TaxTMI Updates e-Newsletter
Aug 28,2026

Appellate forum jurisdiction - Transfer of appeal to competent State Bench - Whether the appeal was required to be dealt with exclusively by the Principal Bench?

HELD THAT: - On examination of the electronic record, the Tribunal found that the appellant's indication in Form APL-05 that the appeal involved a question exclusively within the Principal Bench's jurisdiction was erroneous. The appeal was therefore required to be placed before the Delhi State Bench. [Paras 3, 4, 5]

The Registry was directed to ensure online transfer of the appeal to the Delhi State Bench, without treating it as withdrawn.

Final Conclusion: The appeal was directed to be transferred seamlessly to the Delhi State Bench; it was not to be dismissed as withdrawn.

Mandatory carriage of e-way bill for movement of goods - presumption of intention to evade tax where goods are not accompanied by e-way bill - rebuttable presumption by production of materials by owner/transporter - detention and penalty under Section 129 of the State GST law - non-production or subsequent production of e-way bill not absolving liability - misclassification of goods and tax rate disparity as indicia of evasion - service of notice and opportunity of hearing in detention/penalty proceedings

HELD THAT:- The special leave petition was dismissed after condoning delay, no ground for interference with the impugned order being found [2025 (3) TMI 419 - ALLAHABAD HIGH COURT]

Alternative statutory remedy against cancellation of GST registration - Maintainability of the writ petition challenging cancellation of GST registration when remedies for revocation and statutory appeal were available

HELD THAT: - As an adjudication order under Section 74-A had already been passed before institution of the writ petition, the Court sustained the State's objection that the petitioner had efficacious statutory remedies of seeking revocation of cancellation under Rule 86-A(2) and filing an appeal under Section 107. [Paras 4]

The writ petition was disposed of, leaving the petitioner to avail the statutory remedies within the stipulated period; if so availed, they were directed to be entertained on merits without objection as to limitation.

Final Conclusion: The writ petition was disposed of on the ground of availability of statutory remedies against cancellation of registration, with protection against limitation for their timely invocation.

Penalty beyond show-cause notice - Imposition upon the petitioner of a penalty u/s 122(1A) of the CGST Act which had been specifically proposed against its handler/operator - HELD THAT: - The show-cause notice proposed specified penalties against the petitioner, while the penalty u/s 122(1A) was separately proposed against its handler/operator. The adjudicating authority nevertheless imposed both penalties upon the petitioner. The mixing up of the proposed penalties was not specifically controverted by the respondents. [Paras 8, 9, 10]

The impugned penalty order was quashed and the matter remanded to the adjudicating authority for a fresh order after hearing the petitioner; all other issues were left open.

Final Conclusion: The writ petition was allowed, the impugned order was quashed, and the matter was remanded for fresh adjudication.

Change of valuation basis beyond show-cause notice - Natural justice in GST valuation proceedings

Validity of confirmation of GST demand for alleged barter supply of excavated soil by applying a valuation rule different from that invoked in the show-cause notice - HELD THAT: - The show-cause notice invoked Rule 28(a) for valuation, although the adjudicating authority itself found that provision to have been incorrectly invoked. The authority nevertheless confirmed the demand by applying Rule 27(c), without affording the petitioner an opportunity to meet that distinct valuation basis. This caused grave prejudice and rendered the proceedings unsustainable. [Paras 7]

The show-cause notice and the adjudication order were quashed and set aside, with liberty to the Revenue to initiate fresh proceedings by issuing a fresh show-cause notice.

Final Conclusion: The writ petition was allowed. The demand proceedings were quashed for adoption of a different valuation rule without notice or opportunity to the petitioner.

Cancellation of GST registration - registered person reported nil turnover in GSTR-3B returns and did not respond to the subsequent show-cause notice - Independent satisfaction for cancellation of registration -

HELD THAT: - Cancellation under Section 29 requires the Proper Officer independently to be satisfied, on cogent and tangible material, that the circumstances specified in Section 29(1) or Section 29(2) exist. Mere declaration of nil turnover in GSTR-3B returns cannot establish discontinuance of business, particularly when material showing continuance of business from the registered premises had been produced. The show cause notice founded solely on nil turnover did not disclose a circumstance warranting cancellation under Section 29(1). [Paras 6, 7]

The impugned proceedings were quashed and set aside; the authority was left at liberty to verify whether the petitioner's business continued and to proceed in accordance with law.

Final Conclusion: The writ petition was allowed and the impugned proceedings rejecting revocation of GST registration were quashed. The respondent authority retained liberty to verify continuation of the business and act in accordance with law.

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

Validity of an assessment order passed under the GST law on the basis of a show-cause notice uploaded on the portal after cancellation of the assessee's registration - HELD THAT: - After cancellation of registration, the assessee was not obliged to check the GST portal. A show-cause notice in such circumstances was required to be served through an alternative mode. The order founded upon portal-based notice alone was therefore passed in breach of the principles of natural justice. [Paras 4, 6]

The assessment order was quashed, with liberty to the department to issue a proper notice and conclude fresh proceedings in accordance with law; any amount recovered remains subject to the final outcome of those proceedings.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order for denial of a proper opportunity of hearing and permitting fresh proceedings upon due notice.

GST waiver application - consideration of tax payment reflected in GSTR-3B return

Rejection of a GST waiver application despite prima facie evidence in the GSTR-3B return that the relevant CGST dues had been discharged - HELD THAT: - The GSTR-3B return prima facie recorded payment of the CGST dues which the rejection order treated as unpaid. Reconsideration of the waiver application was therefore warranted. [Paras 5]

The rejection order was set aside and the waiver application was remanded for fresh consideration after affording reasonable opportunity to the petitioner.

Final Conclusion: The writ petition was disposed of by setting aside the rejection of the waiver application and remanding it for fresh consideration.

Recovery of refund by applying Rule 96(10) after its omission without a savings clause - Whether the omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017, without a savings clause, applies to pending refund-recovery proceedings.?

HELD THAT: - The Supreme Court pronouncement [2026 (8) TMI 719 - SUPREME COURT] on the omission of Rule 96(10) was treated as authoritative. Since the omission without a savings clause applies to pending proceedings, the refund-recovery orders required fresh consideration in accordance with that pronouncement. [Paras 6]

The impugned orders were set aside and the matters remanded for reconsideration; the merits of the refund recovery were not adjudicated.

Final Conclusion: The writ petitions were disposed of by setting aside the refund-recovery orders and remanding the matters for reconsideration in light of the Supreme Court ruling on omitted Rule 96(10).

Conditional remand for de novo GST adjudication - Quashing of the GST assessment order and remand for fresh adjudication subject to payment of the stipulated portion of the disputed tax and filing of a reply to the show-cause notice - HELD THAT: - Recording the petitioner's undertaking and the respondent's no objection, the Court accepted the request for fresh adjudication subject to deposit of the stipulated portions of the disputed IGST, CGST and SGST liabilities.

Where CGST and SGST had already been recovered, no further pre-deposit towards those components was to be required. Petitioner was required to submit its reply and supporting documents, with the impugned assessment order treated as an addendum to the show-cause notice.

We are inclined to quash the impugned order and remit the case back to the respondent to pass a fresh order, subject to the petitioner depositing 50% of the disputed tax towards IGST and 50% of the balance tax liability towards CGST and SGST in cash from the petitioner's Electronic Cash Register, within a period of thirty (30) days from the date of receipt of a copy of this order.

However, it is made clear that, in case the amount towards CGST and SGST has already been recovered, no further pre-deposit shall be insisted upon. [Paras 9, 10, 11, 12, 13]

The impugned orders were quashed and the matter was remitted for fresh adjudication on merits upon compliance with the stipulated deposit and reply requirements; on default, recovery could proceed in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by quashing the impugned orders and directing de novo adjudication subject to the stated conditions.

Delayed statutory appeal against GST assessment order - Entitlement to pursue a statutory appeal against a GST assessment order confirming tax, interest and penalty despite expiry of the appeal period - HELD THAT: - Accepting the petitioner's undertaking to discharge the unpaid tax liability and interest, the Court permitted recourse to the appellate remedy subject to deposit of 10% of the penalty imposed. The direction was conditional upon compliance with the stipulated deposits. [Paras 7, 8, 9]

On compliance, the Appellate Authority shall decide the appeal on merits without reference to limitation; failing compliance, the respondents may recover the tax in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by permitting a delayed statutory appeal subject to payment of the unpaid tax and interest and the prescribed deposit towards penalty.

Goods and Services Tax on compulsory acquisition compensation - Eminent-domain acquisition and supply of goods or services - Scope of definition of the words "supply of goods or service"

Levy of GST by deduction from compensation paid for compulsory acquisition of land and structures - HELD THAT: - GST is leviable on the supply of goods or services. Land and buildings attached to it are immovable property and cannot be treated as goods. Compulsory acquisition in exercise of eminent domain is an expropriation by statutory power, not a transaction in which the landowner supplies goods or provides services. The respondents failed to identify any provision under the GST Act under which acquisition of land or structures could amount to such supply.

As a matter of fact, the High Court of Judicature at Madras in M. Poomani [2024 (2) TMI 1678 - MADRAS HIGH COURT] while considering a similar contention, has held that 'no levy of GST is applicable and charged on the compensation amount paid to the petitioner and no GST has also been paid by the petitioner to any GST authorities of the Central Government or the State Government, no direction as sought for by the petitioner is necessary in this writ petition.'

This Court, while considering whether income tax could be deducted at source on the interest on compensation paid to a landloser, held that tax cannot be deducted at source even on the interest awarded under Section 28 of the Land Acquisition Act, 1894, as that forms part of the compensation and such interest is intended to factor inflation during the period between the determination of compensation and its payment.

Therefore, this Court has no hesitation to hold that the respondents have acted in excess of their power in deducting GST from compensation payable to the petitioner.[Paras 6, 7, 9]

The deduction of GST from the compensation was held to be in excess of power; the impugned award notice was quashed to that extent and refund of the deducted GST with interest was directed.

Final Conclusion: The writ petition was disposed of by quashing the GST deduction from the acquisition compensation and directing refund with interest.

Service of GST notices and orders through Common Portal - Limitation for appeal against portal-uploaded orders

Availability of relief where show-cause notices or adjudication orders were served only by uploading them on the Common Portal - HELD THAT: - The Court noted that the decision in Luxmi Traders v. Union Territory of Chandigarh & Ors. [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT] held that mere portal uploading, absent acknowledgement of receipt or a reply, does not constitute sufficient service of a show-cause notice; further, service of a contested order-in-original solely through the portal does not trigger limitation for appeal. The respondents were unable to distinguish that decision, and the parties consented to disposal on that basis. [Paras 4, 5]

Final Conclusion: The batch of writ petitions was disposed of by extending to the petitioners the remedies recognised in Luxmi Traders v. Union Territory of Chandigarh & Ors. concerning service solely through the Common Portal.

