. The applicant had itself sought revision of the plan but declined to revise its total value when the Committee considered the remanded plan.

A resolution plan is not finally approved until approval by the Adjudicating Authority; until then, the Committee of Creditors may reconsider its decision, including by resolving to liquidate the corporate debtor. Its commercial decision to reject the plan was non-justiciable in the circumstances. [Paras 30, 33, 34, 38, 40]

The rejection of the proposed resolution plan and dismissal of the application challenging that rejection were upheld.

Final Conclusion: The appeal was dismissed. The rejection of the proposed resolution plan by the Committee of Creditors, followed by liquidation, disclosed no error warranting appellate interference.

Forfeiture of earnest money deposit by scheme proponent - Withdrawal from liquidation scheme process after non-acceptance of scheme

Liability of a scheme proponent to deposit the earnest money guarantee into the liquidation estate after its scheme was not accepted and it elected not to continue in the process - HELD THAT: - The earnest money deposit was furnished for submission of the scheme chosen by the proponent. Once that scheme was not accepted, the proponent was entitled to decide whether to participate further. A scheme proponent undertakes to submit its own scheme, not to submit a scheme conforming to the satisfaction of the stakeholders' committee or the Adjudicating Authority. Commercial considerations and the time involved in the process may lead a proponent to withdraw; absent a demonstrated legal basis for liability, such withdrawal cannot justify recovery of the earnest money guarantee. [Paras 6, 7, 8, 9]

The liquidator's claim to recover the earnest money guarantee was held unsustainable in law; the order directing its deposit into the liquidation estate was set aside.

Final Conclusion: The appeal was allowed and the direction requiring the scheme proponent to deposit the earnest money guarantee into the liquidation estate was set aside. Pending interlocutory applications stood closed without costs.

Unlawful arrest or detention - bail application - Communication of grounds of arrest to relatives - Production before available Magistrate after court hours - Money-laundering bail conditions and prolonged incarceration

Communication of grounds of arrest to relatives - Production before available Magistrate after court hours - Alleged illegality of arrest for production before a Magistrate other than the nearest Magistrate and for non-supply of grounds of arrest to the petitioner's relatives - HELD THAT: - Production before an available Magistrate after court hours, followed by production before the Special Court within twenty-four hours, did not violate the statutory requirement or cause prejudice. The material indicating that the grounds of arrest supplied to the petitioner were thereafter handed to relatives, coupled with the prompt steps taken on his behalf in the criminal proceeding, was sufficient at the bail stage to rebut the alleged non-communication and absence of prejudice. [Paras 9, 12, 13]

The challenge to the legality of arrest did not furnish a ground for bail.

Money-laundering bail conditions and prolonged incarceration - Flight risk in grant of bail - Grant of bail in a money-laundering case involving alleged operation of mule accounts for illegal online betting, notwithstanding custody of about one year and two months - HELD THAT: - While long incarceration without substantial progress may override the statutory restrictions on bail when assessed with the right to speedy trial, custody of about one year and two months was outweighed by prima facie incriminating material concerning the alleged provision of mule accounts for betting activities, the petitioner's alleged principal role, the inability to satisfy the statutory conditions for bail, the prospect of witness influence or evidence tampering, and the risk of absconding. The proceeding had also progressed towards framing of charges. [Paras 16, 17, 18, 19, 20]

Bail was refused.

Final Conclusion: The bail application was rejected, the alleged arrest irregularities not having been established at the bail stage and the statutory bail conditions remaining unsatisfied in light of the prima facie material and flight risk.

Attachment of proceeds of crime - Money trail to a third-party property - Property of equivalent value

Provisional attachment of office property purchased by a company in a bank auction, on the allegation that it was controlled by the accused in the predicate offence - HELD THAT: - Property held by a person not accused of money laundering may be attached only upon establishing that proceeds of crime reached that person and were used to acquire the property, or that the property is liable as property of equivalent value in the hands of the person involved in money laundering. Alleged control of the company by the accused, founded principally on witness statements, could not substitute proof of a money trail. The company established that the property was acquired through bank finance and its own savings; those funds were not shown to be proceeds of crime. Nor was the property shown to have been acquired after layering such proceeds, or to belong to the accused or an entity used for laundering them. [Paras 16, 17, 18]

The provisional attachment and its confirmation were unsustainable and were set aside.

