TaxTMI Updates e-Newsletter
Aug 25,2026

Rectification order - non-communication and portal-generated order discrepancy - Validity of the rejection of the application for rectification where the order-sheet recorded that the rejection order could not be generated through the portal, whereas the purported rejection order bore a later handwritten signature date - HELD THAT: - The record disclosed an inconsistency between the order-sheet, which recorded that the rejection order could not be generated owing to technical glitches in the portal, and the concluding portion of the purported rejection order, which bore a handwritten signature on a later date. The rejection order was therefore untenable in law. The matter required fresh consideration of the rectification application after affording the petitioner adequate opportunity to present its explanation and supporting records. [Paras 7, 8, 9]

The rejection of the rectification application was quashed and the matter was remanded to the competent authority for a reasoned disposal of the application after hearing the petitioner and communicating the order forthwith.

Final Conclusion: The writ petition was disposed of by quashing the impugned rejection of the rectification application and remanding it for fresh, reasoned consideration after opportunity of hearing.

Input tax credit mismatch verification - Compliance with mandatory GST circular procedure

Validity of the ex parte adjudication of demand for mismatch between input tax credit claimed in FORM GSTR-3B and that reflected in FORM GSTR-2A without following the prescribed verification procedure - HELD THAT: - The Circular requires the proper officer, before confirming a demand for input tax credit mismatch, to obtain invoice details from the registered person and verify fulfilment of the conditions for availment of credit. The Court found that this exercise had not been undertaken before the impugned ex parte order was made. [Paras 12, 13]

The adjudication order was quashed and the matter was directed to be reconsidered on the petitioner's representation, in accordance with the Circular and after affording a reasonable opportunity of hearing, without any adjudication on the merits.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte adjudication order and directing fresh consideration in accordance with the prescribed procedure for verification of input tax credit mismatch.

GST appeal limitation following rectification proceedings - Limitation for an appeal against rejection of a refund claim where a timely rectification application was decided by a reasoned order - HELD THAT: - Where a rectification application under Section 161 of the GST Act was filed within the prescribed period and was duly decided, its filing and disposal directly affected computation of limitation for the appeal. The Appellate Authority was required to compute limitation from the rectification order, rather than exclusively from the original adjudication order, and examine the appeal on that basis. [Paras 15, 16]

The rejection of the appeals as time-barred by computing limitation from the original adjudication order was impermissible; the impugned orders were quashed and the appeals were remanded for fresh decision on merits in accordance with law.

Final Conclusion: The petitions were allowed, and the appellate orders rejecting the refund appeals on limitation were quashed. The matters were remanded to the Appellate Authority for fresh adjudication on merits after hearing the petitioners.

GST proceedings against deceased proprietor - Demand proceedings against legal heir

Validity of show cause and demand proceedings initiated against a deceased sole proprietor when the legal heir was unaware of the GST portal proceedings - HELD THAT: - The proceedings were initiated against the deceased proprietor long after his death and after cancellation of the proprietorship registration. The petitioner, being the legal heir and unconnected with the business, was unaware of the proceedings conducted through the GST portal. Proceedings initiated against a dead person could not be sustained. [Paras 6, 7]

The show cause notices and consequential demand order were quashed and set aside, while leaving it open to the respondent to initiate proper proceedings in accordance with law against the petitioner for the outstanding demand.

Final Conclusion: The writ petition was allowed and the notices and consequential demand order issued against the deceased proprietor were quashed, without precluding lawful proceedings against the legal heir.

Order passed by the State Tax Officer by placing reliance exclusively on the AI generated case laws - HELD THAT:- AGP shall take appropriate instructions in the matter, failing which the Court will be constrained to seek presence of the State Tax Officer Unit-67 who has passed the impugned order.

This Court shall also initiate appropriate action against him, in case it finds that the submissions advanced regarding the case laws upon which reliance has been placed by the State Tax Officer are correct, that such case laws are either not in existence or do not even remotely apply to the issue. Such instructions shall be taken by the next date of hearing.

Condonation of delay in GST appeal - Restoration of time-barred statutory appeal

Whether the appeal against the assessment order, filed beyond the period available under section 107 of the Act, should be restored for adjudication on merits? - HELD THAT: - Although the appeal was filed after expiry of the period contemplated by section 107, factual questions required adjudication in appeal. Having regard to the peculiar facts and the decision in Simplex Infrastructures Ltd., and Another [2022 (1) TMI 761 - KARNATAKA HIGH COURT] the petitioner was held entitled to a further opportunity to prosecute the statutory appeal. [Paras 5]

The dismissal of the appeal as time-barred and the consequential rectification order were quashed; delay was condoned and the appeal was restored for decision in accordance with law after adequate opportunity of hearing, with all merits kept open.

Final Conclusion: The writ petition was partly allowed by condoning the delay and restoring the statutory appeal for adjudication on merits. All contentions of the parties were left open.

Blocking of electronic credit ledger under Rule 86A - Negative blocking of input tax credit

Validity of blocking the electronic credit ledger beyond the input tax credit available therein at the time of invoking Rule 86A - HELD THAT: - Rule 86A permits a temporary restriction on debit of input tax credit available in the electronic credit ledger where the prescribed conditions are met. Availability of such credit is a condition precedent to exercise of the power; the Rule does not authorise debit entries by the authorities or creation of a negative balance. Recovery of wrongly availed or utilised credit must be pursued through the statutory remedies available under law. [Paras 9, 11]

The impugned entries were set aside insofar as they disallowed debit from the electronic credit ledger in excess of the input tax credit available when those entries were made.

Final Conclusion: The writ petition was allowed and the negative blocking of input tax credit was invalidated to the extent it exceeded the credit available in the electronic credit ledger. The authorities were left at liberty to pursue statutory recovery remedies in accordance with law.

Lapse of composition - scheme option on exceeding aggregate-turnover threshold - Cum-tax valuation of post-composition supplies

Eligibility for the composition scheme after aggregate turnover exceeded the prescribed threshold - HELD THAT: - The composition option lapses by operation of law from the day aggregate turnover exceeds the prescribed threshold. From that date, the registered person is liable to tax under the regular scheme on subsequent supplies, subject to adjustment of composition tax already paid on the post-lapse turnover. The admitted excess of the threshold warranted no interference with the turnover figures and findings sustained by the lower authorities. [Paras 14, 15, 16]

The finding that the appellants ceased to be eligible for composition levy upon crossing the threshold was upheld.

Cum-tax valuation of post-composition supplies - Determination of differential tax on supplies made after lapse of the composition option where tax had not been separately collected - HELD THAT: - As a composition taxpayer cannot collect tax separately and the Department did not allege collection over and above the invoice values, the declared invoice value must be treated as inclusive of tax. Rule 35 consequently requires extraction of the tax component by its prescribed formula; tax cannot be levied on a value already inclusive of tax. The statutory benefit could not be denied merely because it was not specifically claimed. [Paras 17, 18, 19]

The differential tax on post-lapse supplies shall be recomputed on a cum-tax basis under Rule 35, with interest and penalty recalculated consequentially.

Final Conclusion: The orders sustaining cessation of the composition scheme were upheld, subject to recomputation of tax on cum-tax valuation for supplies made after the option lapsed. Consequential interest and penalty shall be redetermined on the revised tax liability.

Deductibility of actuarial deficit contributions to approved superannuation fund - Rule 87 ceiling on ordinary annual superannuation contributions

Deductibility of ad hoc contributions made to an approved superannuation fund to meet actuarial deficits despite exceeding the ceiling prescribed for ordinary annual contributions - HELD THAT: - The legal character of a contribution depends on its purpose. Payments made to bridge the actuarially determined deficit in an approved fund, including deficiencies from prior years, are ad hoc gap-filling contributions and are neither ordinary annual contributions governed by Rule 87 nor initial contributions. The recurrence of funding deficits does not transform such actuarially backed payments into ordinary annual contributions. Applying the Rule 87 ceiling to necessary funding for meeting actuarial liabilities would compromise the fund's solvency and be contrary to the scheme governing deduction of contributions to approved superannuation funds. [Paras 7, 8]

The deletion of the disallowance of contributions to the approved superannuation fund was upheld.