Condonation of delay in GST appeal - Condonation of delay exceeding the period contemplated for filing an appeal against an assessment order under the GST enactments - HELD THAT: - Although the appeal was filed beyond the condonable period, the Court found it expedient to condone the delay because the stated rectification proceedings were not the sole explanation and the petitioner contested the tax levy on factual grounds requiring adjudication. The Court followed its approach in a similar factual situation in Simplex Infrastructures Ltd., and Another [2022 (1) TMI 761 - KARNATAKA HIGH COURT] [Paras 6, 7]

The dismissal of the appeal for delay was set aside; the appeal was restored and the delay was condoned for adjudication on merits after affording an opportunity of hearing, with all merits contentions left open.

Final Conclusion: The writ petition was partly allowed. The GST appeal was restored and directed to be decided on merits in accordance with law.

Sale of detained hazardous goods under section 129(6) of the GST Acts - Exercise of the power to sell detained bulk bitumen, being hazardous goods, where the penalty remains unpaid - HELD THAT: - Section 129(6) requires sale or other disposal of detained goods to recover the unpaid penalty after the stipulated period. The statutory scheme also permits reduction of that period where the goods are perishable, hazardous, or likely to depreciate.

The seized bulk bitumen was inflammable and therefore hazardous; the subsistence of time for an appeal could not detract from the statutory obligation to act, particularly having regard to the risk to the goods and the conveyance. [Paras 3, 4, 5]

The petition stands disposed of calling upon the authorities to act in exercise of the powers under the proviso to Section 129(6) of the KSGST/CGST Act to bring the goods to sale issuing public notice of sale causing notice thereof to the owner at the earliest and in any event within five [5] weeks from today.

Final Conclusion: The petition was disposed of with a direction to the authorities to take steps for sale of the hazardous detained goods in accordance with section 129(6) of the GST Acts.

Penalty for cash receipt of immovable-property sale consideration - Parity with co-sharer's treatment in identical transaction

Levy of penalty u/s 271D for acceptance of part of the sale consideration for ancestral property in cash, despite disclosure of that receipt in the revised return and dropping of identical penalty proceedings against a co-sharer in the same transaction - HELD THAT: - The assessee explained that the cash component was accepted under financial necessity and a bona fide belief, and that the receipt was disclosed through a revised return before initiation of reassessment proceedings. In an identical transaction involving the same property, the Assessing Officer had accepted the co-sharer's explanation and dropped penalty proceedings. The assessee, being similarly placed and having offered the cash receipt to tax, was held entitled to identical treatment. [Paras 4]

The penalty imposed for receipt of part of the sale consideration in cash was deleted.

Final Conclusion: The appeal was allowed and the penalty levied under section 271D was deleted.

Interest on tax refund - effect of settlement under Kar Vivad Samadhan Scheme - Finality of unchallenged appellate directions

HELD THAT:- The special leave petition was dismissed, with pending applications disposed of. No reason to interfere with the High Court’s order [2026 (4) TMI 1909 - RAJASTHAN HIGH COURT]

Faceless assessment - breach of natural justice - Writ jurisdiction despite alternative statutory remedy

Faceless assessment - consideration of authenticated responses - Effective opportunity of personal hearing - Validity of the faceless assessment where authenticated replies were ignored, insufficient time was granted to answer the show-cause notice, and a meaningful personal hearing was not afforded - HELD THAT: - The replies filed in response to the notice under section 142(1) and the show-cause notice were authenticated by acknowledgements containing hash results and ought to have been considered. Recording that no replies had been filed was factually incorrect. Grant of only two effective working days to respond was contrary to the prescribed minimum period, and, upon being informed of the technical failure preventing attendance at video conferencing, a fresh hearing ought to have been afforded. These deficiencies constituted a gross breach of natural justice. [Paras 7]

The assessment order and consequential demand and penalty show-cause notice were quashed, and the matter was remanded for a fresh assessment from the stage of the show-cause notice, after considering the replies and affording further opportunity and hearing as directed.

Maintainability of the writ petition despite the assessee having filed a statutory appeal to preserve limitation - HELD THAT: - Availability or invocation of an appellate remedy does not bar exercise of writ jurisdiction where the impugned action violates principles of natural justice. The rule requiring recourse to a statutory remedy is one of self-restraint and does not render the writ petition non-maintainable. [Paras 8]

The objection based on the alternative remedy was rejected; the appeal filed to save limitation was rendered infructuous upon quashing of the assessment order.

Final Conclusion: The writ petition was allowed. The assessment and consequential proceedings were quashed for breach of natural justice and remanded for fresh adjudication in accordance with the directions issued.

Deduction for new industrial undertaking under section 80-IE - Recomputation of eligible profits under section 80-IA(10) - Excise-duty incentive as capital receipt - Working-partner remuneration and deduction computation

Deduction for new industrial undertaking under section 80-IE - Splitting up or reconstruction of existing business - Transfer of previously used plant and machinery - Entitlement of the pharmaceutical manufacturing undertaking to deduction under section 80-IE despite the transfer of the Sikkim unit and the allegation that it was formed by reconstruction of an existing business using old machinery - HELD THAT: - The concurrent factual findings established that the undertaking was not formed by splitting up or reconstruction of the existing business. The evidence produced in remand proceedings also did not establish that old or used plant and machinery exceeded the statutory limit. In the absence of supplier enquiries or material substantiating the Assessing Officer's presumption that machinery supported by duplicate or photocopied bills was old, that presumption was rightly rejected. [Paras 29, 30]

The assessee was entitled to deduction under section 80-IE, and no substantial question of law arose.

Recomputation of eligible profits under section 80-IA(10) - Notional allocation of related-party expenses - Reduction of profits eligible for section 80-IE deduction by allocating selling and distribution, research and development, royalty and management expenses allegedly incurred by the working partner for the assessee - HELD THAT: - Section 80-IA(10), as applied through section 80-IE, permits recomputation only where the material demonstrates that, because of close connection or another arrangement, the business was so arranged as to yield more than ordinary profits to the eligible undertaking. Close connection by itself was insufficient. General statements recorded during survey and a turnover-based comparison of expenses, without evidence of an arrangement or verification of the assessee's distribution and marketing network, could not justify notional allocation of the working partner's expenses. [Paras 33, 34, 35, 39]

The deletion of the notional expense allocations was upheld.

Excise-duty incentive as capital receipt - Exclusion of capital receipt from eligible profits - Treatment of the excise-duty incentive received by the eligible undertaking for purposes of total income and deduction under section 80-IE - HELD THAT: - The incentive, having regard to the policy objective of industrial development and employment generation, was treated as a capital receipt. A receipt excluded from taxable income could not form part of the eligible profits for deduction u/s 80-IE; the resulting treatment was tax neutral because the undertaking otherwise qualified for full deduction. [Paras 39]

The direction to exclude the excise-duty incentive from total income as well as from computation of deduction under section 80-IE was sustained.

Working-partner remuneration and deduction computation - Double disallowance of expenditure - Disallowance of remuneration payable to the working partner while computing profits eligible for deduction under section 80-IE - HELD THAT: - The supplementary partnership deed governed remuneration payable to the working partner. Further, where the assessee had itself added back the remuneration in its revised return, the Assessing Officer could not make a further addition of the same amount. [Paras 39]

The deletion of the disallowance concerning working-partner remuneration was upheld.

Final Conclusion: The appeals were dismissed. The concurrent findings sustaining the section 80-IE deduction and rejecting the impugned recomputation of eligible profits disclosed no substantial question of law.

Credit of tax deducted at source where deductor fails to deposit tax - Entitlement of a salaried taxpayer to credit of tax deducted at source by the employer but not deposited with the Revenue - HELD THAT: - Though the Revenue could have been justified in disallowing TDS not deposited by the deductor, the taxpayer could not be blamed for the employer's failure or deprived of the resulting legitimate entitlement as has been held by this Court in its judgement Satwant Singh Sanghera [2024 (10) TMI 762 - DELHI HIGH COURT] [Paras 6, 7]

The intimation, consequential demand and recovery from the taxpayer's refund were quashed to the extent of denial of TDS credit deducted by the employer; refund of the recovered amount with applicable interest was directed.

Final Conclusion: The writ petition was allowed, confined to the denial of credit for tax deducted by the employer. The Revenue was directed to restore the amount recovered from the refund with applicable interest.

Adjustment of income-tax refund against outstanding demand - Release of the balance income-tax refund where adjustment against an outstanding demand is proposed - HELD THAT: - Where a refund is found due and adjustment under Section 245 of the Act of 1961 is proposed against an outstanding demand, only the amount proposed for withholding or adjustment may be retained. The remaining refund must be remitted immediately, without prejudice to the parties' right to contest whether the proposed adjustment is legally permissible. [Paras 6]

The respondents were directed to credit the balance refund within the stipulated period, failing which it would carry interest at the rate directed by the Court.

Final Conclusion: The petition was disposed of with a direction for prompt release of the refund remaining after retention of the amount proposed for adjustment, while leaving the validity of the outstanding demand and proposed adjustment open.

Perverse findings based on an erroneous factual premise - Validity of the Tribunal's decision on limitation rendered on the premise that the assessee had adopted the Dispute Resolution Panel route -

HELD THAT: - The assessee had admittedly pursued the appellate route before the Commissioner of Income Tax (Appeals), and not proceedings before the Dispute Resolution Panel. Since the Tribunal's discussion and conclusion proceeded throughout on the contrary factual foundation, its findings were perverse. The Court did not adjudicate the parties' respective contentions on limitation or any other issue. [Paras 9, 10, 11]

The Tribunal's order was set aside and the matter remanded for fresh decision on all issues in accordance with law, with limitation left open.

Final Conclusion: The appeals were disposed of by setting aside the Tribunal's order and remanding the matter for fresh adjudication. No view was expressed on limitation or the merits of the parties' contentions.

Settlement under Section 125B of the Customs Act - writ petition which was pending before this Court against the order of the Settlement Commission has been decided by the Division Bench of this Court, vide its judgment [2017 (5) TMI 743 - DELHI HIGH COURT] and Hon’ble the Supreme Court has issued notices and stayed the effect and operation of the judgment [supra]

HELD THAT:- We find that the present appeal was adjourned sine-die on 20.01.2016 and has thereafter has been listed on a number of occasions, but is being adjourned because of the pendency of above SLP/appeal.

Hence, rather than keeping the appeal pending, we hereby dismiss the appeal in light of the findings recorded in the judgment dated [2017 (5) TMI 743 - DELHI HIGH COURT] passed by this Court; because the Income Tax Appellate Tribunal had relied upon the order of the Settlement Commission, which has been affirmed by this Court vide judgment dated 15.05.2017.

While doing so, we direct the respondent-assessee to move an application and place on record the final order of the Hon’ble Supreme Court within 4 weeks arising out of SLP being finally decided by the Hon’ble Supreme Court.

Reassessment based on loose paper - live link with assessee

Whether reassessment notice founded on an unsigned and uncorroborated loose paper, without a live link between its contents and the assessee, was valid? - HELD THAT: - The loose paper neither identified the petitioner nor established any connection with the person named therein or with the entities referred to in the satisfaction note. The alleged rate and inference of escaped income were derived from third-party material and were based only on hypothesis.