Final Conclusion: The appeals were allowed and the order confirming provisional attachment of the property was set aside.

Interim release of frozen funds for essential salary and statutory payments - Balance of convenience in attachment proceedings under the PMLA

Grant of limited interim access to frozen funds of a wholly owned subsidiary for payment of the holding company's employee salaries and statutory dues - HELD THAT: - The Tribunal found no dispute as to the genuineness of the holding company's salary and statutory liabilities. Since the subsidiary had received funds from, and prima facie owed monies to, its holding company, its request to defray essential expenditure on the holding company's behalf was justified at the interim stage.

Further, compelling payment defaults in respect of TDS and GST was unwarranted, as the Central Government would itself be the beneficiary of those statutory payments. The statutory objective of preserving suspected proceeds was protected by verification-based safeguards. [Paras 14, 15, 16, 17, 18]

The application was allowed to the limited extent of permitting payment of verified outstanding employee salaries for financial year 2025-26 and verified statutory dues, subject to submission, verification and bank-authorisation safeguards.

Final Conclusion: Limited interim relief was granted for verified payment of the holding company's employee salaries and statutory dues from the frozen funds, without expressing any opinion on the merits of the pending appeals.

CENVAT credit on telecommunication towers and pre-fabricated buildings as inputs - “goods" as qualify as “inputs” under Rule 2(k) of the CCR, 2004

HELD THAT: - The Supreme Court [2024 (11) TMI 1042 - SUPREME COURT] having settled that towers and pre-fabricated buildings are goods, not immovable property, and are indispensable to the effective functioning of antennas for transmission of signals, they have a close and proximate nexus with the output telecommunication service. They consequently qualify as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004. [Paras 9, 10]

No substantial question of law arose, and the Revenue's challenge to the grant of CENVAT credit was rejected.

Final Conclusion: The Revenue's tax appeals were dismissed, as the entitlement to CENVAT credit on the towers and pre-fabricated buildings stood concluded in favour of the assessee.

Service tax exemption for services rendered by a subcontractor for authorised SEZ operations - Procedural requirements for SEZ service tax exemption

Service tax exemption for services rendered by a subcontractor for authorised SEZ operations - Notification No. 9/2009-ST - Entitlement of a subcontractor to service tax exemption for taxable services provided in relation to authorised operations of an SEZ unit. - HELD THAT: - Notification No. 9/2009-ST grants exemption to taxable services provided in relation to authorised SEZ operations. The assessee had admittedly rendered approved services for such operations to the SEZ unit and had not breached any stipulated condition. The fact that the authorisation certificate stood in the name of the main contractor did not negate fulfilment of the requirement, since the assessee's services were rendered as subcontractor for the authorised operations. [Paras 10, 11]

The subcontractor was entitled to the claimed exemption; the Tribunal rightly held that exemption could not be denied merely because the certificate was issued in the main contractor's name.

Procedural requirements for SEZ service tax exemption - Form A-1 declaration - Effect of non-submission of Form A-1 on exemption for SEZ-related taxable services. - HELD THAT: - The Form A-1 requirement was introduced by Notification No. 17/2011-ST, whereas the show-cause notice covered the period commencing from 2009-10. In any event, the prescribed declaration procedure was procedural in character and could not defeat the substantive exemption where the approved services had been used for authorised SEZ operations. [Paras 10, 11, 12]

Non-compliance with the procedural Form A-1 requirement did not justify denial of the substantive exemption.

Final Conclusion: The appeal was dismissed, as no substantial question of law arose from the Tribunal's order allowing service tax exemption for services rendered as subcontractor in relation to authorised SEZ operations.

Supply of tangible goods service - transfer of possession and effective control of aircraft - Taxable value - inclusion of receipts beyond show cause notice - Double taxation of identical lease receipts - Extended limitation - departmental knowledge of material facts - Penalty for suppression with intent to evade service tax

Supply of tangible goods service - transfer of possession and effective control of aircraft - Classification of aircraft made available under the stated lease arrangement as supply of tangible goods service or transfer of the right to use goods - HELD THAT: - The five fold test laid down by the Hon’ble Apex Court in Bharat Sanchar Nigam Ltd v. Union of india [2006 (3) TMI 1 - SUPREME COURT] to constitute a transaction for the transfer of the right to use the goods, requires, inter-alia, that the goods be available for delivery, that there be consensus on their identity, that the transferee have a legal right to use the goods, that for the period during which the transferee has such legal right to use the goods, it should be to the exclusion of the transferor, and that the transferor be precluded from transferring the same right to another during the currency of the transfer.