Final Conclusion: The revenue's appeal was dismissed. The Tribunal's order deleting the disallowance of actuarial deficit contributions and its finding that the order was not perverse or arbitrary were upheld.

Deductibility of actuarial deficit contributions to approved superannuation fund - Deductibility of actuarial deficit contributions to approved gratuity fund

Actuarial deficit contributions to approved superannuation fund - Rule 87 ceiling on annual contributions - Deductibility of ad hoc contributions to an approved superannuation fund made to meet actuarial deficits - HELD THAT: - The character of a contribution is determined by its purpose of remedying an actuarial deficit, and not by the number of years over which the deficit arose or was addressed. Payments made to bridge the actuarial shortfall and align fund assets with actuarial liabilities are neither ordinary annual contributions subject to the Rule 87 ceiling nor initial contributions. Applying that ceiling to actuarially required funding would undermine the solvency of the approved fund and be contrary to the scheme governing deduction of employer contributions. [Paras 8]

The deletion of the disallowance of contributions to the superannuation fund was upheld.

Actuarial deficit contributions to approved gratuity fund - Binding effect of approval of gratuity fund - Deductibility of contributions to an approved gratuity fund made to bridge the gap between actuarial liability and available fund assets - HELD THAT: - A contribution made to meet an actuarial shortfall in an approved gratuity fund is not an ordinary annual contribution subject to the Rule 103 ceiling. The provision allowing deduction for contributions to an approved gratuity fund does not itself impose that ceiling. So long as the fund's approval has not been formally withdrawn, the assessing authority must proceed on the basis of that approval and lacks jurisdiction in assessment proceedings to question conformity of the contribution with the Rules or to impose a deduction restriction on that basis. [Paras 9, 10]

The deletion of the disallowance of contributions to the gratuity fund was upheld.

Final Conclusion: The revenue's appeal was dismissed and the Tribunal's deletion of the disallowances relating to the superannuation and gratuity funds was affirmed.

Deductibility of actuarial-deficit contributions to approved superannuation fund - Rule 87 ceiling on ordinary annual contributions

Deductibility of contributions made to the approved Superannuation Fund to bridge an actuarially determined deficit, notwithstanding the ceiling prescribed for ordinary annual contributions - HELD THAT: - The character of a contribution depends upon its purpose and not upon the number of years over which the deficit is addressed. Ad hoc interim payments made to align the fund assets with actuarial liabilities and to meet accumulated funding deficiencies are neither ordinary annual contributions under Rule 87 nor initial contributions. Applying the Rule 87 ceiling to necessary actuarially backed funding would impair the fund's solvency and would be contrary to the scheme governing deduction of contributions to an approved superannuation fund. [Paras 7, 8]

The disallowance of the contributions to the Superannuation Fund was rightly deleted and the substantial questions on that issue were answered against the revenue.

Perverse or arbitrary appellate order - Whether the appellate order was perverse or arbitrary for upholding deletion of the disallowance relating to the Superannuation Fund. - HELD THAT: - The appellate order was founded on jurisdictional High Court precedents and constituted a reasoned legal determination. The revenue's disagreement with the application of those precedents did not render the order perverse or arbitrary. [Paras 9]

The challenge to the overall validity of the appellate order was rejected.

Final Conclusion: The revenue's appeal was dismissed. The deletion of the disallowance of actuarial-deficit contributions to the approved Superannuation Fund for AY 2020-21 was upheld.

Cash credit u/s 68 - unexplained foreign investment in shares and compulsorily convertible debentures - Procedural fairness in assessment proceedings

Cash credit u/s 68 - unexplained foreign investment in the assessee's shares and compulsorily convertible debentures - HELD THAT: - The concurrent findings of the appellate authorities established, on material on record, the investment-cum-collaboration arrangement, the foreign investors' status in their respective jurisdictions, the inward-remittance certificates, and their audited financial statements. The Revenue failed to demonstrate that those factual findings were perverse; consequently, no question of law arose from the Tribunal's order. [Paras 11]

The Revenue's appeal against deletion of the addition under section 68 was rejected.

Procedural fairness in assessment proceedings - Assessing Officer's obligation to objectively consider the assessee's replies and supporting documents - HELD THAT: - An Assessing Officer must judiciously and objectively deal with the assessee's replies, pleas, authorities and documents, rather than merely protect revenue interests. Ignoring documents furnished by the assessee breaches principles of natural justice, undermines procedural fairness and causes injustice. [Paras 13]

The Court disapproved the Assessing Officer's failure to consider the material placed by the assessee.

Final Conclusion: The appeal was dismissed, as the concurrent factual findings supporting the genuineness and explanation of the foreign investment were not shown to be perverse and raised no question of law.

Corpus donation exemption - specific written direction of donor - Interest on fixed deposits - diversion of income and application of income

Taxability of interest on bank fixed deposits credited to a sustainable fund and claimed to be held by the trust as custodian for Self-Help Groups - HELD THAT: - Interest earned on investment of funds constitutes income of the trust. Exemption available to corpus contributions requires a specific written direction from the donor; correspondence permitting distribution of refunded funds to Self-Help Groups did not direct that interest on fixed deposits should form part of the corpus. The deposits stood in the trust's name and the interest accrued directly from its own investments.

A subsequent obligation to allocate the funds for Self-Help Groups amounted only to application of income and not diversion at source. The trust could not claim credit for tax deducted at source on the interest while excluding that interest from its revenue receipts. The treatment in an earlier assessment year did not preclude correct application of the provision in the assessment year in question. [Paras 5, 6, 7, 8, 9]

The interest on bank fixed deposits was held to be taxable revenue receipt and not exempt as corpus income.

Final Conclusion: The tax case appeal was dismissed and the addition of interest income was affirmed.

Doctrine of merger of interlocutory orders in final appellate order - Maintainability of writ petition against merged recall order

Maintainability of the writ petition challenging the Appellate Tribunal's recall order after the Tribunal had passed its final order in the appeal - HELD THAT: - The Court held that, upon passing of the final order, all prior orders merge into that final order. Consequently, the recall order ceased to have an independent existence. As the final order had been challenged through the statutory remedy of a tax appeal, the challenge to the merged recall order by writ petition could not survive. [Paras 8]

The writ petition was dismissed as the recall order had merged with the final order, against which the petitioner had availed the statutory appellate remedy.

Final Conclusion: The petition challenging the recall order and the consequential final order was dismissed. The challenge to the final order was required to be pursued through the statutory tax appeal already filed.

Limitation for sale of attached immovable property - Retrospective application of extended limitation - Quasi-judicial functions of Tax Recovery Officer

Limitation for sale of attached immovable property - Retrospective application of extended limitation - Applicability of the extended seven-year period for sale of attached immovable property to demands arising from assessment years 2007-2008 to 2009-2010 - HELD THAT: - An amendment extending a period of limitation, being procedural, ordinarily operates retrospectively; but it cannot revive a claim already time-barred when the amendment entered into force. The original three-year limitation had expired for assessment years 2007-2008 and 2008-2009 before the amendment, whereas, for assessment year 2009-2010, the assessment order became final in the financial year ending on 31.03.2017 and the unamended limitation remained alive when the amendment took effect. The extended seven-year period consequently applied only to assessment year 2009-2010. [Paras 15, 17, 18]

Sale proceedings were barred by limitation for assessment years 2007-2008 and 2008-2009, but the extended limitation applied to assessment year 2009-2010.

Quasi-judicial functions of Tax Recovery Officer - Exclusion of COVID-19 limitation period - Applicability of the Supreme Court's COVID-19 limitation exclusion to attachment and sale proceedings before the Tax Recovery Officer - HELD THAT: - The Tax Recovery Officer's functions under the Second Schedule affect parties' rights and liabilities, including attachment, sale proclamation and applications to set aside a sale, and are therefore quasi-judicial. The period excluded by the Supreme Court [2022 (1) TMI 385 - SC ORDER] for judicial and quasi-judicial proceedings was consequently applicable to such recovery proceedings. The period during which sale proceedings remained stayed by the Court was also excludable, with the statutory minimum remaining period becoming available to the revenue. [Paras 19, 22, 23]

The limitation for sale in relation to assessment year 2009-2010 stood extended by the COVID-19 exclusion and the subsequent stay, leaving the revenue further time to conclude the sale.