The expressions "relates to" and "pertains to" in the reassessment provision do not dispense with the requirement that the Revenue analyse the seized material in its attendant circumstances and form a prima facie opinion establishing a live link with the assessee. The identical loose paper had also failed to establish such nexus in the earlier reassessment concerning the petitioner. [Paras 9, 11]

The reassessment notice was quashed and set aside.

Final Conclusion: The writ petition was allowed and the reassessment notice for AY 2022-23 was quashed for want of a prima facie live link between the loose paper and the petitioner.

Opening stock valuation - Interest disallowance on undisputed outstanding credit

Opening stock valuation - Closing stock carried forward as opening stock - Revaluation of the opening stock of Guar Dal where the corresponding closing stock of the preceding year had been accepted by the Department - HELD THAT: - The settled accounting principle is that the closing stock of an earlier year forms the opening stock of the succeeding year, the two assessments being interlinked for determination of the true stock position.

The above principle has also been recognised by this Court in Hindustan Zinc Limited [2017 (5) TMI 259 - RAJASTHAN HIGH COURT] wherein this Court specifically observed that the issue concerning valuation of closing stock “has already been settled by the Apex Court” and reiterated that the closing stock becomes the opening stock of the next year.

The Tribunal found that the disputed stock had been shown as closing stock at the end of the preceding year, that such closing stock was accepted by the Department, that the books of account were not rejected, and that no material explained the altered valuation of the same stock on the following day. [Paras 5, 6, 7, 8]

The addition made by doubting and revaluing the opening stock was rightly deleted.

Interest disallowance on undisputed outstanding credit - Disallowance of interest claimed on an outstanding credit of a related concern when the principal credit pertained to the preceding year and was not doubted - HELD THAT: - The Tribunal found that the outstanding credit related to the preceding year and that the Assessing Officer had not questioned the outstanding amount in the account of the related concern. The Revenue did not oppose the position advanced by the assessee. [Paras 9, 10, 11]

The deletion of the interest disallowance was sustained.

Final Conclusion: The Tribunal's deletion of the addition arising from revaluation of accepted closing stock carried forward as opening stock, and of the interest disallowance on an undisputed preceding-year credit, was upheld. The Revenue's appeal was dismissed.

Limitation for penalty u/s 271DA for contravention of cash-receipt restrictions - Limitation for initiation of penalty proceedings under section 271DA for alleged receipt of cash in contravention of section 269ST - HELD THAT: - The two co-ordinate Bench decisions Shri. K. Umesh Shetty [2025 (1) TMI 1237 - KARNATAKA HIGH COURT] and Ganesh Agarwal [2026 (7) TMI 1035 - KARNATAKA HIGH COURT] adopted differing points for commencement of limitation under section 275(1)(c). The Court held that, on the admitted facts, the penalty proceedings were barred under either interpretation: the assessment orders having been passed in March 2024, the six-month period expired on 30.09.2024, whereas the show-cause notice was issued thereafter. The Court therefore found the penalty proceedings to be beyond the prescribed limitation. [Paras 9, 10]

The penalty orders and consequential demand notices were unsustainable as time-barred.

Final Conclusion: The appeals were dismissed. The penalty orders and demand notices under section 271DA were held barred by limitation.

Interest on delayed refunds under Vivad se Vishwas Scheme - CBDT Action Plan timeline for consequential orders after Form-5

Entitlement to interest on refund retained after issuance of Form-5 under the Vivad se Vishwas Act, 2020, and the date from which such interest is payable - HELD THAT: - Section 5(2) of the VsV Act and Rule 7 culminate in issuance of Form-5 and do not contemplate a further consequential order. Though Circular No. 03 of 2021 authorises the AO to pass a consequential order, it prescribes no time limit and does not attract the limitation under Section 153 of the Income-tax Act.

Clause 9 of the CBDT Central Action Plan, which required consequential orders or refunds by 31.07.2021 where Form-5 was issued up to 30.06.2021, could not be disowned by the Revenue. Interest compensates for wrongful retention of money refundable to the assessee. [Paras 35, 37, 39, 40, 41]

Interest at 6% per annum was directed from 01.08.2021 until 02.03.2024; non-payment within the stipulated period would entail further interest at 9% per annum recoverable from the erring officers.

Final Conclusion: The writ petitions were partly allowed, with interest on the delayed refunds directed at 6% per annum from 01.08.2021 until the date of credit. Continued default would attract further interest at 9% per annum recoverable from the erring officers.

Reassessment after scrutiny assessment - change of opinion - Limitation for reassessment notice following deemed notice under the amended reassessment regime

Reassessment after scrutiny assessment - change of opinion - Reassessment of share-capital and investment transactions already examined in scrutiny assessment on the basis of an anonymous complaint - HELD THAT: - The original assessment had followed detailed enquiry into the petitioner's share-capital and investment transactions, with no addition on those counts. In the absence of concealment or withholding of material by the assessee, reopening on the same transactions merely upon receipt of an anonymous complaint constituted a change of opinion and could not sustain reassessment. [Paras 31, 32, 33]

The reassessment proceedings were invalid as founded on a mere change of opinion.

Limitation for reassessment notice following deemed notice under the amended reassessment regime - Sanction for reassessment beyond three years - Validity of the reassessment notice issued after expiry of the surviving limitation period available following conversion of the original notice into a show-cause notice - HELD THAT: - The original reassessment notice, issued within the period extended by TOLA, was deemed to be a show-cause notice under the amended regime. After excluding the period during which that deemed notice remained stayed and the time allowed for response, only the balance period surviving from the original limitation remained available for issuance of the reassessment notice. The fresh notice was issued after expiry of that surviving period. The alternative reliance on the extended limitation was also unavailable, since the proceedings neither invoked nor recorded satisfaction of the statutory conditions for that period, and the sanction was not obtained from the authority competent where more than three years had elapsed. [Paras 44, 45, 46, 47, 48]

The reassessment notice was void ab initio as time-barred; the consequential order, subsequent notice, assessment order, demand notice and penalty notice were quashed, with liberty to initiate fresh proceedings if permissible in law.

Final Conclusion: The writ petition was allowed. The reassessment proceedings and all consequential orders were quashed, while leaving it open to the respondents to proceed afresh if permissible in law.

Transfer pricing characterisation of service reseller - Reasoned departure from prior FAR characterisation - Characterisation of the assessee's purchase of services for resale as IT-enabled services without examining its functions or giving reasons for departure from the earlier characterisation

HELD THAT: - The Dispute Resolution Panel affirmed the Transfer Pricing Officer's characterisation of the assessee as an IT-enabled service provider without cogent reasons and without considering its own earlier direction characterising the assessee differently on an unchanged FAR profile. Its direction was therefore unsustainable.

Although the unilateral Advance Pricing Agreement did not cover the relevant assessment year, the AO could, upon being satisfied that the assessee was a reseller, consider its terms for determining the arm's length price if found reasonable; otherwise, the transfer pricing study was to be examined independently. [Paras 13, 14, 15]

The characterisation and arm's length price issue was restored to the Assessing Officer for fresh adjudication in accordance with law; the remaining transfer pricing grounds were treated as premature, with liberty to raise the contentions afresh.

Final Conclusion: The appeal was allowed for statistical purposes to the extent of remand of the transfer pricing characterisation and arm's length price determination.

Business loss - commercial substance of related-party service arrangements - Interest on borrowed capital-commercial expediency of investment in another company - Disallowance of expenditure relating to exempt income - Unexplained share capital-genuineness of circular group-fund transactions

Business loss - commercial substance of related-party service arrangements - Substance over form - Allowability of the claimed business loss where advisory-fee income and corresponding expenditure arose from back-to-back arrangements between related entities - HELD THAT: - Allowability of business loss presupposes genuine business activity carried on by the assessee. The mirror-image agreements executed on the same day, absence of independent infrastructure or evidence of services rendered, lack of authority to subcontract, absence of actual fund flows, and year-end journal entries collectively showed that the assessee merely acted as a conduit between related entities. The arrangement lacked commercial substance and could not establish that any genuine business was carried on. [Paras 11, 12]

The claimed loss was not allowable as business loss, and the Assessing Officer's disallowance was restored.

Interest on borrowed capital-commercial expediency - Investment in shares unrelated to business - Deductibility of interest on borrowings used for investment in shares of another company on the asserted ground of commercial expediency - HELD THAT: - Interest on borrowed capital is allowable only where the borrowing is for the assessee's business or profession. The assessee did not establish that the investee was its subsidiary before the relevant acquisition, that it had a deep or controlling business interest in that company, that the investee's activities were connected with its business, or that the investment served any commercial purpose of the assessee. The asserted acquisition of controlling interest, without proof of business nexus or commercial expediency, did not satisfy the statutory test. [Paras 18, 19, 20]

The interest disallowance was confirmed.

Disallowance of expenditure relating to exempt income - Prospective operation of the Explanation to section 14A - Extent of disallowance of expenditure relating to exempt income and applicability of the Explanation inserted in section 14A by the Finance Act, 2022 - HELD THAT: - Following the view that the Explanation inserted by the Finance Act, 2022 operates prospectively, the disallowance under section 14A could not exceed the exempt income earned during the relevant year. The Assessing Officer was directed to verify the actual exempt income and restrict the disallowance accordingly. [Paras 24, 25]

The restriction of disallowance to the exempt income earned was upheld in principle, subject to verification by the Assessing Officer.

Unexplained share capital - genuineness of transaction - Circular movement of funds through group entities - addition for share capital where the genuineness of the transaction was questioned because the funds were routed back to the subscriber through group entities - HELD THAT: - Under section 68, the assessee must establish identity, creditworthiness and genuineness of the transaction. Though the subscriber's identity was not in dispute, the lower appellate authority did not examine the vital question of genuineness, including the application of the capital raised. The material indicated that substantially identical amounts received as share capital were transferred through group entities and returned to the subscriber on the same dates, without the assessee retaining the funds. The circular movement of funds required fresh examination. [Paras 29]

The deletion of the addition was set aside and the matter was remanded to the Assessing Officer for fresh examination of genuineness after affording adequate opportunity to the assessee.

Final Conclusion: The Revenue's appeal was treated as allowed for statistical purposes. The disallowance of business loss and interest was restored or confirmed, while the section 14A disallowance was limited to verified exempt income and the share-capital issue was remanded for fresh examination.

Customs duty on pilfered imported goods - Liability of approved customs-area custodian - Saving clause and non obstante clause - Overriding effect of non obstante clause - validity of Notification dated 11.10.2000 issued by the Commissioner of Customs (Import) in exercise of the powers conferred under Section 45(1) of the Customs Act

Validity of approval of a Major Port Trust as custodian under Section 45(1) of the Customs Act and its consequent liability for customs duty on pilfered imported goods under Section 45(3) - HELD THAT: - The liability of the Port Trust under the Major Port Trusts Act is a conditional civil liability of a bailee towards the owner of goods, whereas the liability u/s 45(3) is an independent statutory obligation owed to the Revenue in respect of pilfered goods.

The saving clause in Section 45(1) does not preclude approval of the Port Trust where the other enactment does not impose a corresponding customs-duty liability for pilferage.