Transfer of the right to use goods requires that the transferee have exclusive legal possession and effective control for the relevant period. The agreement permitted the lessor to use the aircraft when not used by the lessee or its clients, required its return after each trip, placed running costs and expenses upon the lessor, and was terminable by either party on short notice. These operational terms showed that the lessor retained legal possession and effective control notwithstanding the description of the arrangement as a dry lease. [Paras 10, 12]

The activity was rightly classifiable as supply of tangible goods service.

Taxable value - "SOTG Service” in relation to the lease of the aircraft - inclusion of receipts beyond show cause notice - Inclusion of receipts described as other collections in the taxable value for aircraft leasing service - HELD THAT: - It is settled, as held in Ballarpur Industries Ltd.[2007 (8) TMI 10 - SUPREME COURT] that an adjudicating authority cannot travel beyond the show cause notice, which constitutes the foundation of the proceedings. Inclusion of the ‘other collections” in the taxable value, without any corresponding allegation in the notices is accordingly unsustainable and we hold that the demand on this count is liable to be set aside. The reliance placed by the appellant on the decision in Confederation of India Industry v CCE & ST, Chandigarh I [2023 (7) TMI 57 - CESTAT CHANDIGARH] is apposite in this context.[Paras 13]

The demand attributable to other collections was set aside.

Double taxation of identical lease receipts - Sustainability of service-tax demand on lease receipts which had already been subjected to a demand against the related concern - HELD THAT: - The assertion that the same lease receipts formed part of the demand raised against the related concern remained uncontroverted. Confirmation of tax again upon the appellant in respect of those identical receipts would result in impermissible double taxation of the same transaction. [Paras 14]

Tax could not be confirmed again on the appellant in respect of the identical receipts, without prejudice to proceedings in accordance with law against the person ultimately liable.

Invocation of the extended period of limitation - departmental knowledge of material facts - HELD THAT: - The material transaction and receipts were already within departmental knowledge when the earlier notice was issued to the related concern. The later notice proceeded on the same facts, without any fresh suppression, and the notices disclosed no positive act amounting to wilful suppression or intent to evade tax. Once the alleged suppressed facts were known to the Department, the extended period could not be invoked on the same or similar facts. [Paras 15]

Invocation of the extended period in both notices was held unsustainable; the demands were upheld only for the applicable normal period.

Penalty for suppression with intent to evade service tax - Reasonable cause for statutory penalty - Sustainability of penalties for non-registration and alleged suppression in relation to the aircraft leasing service - HELD THAT: - As fraud, collusion, wilful misstatement or suppression with intent to evade tax had not been established, the essential basis for the penalty for suppression failed. In the circumstances, reasonable cause warranted extension of the statutory protection then available against the penalty for non-registration. [Paras 16]

The penalties imposed under Sections 77(1)(a) and 78 were set aside.

Final Conclusion: The appeals were partly allowed. The demand for supply of tangible goods service was sustained only for the applicable normal period, while the demand on other collections, duplicate demand on identical receipts, and all penalties were set aside.

Valuation of maintenance and repair works contracts - Extended limitation for suppression of service tax liability - CENVAT credit on common inputs and input services - Penalty for short-payment of service tax and non-filing of returns

Valuation of maintenance and repair works contracts - Rule 2A valuation of works contract services - Service tax valuation of airport repair and maintenance works contracts where the invoices and purchase orders did not separately identify the value of goods transferred - HELD THAT: - The services were repair and maintenance works and not original works. Valuation under Rule 2A(i) required ascertainment of the value of property in goods transferred in execution of each works contract. Neither the purchase orders nor the invoices bifurcated goods and service values, and the subsequently produced cost accountant's certificate, based on common project-cost records and test checks, did not identify the goods, quantities or values transferred under the individual contracts. The appellant could therefore not shift to Rule 2A(i); the works were liable to valuation under Rule 2A(ii), with only 30% abatement applicable to repair and maintenance works. Tax liability arose under the statute and could not be governed by the contractual tax treatment agreed with the recipient. [Paras 17, 18, 19, 20, 21]

The claim to valuation under Rule 2A(i) and to 65% abatement was rejected, and the short-payment determined by applying the 30% abatement applicable to repair and maintenance works was sustained.