Finality of assessment order for recovery sale limitation - Limitation for sale of attached immovable property - Commencement of limitation for sale of attached immovable property where no appeal was filed against assessment orders for assessment years 2010-2011 and 2011-2012 - HELD THAT: - Recovery proceedings under the Second Schedule are contingent upon the assessee becoming an assessee in default and the drawing up of a certificate. Where no appeal is filed, the assessment order becomes final for Rule 68B purposes upon expiry of the ordinary thirty-day period under the notice of demand, which is coterminous with the limitation for filing an appeal. Since the original limitation had not expired when the amendment took effect, the seven-year period applied; after excluding the COVID-19 period and the period of stay, the sale proceedings remained within limitation. [Paras 27, 28]

The sale proceedings relating to assessment years 2010-2011 and 2011-2012 were within limitation.

Final Conclusion: The proclamation of sale was held valid for recovery certificates relating to assessment years 2009-2010 to 2011-2012. Sale proceedings for assessment years 2007-2008 and 2008-2009 were barred by limitation, but the property was not directed to be released from attachment.

Unexplained expenditure-requirement of unexplained source u/s 69C - Source of expenditure established through bank payments

Addition as unexplained expenditure where excess payments were made through bearer cheques from the assessee's bank accounts but exceeded the purchases and expenses claimed - HELD THAT: - Section 69C applies where the assessee offers no satisfactory explanation regarding the source of expenditure.

The assessment order itself recorded that the payments were made through bearer cheques from the assessee's bank accounts, and the AO recorded no dissatisfaction as to their source. An inability to explain the purpose or destination of payments exceeding the expenditure claimed does not meet the statutory requirement when their source is neither doubted nor found unexplained. [Paras 9]

The addition u/s 69C was deleted.

Final Conclusion: The appeal was allowed and the addition for unexplained expenditure was deleted.

Deduction of interest income from co-operative banks under section 80P(2)(d) - Entitlement of a co-operative housing society to deduction under section 80P(2)(d) in respect of interest income earned from co-operative banks - HELD THAT: - The Tribunal found that the identical claim had been allowed in the assessee's own cases for earlier assessment years. As no distinguishing facts for the relevant assessment year were brought on record, the earlier decisions were followed. [Paras 8]

The Assessing Officer was directed to allow the deduction claimed on interest income earned from co-operative banks.

Final Conclusion: The appeal was allowed and the claimed deduction under section 80P(2)(d) on interest income from co-operative banks was directed to be allowed.

Unexplained money addition for purchase of immovable properties - Source of investment in immovable properties -

HELD THAT: - The assessee had furnished agreements to sell, cash-flow statements corroborated by bank statements, family income-tax returns, loan confirmations, sale deeds, and booking confirmations with cheque-payment details. These documents explained the facets and sources of the property transactions and established their legitimacy; consequently, the addition could not be sustained. [Paras 7]

The addition under section 69A was set aside; the remaining grounds were left open as academic.

Final Conclusion: The appeal was allowed and the addition made for the property purchases was deleted on acceptance of the documentary explanation of their sources.

Deduction of interest income from co-operative banks u/s 80P - Interest on savings accounts as investment income

Deduction u/s 80P(2)(d) in respect of interest earned by a co-operative housing society from deposits and savings accounts maintained with co-operative banks- HELD THAT: - The Tribunal followed the earlier orders in the assessee's own case. [2024 (7) TMI 1810 - ITAT MUMBAI] Section 80P(2)(d) covers interest derived from investments with another co-operative society, including a co-operative bank; the expression "investment" is not confined to fixed deposits. Interest on savings accounts, maintained for earning interest and subject to withdrawal restrictions, is also interest from an investment for this purpose. [Paras 4, 5, 6]

The claimed deduction on interest income earned from co-operative banks was directed to be allowed.

Final Conclusion: The appeal was allowed and the Assessing Officer was directed to grant deduction under section 80P(2)(d) on the interest income earned from co-operative banks.

Reassessment notice - approval of specified authority after three years - Jurisdictional validity of reassessment

Validity of reassessment for assessment year 2018-19 where approval for issuing notice after expiry of three years from the end of the relevant assessment year was granted by the Principal Commissioner instead of the authority specified u/s 151(ii) - HELD THAT: - Sanction of the authority specified under section 151 is a precondition to assumption of jurisdiction for issuing a reassessment notice. Where more than three years have elapsed from the end of the relevant assessment year, approval must be obtained from the higher authority prescribed by section 151(ii); approval of the Principal Commissioner, being the authority under section 151(i), does not satisfy that requirement.

Hon'ble Supreme Court in the case of ITO vs. Mangla Gupta,[2026 (1) TMI 1428 - SC ORDER] dismissed SLP filed by the Revenue affirming the decision of Twylight Infrastructure (P.) Ltd. [2024 (1) TMI 759 - DELHI HIGH COURT] wherein the Hon'ble High Court held that where the Revenue issued a notice u/s. 148/148A(d) to the assessee after the lapse of three years from the end of the relevant assessment year after obtaining prior approval from the PCIT, since approval was sought from the “specified authority” in clause (i) of section 151, as against clause (ii) of section 151, the notice and order were to be quashed on the ground that there was no approval of the “specified authority” as indicated in section 151(ii) of the Act. [Paras 13]

The notice under section 148 was held bad in law and the reassessment framed under section 147 read with section 144B was quashed as void ab initio.

Final Conclusion: The delay in filing the appeal was condoned. The appeal was allowed and the reassessment was quashed for want of approval from the specified authority under section 151(ii).

Notional rental income on unsold flats held as stock-in-trade - Prospective operation of deemed rental income provision for unsold stock-in-trade - Resolution of conflicting High Court decisions in favour of the assessee

Taxability of deemed rental income from unsold flats held by a real-estate developer as stock-in-trade for Assessment Year 2017-18 - HELD THAT: - The provision for assessing deemed rental value of unsold stock-in-trade was introduced with effect from 01.04.2018 and applies from Assessment Year 2018-19 onwards. It was therefore inapplicable to Assessment Year 2017-18.

The view of the Tribunal that there cannot be any notional rental value on the unsold stock-in-trade of the assessee was upheld in the case of CIT vs. Neha Builders Pvt. Ltd. [2006 (8) TMI 105 - GUJARAT HIGH COURT] which decision was consistently followed in C.R. Development Pvt. Ltd. [2015 (5) TMI 1161 - ITAT MUMBAI] and Runwal Constructions [2018 (2) TMI 1707 - ITAT MUMBAI]. We are also aware of the decision in the case of CIT vs. Ansal Housing Finance & Leasing Company Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] which was held against the assessee. However, in view of the conflicting decisions, the Coordinate Benches, following the decision of Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT] the decision in favour of the assessee was adopted.[Paras 3, 4, 5]

The addition of deemed rental income in respect of unsold flats held as stock-in-trade was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition towards deemed rental income on unsold flats held as stock-in-trade for Assessment Year 2017-18 was deleted.

Unexplained cash credits - proof of identity, creditworthiness and genuineness of corporate loans - Unexplained expenditure-presumptive commission for accommodation entries without evidence - Unexplained money - repayment of old loans through banking channels - Bogus purchases - absence of evidentiary basis

Unexplained cash credits - proof of identity, creditworthiness and genuineness of corporate loans - Addition of unsecured loans from corporate lenders as unexplained cash credits despite documentary evidence of the lenders, banking transactions, interest payments and repayment - HELD THAT: - The loans were received through banking channels from identified entities, supported by lender confirmations, audited financial statements, income-tax records, bank statements, ledger accounts and tax deduction records. The lenders had declared income or possessed capital and reserves, and the loans were repaid. A general investigation lead concerning entry operators, without cogent or circumstantial evidence discrediting the lenders' funds or the transactions, could not sustain the additions. [Paras 4, 5, 10, 14, 20]

The additions under section 68 were deleted or the deletion thereof was affirmed for all the assessment years in question.

Interest on genuine unsecured loans - allowability of business expenditure - Disallowance of interest paid on unsecured loans as unexplained expenditure where the underlying loans were held genuine and interest was paid through banking channels with tax deducted at source - HELD THAT: - Once the underlying borrowings were accepted as genuine, interest paid on such loans could not be treated as unexplained expenditure. The interest payments were supported by lender confirmations and banking records, and tax had been deducted at source; in respect of other lenders, payment was shown from explained bank funds. [Paras 4, 6, 11, 18, 21]

The disallowances of interest expenditure were deleted or their deletion was affirmed.