Section 45(3), introduced to prevent non-recovery of duty after the importer is absolved under Section 13, operates notwithstanding any other law once the person having custody has been approved under Section 45(1). There was therefore no conflict between the two enactments, and a statutory Port Trust, being a juristic person, could validly be so approved. [Paras 6, 7]

The notification approving the Port Trust as custodian was valid and the High Court's contrary declaration was set aside. However, the quashing of demands relating to pilferage before the approval was not interfered with, as no liability under Section 45(3) could arise without such approval.

Final Conclusion: The notification approving the Port Trust as custodian under the Customs Act was upheld. The pre-approval demands for customs duty on pilfered goods remained quashed.

Maintainability of appeal on low tax effect - Whether an exception under the National Litigation Policy could be invoked in a Special Leave Petition when that ground had not been raised before the High Court?

HELD THAT:- The Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”) as well as the High Court [2026 (2) TMI 1471 - CALCUTTA HIGH COURT] has dismissed the appeal/petition of the petitioner on the ground that the tax involvement was below the threshold prescribed under the National Litigation Policy (“NLP”).

In this petition, the petitioner seeks to raise a ground that the case fell within one of those exceptions provided in the Policy.However, we do not find that any such ground was taken before the High Court.

In such circumstances, we decline to entertain this Special Leave Petition and the same is, accordingly, dismissed.

Agency liability for customs duty - Knowledge in customs-smuggling abetment - Penalty for customs duty evasion - Penalty for knowing use of false customs documents

Agency liability for customs duty - Knowledge in customs-smuggling abetment - Liability of a customs clearance facilitator for differential duty as an owner, beneficial owner or agent of goods containing undeclared articles - HELD THAT: - Mere involvement in filing the Bill of Entry, payment of assessed duty and arranging examination and clearance established, at the highest, participation in clearance, but did not establish ownership, beneficial ownership or knowing participation in misdeclaration. Agency liability under Section 147(3) required foundational proof of express or implied authority from the actual owner or importer, which was absent. Nor did the impugned order record a cogent and reasoned finding that the petitioner knew of the concealed goods or knowingly facilitated the attempted smuggling, despite the specific remit in the earlier proceedings. The subsequently set-aside earlier penalty proceedings could not supply that deficiency. [Paras 25, 27, 28, 32, 33]

The finding fastening joint and several liability for the differential customs duty and consequential interest upon the petitioner was unsustainable and was set aside.

Penalty for customs duty evasion - Penalty for alleged duty evasion where the petitioner's liability to pay differential duty was not established - HELD THAT: - Penalty under Section 114A is consequential upon establishing that the person is liable for duty or interest where the non-levy or short-levy results from collusion, wilful misstatement or suppression. Since the foundational duty liability of the petitioner was not established, the consequential penalty could not survive. [Paras 29, 33]

The penalty imposed under Section 114A was set aside.

Penalty for knowing use of false customs documents - Penalty for alleged use of false customs documents without a finding of knowledge or intention - HELD THAT: - Section 114AA requires a finding that the person knowingly or intentionally made, signed, used or caused to be used a declaration, statement or document false in a material particular. The existence of false documents alone was insufficient, and the impugned order contained no specific finding that the petitioner knowingly or intentionally used any such document. [Paras 30, 31, 33]

The penalty imposed in respect of the alleged false documents was set aside.

Final Conclusion: The impugned order was set aside insofar as it fastened differential duty, interest and penalties upon the petitioner. The order was confined to the petitioner's liability and did not affect proceedings against the other noticees.

Provisional release of imported goods - Security for differential customs duty - Bank guarantee for differential customs duty -

Provisional release of imported hand and luggage trolleys pending adjudication of the actual duty liability - HELD THAT: - In the present case, the petitioner agrees to pay 100% of the duty determined on the declared value and further undertakes to execute a personal bond for the balance duty, if any. The actual duty payable is yet to be determined in the adjudication proceedings.

Since the actual duty was yet to be determined, the Revenue's interest could be adequately safeguarded by requiring payment of duty on the declared value and a personal bond for the balance duty, if any. Continued detention of the goods and insistence on a bank guarantee were unnecessary. [Paras 8, 9]

The bank-guarantee condition was set aside and provisional release was directed on payment of applicable duty on the declared value and execution of a personal bond for the balance duty, without prejudice to adjudication.

Final Conclusion: The writ petition was allowed and the imported goods were directed to be provisionally released on payment of duty on the declared value and furnishing of a personal bond for any balance duty.

Prospective operation of customs exemption notification - Provisional release of imported highly specialised equipment

Consideration of provisional release of imported second-hand highly specialised digital multifunction print and copying machines where the respondents relied on an exemption-notification amendment brought into force after the bills of lading - HELD THAT: - A statutory notification operates prospectively unless it expressly provides otherwise. Since the bills of lading pre-dated commencement of the amendment relied on by the respondents, that amendment could not govern the imports or furnish a ground to decline consideration of provisional release. The Court also found no distinguishing feature from its earlier common order concerning provisional release of similar goods [2025 (7) TMI 1350 - MADRAS HIGH COURT] [Paras 5, 6]

The respondents were directed to consider the request for provisional release under Section 110A and, upon compliance with the conditions imposed, release the goods provisionally; such release remains subject to independent adjudication on merits.

Final Conclusion: The writ petition was disposed of by directing consideration and consequential provisional release of the imported goods, subject to conditions and the outcome of independent adjudication proceedings.

Tariff classification of mixed lot polyester knitted fabrics based on actual composition - Penalty for misclassification - requirement of wilful suppression or misstatement

Classification of imported mixed lots of polyester knitted fabric under CTH 6006 9000 or CTH 6006 3200 - Burden of proof for reclassification of imported goods - HELD THAT: - The Bills of Entry had been assessed and cleared under the declared classification. Since the goods were described as mixed lots of assorted fabrics, their actual composition could not be assumed merely from the description "polyester knitted fabric". The Department neither subjected the fabrics to testing nor produced cogent evidence establishing that the goods possessed the characteristics required for classification as fabrics of synthetic fibres. Each Bill of Entry required classification with reference to the goods actually imported thereunder; the originally accepted classification could not be displaced on a subsequent change of perception unsupported by affirmative evidence. Contemporaneous acceptance of the same classification for comparable imports was also a relevant circumstance. [Paras 13, 14, 15, 17]

The reclassification under CTH 6006 3200 was rejected; the declared classification under CTH 6006 9000 was upheld, and the differential customs duty demand with interest was set aside.

Penalty for alleged misclassification under Section 114A - Wilful suppression in customs duty evasion - HELD THAT: - The dispute concerned an interpretational question of classification, and the classification declared by the appellant was upheld. No cogent material established deliberate suppression, wilful misstatement, or mala fide intent to evade duty. [Paras 18]

The penalty imposed under Section 114A of the Customs Act, 1962 was set aside.

Final Conclusion: The appeal was allowed. The imported goods were held classifiable under CTH 6006 9000, with consequential setting aside of the differential duty demand, interest and penalty.

Personal penalty for abetment of gold smuggling - Accomplice statements - material corroboration - Suspicion cannot substitute proof

Personal penalty on a Customs Hawaldar for alleged abetment of gold smuggling, founded on accomplice statements, call records and alleged use of a syndicate mobile connection without incriminating recovery or material corroboration - HELD THAT: - Where no incriminating article or alleged mobile connection was recovered from the deceased officer, an accomplice's statement could not, without corroboration in material particulars, establish his involvement. The record also disclosed calls to the Superintendent before the seizure, supporting the defence that information had been conveyed. The Department had not investigated whether other officers were alerted, and the alleged use of a mobile connection merely because of its tower location remained suspicion. Strong suspicion cannot take the place of proof. [Paras 5, 6, 7, 8]

The personal penalties for alleged abetment of gold smuggling were unsustainable and were set aside.

Final Conclusion: The appeal by the successor in interest of the deceased Customs Hawaldar was allowed, and the appellate order confirming the personal penalties was set aside with consequential relief.

Absolute confiscation of the seized gold - Burden of proof regarding notified gold - Penalty for carrying confiscable gold

Absolute confiscation of gold recovered from carriers who possessed no licit documents and whose claimed owner asserted ownership only in reply to the show cause notice - HELD THAT: - Gold being a notified item, the persons in possession were required to establish its licit procurement. The carriers had no documentary evidence at the time of interception, and the claim of ownership was made only at the stage of reply to the show cause notice. The documents then produced were treated as an afterthought and were held inadmissible for establishing ownership of the seized gold. [Paras 17, 18]

The absolute confiscation of the gold was affirmed.

Penalty for carrying confiscable gold - Penalty on the carriers for transporting gold of foreign origin without licit documents - HELD THAT: - The carriers were found to have been engaged in carrying gold of foreign origin without documents evidencing its lawful possession or transportation. [Paras 19]

The penalties imposed on the carriers under Section 112(b) were affirmed.

Quantum of penalty for dealing with confiscable gold - HELD THAT: - Although the claim of ownership was not accepted and the person was found to have attempted to mislead the investigating agencies, the Tribunal considered the penalty imposed to be highly excessive. [Paras 19]

The penalty was reduced.

Final Conclusion: The absolute confiscation of the gold and the penalties on the carriers were sustained. The penalty on the person claiming ownership was reduced.

Penalty for bona fide import-declaration error - Residuary penalty where specific penal provisions exist - Penalty u/s 117 of the Customs Act for goods omitted from the Bill of Entry owing to the supplier's failure to furnish the corresponding invoice

HELD THAT: - The appellant, upon verifying the consignment after clearance, voluntarily informed Customs of the omitted invoice and sought reassessment for payment of duty on the entire consignment. There was no material to show that Customs would have known of the irregularity but for this disclosure. In these circumstances, penalising the appellant under a residuary provision despite the availability of express penal provisions was held unsustainable. [Paras 5, 6]

The penalty imposed under Section 117 was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The impugned appellate order confirming penalty under Section 117 of the Customs Act was set aside.

Classification of low-ethoxylated non-ionic fatty alcohol ethoxylates - CTI 3824 9090/3824 9990 v/s CTI 3402 1300 - Water-insoluble organic surface-active products -

HELD THAT: - Classification is governed primarily by the tariff headings and the relevant Chapter Notes. Chapter Note 3 to Chapter 34 requires both the prescribed water-mixture characteristic and reduction of surface tension to be satisfied for classification as an organic surface-active agent. The departmental test reports showed that the samples gave a translucent liquid with separation into two layers, and thus did not satisfy the requirement that the liquid or stable emulsion be without separation of insoluble matter. The HSN Explanatory Notes exclude water-insoluble surface-active products from Heading 3402 and place them under Heading 3824, if not more specifically covered. [Paras 8, 9, 10, 11]

The imported goods were rightly classified under CTI 3824 9090/3824 9990 and not under CTI 3402 1300; consequently, the proposed duty demand, interest and penalties were unsustainable.

Final Conclusion: The Revenue appeal was dismissed and the classification of the imported goods under CTI 3824 9090/3824 9990 was sustained. The respondent's cross-objection was disposed of.