Extended limitation for suppression of service tax liability - Invocation of the extended limitation period for short-payment of service tax on repair and maintenance works contracts - HELD THAT: - The asserted exclusion of airport services from the definition of works contract had no basis in section 65B(54) and could not establish bona fides. Though registered and collecting service tax, the appellant did not file service tax returns during the relevant period and paid tax after wrongly claiming 65% abatement instead of the permissible 30%. The short-payment remained undisclosed because returns were not filed, warranting invocation of the extended period. [Paras 9, 23]

The extended period of limitation was correctly invoked.

CENVAT credit on common inputs and input services - Failure to comply with Rule 6 options - Admissibility of CENVAT credit on common inputs and input services used for taxable and exempted services where separate accounts were not maintained and no Rule 6 option was exercised - HELD THAT: - Rule 6 afforded the provider alternative methods to meet its obligations, including maintaining separate accounts, reversing proportionate credit, paying the prescribed amount, or not availing credit. The appellant admittedly complied with none of these alternatives. Proportionate reversal was an option exercisable by the appellant and could not be selected by the Commissioner or the Tribunal on its behalf; consequently, the wrongly availed credit was recoverable under Rule 14. [Paras 27, 28, 29]

Denial and recovery of the wrongly availed CENVAT credit was upheld.

Penalty for short-payment of service tax - Penalty for non-filing of service tax returns - Penalties for short-payment of service tax and failure to file service tax returns - HELD THAT: - The conditions for penalty under section 78 were the same as those supporting invocation of the extended limitation period, which stood satisfied. The separate penalties and late fee imposed for failure to file returns in time were also justified. [Paras 30, 31]

The penalties and late fee were upheld.

Final Conclusion: The impugned order was upheld and the appeal was dismissed. The service tax demand, CENVAT credit recovery, interest, penalties and late fee were sustained.

Service tax after repeal of Finance Act, 1994 - Exemption for transportation of food grains and fertilizers - Exemption for vehicles hired to goods transport agencies - Reverse charge on GTA services provided to body corporates

Service tax after repeal of Finance Act, 1994 - Levy of service tax on amounts received during July 2017 to March 2018 after introduction of the GST regime - HELD THAT: - Once the Finance Act, 1994 stood repealed from 01.07.2017, service tax could not be demanded for that period. Any discrepancy in GST disclosures or liability could only be examined under the GST law and could not support a demand under the repealed service-tax law. [Paras 9]

The service-tax demand relating to July 2017 to March 2018 was set aside.

Exemption for transportation of food grains and fertilizers - Negative-list treatment of handling of agricultural produce - Burden to establish taxable service - Denial of exemption for services involving transportation and handling of food grains and chemical fertilizers - HELD THAT: - Handling, loading, unloading, storage and warehousing of agricultural produce were in the negative list; GTA services for transportation of food grains and fertilizers were exempt. The department, having alleged taxable services, bore the burden to establish that the services related to non-exempt goods. The mere use of expressions such as "other goods" or "etc." in contracts, or unsigned sample bills where receipts from the fertilizer manufacturer were undisputed, did not establish provision of taxable services. [Paras 13, 14, 15]

The denial of exemption for services rendered in relation to food grains and chemical fertilizers was held unsustainable.

Exemption for vehicles hired to goods transport agencies - Levy of service tax on vehicles given on hire to goods transport agencies - HELD THAT: - Hiring a means of transport of goods to a goods transport agency was exempt. Non-disclosure of exempt receipts in ST-3 returns could not justify charging service tax on an exempt service, particularly when there was no material disputing that the vehicles had been hired to goods transport agencies. [Paras 16]

The demand on amounts received for vehicles hired to goods transport agencies was set aside.

Reverse charge on GTA services provided to body corporates - Liability of the GTA service provider for tax on services rendered to body corporates under the reverse-charge mechanism - HELD THAT: - Where GTA services were supplied to body corporates, tax was payable by the service recipient under reverse charge. The department could not sustain the demand on the service provider by doubting the corporate character of the recipients without material, or merely because exempt services had not been disclosed in ST-3 returns. [Paras 17]

The demand on GTA services supplied to body corporates was held unsustainable.

Final Conclusion: All grounds sustaining the service-tax demand failed. The impugned order, including the consequential interest and penalties, was set aside and the appeal was allowed with consequential relief.