Unexplained expenditure - presumptive commission for accommodation entries without evidence - Addition of estimated commission allegedly paid for obtaining accommodation entries in the absence of evidence of cash expenditure or unaccounted cash generation - HELD THAT: - The Assessing Officer produced no evidence, whether direct or circumstantial, of expenditure incurred by the assessee towards commission or of unaccounted cash generated for that purpose. An addition founded merely on the presumption that commission must have been paid for alleged accommodation entries was unsustainable. [Paras 7, 12, 16, 23]

The additions under section 69C for presumptive commission were deleted or the deletion thereof was affirmed.

Unexplained money - repayment of old loans through banking channels - Addition as unexplained money on repayment of outstanding loans to an NBFC through banking channels, without evidence that unexplained money accrued to the assessee - HELD THAT: - Section 69A requires evidence that the assessee was found to be the owner of unexplained money or other specified assets. Repayment of an old loan through banking channels, supported by ledger, tax deduction and repayment records, did not establish receipt or ownership of unexplained money. A presumption founded on an investigation allegation concerning the lender was insufficient. [Paras 15, 22]

The additions under section 69A were deleted or the deletion thereof was affirmed.

Bogus purchases - absence of evidentiary basis - Addition for alleged bogus purchases where the assessee either denied the alleged transaction and its audited accounts did not record it, or substantiated purchases by ledger accounts, invoices, transport records and banking payments - HELD THAT: - For one assessment year, the alleged purchase was not reflected in the assessee's audited financial statements and the addition lacked any factual basis. For the other year, purchase ledgers, vendor invoices, transport and e-way bill records, and payments through banking channels substantiated the transactions. The additions could not therefore be sustained. [Paras 8, 17]

The additions for alleged bogus purchases were deleted or the deletion thereof was affirmed.

Final Conclusion: All the assessee's appeals were allowed and all the Revenue's appeals were dismissed. The additions and disallowances challenged in the appeals were deleted or their deletion was affirmed.

Denial of exemption u/s 11 - Charitable purpose - sponsorship receipts from women's marathon - Proviso to section 2(15) - trade, commerce or business - Audit report for charitable exemption - procedural lapse

Charitable purpose - sponsorship receipts from women's marathon - Proviso to section 2(15) - trade, commerce or business - Section 13(8) - consequential denial of exemption - Applicability of the proviso to section 2(15) and section 13(8) to sponsorship received for a women's marathon conducted in furtherance of charitable objects concerning women's health, fitness, awareness and empowerment. - HELD THAT: - A charitable object need not enumerate every programme or instrumentality adopted to achieve it; the relevant inquiry is whether the activity bears a real and proximate nexus to the stated objects. The women's marathon was directly aligned with those objects, and neither the sponsors' treatment of payments as advertisement expenditure nor the magnitude of sponsorship receipts established that the assessee carried on an independent commercial undertaking. Commerciality depends upon the intrinsic nature, scope and manner of the recipient's activity, not merely upon receipts or surplus. Further, the 20% receipts formulation was inapplicable to A.Y. 2015-16; although the applicable monetary threshold was exceeded, that could not substitute for proof that the activity was in the nature of trade, commerce or business. [Paras 21, 22, 23, 24, 25]

The proviso to section 2(15) was inapplicable and, consequently, section 13(8) could not deny exemption under sections 11 and 12.

Audit report for charitable exemption - procedural lapse - Effect of furnishing Form No.10B during assessment proceedings after an incorrect exemption claim and submission of Form No.10BB with the return - HELD THAT: - The accounts had been audited before the return was filed, and the prescribed Form No.10B was furnished before completion of assessment after the assessee corrected its claim from section 10(23C)(iv) to section 11. Since the Assessing Officer possessed the requisite material and examined eligibility under section 11 on merits, the erroneous form accompanying the original claim was a procedural lapse and could not extinguish the substantive exemption claim. [Paras 26, 27]

The absence of a separate condonation order could not, in the circumstances, be the basis for denying exemption under section 11.

Final Conclusion: The appeal was allowed. The denial of exemption under section 11 and the consequential addition were deleted.

Judicial review of Settlement Commission orders - Reopening of settled show cause notice - Statutory interest on settled customs duty

Challenge to the limitation of the show cause notice after the petitioners elected settlement of the adjudicated proceedings - HELD THAT: - Judicial review of a Settlement Commission order is confined to jurisdictional or statutory infirmity, prejudice, fraud, bias or malice; it does not permit reassessment of the underlying proceedings as an appellate court. Having not pursued the statutory appeal against adjudication and having voluntarily obtained settlement of the proceedings arising from the show cause notice, the petitioners could not indirectly reopen its validity on limitation or reasonable-period grounds by isolating the consequential interest direction. [Paras 19, 20, 21, 22, 25]

The challenge to the show cause notice on limitation was held impermissible in proceedings for judicial review of the settlement order.

Statutory interest on settled customs duty - Quantification of interest pursuant to settlement - Validity of the direction requiring the jurisdictional Commissioner to verify and quantify interest payable on the settled duty liability - HELD THAT: - The Settlement Commission had not accepted the petitioners' computation as final, but directed verification and quantification of any further interest payable. Interest is a statutory consequence of duty liability and is not extinguished by settlement of the duty quantum. A higher subsequent quantification did not establish any statutory contravention, jurisdictional error or other ground warranting interference with that direction. [Paras 24, 26, 27, 28, 29]

The consequential direction for quantification of interest was upheld, without prejudice to any independently maintainable challenge to the statutory computation of interest.

Final Conclusion: The writ petition was dismissed. No ground was made out to interfere with the settlement order or its consequential direction for quantification of statutory interest.

Unauthorised transfer of Customs Broker licence - Customs Broker's obligation to obtain exporter authorisation and verify client identity - Proportionality of revocation of Customs Broker licence

Unauthorised transfer of Customs Broker licence - whether Lending a Customs Broker licence and dongle to a G-card holder for monetary consideration amounted to an impermissible transfer of the licence? - HELD THAT: - The prohibition against a licence being sold or otherwise transferred applies to the substance of the arrangement and is not confined to transfer of proprietary title. The appellant's admitted lending of the licence and dongle for consideration enabled the G-card holder to undertake Customs transactions using the appellant's credentials; the G-card holder's association with the appellant did not legitimise that arrangement. [Paras 22, 23, 24, 25, 26]

The finding of contravention of the prohibition on transfer of the Customs Broker licence was upheld.

Customs Broker's obligation to obtain exporter authorisation and verify client identity - Regulatory liability independent of knowledge of prohibited goods - Filing a Shipping Bill in the name of an exporter without its authorisation or contact, while failing to verify its identity and functioning, breached the Customs Broker's regulatory obligations - HELD THAT: - Checking the existence of IEC and GST particulars does not substitute for authorisation from the named exporter or verification of the client's identity and functioning. The appellant acted on a third party's request to file the Shipping Bill in another exporter's name without obtaining that exporter's authority. Knowledge of the prohibited goods was not necessary to establish these independent regulatory breaches. The finding under the obligation concerning information imparted by a Customs Broker to its client was, however, not independently sustainable because no such incorrect information was identified. [Paras 31, 32, 33, 35, 37]

The violations relating to exporter authorisation, control and client verification were sustained, though the independent finding concerning due diligence in information imparted to a client was not sustained.

Proportionality of revocation of Customs Broker licence - Revocation of the Customs Broker licence, forfeiture of security and imposition of penalty for the established cumulative misconduct were not disproportionate - HELD THAT: - Proportionality depends upon the nature of the misconduct and the aggravating circumstances. The appellant knowingly permitted use of his licence and dongle for consideration, and a Shipping Bill was filed without authorisation from the named exporter in connection with an attempted export of prohibited Red Sanders. These were not isolated technical lapses, and the punishment bore a reasonable relationship to the gravity of the established misconduct. [Paras 40, 41, 42, 43, 44]

The revocation, forfeiture of security deposit and penalty were held not to be shockingly or manifestly disproportionate.