Customs duty on goods warehoused in FTWZ for authorised operations - Provisional release of seized goods - bank guarantee

SEZ-to-DTA clearance - customs duty incidence - Provisional release - security for differential duty - Provisional release of imported fabric intended for authorised operations in an FTWZ - Validity of requiring a bank guarantee computed on differential customs duty before the goods or resultant manufactured goods are cleared to the Domestic Tariff Area - HELD THAT: - Goods imported into an SEZ for authorised operations enjoy customs-duty exemption, while customs duty is attracted only upon removal from the SEZ to the DTA. The statutory fiction governing such removal requires duty treatment equivalent to that applicable to comparable imports; it does not create a duty liability before the stage of DTA clearance.

Since the imported goods were yet to undergo authorised operations and the manufactured goods alone were to be cleared subsequently to the DTA, computation of differential duty on the imported goods for insisting upon a bank guarantee was unsustainable. [Paras 4]

The bank-guarantee condition was set aside. Provisional release was permitted on furnishing a bond equal to the value of the goods, subject to their use only for authorised operations in the FTWZ; appropriate customs duty would be payable when the manufactured goods are cleared to the DTA.

Final Conclusion: The appeal was allowed to the extent of deleting the bank-guarantee requirement for provisional release. The goods may be released upon execution of a value-based bond for authorised FTWZ operations, without prejudice to customs duty payable upon subsequent DTA clearance.

Confiscation of the gold seized from the assessee's premises under Section 111(d) of the Customs Act, 1962 - Cross-examination of retracted customs statements - Admissibility of statements under Section 138B of the Customs Act - Natural justice in customs confiscation proceedings - Reliance on retracted and untested statements for confiscation of gold seized from the appellant and imposition of penalty

HELD THAT: - A statement relied upon to prove its contents against a noticee is relevant under Section 138B only in the prescribed circumstances. Where the maker has retracted the statement and the noticee is denied the specifically sought cross-examination, the statement cannot constitute legal evidence against the noticee.

The retracted and untested statements formed the substantial evidentiary basis for connecting the appellant with receipt and refining of smuggled gold; without them, the investigation concerning the wider smuggling syndicate did not independently establish that the gold seized from the appellant was smuggled or that the appellant knew it to be liable to confiscation. [Paras 10, 11]

The denial of cross-examination vitiated the findings against the appellant; the confiscation of the seized gold and the penalty imposed under Section 112 were set aside.

Final Conclusion: The appeal was allowed. The impugned order, insofar as it concerned the appellant, was set aside with consequential relief in accordance with law.

Validity of revocation proceedings - Violation of principles of natural justice by non-supply of relied-upon statements

Revocation of the Customs Broker licence and allied action founded on statements of its F-Card and G-Card holders which were not supplied to the Customs Broker despite requests - HELD THAT: - The statements were heavily relied upon in the offence report and show-cause notice, but their copies were not furnished despite repeated requests. The Customs Broker was consequently denied an opportunity to meet, contradict or make submissions on that material, resulting in violation of the principles of natural justice. [Paras 5]

The matter was remanded to the Principal Commissioner for fresh decision after supplying the statements and affording reasonable opportunity to the Customs Broker; all other submissions were left open.

Final Conclusion: The appeal was allowed by way of remand for fresh adjudication in conformity with principles of natural justice.

Classification of Magnesia Carbon Bricks - Prospective applicability of firing requirement under Chapter 69 - Penalty for customs misdeclaration - Confiscation for incorrect declaration in bills of entry

Classification of Magnesia Carbon Bricks under specific and residuary tariff entries - Prospective applicability of firing requirement under Chapter 69 - HSN Explanatory Notes and Indian Customs Tariff - HELD THAT: - Tariff Item 69021040 specifically covered Magnesia Carbon Bricks and shapes, whereas Tariff Item 68159100 was a residuary entry for mineral articles not elsewhere specified or included; the specific entry therefore prevailed. Before the amendment effective from 01.01.2022, Chapter Note 1 did not prescribe that articles heated below 800 C were not fired or stood excluded from Chapter 69. The subsequently inserted condition could not be applied to the earlier period. Where the Indian Customs Tariff and HSN were at variance, the HSN explanatory notes could not govern classification under the Indian tariff. The Tribunal further held that the firing stipulation applied to products under headings 6904 to 6914 and not to refractory products under headings 6901 to 6903. [Paras 6]

The goods were classifiable under Tariff Item 69021040 and eligible for the claimed concessional rate; the reclassification under heading 6815, differential duty demand and consequential interest were set aside.

Penalty for alleged misdeclaration of classification and exemption claim - HELD THAT: - As the classification adopted by the importer and the claimed exemption benefit were held to be legally correct, no misdeclaration with intent to evade customs duty was established. [Paras 7]

The penalty imposed under section 112(a) of the Customs Act, 1962 was set aside.

Confiscation for alleged incorrect declaration of classification and exemption claim - Confiscation of Magnesia Carbon Bricks on the allegation that the particulars declared in the bills of entry were incorrect - HELD THAT: - The correct classification and eligibility for concessional duty excluded any finding of misdeclaration. Further, a claim to exemption, even if considered inadmissible by the Revenue, does not by itself constitute misdeclaration warranting confiscation under section 111(m).

It is settled law laid down by the Apex Court in the case of Northern Plastic Ltd. vs. Collector of Custom & Central Excise [1998 (7) TMI 91 - SUPREME COURT] that claiming the benefit of exemption which according to the revenue is inadmissible does not tantamount to mis-declaration of particular so as to result into invocation of section 111(m) of the Customs Act. The same view has been held by the Tribunal, Delhi in the case of Vivo Mobile India Pvt. Ltd. [2024 (2) TMI 1508 - CESTAT NEW DELHI] wherein it was held that that even if the classification adopted by the assessee is not correct, it does not render the goods liable for confiscation under Section 111(m) of Customs Act, 1962. [Paras 8]

The confiscation of the goods under section 111(m) of the Customs Act, 1962 was set aside.

Final Conclusion: The appeal was allowed with consequential relief. The reclassification, differential duty demand, interest, penalty and confiscation were set aside.

Authorization to institute disgorgement proceedings on behalf of Central Government - Delegation of statutory power and ministerial implementation

Maintainability of an application for attachment and disgorgement presented by SFIO on behalf of the Union of India pursuant to the Central Government's decision under Section 212(14A) of the Companies Act, 2013 - HELD THAT: - The SFIO had submitted its investigation report to the Central Government, which considered the material, decided to institute the proceedings and caused the application to be filed in the name of the Union of India. The authorization to the Director, SFIO was confined to presenting and implementing that decision under the Allocation of Business Rules and the Transaction of Business Rules. Since no essential decision-making discretion was transferred to SFIO, the authorization was not a delegation requiring compliance with Section 458 of the Act. [Paras 12, 13, 14, 15]

The application was validly instituted by the Union of India through its authorized officer, and the challenge to SFIO's authority and locus was rejected.

Disgorgement for fraudulent conduct under the Companies Act - Exclusivity of Section 212(14A) as the source of power to seek disgorgement and personal liability for fraudulent conduct - HELD THAT: - Appellant has also sought to mis-label Section 212(14A) of the Act to be the only power to seek disgorgement/imposition of liability for fraudulent conduct of business. This argument is incorrect and contrary to the position of law set out in Shriraj Investment & Finance Ltd. [2021 (9) TMI 670 - DELHI HIGH COURT] which clearly holds the same power can be exercised under Section 241(2) read with Section 246 and 339 of the Companies Act whether with an Investigation Report or without.

Section 212(14A) cannot be read in isolation as the exclusive source of disgorgement relief. The Central Government may seek freezing of assets and disgorgement under the statutory scheme governing oppression, mismanagement and fraudulent conduct, independently of Section 212(14A). [Paras 17]

The contention that disgorgement could be sought only under Section 212(14A) was rejected.

Final Conclusion: The appeals were dismissed. The proceedings for attachment and disgorgement were held to have been validly instituted by the Union of India through SFIO acting under its authorization.

Binding effect and overriding primacy of an approved resolution plan - Rectification of Register of Members following extinguishment of equity share capital - Membership as inseparable from shareholding in a company limited by shares - Scope of rectification jurisdiction for monetary and consequential reliefs

Rectification of Register of Members following resolution-plan cancellation of shares - Omission with sufficient cause - omission of the appellant's name from the Register of Members after cancellation of the pre-existing equity capital under the approved Resolution Plan - HELD THAT: - Section 59 is a narrow and summary rectificatory remedy for wrongful entries or omissions; it cannot be used to revive equity share capital validly extinguished under a concluded insolvency resolution. The cancellation of the appellant's holding resulted uniformly from the approved Resolution Plan and the approval order. Such omission was therefore supported by sufficient cause and could not be collaterally challenged through rectification proceedings. [Paras 38, 39]

The omission was not without sufficient cause, and no rectification of the Register of Members was warranted.

Membership and shareholding in a company limited by shares - Extinguishment of pre-resolution membership rights - appellant's claim to a surviving membership right distinct from the extinguished pre-CIRP shareholding - HELD THAT: - For a company having share capital, member and shareholder describe the same legal status; membership flows from holding shares, including as a beneficial owner in depository records. The Resolution Plan applied to all existing equity shareholders, while the approval order made it binding upon members. The post-implementation annual returns reflected restructured capital issued under the Plan and did not establish continuity of the appellant's extinguished holding or discriminatory retention of it. [Paras 40, 41]

No independent membership or enforceable right survived the extinguishment of the appellant's pre-CIRP shareholding.

Statutory register-maintenance obligations and extinguished share capital - Producer Company provisions - applicability of the Companies Act provisions concerning membership, maintenance of the Register of Members, Producer Companies and consequential register entries to the appellant's claim - HELD THAT: - The provisions defining membership and requiring maintenance of the register are definitional and administrative; they do not create a right surviving lawful extinguishment of share capital under an approved Resolution Plan. The provisions governing Producer Companies were inapplicable, as the corporate debtor was not a Producer Company. The prescribed timeline for consequential register entries upon capital reduction was procedural and did not confer an independent substantive entitlement. [Paras 42, 43, 44]

The statutory provisions invoked did not assist the appellant or preserve any right after extinguishment of the shares.

Scope of rectification jurisdiction for consequential monetary reliefs - Clean-slate effect of an approved resolution plan - grant of compensation, interest, fresh equity shares and damages in rectification proceedings concerning shares extinguished under an approved Resolution Plan - HELD THAT: - The rectification power is anchored to correction of a wrongful entry or omission and permits only damages flowing from such wrongful entry or omission; it does not encompass free-standing compensation, fresh issuance of equity shares or damages for mental suffering. Further, an approved Resolution Plan binds members and prevails over inconsistent company-law remedies. Claims not provided in the Plan stand extinguished, preserving the clean-slate acquisition of the corporate debtor by the successful resolution applicant. [Paras 45, 46, 48, 49]

The claimed reliefs were beyond the scope of rectification jurisdiction and were, in any event, barred by the binding and overriding effect of the approved Resolution Plan.