Service tax on maintenance fund collected by residential developer - Corpus fund transferred to housing society without rendition of service

Taxability of maintenance fund utilised for common-area maintenance - Service tax liability on the maintenance fund collected by the residential developer and utilised for maintenance of the common areas before formation of the housing society - HELD THAT: - The developer had undertaken responsibility for maintenance of the common areas and amenities until the housing society came into existence. The amounts utilised from the maintenance fund constituted consideration for maintenance, management and repair services provided by the developer; such activity was not covered by the negative list. The decision in Commissioner CGST vs. Mangalam Build Developers Ltd [2022 (4) TMI 255 - CESTAT NEW DELHI] was inapplicable, since in that case the maintenance amount had not been utilised by the builder. [Paras 8, 9]

The demand was sustained to the extent of the maintenance fund utilised by the developer, with penalty reduced proportionately.

Taxability of corpus fund not utilised for any service - Service tax liability on the corpus fund received before formation of the housing society but transferred in full to that society without being utilised - HELD THAT: - Although the corpus fund was received before the housing society was formed, the developer neither utilised it for maintenance nor agreed to render any service against it. Under the sale agreement, the corpus fund was required to be transferred as such to the society. Receipt of the fund, without a corresponding service under section 65B(44), did not attract service tax. [Paras 10, 11]

The service tax demand on the corpus fund, and on the unutilised maintenance fund transferred to the housing society, was set aside.

Final Conclusion: The appeal was partly allowed. Service tax was upheld only on the maintenance fund actually utilised for common-area maintenance, while the demand on the corpus fund and maintenance fund transferred to the housing society was set aside.

CENVAT credit reversal on written-off inputs - Extended limitation-absence of suppression

CENVAT credit reversal on written-off inputs - Write-off of vendor dues - Reversal of CENVAT credit where outstanding dues to suppliers, rather than the credit-availed inputs themselves, were written off. - HELD THAT: - Rule 3(5B) requires reversal where the input or capital goods on which credit was taken are written off, which denotes writing off the stocks as unusable. Writing off amounts payable to vendors does not, by itself, establish that the inputs were not used or were written off. The Chartered Accountant's certificate that the goods were not written off was proper documentary evidence and had to be accepted in the absence of factual evidence from the Revenue that the goods had also been written off. [Paras 9, 10, 12, 14]

The demand for reversal of CENVAT credit was set aside on merits.

Extended limitation-absence of suppression - Disclosure of write-off of vendor dues - Invocation of the extended period for recovery of CENVAT credit allegedly liable to reversal on account of written-off vendor dues. - HELD THAT: - The write-off of vendor dues was recorded in the books of account and had come to the Department's knowledge during audit. The controversy concerned the interpretation of Rule 3(5B), and the appellant's interpretation was supported by the cited decisions. These circumstances negatived suppression of facts, so that the extended period could not be invoked. [Paras 16]

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

Final Conclusion: The appeal was allowed. The demand was set aside both on merits, as only vendor dues and not inputs had been written off, and as barred by limitation for the extended period.

Deposit of excess amount collected as excise duty - Scope of section 11D(1A) of the Central Excise Act - Non-manufacturer collecting amount as excise duty

Liability of a non-manufacturer supplier to deposit the excess amount collected from the purchaser as representing excise duty on goods procured from manufacturers - HELD THAT: - Section 11D(1A) applies to every person collecting an amount as representing excise duty on excisable goods; it is not confined to the manufacturer liable under section 11D(1). The appellant's accepted bid disclosed excise duty, and its invoices and running bills represented that statutory taxes and duties had been deposited. Having collected an amount as excise duty in excess of the duty actually paid by the manufacturers, the appellant was bound to credit the differential amount to the Central Government.

The decisions cited by the appellant Sangam (India) Limited [2017 (11) TMI 748 - CESTAT NEW DELHI], Mayfair Polymers Limited [2007 (9) TMI 519 - CESTAT, AHMEDABAD], Pitambar Coated Papers Limited [2002 (8) TMI 686 - CEGAT, NEW DELHI], Bharat Petroleum Corporation Limited[2016 (2) TMI 1046 - CESTAT NEW DELHI] and Alpha Helical Pumps Pvt Ltd. [2025 (1) TMI 535 - MADRAS HIGH COURT]were factually distinguishable, as they did not involve collection of an amount from customers as representing excise duty. [Paras 22, 23, 24, 25, 26]

The demand for the excess amount collected as excise duty, with applicable interest, was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal held that the appellant, though not a manufacturer, was liable under section 11D(1A) to deposit the excess amount collected as representing excise duty. The impugned order was upheld and the appeal dismissed.