Final Conclusion: No perversity or error of law was found in the disciplinary findings, except that the independent finding concerning the obligation to exercise due diligence in information imparted to a client was not sustained. The appeal was dismissed, as no substantial question of law arose.

Writ jurisdiction and disputed questions of fact - Seizure of imported industrial oil - Sampling of imported industrial oil

Challenge to seizure of imported industrial oil on the ground that the petitioner's authorised representative was absent when the first sample was drawn - HELD THAT: - The disputed presence of the Customs Broker at the first sampling could not be examined in writ jurisdiction, particularly when the respondents asserted his presence and the sampling report recorded it. The petitioner admitted that the same representative was present when the subsequent sample was drawn.

The Court also noted that the MRPL test report showed that the declared industrial oil did not meet the relevant parameters, an issue already examined in the earlier decision [2026 (3) TMI 769 - GUJARAT HIGH COURT]. [Paras 7, 8]

The writ petition challenging the seizure was rejected; no interference was warranted on the disputed factual objection concerning the first sampling.

Final Conclusion: The challenge to seizure of the imported industrial oil was rejected, the objection to the first sampling involving a disputed question of fact and the test-parameter issue having already been upheld in the earlier decision.

Duty-free import under DEEC licence - alleged diversion and fraudulent export - Clandestine diversion - requirement of reliable and corroborative evidence - Adjudication beyond show cause notice - Retracted statements - evidentiary value

Duty-free import under DEEC licence - alleged diversion and fraudulent export - Clandestine diversion - requirement of reliable and corroborative evidence - Sustainability of duty demand, confiscation consequences and penalties founded on the allegation that duty-free imported scrap was diverted and maize was exported in place of the stipulated resultant steel products - HELD THAT: - The closure report of the CBI, accepted by the competent Criminal Court, concerned the same alleged exports and was a material circumstance which the adjudicating authority could not disregard without identifying additional evidence. The official permissions, Customs examination, Central Excise certifications, confirmation of manufacture by the supporting manufacturer, realisation of export proceeds and subsisting export obligation discharge supported the exports. Revenue produced no reliable evidence of diversion, procurement or transportation of maize, domestic disposal, buyers, money trail, seizure, or non-crossing of the declared vehicles. Suspicion and unresolved grey areas could not substitute the cogent corroborative evidence required to establish the penal allegations. Case of Sheshank Sea Foods Pvt. Ltd. v. Union of India [1996 (11) TMI 67 - SUPREME COURT] distinguished.

Decisions in M/s. Bharat Udyog and Ors. v. Commissioner of Customs, Noida [2019 (6) TMI 1033 - CESTAT ALLAHABAD] and Dhaval Agri Exports LLP [2024 (10) TMI 335 - CESTAT AHMEDABAD] also support the appellant's defence. The principles laid down therein reinforce the requirement of positive and corroborative evidence where serious allegations of clandestine diversion or fraudulent transactions are made. [Paras 13, 14, 16, 19, 22]

The duty demand with consequential interest and penalties imposed on the principal noticee was set aside.

Adjudication beyond show cause notice - DEEC export-product description - Validity of the finding that CTD bars did not conform to the export goods required under the DEEC licence - HELD THAT: - The adjudicating authority introduced questions concerning classification of CTD bars, availability of particular sizes of bars and amendment of the licence, though these were not allegations in the show cause notice. An adjudicating authority cannot confirm a demand on a ground not proposed in the notice, and the appellant's explanation that CTD bars were a form of non-alloy steel bars and rods could not be rejected on a new basis of adjudication. [Paras 15]

The finding of misuse based on grounds beyond the show cause notice could not be sustained.

Retracted statements - corroborative evidence - Statements under Customs Act - statutory safeguards - Whether the retracted and inconsistent statements recorded during investigation could establish the alleged fraudulent exports and diversion? - HELD THAT: - Some statements were retracted, the circumstances of interrogation had been questioned, and the statements contained material inconsistencies that Revenue did not reconcile. In the absence of independent corroboration of diversion or export of maize, such statements could not be treated as conclusive evidence; the adjudicating authority had also relied on statements recorded under the Customs Act without examining the statutory requirements for their use. [Paras 20, 21]

The statements could not sustain the allegations or the consequential liabilities.

Penalty for alleged abetment of fraudulent exports - penalties on the co-appellants for alleged connivance or abetment in the purported diversion and fraudulent exports - HELD THAT: - As the allegations against the principal noticee failed for want of reliable and corroborative evidence, the allegations of connivance or abetment against the co-appellants had no independent evidentiary foundation. Fraud could not be invoked to sustain penalties where the alleged fraud itself was not established. [Paras 23]

The penalties imposed on the co-appellants were set aside.

Final Conclusion: All appeals were allowed and the impugned order, including the duty demand, interest and penalties, was set aside with consequential relief in accordance with law.

Country-of-origin misdeclaration and classification of Pakistan-origin brass scrap

Classification of imported brass scrap declared as originating in the UAE, where the containers had in fact originated from Pakistan - HELD THAT: - The Tribunal adopted the reasoning in the earlier final order concerning the connected live consignment, as the same modus operandi and evidentiary basis applied to the past imports. The matching container and seal particulars, coupled with the material establishing that the goods were loaded at Karachi and remained in the same containers through Jebel Ali, established Pakistan as the country of origin. Goods originating in Pakistan were consequently classifiable under CTH 98060000 pursuant to Notification No. 05/2019-Customs, rather than under the heading claimed for brass scrap. [Paras 10, 11]

The impugned order, including the consequential differential duty, interest and penalties, was upheld and the appeals were dismissed.

Final Conclusion: Applying its earlier final order on the connected live consignment, the Tribunal sustained the finding that the disputed brass-scrap imports originated in Pakistan and were liable to classification under CTH 98060000. The appeals were dismissed.

Recovery of excess DEPB credit - Customs jurisdiction under Section 28

Recovery from exporters, under Section 28 of the Customs Act, of DEPB credit allegedly obtained in excess by incorrect determination of FOB value through non-deduction of CAF and BAF - HELD THAT: - The alleged liability arose from the claimed excess DEPB credit obtained on exports, and not from breach of an exemption condition at the time of import. DEPB credit is distinct from customs duty; recovery of credit allegedly obtained in excess is within the jurisdiction of the DGFT, and Customs cannot recover it from the exporter under Section 28.

The demand in question is not founded upon a failure to satisfy a condition attached to an exemption at the time of import. It arises from the allegation that the exporter obtained DEPB credit in excess of its entitlement on account of an incorrect determination of FOB value. The nature of the alleged liability cannot be altered merely by describing DEPB as a customs duty exemption. The Tribunal in Mercantile India [2007 (6) TMI 13 - CESTAT,CHENNAI] has specifically distinguished between customs duty and DEPB credit and held that the latter cannot be recovered under Section 28.

The coordinate Bench's decision M/s. Cheran Spinners Ltd [2025 (7) TMI 1347 - CESTAT CHENNAI] on the substantially identical controversy was required to be followed in the absence of any contrary appellate decision. [Paras 5, 6, 7]

The recovery of alleged excess DEPB benefit under Section 28, with consequential interest and penalties, was held unsustainable.

Final Conclusion: The impugned orders were set aside and the appeals were allowed with consequential relief.

Limitation for confiscation notice where import documents are found forged - Fraud vitiating the defence of limitation - Liability to pay customs duty and interest on redemption of confiscated goods under Section 125(2) of the Customs Act, 1962 - Bona fide purchase not a defence to duty liability on redemption - Quantum of redemption fine

Limitation for confiscation notice - Fraud extends period for issuance of show cause notice - show cause notice proposing confiscation of the motorbike, issued after discovery that the Bill of Entry and import documents were fake, was barred by limitation - HELD THAT: - The Tribunal found it an admitted fact that the motorbike had been smuggled without payment of duty, the RTO-recorded owner was fictitious, and the Bill of Entry relied upon was fake and fabricated. The plea of limitation was examined on the footing that the Revenue could only be said to have knowledge of the fraudulent import when the fraud was actually unearthed, and not from the date of the purported import. Since the fraudulent nature of the import came to light only on 17.04.2013 and the show cause notice was issued on 19.08.2013, it was held to be within time.