Natural justice in rectification proceedings - alleged denial of natural justice in the proceedings resulting in the impugned order - HELD THAT: - The appellant was represented, filed a rejoinder, and identified no procedural opportunity that had been denied. The impugned order considered the rival contentions, the Resolution Plan, the approval order and the applicable statutory provisions; the grievance was directed against the merits of the conclusion rather than the procedure adopted. [Paras 47]

No violation of natural justice or other procedural infirmity was established.

Final Conclusion: The appeal was dismissed, the appellant having no surviving membership or enforceable right independent of the equity shares extinguished under the approved Resolution Plan. The rectification proceedings and the consequential reliefs claimed were held not maintainable.

Show cause notice on material extraneous to investigation - Natural justice in disciplinary proceedings against insolvency professionals

Show cause notice on material extraneous to investigation - Consideration of investigation report - Validity of the show cause notice issued to the liquidator on matters not arising from the investigation report - HELD THAT: - Under the statutory scheme then in force, a show cause notice could follow completion and consideration of the investigation report upon formation of a prima facie opinion for disciplinary action. Although the regulator could act on its own motion in an appropriate case, it was required to disclose or allude to the material forming the basis for such action. The investigation report found no actionable material against the liquidator, whereas the show cause notice raised distinct issues founded on undisclosed material extraneous to that investigation. [Paras 29, 30, 31, 32, 48]

The procedure adopted was irregular and the show cause notice stood vitiated.

Failure to consider relevant material in disciplinary proceedings - Procedural fairness in disciplinary findings against a liquidator - Validity of the disciplinary findings concerning constitution of the stakeholders' consultation committee, presentation of liquidation costs, and delay in auction notices - HELD THAT: - The writ court did not reassess the disciplinary findings as an appellate authority, but examined whether relevant material and defences were disregarded. The disciplinary authority failed to consider the liquidator's plausible interpretation concerning representation of secured financial creditors, the participation and absence of grievance by the other creditors, the limited scope of the allegation regarding specified consultation meetings, and the circumstances and condonation relevant to the auction delays. Ignoring this material and the background placed by the liquidator constituted a serious procedural infirmity and breach of natural justice. [Paras 42, 43, 44, 45, 46]

The disciplinary order was vitiated by procedural irregularity and violation of natural justice and was quashed and set aside.

Final Conclusion: The writ petitions were allowed and the disciplinary order imposing suspension on the liquidator was quashed and set aside. The constitutional challenge to the specified investigation regulation was left open.

Suspended director's meaningful participation in corporate insolvency resolution process - Eligibility of practising Chartered Accountant as resolution applicant - Withdrawal of corporate insolvency resolution process on one-time settlement - Commercial wisdom of Committee of Creditors in selection of resolution plan - Treatment of statutory dues under approved resolution plan - Material irregularity by resolution professional

Suspended director's right to participate in CIRP - Prejudice from non-supply of resolution plan - Non-supply of the plan-approval application and Resolution Plan to the suspended director before the plan-approval hearing - HELD THAT: - A suspended director, being entitled to notice of CoC meetings and bound by an approved Resolution Plan, has standing to challenge its approval and is entitled to meaningful participation in the CIRP. However, non-supply of the Resolution Plan does not by itself invalidate the approval. The suspended directors had knowledge of the CIRP and received CoC minutes, but did not furnish the confidentiality undertaking required for sharing the plans and did not identify any specific objection that non-supply had prevented them from raising. No material prejudice or breach of a substantive requirement of the Code was established. [Paras 67, 68, 69, 70, 72]

The alleged procedural irregularity did not vitiate the approval of the Resolution Plan.

Eligibility of practising Chartered Accountant as resolution applicant - Statutory disqualification under section 29A - Eligibility of a practising Chartered Accountant to submit a Resolution Plan - HELD THAT: - A practising Chartered Accountant is not disqualified from submitting a Resolution Plan merely by reason of professional status, since such status is not among the ineligibilities specified under section 29A. The professional regulator had stated that a practising Chartered Accountant may be a Resolution Applicant provided he does not act as a whole-time director. Management under the leadership of the Resolution Applicant did not, without more, establish assumption of a prohibited office; nor was any statutory provision shown prohibiting submission of the plan. [Paras 75, 76, 77, 78, 79]

The objection to the Successful Resolution Applicant's eligibility was rejected.

Withdrawal of CIRP on one-time settlement - Statutory withdrawal under section 12A - Effect of the alleged one-time settlement on continuation of the CIRP and approval of the Resolution Plan - HELD THAT: - After admission of an insolvency application, CIRP can be withdrawn only through the statutory mechanism requiring the prescribed CoC approval and an application under section 12A. A settlement proposal or part-payment, without such withdrawal, cannot terminate CIRP, prevent consideration of Resolution Plans, or authorise the Resolution Professional to discontinue the process. The alleged settlement had, in any event, not materialised as asserted. [Paras 81, 82]

The alleged one-time settlement did not render continuation of CIRP or approval of the Resolution Plan impermissible.

Commercial wisdom of Committee of Creditors - Post-closure revision of resolution offer - Approval of the Successful Resolution Applicant's plan despite a revised higher offer communicated by another prospective resolution applicant after closure of the hybrid challenge - HELD THAT: - The hybrid challenge had closed before the revised offer was communicated. Reopening the process to entertain post-closure revisions would destabilise the insolvency process and permit manipulation. Further, the Code does not require the CoC to select the plan offering the highest monetary amount alone; it may assess feasibility, viability, implementation capability, plan conditions and stakeholders' interests. In the absence of fraud, discrimination or a consideration prohibited by the Code, the commercial decision of the CoC cannot be substituted by the Adjudicating or Appellate Authority. [Paras 86, 87, 88, 89, 90]

The CoC's approval of the Resolution Plan with full voting support was not open to interference on the basis of the alleged higher offer.

Statutory dues under approved resolution plan - Extinguishment of claims not forming part of resolution plan - Statutory charge and secured creditor status - Validity of the Resolution Plan notwithstanding non-provision for the Government demand - HELD THAT: - The Resolution Professional was required to examine the plan with reference to admitted or known dues, and the demand had not crystallised until shortly before conclusion of voting. Upon approval, claims included in the plan crystallise and the plan binds Government authorities and other stakeholders; claims not included are extinguished under the statutory scheme. The principle concerning statutory first charges was confined to enactments creating an express first or deemed charge and did not establish a general parity of Government dues with secured financial creditors. The subsequently notified Explanation excluding a security interest created merely by operation of law was treated as clarificatory and retrospective. The suspended director could not invalidate the plan on behalf of a statutory creditor which had not itself challenged the approval. [Paras 95, 96, 97, 98, 99]

Non-provision for the Government demand did not establish non-compliance with the Code or warrant rejection of the Resolution Plan.

Material irregularity by resolution professional - Scope of appeal against approved resolution plan - Whether the alleged deficiencies in conduct of CIRP by the Resolution Professional constituted material irregularity warranting interference? - HELD THAT: - The record showed issuance of Form G, identification of eligible applicants, circulation of the information memorandum and evaluation matrix, valuation, due diligence, opportunities to revise plans, a hybrid challenge, and consideration and approval of the plan by the CoC. The revised plan of another applicant was also placed before the CoC. The allegations concerning non-disclosure, collusion and association with another insolvency professional were either unparticularised or did not establish material irregularity in exercise of the Resolution Professional's powers. A suspended director who failed to cooperate in the process could not invalidate it through general allegations without proving a specific and material breach of the Code. [Paras 103, 104, 105, 106]

No material irregularity under section 61 was established.

Final Conclusion: The appeals were dismissed and the approval of the Resolution Plan was affirmed. The Tribunal found no statutory non-compliance, material irregularity, or demonstrated prejudice warranting interference, and imposed costs on the appellants.

Jurisdiction to determine priority of charges in liquidation - Priority of successive mortgages - Registration of charges and mortgage priority - Failure to exercise security-realisation option in liquidation

Jurisdiction to determine priority of charges in liquidation - Adjudicating Authority's jurisdiction to determine competing mortgage priorities over an asset of the Corporate Debtor during liquidation - HELD THAT: - Section 60(5)(c) expressly empowers the Adjudicating Authority to determine questions of priorities arising out of or in relation to liquidation. Determination of the encumbrances affecting an asset and whether it forms part of the liquidation estate is foundational to the Liquidator's statutory duties of custody, verification and realisation. Appellant had itself sought an adjudication on priority before the Adjudicating Authority and could not subsequently question that forum's jurisdiction. The determination of mortgage priority was also necessary to decide the declarations sought and was not beyond the pleadings. [Paras 55, 56, 57, 58]

The challenge to the jurisdiction of the Adjudicating Authority under Section 60(5) was rejected.

Priority of successive mortgages - Assignee takes no better title than assignor - priority between the consortium banks' earlier second pari-passu charge and the subsequent simple mortgage created to secure the Appellant's independent facilities - HELD THAT: - Upon discharge of Bank of Maharashtra's earlier first mortgage, the subsisting second pari-passu charge of IDBI Bank and Bank of Baroda moved up in priority. The subsequent simple mortgage was a fresh and independent transaction securing facilities granted to a different borrower; it was neither a renewal nor a continuation of the discharged mortgage. Under Section 48 of the Transfer of Property Act, successive rights over immovable property rank in the order of their creation, absent a special contractual reservation. A pending review of the Debts Recovery Tribunal order, without any stay, did not suspend its operation; in any event, the priority finding independently followed from the documentary chronology. The assignees could acquire no better right than the subordinate charge held by the assignor. [Paras 62, 63, 65, 71, 72]

The consortium banks' charge ranked in priority, and the mortgage traceable to Bank of Maharashtra and its assignees remained subordinate.

Registration of charges and mortgage priority - effect of alleged non-registration of the consortium banks' charge on its enforceability and priority over the subsequent mortgage - HELD THAT: - Registration under the Companies Act operates as constructive notice and may enable the liquidator and other creditors to disregard an unregistered charge, but it is not the mode by which the charge is created. The earlier charge arose from the underlying mortgage transactions and continued to bind the immediate parties and persons claiming with notice. The Appellant, as a stranger aligned with the subsequent mortgagee, could not invoke the registration provisions to elevate a later-created mortgage. An order was not per incuriam merely because it did not expressly refer to statutory provisions that could not have altered the result. [Paras 67, 68, 69]

The alleged absence of registration did not displace the earlier charge or render the impugned order perverse or per incuriam.

Failure to exercise security-realisation option in liquidation - Security interest deemed part of liquidation estate - consequence of the secured creditor and its assignees failing to timely elect realisation of the subordinate security outside liquidation and of the delayed claim lodged by the assignee - HELD THAT: - The assignment deeds could remain valid between the assignors and assignees while the security transferred under them was subject to the statutory consequences of liquidation. The assignees obtained only the subordinate charge held by Bank of Maharashtra. Failure to intimate an election to realise the security outside liquidation within the period stipulated by Regulation 21A resulted, by operation of that Regulation, in the security interest being treated as part of the liquidation estate. The delayed claim of the assignee was consequently not entitled to interference. This consequence did not rest on general extinguishment of the mortgage or on proof of prejudice to the liquidation process. Custody of the original title deeds was a necessary incident of the Liquidator's duty to take custody and control of the estate asset. [Paras 75, 76, 78, 79, 80]

The property was held to form part of the liquidation estate; dismissal of the assignee's claim and the direction to hand over the title deeds to the Liquidator were affirmed.