Interest on refund of revenue deposit - Unspent Personal Ledger Account balance - Statutory and equitable interest on refunds - difference in opinion expressed by the Member (Judicial) and Member (Technical)

Entitlement to interest from the date of deposit on refund of the unspent balance in the Personal Ledger Account, including the amount deposited during investigation - HELD THAT: - The majority accepted that the amount deposited during investigation, before determination of any duty liability, retained the character of a revenue deposit.

It is held that the court has to take all relevant factors into consideration while awarding the rate of interest on the compensation. Lr. A.R. also submits that such a clarification against any blanket and indiscriminate application and invocation of the Sandvik case [2006 (1) TMI 55 - SUPREME COURT] by the Hon’ble Supreme Court fairly and squarely goes to the root of the matter and is categorically against the kind of interpretation taken by the Tribunal in case of Parle Agro [2017 (2) TMI 984 - CESTAT ALLAHABAD] and other such decisions of other branches which are relied up by the Member (Judicial) for allowing 12% interest. All these Branches of the Tribunals have gone overboard and shown misplaced sympathy to all and sundry de hors of the special facts and circumstances of the Sandvik case and started granting 12% interest without any judicial discipline and regard to the observations of the Hon’ble Supreme Court in the cases of M/s WilloWoods [2022 (4) TMI 980 - SUPREME COURT] and M/s Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT (LB)]. Thus, granting 12 % interest is unsustainable.

Since the issue in the present appeal is squarely covered by the decision of the jurisdictional High Court in the matter of Commissioner, Central Goods & Service Tax V/s M/s Parle Agro Private Limited [2025 (11) TMI 2024 - ALLAHABAD HIGH COURT] the opinion expressed by the learned Member (Technical) is not correct in law.

Now, let the matter be placed before the Regular Division Bench for drawing majority view.[Paras 12, 13]

The Revenue's challenge to interest from the date of deposit was rejected and both appeals were dismissed.

Final Conclusion: By majority, the Tribunal dismissed both Revenue appeals. Interest on the refundable revenue deposit, including the unspent Personal Ledger Account balance, remained payable from the date of deposit.

Inclusion of Government fertilizer subsidy in assessable value - Additional consideration flowing from buyer for levy of central excise duty - Assessable value of fertilizers

Inclusion of subsidy received from the Government of India under the Nutrient Based Subsidy Policy in the assessable value of fertilizers - HELD THAT: - Rule 6 is attracted only where additional consideration flows directly or indirectly from the buyer to the manufacturer. A subsidy independently paid by the Government under a policy scheme cannot be treated as such consideration merely because it is determined with reference to the quantity or category of fertilizers sold. As the subsidy neither emanated from nor was paid by the buyers, it did not form part of the transaction value; the Board clarification on fertilizer subsidy was binding on the Departmental authorities.

The legal position is further supported by the decision of the Hon’ble Supreme Court in Commissioner of Central Excise Vs Mazagon Dock Ltd. [2005 (7) TMI 105 - SUPREME COURT] held a subsidy received from the Government, which does not flow from the buyer either directly or indirectly, cannot be treated as additional consideration for valuation of the excisable goods. The distinction is important.

The same principle has subsequently been followed in cases holding that Government subsidy or incentive which does not flow from the customer cannot be included in the assessable value merely on the ground that the manufacture receives a financial benefit. The appellant has also relied upon the decisions in M/s Nagarjuna Fertilisers & Chemicals Ltd [2025 (3) TMI 959 - CESTAT HYDERABAD], Ranar Agrochem Ltd [2024 (3) TMI 1279 - CESTAT HYDERABAD] and Coramandel International Ltd., [2014 (8) TMI 775 - CESTAT BANGALORE] [Paras 9, 10, 11,12, 13]

The Government subsidy was not includible in the assessable value of the fertilizers; consequently, the demand of differential duty, interest and penalty could not survive.