Reliance was placed on the Supreme Court's exposition in Commissioner of Customs (Preventive) v. AAFLOAT Textiles (I) Pvt. Ltd. [2009 (2) TMI 75 - SUPREME COURT] that fraud vitiates every solemn act and unravels transactions otherwise protected by limitation or equitable doctrines, and that forged documents are, in the eye of law, non-existent, which is sufficient to extend the period available for taking action. [Paras 4]

The notice was held not to be time-barred and the confiscation of the vehicle under Section 111(d) and (m) of the Customs Act was sustained on this ground

Liability to pay duty and interest on redemption under Section 125(2) - Bona fide belief of subsequent purchaser - Reduction of redemption fine - whether the appellant, a subsequent purchaser of the smuggled vehicle claiming to have acted in good faith on the strength of documents later found to be forged, is liable to pay customs duty and interest on redemption of the confiscated vehicle, and what quantum of redemption fine is warranted? - HELD THAT: - Following the Supreme Court's ruling in Navayuga Engineering Co. Ltd. v. Union of India [2024 (7) TMI 1221 - SUPREME COURT] the Tribunal held that once confiscation is authorised and the owner exercises the option to redeem the goods, the liability to pay duty and charges under Section 125(2) of the Customs Act arises as an integral incident of redemption, independent of the person's knowledge of the underlying fraud. Since it stood established beyond doubt that the documents were forged and no duty had been discharged on the imported bike, the appellant, as the person seeking to redeem the confiscated vehicle, was held liable to pay duty along with interest. At the same time, the Tribunal took note that the Commissioner (Appeals) had already accepted the appellant's bona fide belief and good faith in purchasing the vehicle to the extent of setting aside the penalty, and on that consideration proceeded to moderate the quantum of redemption fine. [Paras 4, 5]

The liability to pay duty along with interest on redemption of the confiscated vehicle was upheld, while the redemption fine was reduced having regard to the appellant's bona fide purchase in good faith

Final Conclusion: The appeal was partly allowed. The Tribunal rejected the plea of limitation, holding the show cause notice for confiscation to be within time since the fraudulent import came to light only shortly before its issuance, and upheld the liability of the appellant to pay customs duty along with interest on redemption of the confiscated vehicle. However, considering the appellant's bona fide purchase in good faith, the redemption fine imposed by the lower authorities was reduced.

Classification of medical diagnostic instrument (namely BD Viper™ LT System) imported in India which is intended to be used for cervical cancer screening to detect high-risk HPV types under Customs Tariff Act, 1975

Classification of BD Viper LT System - Chemical analysis and automated checking - Optical instruments and appliances - Classification of the BD Viper LT System, an automated PCR-based molecular diagnostic platform for detection of high-risk HPV DNA, as an instrument for chemical analysis under heading 9027 or as an optical checking instrument under heading 9031 - HELD THAT: - The system does not examine or measure a property, composition, concentration or quantity of the specimen as presented. It processes the specimen, creates a fluorescence signal through the assay procedure, compares that signal with the prescribed criterion and reports a positive or negative result. Its function is therefore checking, not physical or chemical analysis. Since heading 9027 does not describe the goods, the residuary condition of heading 9031 is satisfied; Rule 3 is neither necessary nor available where Rule 1 determines the classification. As the instrument functions through optical elements and processes, it falls within the optical group under heading 9031 rather than the residual non-optical entry. [Paras 5]

The BD Viper LT System is not classifiable under tariff items 9027 50 90 or 9027 89 90; it is classifiable under tariff item 9031 49 00.

Basic customs duty on optical checking instruments - Import IGST on goods classifiable under heading 9031 - Rates of basic customs duty and import IGST applicable to the BD Viper LT System upon its classification under tariff item 9031 49 00 - HELD THAT: - The First Schedule prescribes basic customs duty at 7.5% ad valorem for tariff item 9031 49 00. Goods classifiable under heading 9031 are covered by Entry 580 of Schedule II to Notification No. 9/2025-Integrated Tax (Rate) and attract IGST at 18%. [Paras 5]

Basic customs duty is leviable at 7.5% ad valorem and import IGST at 18%.

Final Conclusion: BD Viper™ LT System imported by the Applicant does not merit classification under Customs Tariff Item ('CTI') 9027 50 90 or 9027 89 90 of the First Schedule of the Customs Tariff Act, 1975. It is classifiable under tariff item 9031 49 00

Basic Customs duty on the BD Viper™ LT System, classifiable under tariff item 9031 49 00, is leviable at the rate of 7.5% ad valorem as specified in the First Schedule to the Customs Tariff Act, 1975. IGST is leviable at the rate of 18% under Entry 580 of Schedule II to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025.

Status quo pending valuation for proposed share buyout - Continuation of status quo over the company's assets pending appointment of a valuer and decision on the proposed buyout of the appellant's shareholding

HELD THAT: - The controversy before the appellate forum stood confined to the alternative buyout relief, for which the parties had proposed names of valuers but no valuer had yet been appointed and no valuation report had been obtained. In those circumstances, the status quo previously granted was required to continue until the Tribunal appointed a valuer, obtained the valuation report and independently decided the buyout offer.

The status quo order was continued, and the Tribunal was requested to appoint a valuer, obtain the valuation report and decide the proposed buyout independently and expeditiously.

Final Conclusion: The company appeal was disposed of with continuation of status quo pending valuation and an independent decision on the proposed share buyout.

Judicial restraint in writ jurisdiction over ODR arbitration - ODR arbitration - participation without waiver of objections

Judicial restraint in writ jurisdiction over ODR arbitration - Patent lack of jurisdiction - Interdiction of ODR arbitral proceedings on the ground that the complaint was allocated to an ODR Institution empanelled by a stock exchange on which the petitioner's securities were not listed - HELD THAT: - Writ jurisdiction does not entail appellate review of proceedings under the regulatory ODR mechanism. Interference at the threshold is warranted only where the action is demonstrably without authority, contrary to the governing framework, or suffers from a patent jurisdictional defect. Although the Master Circular requires complaints involving a listed company to be referred to an ODR Institution empanelled by the relevant Stock Exchange, the petitioner not being listed on MSE, by itself, did not conclusively establish lack of authority. The validity of allocation depended on the petitioner's status, the exchanges on which its securities were listed at the relevant time, the nature of the grievance and the manner of allocation through the ODR Portal. The material did not disclose a patent and demonstrable absence of authority warranting writ interference. [Paras 19, 23, 24, 33, 34]

The impugned communications were not quashed; the objection to allocation before an ODR Institution empanelled by MSE was left open for determination by the arbitral forum.

ODR arbitration-participation without waiver of objections - Arbitral determination of limitation and maintainability objections - Whether objections concerning limitation, locus, maintainability, repeated proceedings, res judicata, abuse of process, arbitrability and the claimant's substantive entitlement justified refusal to participate in ODR arbitration? - HELD THAT: - Once a dispute validly enters the ODR framework and conciliation remains unresolved, the mandatory requirement to participate in arbitration prevents a Market Participant from unilaterally terminating the process merely because it disputes the claim. That obligation operates within the Master Circular and does not create jurisdiction where the framework excludes the dispute or where a patent absence of jurisdiction is established. Participation neither admits the claim nor waives legally sustainable objections. Limitation is specifically governed by the Master Circular, while objections as to locus, maintainability, prior proceedings, abuse of process, arbitrability and entitlement require examination by the arbitral forum and did not constitute clear bars to the proceedings in writ jurisdiction. [Paras 31, 32, 35, 36, 37]

The petitioner was directed to comply with the applicable arbitral requirements, without prejudice to all objections available in law before the arbitral forum.

Final Conclusion: The writ petition was dismissed. The petitioner was required to participate in the ODR arbitration and pay the applicable fees, while retaining all objections for consideration by the arbitral forum.

Inspection and measurement of disputed property in liquidation estate - Adjudicating Authority's jurisdiction over disputed title and possession

Validity of directions for inspection and measurement of premises claimed as part of the corporate debtor's liquidation estate notwithstanding the appellants' disputed ownership and possession - HELD THAT: - The Adjudicating Authority had recognised that its residuary jurisdiction could not ordinarily be invoked to adjudicate complex and disputed questions of title and possession between third parties. Its directions were, however, confined to inspection and measurement of the premises claimed by the liquidator to form part of the liquidation estate, so as to segregate that area and enable the liquidator to take action in accordance with law if encroachment emerged. Such limited directions neither adjudicated nor affected the appellants' ownership or possessory rights. [Paras 16]

The appeal was premature; the limited direction for inspection and measurement, with consequential steps by the liquidator in accordance with law, was upheld.