Final Conclusion: The appeal was dismissed, the findings on mortgage priority and statutory lapse of the subordinate security interest were affirmed, and the property remained available to the Liquidator as part of the liquidation estate.

Prolonged undertrial incarceration - Right to speedy trial under Article 21 - PMLA bail restrictions and constitutional liberty

Regular bail in a money-laundering prosecution - effect of prolonged custody and delayed trial on the twin conditions under Section 45 of the PMLA - HELD THAT: - The statutory rigours governing bail under Section 45 ordinarily apply to a bail plea on merits. However, where pre-trial custody becomes unduly prolonged, the trial has no realistic prospect of early completion, and the delay is not attributable to the accused, the constitutional guarantee of personal liberty and speedy trial under Article 21 prevails over the statutory restrictions.

No fixed period of custody determines constitutional invalidity; the assessment must be fact-sensitive, having regard to the prescribed sentence, the accused's role, the stage and likely duration of trial, and the risks of absconding or interference with evidence.

In the present case, investigation was complete, the matter remained at cognizance stage despite extensive documentary evidence and proposed witnesses, and no tangible material established flight risk, witness influence, or need for further custodial interrogation. [Paras 9, 10, 11]

The fetters under Section 45 stood diluted by Article 21 considerations, and regular bail was granted subject to conditions.

Final Conclusion: The petition for regular bail was allowed, subject to conditions imposed by the competent court. The order expressed no opinion on the merits of the prosecution.

Redemption fine under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Inclusion of redemption fine in Scheme dues

Whether redemption fine imposed in lieu of confiscation can be included while estimating the amount payable under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019? - HELD THAT: - The Court held that the controversy stood covered by the Gujarat High Court ruling [2020 (9) TMI 257 - GUJARAT HIGH COURT] which treated redemption fine in lieu of confiscation as forming part of the amount in arrears under the Scheme. Since the special leave petition against that ruling had been dismissed [2021 (3) TMI 292 - SC ORDER], departmental clarification requiring prior payment of redemption fine could not be reopened. [Paras 7, 8, 9]

The inclusion of redemption fine in the estimated payable amount was quashed and the authorities were directed to recalculate the amount after excluding it; a discharge certificate was to issue upon payment of the legally recoverable dues and fulfilment of the Scheme conditions.

Final Conclusion: The petition was allowed. The estimated liability under the Scheme was directed to be recalculated without redemption fine.

Construction of Complex Service - individual residential houses on independent plots - Statutory Ingredients of Taxable Service - Composite Works Contract

Levy of Service Tax under Construction of Complex Service on individual houses constructed on independent plots - HELD THAT: - A residential complex under Section 65(91a) requires proof of the prescribed statutory ingredients, including common area and specified common facilities. The material showed construction of individual houses on independent plots for purchasers, while the roads and open spaces had been handed over to the municipal authority. The Department failed to establish common areas and common facilities forming part of a residential complex. [Paras 7, 8, 9, 10, 14]

The construction was not established to be a residential complex liable to Service Tax under Construction of Complex Service; the demands, interest and penalties were set aside.

Final Conclusion: Both appeals were allowed with consequential relief, as the Department failed to establish that the individual houses formed a residential complex within the statutory definition.

Taxability of statutory-authorised export facilitation as Business Support Service - Extended limitation for non-declaration of taxable service receipts - Penalty for non-payment of service tax on undisclosed receipts

Business Support Service - Sovereign and statutory functions - Statutory levy versus consideration for services - Taxability of charges collected for certification of SOFTEX forms, issuance of NoCs and allied assistance provided to STP/software exporting units - HELD THAT: - Statutory authorisation, governmental supervision or exclusivity to perform an activity does not by itself impart sovereign character. The determinative consideration is whether the amount collected is a compulsory statutory exaction payable to Government or consideration for an identifiable service rendered to a beneficiary. The charges were not shown to be statutory levies payable into the Government Treasury; they were retained and used by the appellant. Since the certification, approvals and allied facilitation directly enabled exporting units to conduct their business and export activities, the services had the requisite nexus with business or commerce. [Paras 12, 13, 14, 15, 19]

The impugned activities were classifiable as Business Support Service and the charges constituted consideration for taxable services, not sovereign or statutory functions.

Extended limitation for non-declaration of taxable receipts - Invocation of the extended period for service tax demand on charges not declared in statutory returns - HELD THAT: - The appellant had neither declared the value of the impugned services in its statutory returns nor paid tax thereon, despite being registered and discharging service tax on other services. Availability of information with the Department or production of records during audit did not establish disclosure of the taxable activity through prescribed returns. [Paras 16, 17]

Invocation of the extended period was sustained.

Penalty for non-payment of service tax on undisclosed receipts - Penalty for continued non-payment of service tax on the impugned receipts - HELD THAT: - Having been registered under service tax law and having paid tax on other taxable services, the appellant was required to correctly assess and disclose all taxable services rendered. No legal infirmity was found in the penalty imposed. [Paras 18]

The penalty was upheld, subject to any statutory benefit as to quantum available upon fulfilment of prescribed conditions.

Final Conclusion: The classification of the impugned activities as Business Support Service, invocation of the extended period and imposition of penalty were sustained. Both appeals were dismissed.

Service tax on commercial leasing by statutory authorities - Service tax on membership subscriptions of statutory sports complexes

Service tax on commercial leasing by statutory authorities - Statutory functions and taxable services - Liability of a statutory development authority to service tax on lease premium and ground rent received for leasing Government Nazul land - HELD THAT: - A statutory authority is not immune from service tax merely because it was constituted to discharge statutory functions. Only mandatory statutory activities for which a compulsory levy is collected and deposited in the Government treasury fall outside taxable service. The consideration received as lease premium and ground rent was not established to be a statutory fee and was admittedly received for renting immovable property. Such activity fell within the taxable-service provisions and was not covered by the negative list. [Paras 5, 6]

The demand on lease premium and ground rent for renting immovable property was upheld.

Service tax on membership subscriptions of statutory sports complexes - Taxability of membership and subscription charges collected for sports-complex services - HELD THAT: - The activity of collecting membership and subscription charges for the sports complexes was held not to be a sovereign function, but an activity undertaken for commercial purposes. [Paras 5, 6]

Service tax on the membership and subscription charges was upheld.

Final Conclusion: The findings that the leasing receipts and sports-complex membership charges constituted taxable services were affirmed. Both appeals were dismissed.

Deemed sale vis-a -vis declared service on equipment leasing - Transfer of right to use leased haemodialysis equipment - Deemed sale vis-a -vis declared service - Leasing of haemodialysis equipment to a hospital -

Whether the arrangement transferred the right to use the equipment so as to constitute a deemed sale rather than a taxable declared service? - HELD THAT: - A transfer of the right to use goods, excluded from the definition of service as a deemed sale, requires that the transferee have a legal right to use the identified goods to the exclusion of the transferor for the stipulated period. The lease terms retained the appellant's control over the manner of use through operating guidelines subject to its approval, inspection rights, and its responsibility for maintenance and insurance. The requisite legal right of exclusive use was therefore not transferred; payment of VAT did not alter the character of the transaction.

The activity in question falls under the definition of service and declared service under Section 66E(e) of the Finance Act. Prior 2012 the activity was categorised as ‘Supply of Tangible Goods under Section 65 (105) (zzzzj) of the Act. Payment of VAT by the Fortis Hospital is also insufficient to alter the conclusion. We draw our support from decision of Indian Compressors Vs. Union of India [2024 (11) TMI 1413 - DELHI HIGH COURT] [Paras 6, 8]

The leasing activity was held to be a taxable declared service and not a deemed sale.

Final Conclusion: The Tribunal held that the equipment lease did not effect a transfer of the right to use goods and was taxable as a declared service. The appeal was dismissed.

Joint venture cost-sharing arrangements and taxable service - Extended limitation for service tax demand

Joint venture cost-sharing arrangements and taxable service - Manpower and administrative cost reimbursements - Taxability of cash calls and reimbursement of manpower, administrative and operational expenditure incurred by the Operator under Joint Operating Agreements for petroleum exploration blocks - HELD THAT: - Under the Joint Operating Agreements, the Operator incurred costs for joint operations and the co-venturers bore those costs according to their participating interests. The Operator's deployment of manpower, office facilities and administrative support was in discharge of its contractual obligations for the common venture, and the consequent reimbursements were allocation of common operational expenditure, not consideration for an independent service.

There was no service-provider and service-recipient, contractor-contractee or principal-agent relationship between the Operator and the Joint Venture or its co-venturers; nor did the cash calls constitute a quid pro quo for taxable services. [Paras 14, 16, 18, 19]

The activities of the Operator did not constitute taxable Manpower Supply Service or Business Support Service, and the service tax demand founded on the cash calls and cost reimbursements was set aside.

Extended limitation for service tax demand - Suppression of facts with intent to evade tax - Validity of invocation of the extended period for the service tax demand arising from the Operator's cost-sharing transactions under the Joint Operating Agreements - HELD THAT: - The transactions were reflected in the appellant's statutory records and service tax returns, and the dispute concerned their legal characterisation. As no positive act of fraud, collusion, wilful misstatement or suppression of facts with intent to evade service tax was established, the extended period was invoked mechanically and could not be sustained. [Paras 17]

The demand raised by invoking the extended period of limitation was held unsustainable in law.

Final Conclusion: The appeal was allowed. The service tax demand, consequential interest and penalties were set aside on merits as well as on the ground that the extended period was not invocable.

Service tax paid under reverse charge on legal services - Threshold turnover for reverse-charge exemption on legal services - Refund of tax paid under mistake as deposit - Unjust enrichment in refund of reverse-charge tax

Threshold turnover for reverse-charge exemption on legal services - Advance recovered on termination of contract - Reversal of CENVAT credit - Eligibility for threshold exemption from reverse-charge service tax on legal services received from advocates, where the preceding-year receipts included an advance recovered by the service recipient upon termination of the underlying contract - HELD THAT: - Though service tax became payable upon receipt of the advance under the applicable point-of-taxation provisions, the advance was towards services to be rendered and was recoverable against the eventual service liability. Since no service was performed, the contract stood terminated and the advance was recovered, the amount was neither income nor turnover in common parlance. Its disclosure in service-tax returns for tax-payment purposes did not make it turnover for determining the threshold exemption. Further, CENVAT credit inadvertently taken on the legal services had been reversed and remained unutilised; the exemption could not therefore be denied on that ground. [Paras 8]

The appellant was entitled to the threshold exemption on legal services received under reverse charge, and the tax paid thereon was held to have been paid under mistake of fact.

Limitation for refund of tax paid as deposit - Applicability of the statutory one-year limitation to refund of reverse-charge service tax which was not legally payable on exempt legal services - HELD THAT: - An amount paid when no service-tax liability existed is a deposit and not tax. Consequently, the statutory limitation governing refund of duty or tax was held inapplicable to its refund. [Paras 9]

The refund claim could not be rejected as time-barred.