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

CENVAT credit on dealer's invoice - Receipt and accounting of inputs - Entitlement to CENVAT credit where the supplier's invoice named the appellant as consignee, though the buyer named therein was an unregistered dealer - HELD THAT: - The invoice issued by the registered supplier contained all particulars required under Rule 9 of the Cenvat Credit Rules, 2004 and showed the appellant as consignee. There was no allegation that the inputs were not received, and their receipt had been recorded in RG 23A Part I. The absence of dealer registration of the buyer did not establish any contravention by the appellant. [Paras 7, 8, 9]

The demand for reversal of CENVAT credit was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The appellant's CENVAT credit was held admissible on the supplier's compliant invoice, the receipt and accounting of inputs being undisputed. The appeal was allowed with consequential relief.

Area-based excise duty exemption - special rate of value addition - Duplicative recovery of excess refund and utilised self-credit

Area-based excise duty exemption - special rate of value addition - Recalculation of demands for excess self-credit under the area-based exemption without accounting for special rates of value addition fixed by the competent authority - HELD THAT: - Once special rates of value addition had been fixed for the appellant's units, the authorities confirming the demands were required to take those rates into account. The demands could not be sustained on calculations which disregarded the special rates fixed under the amending notifications. [Paras 6]

The matter was remanded to the appellate authority to recalculate the demands after giving effect to the special rates of value addition.

Duplicative recovery of excess refund and utilised self-credit - Recovery of both excess refund availed as self-credit and excise duty discharged through utilisation of that self-credit for subsequent clearances - HELD THAT: - Demanding recovery of the excess refund as well as duty paid by utilisation of the same self-credit results in double jeopardy. Only one of the two amounts can be recovered. [Paras 6]

The appellate authority was directed to examine and eliminate duplicative demand in the specified appeals while recalculating the liability.

Final Conclusion: The appeals were allowed by remand for fresh computation of the demands after considering the special rates of value addition and ensuring that there is no duplicative recovery.

Interest on delayed verification of differential Cenvat credit - Liability to interest on differential Cenvat credit determined nearly ten years after the assessee's application under the retrospective validation provisions - HELD THAT: - The prescribed two-month period for verification of the amount paid was not complied with and the differential demand was issued after an inordinate delay. Although the demand was not challenged on merits and the Tribunal could not quash it solely for delay, the assessee could not be made to suffer interest for the Commissioner's negligence in passing the order after nearly ten years. [Paras 4]

The confirmed demand was retained, but no interest was payable on it.

Final Conclusion: The appeal was disposed of by sustaining the differential Cenvat-credit demand while deleting the interest liability attributable to the inordinate delay in verification and adjudication.

Grant of bail to accused in connection with NDPS offence - statutory twin conditions - Bail to foreign nationals in commercial quantity cases - Verification of sureties - Article 142 - uniform bail safeguards

NDPS bail - statutory twin conditions - Cancellation of bail for absconding - Validity of bail granted to a foreign national accused in an NDPS case involving commercial quantity, without recording satisfaction on the statutory twin conditions - HELD THAT: - For offences involving commercial quantity, the right to personal liberty operates within the framework of the stringent conditions governing bail under the NDPS Act. The High Court neither considered the material indicating the accused's involvement and previous conviction nor recorded reasonable grounds to believe that he was not guilty and unlikely to commit an offence while on bail. The period of incarceration could not, by itself, displace the statutory requirements, particularly where capital punishment was a possible consequence and the statutory protection concerning maximum undertrial detention was unavailable. The accused subsequently absconded after release, violating the conditions of bail. [Paras 14, 15, 16, 17]

The bail order was cancelled and the appeal was disposed of accordingly.

Bail to foreign nationals in commercial quantity cases - Reasonable and proportionate bail conditions - deposit of passport of the foreign national accused in an NDPS case - Safeguards governing grant of bail to foreign nationals accused of NDPS offences involving commercial quantity - HELD THAT: - Foreign nationals are entitled to the protection of Article 21, and foreign nationality alone cannot curtail the right to seek bail. Yet, in commercial quantity NDPS cases, conditions directed to secure attendance and prevent flight may be imposed, provided they remain reasonable, proportionate and capable of compliance. Deposit of passport was held mandatory, subject to an expeditious application for temporary release; two genuine sureties are ordinarily required, though the court may relax that requirement for recorded reasons. Conditions enabling continuous surveillance or making bail contingent on an embassy assurance were not accepted. [Paras 13, 28]

The Court issued binding safeguards concerning passport deposit, FRRO registration, verification of residential address and sureties, disclosure of funds and bank accounts, and intimation to the concerned embassy.