Final Conclusion: The appeal was dismissed, as the impugned directions were limited to inspection and measurement and did not determine the disputed title or possession of the premises.

CENVAT credit on outward GTA services used for delivery of goods under FOR-destination sales - place of removal - CENVAT credit on outward GTA services - Input-service credit for manpower supply and depot rent - Extended limitation for service-tax demand

CENVAT credit on outward GTA services - FOR-destination sales - place of removal - Admissibility of CENVAT credit on GTA services used for transportation of batteries from depots to retailers under FOR-destination sales - HELD THAT: - The place of removal in an FOR-destination transaction depends upon the contractual terms and contemporaneous material showing the point at which possession and property pass and transit risk is assumed. Payment of VAT or duty at an earlier stage is not conclusive. As freight was included in the invoice value, transit risk remained with the appellant and property passed only on delivery at the retailers' premises, those premises constituted the place of removal.

In view of the undisputed FOR-destination terms, inclusion of freight in the invoice value, retention of risk by the Appellant during transit and transfer of property only upon delivery at the retailers premises while also considering Board’s Circular dated 08.06.2018 and the Order of M/S. THE RAMCO CEMENTS LIMITED [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] we hold that the retailers premises constituted the place of removal in the facts of the present case. The GTA service used for transportation of goods up to such place is, therefore, an input service within the meaning of Rule 2(l) of the CENVAT Credit Rules, 2004, and the Appellant is eligible to avail CENVAT credit thereon.[Paras 5]

The outward GTA service up to the retailers' premises was an input service and the CENVAT credit was allowable.

Input-service credit for manpower supply and depot rent - Admissibility of CENVAT credit on manpower supply services and godown/depot rent used for manufacture, storage and allied activities relating to batteries - HELD THAT: - The disputed services were manpower supply and rent of godowns or depots, and not repair and maintenance services performed at customers' premises. Manpower deployed for production, packing, maintenance, storage and allied manufacturing activities, and premises rented for storage of finished products, had the requisite nexus with the manufacturing activity. Input-service credit is not excluded merely because an activity has a post-sale component where the required nexus is established. [Paras 6]

Denial of credit on manpower supply and godown/depot rent was set aside, subject to verification of invoices, tax payment and procedural compliance.

Extended limitation for reverse-charge GTA tax - Interest and penalty consequential to unsustainable demand - Validity of invoking the extended period for the reverse-charge service-tax demand on GTA services for January 2010 to March 2013 - HELD THAT: - The show-cause notice was issued beyond the normal limitation period. Detection during audit, without proof of fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade tax, cannot sustain invocation of the extended period. No positive act evidencing wilful default was established.

The Supreme Court in Easland Combines, Coimbatore [2003 (1) TMI 107 - SUPREME COURT] clarified that mere non-payment of duty or failure to obtain registration, absent of fraud, suppression, or willful misstatement, is insufficient to attract the extended limitation period. This principle was reaffirmed in Uniworth Textiles Ltd. [2013 (1) TMI 616 - SUPREME COURT] wherein the Apex Court citing Easland Combines (supra), held that the Act contemplates a positive action which betrays a negative intention of willful default. No such case has been made out. [Paras 8, 9]

The reverse-charge GTA demand was time-barred; consequently, no interest or penalty survived.

Final Conclusion: The impugned orders were set aside. CENVAT credit on the disputed outward GTA, manpower supply and godown/depot rent services was allowed, and the reverse-charge GTA demand was held time-barred with consequential relief.

Validity of Show cause notice - material facts and scope of demand - Exemption for foreign-language training as recreational training - Extended limitation-suppression of facts

Validity of Show cause notice - material facts and scope of demand - Change of taxable-service classification at adjudication - Sustainability of service-tax demands for 5S management training, translation and interpretation services, hall hire or rental receipts, and other receipts where the show cause notices did not disclose the essential factual and legal foundation of the charges - HELD THAT: - A show cause notice must state the taxable activity, the basis on which it is alleged to be taxable, and the material facts enabling the noticee to answer the charge. Particulars or evidence may be developed during adjudication, but a foundational material fact or a new taxable category cannot be introduced at that stage. The notice concerning 5S training proposed one classification, whereas the adjudication adopted Business Auxiliary Service on a new factual premise. The notices likewise failed to state the factual basis for taxing translation and interpretation services, hall hire or rental receipts, and the other stated receipts. The adjudicating and appellate authorities could not cure these foundational defects by examining and confirming demands on a case not put to the appellant. [Paras 5, 6, 7, 9, 10]

The demands under these heads were held unsustainable and were set aside; the defect was held incapable of cure by remand.

Exemption for foreign-language training as recreational training - Prospective operation of exemption notification amendment - Entitlement to exemption for Japanese language training under Notification No. 24/2004-S.T. despite absence of affiliation to the National Council for Vocational Training - HELD THAT: - Following L.V. Prasad Film & TV Academy [2026 (4) TMI 1358 - CESTAT CHENNAI] the amendment restricting the vocational-training exemption could operate only from its publication and could not sustain the demand for the earlier period. Further, the amendment did not alter the separately available exemption for recreational training institutes. Foreign-language training undertaken as a hobby or for recreation was not excluded merely because it could also impart vocational or soft skills. Since the notice examined only the vocational limb and did not establish that the courses were outside the recreational or hobby category, the exemption could not be denied. [Paras 8]

The appellant was held entitled to the exemption, and the demand on Japanese language training was set aside.

Extended limitation - suppression of facts - Classification dispute and limitation - Invocation of the extended period and consequential penalties in respect of disclosed hall hire or rental receipts and the impugned service-tax demands - HELD THAT: - A classification dispute concerning disclosed transactions and accounted receipts does not by itself establish suppression, wilful misstatement, or intent to evade tax. The notices did not disclose any deliberate act or omission evidencing such intent. As the normal limitation period applicable to the relevant period could not be enlarged by the subsequent amendment, the extended period was unavailable. The deficiencies in the notices also rendered the demands unsustainable even within the normal period. [Paras 7, 11]

The extended period was held not invocable, and no penalty could arise.

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

Valuation of Customs House Agent services - Exclusion of reimbursable third-party expenses - Limits of delegated legislation in determining taxable value - consequential service-tax demand, interest and penalties

Valuation of Customs House Agent services - Reimbursable third-party charges - Rule-making power vis-a -vis charging provision - Inclusion of LCL, deconsolidation, delivery order, terminal handling, demurrage and similar charges recovered by a Customs House Agent towards payments made to third parties in the taxable value of CHA services - HELD THAT: - For the period before 14.05.2015, taxable value under Section 67 was confined to consideration charged for the taxable service. Rule 5 could not enlarge that statutory value by including expenditure or costs which were not consideration for the service. The disputed recoveries represented payments made to port authorities, steamer agents, CFS operators and other third parties on behalf of clients, and their mere recovery from clients did not make them consideration for CHA services. The subsequent amendment bringing reimbursable expenditure within the valuation provision was substantive and prospective.

A consistent line of decisions, culminating in the recent coordinate Bench decisions in Sindhu Cargo Services Pvt. Ltd. [2025 (5) TMI 263 - CESTAT CHENNAI], Balram Shipping Services[2025 (11) TMI 199 - CESTAT CHENNAI] and North Star Shipping Service Pvt. Ltd.[2026 (4) TMI 1832 - CESTAT CHENNAI] holds that, for the period prior to 14.05.2015, genuine reimbursable expenses incurred on behalf of clients cannot be included in the taxable value under Section 67 of the Finance Act, 1994.

Applying the ratio of these decisions, we find that the disputed amounts represent recoveries towards payments made to third parties and not consideration for the appellant's CHA services. Mere recovery of such amounts from clients cannot make them taxable consideration. Accordingly, the impugned inclusion of such reimbursable expenses in the taxable value is unsustainable and Issue No. (i) is answered in favour of the appellant. [Paras 9, 15]

The reimbursable third-party charges were not includible in the taxable value of CHA services; consequently, the service tax demand, interest and penalty were set aside.