Verification of sureties - Fake sureties - departmental accountability - Surety information management - Need for strengthened verification and accountability mechanisms where sureties furnished by a foreign national accused in a commercial quantity NDPS case are found to be fabricated - HELD THAT: - A surety is the institutional link for securing an accused's presence, and acceptance of fictitious sureties renders the bail process ineffective. In view of the demonstrated failure of existing verification processes and absence of uniform safeguards, verification of sureties must involve scrutiny of their identity, address and financial credentials before release. Where purportedly verified sureties are subsequently found false, the concerned police, court and revenue officials must face departmental inquiry, subject to the standard of reasonable care. A lien or charge over property furnished by a surety may be realised by the court upon forfeiture of the bond. [Paras 19, 20, 27, 28, 29]

Directions were issued for time-bound verification, a centralised database, digital verification infrastructure, departmental inquiries, creation of lien or charge over surety property, and insertion of Form 47A for such cases.

Article 142 - uniform bail safeguards - Exercise of Article 142 to prescribe interim uniform safeguards for foreign nationals accused in NDPS cases involving commercial quantity - HELD THAT: - Although different jurisdictions had surety-verification processes, their lack of uniformity and demonstrated inadequacy in cases involving foreign offenders created a gap affecting the effective administration of criminal justice. The Court held that Article 142 could be invoked to issue stop-gap directions necessary to address that gap, without supplanting substantive law or entering the legislative domain. Matters requiring wider policy assessment, including professional bail bondspersons, geo-fencing and Aadhaar authentication, were left for executive consideration. [Paras 26, 27, 28, 30]

The directions were made applicable to cases involving foreign nationals accused of NDPS offences concerning commercial quantity, pending appropriate action by the competent authorities.

Final Conclusion: The bail granted to the respondent-accused was cancelled after he absconded. The Court also issued Article 142 directions to secure and verify bail and surety arrangements for foreign nationals accused of NDPS offences involving commercial quantity, while leaving specified policy matters for executive consideration.

Disciplinary inquiry time-limit and prejudice - Validity of charge memorandum-approval by disciplinary authority - Disciplinary proceedings during deputation

Disciplinary inquiry time-limit and prejudice - Failure to complete a disciplinary inquiry within the period contemplated by Rule 14(24) of the CCS (CCA) Rules, without written extension, did not automatically vitiate the proceedings - HELD THAT: - Whether a statutory time prescription is mandatory or directory depends upon its language, object and the consequence provided for non-compliance. Rule 14(24) prescribes no consequence of abatement or invalidation on expiry of time. Delay in disciplinary proceedings warrants interference only where it is inordinate and unexplained, causes demonstrable prejudice, is mala fide, or renders the proceedings oppressive. Deferred promotional consideration as a natural consequence of pending proceedings did not, by itself, establish legal prejudice. The direction for completion of inquiry within a fixed period furthered the object of expeditious disposal. [Paras 20, 21, 23, 25, 26]

The disciplinary proceedings and the charge memorandum were not liable to be quashed for alleged non-compliance with Rule 14(24); the direction for expeditious completion of the inquiry was sustained.

Approval of charge memorandum by disciplinary authority - Disciplinary proceedings during deputation - Judicial review at charge memorandum stage - HELD THAT: - The record showed that the proposal, vigilance advice and relevant notings were placed before the competent disciplinary authority, which approved initiation of major penalty proceedings. A bare assertion that approval was mechanical, without cogent material showing absence of consideration or abdication of responsibility, was insufficient. The borrowing department was not barred from preliminary fact-finding or seeking vigilance advice concerning acts during deputation, particularly when the charge memorandum was ultimately issued by the competent authority of the parent cadre. Whether the alleged tender-related deviations constituted misconduct required determination upon evidence in the inquiry, since the charges were neither ex facie absurd nor lacking in particulars. Judicial review at the charge memorandum stage is confined to jurisdictional error, patent illegality, mala fides or root-level statutory violation. [Paras 29, 30, 31, 32, 33]

No jurisdictional error or perversity was established in the refusal to quash the charge memorandum or the disciplinary proceedings, which could continue notwithstanding the petitioner's retirement, subject to applicable rules.

Final Conclusion: The petition was dismissed. The charge memorandum and disciplinary proceedings were sustained, with the competent authority required to comply with the direction for conclusion of the inquiry within the stipulated period.