Whether the demands of service tax, interest and penalties are sustainable in the light of the statutory provisions and the judicial precedents relied upon by both sides? - In view of our findings under Issue [supra] the principal service tax demand is unsustainable. Consequently, the demand of interest under Section 75 and the penalties imposed under the Finance Act, 1994, also cannot survive. The Revenue's contention regarding Rule 5(2) does not alter this conclusion, since the disputed amounts have already been held not to constitute consideration for the taxable service.

Final Conclusion: The appeal was allowed. The demand founded on inclusion of reimbursable third-party expenses in the taxable value of CHA services, with consequential interest and penalty, was set aside.

Taxability of overburden disposal as declared service - Service tax on royalty for use of natural resources - Extended limitation for suppression of taxable transaction

Taxability of overburden disposal as declared service - Consideration received from disposal of overburden - character of the appellant's lifting and disposal of overburden, authorised by the mining lessee without a stated sale price, and the taxability of amounts realised from customers - HELD THAT: - The mining lessee was responsible for removal of overburden but authorised the appellant to dispose of it. The purported invoices contained no rate or value and the overburden was admittedly transferred free of cost; consequently, the transaction could not constitute a sale. Looking to its real character, the Tribunal held that the appellant performed the activity of disposal for the mining lessee, and the amounts realised from customers represented the consideration which the appellant would otherwise have received from the lessee for that service. Those receipts accordingly formed the gross amount chargeable to service tax. [Paras 8, 9, 11, 13, 18]

The disposal of overburden was held to be a taxable service rendered to the mining lessee, and the appellant was liable to service tax on the amounts collected from customers.

Service tax on royalty for use of natural resources - Periodic royalty payments - taxability of royalty and permit fees paid for removal of overburden pursuant to rights originating before 1 April 2016 - HELD THAT: - Royalty for mining was held to be contractual consideration for enjoyment of mineral rights and not a tax. The exemption for rights to use natural resources assigned before 1 April 2016 was confined to one-time upfront charges and did not extend to periodic payments. Royalty paid on a per-metric-ton basis for removal of overburden was therefore not exempt. [Paras 14, 16, 18]

Service tax was payable on the royalty and permit-related payments for removal of overburden.

Extended limitation for suppression of taxable transaction - Invocation of the extended period where the transaction with the mining lessee was represented through nil-value invoices as a sale of overburden - HELD THAT: - The Tribunal found that the appellant had suppressed the true nature of its relationship and transaction with the mining lessee. The invoices relied upon as evidence of sale were held to be a camouflage for the taxable service arrangement, satisfying the conditions for invocation of the extended period. [Paras 19]

The extended period of limitation was rightly invoked.

Final Conclusion: The impugned orders confirming service tax on the consideration for disposal of overburden and on royalty payments were affirmed. The appeals were dismissed.

Reverse charge service tax on insurance forming part of imported goods' transaction value

Whether service tax under the reverse charge mechanism was payable on insurance/comprehensive cover obtained from an overseas provider in relation to imported goods for the period after 1 July 2012? - HELD THAT: - Issue whether service tax can be levied on the cargo handling services which forms part of the transaction value of imported goods was considered by Tribunal in the matter of United Shippers Ltd Vs. CCE [2014 (12) TMI 502 - CESTAT MUMBAI] which was affirmed by Hon’ble Supreme Court [2015 (8) TMI 440 - SC ORDER] clarified that service tax cannot be levied on such services which forms part of the transaction value of imported goods.

The comprehensive cover protected against loss or damage in transit up to the Indian port. Where the insurance amount was included in the value of the imported goods under the Customs Act, 1962, and there was no allegation that such cost had been excluded from the assessable value, it could not be treated as a separate service for levy of service tax under reverse charge. Service tax cannot be levied on services forming part of the transaction value of imported goods. [Paras 7, 8]

The reverse charge demand for the relevant period was held unsustainable and was set aside.

Final Conclusion: The appeal was allowed with consequential relief, the entire reverse charge service tax demand being unsustainable.

Judicial review of Settlement Commission orders - Re-appreciation of evidentiary material in writ jurisdiction

Interference under Article 226 with rejection of adjustment of reversed CENVAT credit by the Settlement Commission on the ground of insufficient supporting records - HELD THAT: - Judicial review of an order passed by the Settlement Commission in its discretionary jurisdiction is confined to cases of contravention of the governing statute, prejudice to the opposite party, fraud, bias or mala fides. The Court cannot exercise appellate jurisdiction to reassess the sufficiency, adequacy or evidentiary value of the ER-1 returns, correlation statement, statutory registers and invoices placed before the Settlement Commission.

The earlier remand direction permitted the Settlement Commission to call for further information; its requirement of supporting records for verification of the reversal claim was therefore not outside that remit. Absence of an appellate remedy does not enlarge the settled limits of writ review. [Paras 19, 20, 23, 26, 27]

No jurisdictional or other legally reviewable infirmity was established in the rejection of the claimed adjustment; the writ petition was dismissed.

Final Conclusion: The challenge to the Settlement Commission's refusal to adjust the claimed reversed CENVAT credit against the duty liability was dismissed, as it sought an impermissible re-appreciation of evidentiary material in writ jurisdiction.

Res judicata and fresh cause of action - Transparency in technical bid evaluation - Reasoned decision - making in public procurement

Res judicata and fresh cause of action - Maintainability of the writ petitions challenging the disclosed parameter-wise technical evaluation after the earlier challenge had been disposed of before disclosure of the evaluation material - HELD THAT: - The earlier proceedings had not adjudicated the merits of the technical evaluation, since the challenge was then considered premature. The subsequent disclosure of parameter-wise marks furnished the first occasion for the petitioners to challenge the manner of evaluation; consequently, it constituted a fresh cause of action. Neither res judicata nor constructive res judicata applied, as the legality of the disclosed evaluation neither arose nor could have been decided in the earlier proceedings. [Paras 47, 48, 49, 50, 52]

The preliminary objection was rejected and the petitions were held maintainable.

Transparency in technical bid evaluation - Level playing field in public procurement - Validity of the technical evaluation of bids for outsourced Consular/Passport/Visa services where comparative standards were undisclosed, objective criteria attracted unexplained deductions, and materially identical proposals received inconsistent marks across Missions - HELD THAT: - Judicial review did not extend to reassessing the technical merits of the bids, but was available to examine whether the decision-making process conformed to fairness, transparency, reasonableness and equality. Comparative evaluation was permissible, but required disclosure of objective comparative standards. The use of undisclosed benchmarks, unexplained deductions under measurable criteria, and inconsistent marking of substantially identical proposals without an objective basis rendered the process arbitrary and incapable of meaningful verification. Oral presentations could not replace contemporaneous recorded reasons or validate undisclosed standards. The absence of a comparative evaluation summary and meaningful debriefing further impaired transparency; the exclusion of a lower financial bidder through such a process also implicated public interest. [Paras 82, 83, 84, 85, 87]

The technical evaluation process was held arbitrary, opaque and violative of Article 14.

Communication of reasons for technical disqualification - Fair administrative action in tender evaluation - Effect of failure to record and communicate reasons supporting the rejection of technical bids and the parameter-wise marks subsequently disclosed - HELD THAT: - Communication of numerical marks without the factual basis for deductions or comparative assessment did not demonstrate application of mind or enable the unsuccessful bidders to understand the rejection of their proposals. The applicable procurement framework and the RFP required reasons to be recorded and communicated. The respondents were also bound by the undertaking recorded in the earlier proceedings to furnish reasons after completion of the tender process; the Supreme Court's direction in E TRAV Tech Ltd [2026 (4) TMI 1906 - SC ORDER] to furnish the break-up of marks did not vary or dilute that undertaking. Oral presentations could not substitute recorded reasons. [Paras 92, 93, 94, 95, 96]

The failure to record and communicate reasons vitiated the technical evaluation as opaque, arbitrary and contrary to natural justice and fair administrative action.

Final Conclusion: The writ petitions were allowed. The technical evaluations and consequential tender awards were set aside, and fresh RFPs for CPV services across the concerned Missions were directed, with continuity of existing services pending completion of the fresh process.