Unjust enrichment in refund of reverse-charge tax - Whether refund of service tax paid under reverse charge on legal services was barred by unjust enrichment? - HELD THAT: - The incidence of the tax had been borne by the appellant and could not have been passed on to another person. The appellant also produced a Chartered Accountant certificate confirming that the burden had not been passed on. The doctrine of unjust enrichment was therefore inapplicable. [Paras 10]

Refund was not barred by unjust enrichment.

Final Conclusion: The appeal was allowed with consequential relief. The appellant was held entitled to refund of the reverse-charge service tax paid on exempt legal services.

International freight forwarding on principal-to-principal basis - taxability as Customs House Agent service - CENVAT credit - proof of payment of service tax - Penalty for irregular CENVAT credit - absence of intent

International freight forwarding on principal-to-principal basis - Customs House Agent service - taxable consideration - Taxability of the margin from purchase and resale of international air and sea cargo space on a principal-to-principal basis as consideration for Customs House Agent service - HELD THAT: - Freight forwarding was the appellant's principal commercial activity, while any Customs House Agent activity was merely ancillary. The difference between the negotiated buy rate and sell rate of cargo space was trading profit and could not, merely because it represented a mark-up, be treated as consideration for Customs House Agent service. The Revenue was required to establish by cogent material that the amounts represented consideration for a separately identifiable taxable service; the gross freight receipts could not be taxed solely on the basis of the margin earned.

As relying on M/s. Bax Global India Ltd.[2007 (10) TMI 132 - CESTAT, BANGALORE] we hold that the appellant, in undertaking international freight forwarding activities on a ‘principal-to-principal’ basis, cannot be treated as rendering taxable Customs House Agent (CHA) services merely by reason of the profit margin earned on the differential between the buy rate and the sell rate of cargo space. The Revenue, having failed to establish that the impugned amounts represented consideration towards any identifiable CHA service rendered by the appellant, could not have subjected the gross freight amounts to Service Tax under the said taxable category. [Paras 10, 11]

The service-tax demand on international air freight, sea freight and related charges, with consequential interest and penalty, was set aside.

CENVAT credit - documentary proof of service-tax payment - Entitlement to CENVAT credit on documentation charges paid to the Indian Customs EDI system operator where the supporting bills did not show payment of service tax - HELD THAT: - Evidence of payment of service tax is an essential condition for availment of CENVAT credit. As the documents produced did not indicate any service-tax element or establish payment of service tax, the credit was not allowable. [Paras 12]

Denial of the CENVAT credit was upheld, with liability to interest.

Penalty for irregular CENVAT credit - absence of intent - Imposition of penalty for availing and utilising CENVAT credit on documentation charges without proof of service-tax payment - HELD THAT: - Though the credit was irregular, no intention to avail inadmissible credit was established. [Paras 12]

The penalty imposed in respect of the irregular CENVAT credit was set aside.

Final Conclusion: The impugned order was modified: the service-tax demand on freight forwarding was set aside, while denial of CENVAT credit and interest was sustained. The penalty relating to the irregular credit was deleted.

Refund of excess service tax paid under mistake of law - Unjust enrichment in refund of excess service tax

Refund of excess service tax paid under mistake of law - Limitation for refund of deposit - Applicability of the one-year limitation u/s 11B to refund of excess service tax paid under a mistaken notion - HELD THAT: - Section 11B governs a claim for refund of duty or tax legally leviable under the statute. Where service tax is paid in excess through inadvertent error, the excess has no legal basis as tax and is in the nature of a deposit which the Government cannot retain without authority of law. Consequently, the statutory limitation for refund of duty or tax does not apply. The authorities relied upon by the Revenue concerned reassessment through refund proceedings and were inapplicable to a claim for return of a deposit. [Paras 7, 8, 10]

The refund claim could not be rejected as time-barred.

Unjust enrichment in refund of excess service tax - Whether refund of the excess service tax was barred by unjust enrichment? - HELD THAT: - The invoices and the departmental certificate established that the appellant had not recovered the service tax from service recipients. The appellant had therefore discharged the burden of showing that the incidence of the claimed amount had not been passed on to any other person. [Paras 9, 10]

The refund claim was not hit by unjust enrichment.

Final Conclusion: The appeal was allowed and the impugned rejection of the refund claim on limitation and unjust-enrichment grounds was set aside, with consequential relief.

Documentary proof of pure-agent reimbursement - Claimed exclusion of expenses reimbursed to a Customs House Agent from the taxable value of its services, in the absence of documentary proof of a pure-agent arrangement - crux of the Appellant’s case is that there is no service tax liability on the reimbursed expenses since, according to the Appellant, various expenses were incurred by them on behalf of their client

HELD THAT: - The claim could not be accepted merely on the characterisation of the receipts as reimbursements. The appellant had the initial burden to produce contractual agreements and correlating documentary evidence establishing that it had acted as a pure agent and that the amounts represented reimbursement of expenses.

Since that factual foundation had not been established, the nature of the receipts required fresh examination. If reimbursement is proved, the original authority must apply the Supreme Court ratio that no service tax is leviable on reimbursed expenses. [Paras 9, 10]

The impugned order was set aside and the matter remanded for de novo consideration, with liberty to the appellant to adduce the requisite documentary evidence; all contentions were kept open.

Final Conclusion: The appeal was disposed of by setting aside the impugned order and remanding the reimbursement claim for fresh adjudication on production of supporting evidence.

Service tax on hospital-doctor revenue-sharing arrangements - Healthcare services exemption

Service tax liability on the hospital's retained share of patient fees under contractual arrangements with specialist doctors - HELD THAT: - The arrangements involved shared obligations, responsibilities and benefits in providing healthcare services, without specification of infrastructural facilities or any consideration attributable to their use by the doctors. The hospital availed the doctors' professional services for rendering healthcare to patients, and the retained share formed part of the consideration for such healthcare services.

Treating that share as consideration for business support service or taxable service would defeat the exemption available to healthcare services rendered by clinical establishments. The issue stood covered by the co-ordinate Bench decisions [2020 (11) TMI 536 - CESTAT NEW DELHI], including the earlier order accepted by the department [2017 (12) TMI 509 - CESTAT NEW DELHI]. [Paras 3, 4]

The confirmation of service tax demand was unsustainable; the impugned order was set aside and the appeal allowed.

Final Conclusion: The impugned order sustaining service tax on the retained share of patient fees was set aside, and the appeal was allowed.

Long-term transfer of development rights as immovable property - Abatement for construction of residential complex service - Interest on delayed consideration as liquidated damages - Water supply by governmental authority - Extended limitation for repeated non-payment of service tax

Long-term transfer of development rights as immovable property - Taxability of long-term lease of land conferring development rights, including the premium and transfer fee received in relation to such allotment - HELD THAT: - The Tribunal followed its unappealed earlier final order concerning identical issues [2025 (7) TMI 1542 - CESTAT NEW DELHI]. That order treated the transfer of development rights as a transfer of benefits arising from land and, therefore, as transfer of immovable property outside the scope of service. It further held that a long-term lease granting possession and effective control for a one-time premium was akin to sale and was not renting of immovable property. [Paras 12]

The service-tax demand on the long-term land allotment, lease premium and related transfer fee was set aside.

Abatement for construction of residential complex service - Service-tax liability on construction of residential complex service involving the sale of superstructure and consideration inclusive of land cost - HELD THAT: - The Tribunal adopted its earlier finding that the construction activity remained taxable, but the appellant was entitled to the prescribed abatement. The conditions for abatement were not shown to have been breached, and the CENVAT credit earlier taken had been reversed. [Paras 12]

The demand relating to construction of residential complex service was retained only after re-quantification by allowing the applicable abatement.

Interest on delayed consideration as liquidated damages - Taxability of interest recovered from purchasers of residential units for delayed payment of sale consideration - HELD THAT: - Following the earlier final order, the Tribunal treated the interest as a penal consequence of delayed payment, in the nature of liquidated damages, and not as consideration for taxable service. [Paras 12]

The demand of service tax on such interest was set aside.

Taxability of water supplied by the statutory development authority to occupants of residential complexes - HELD THAT: - The Tribunal adhered to its earlier conclusion that water supply by the governmental authority in discharge of its sovereign function was not provision of taxable service. It was also regarded as supply of goods rather than a service. [Paras 12]

The demand of service tax on the water-supply receipts was set aside.

Extended limitation for repeated non-payment of service tax - Invocation of the extended period for the residual service-tax liability after the appellant had previously been put to notice of the liability - HELD THAT: - The Tribunal found that the liability had been pointed out before issuance of the impugned show-cause notices and had also been confirmed earlier, yet the appellant did not discharge service tax in the subsequent years. This was held to amount to intentional evasion. [Paras 13]

Invocation of the extended period was upheld.

Final Conclusion: The appeal was partly allowed. Except for the construction of residential complex service, to be re-quantified after allowing abatement, the remaining service-tax demands were set aside; invocation of the extended period for the surviving liability was sustained.

Refund of accumulated CENVAT credit for exported output services - Challenge to input-service credit eligibility in Rule 5 refund proceedings

Denial of refund of accumulated CENVAT credit attributable to exported output services on the ground of absence of nexus between input services and exported output services, and inadequate supporting documents - HELD THAT: - Where the availment of CENVAT credit had not been disputed through proceedings for its recovery under Rule 14 of the CENVAT Credit Rules, 2004, the eligibility of such credit, including the nexus of input services with exported output services, could not be questioned while deciding a refund claim under Rule 5. Rule 5 required application of the prescribed formula to determine the refundable proportion of accumulated credit; as non-compliance with that procedure or formula was not alleged, refund could not be denied on the stated grounds. [Paras 3]

The denial of the refund benefit was unsustainable; the impugned order was set aside and the appeals were allowed.

Final Conclusion: The appeals were allowed and the denial of refund of accumulated CENVAT credit was set aside.

Refund of accumulated CENVAT credit on export of output services - Nexus of input services with exported output services - Reasoned determination of compliance with the refund formula

Refund of accumulated CENVAT credit on export of output services - Nexus of input services with exported output services - Denial of refund of accumulated CENVAT credit on the ground that the input services lacked nexus with exported output services - HELD THAT: - Where the Department had not initiated proceedings for recovery of allegedly irregularly availed CENVAT credit at the stage of its availment, the eligibility of that credit could not be questioned while considering a refund claim. For refund under Rule 5, the relevant enquiry is whether the prescribed formula has been followed; the nexus between input services and exported output services cannot be made a ground for denial. [Paras 4]

The denial of refund for non-establishment of nexus was held unsustainable and the appeal was allowed on that ground.

Compliance with the refund formula for accumulated CENVAT credit - Failure to record reasons for non-compliance with refund conditions - Rejection of refund on the ground of non-compliance with the formula prescribed for refund of accumulated CENVAT credit - HELD THAT: - The appellate order did not identify the particular requirement of the prescribed formula that had not been complied with. A proper factual determination of fulfilment of the refund conditions, including consideration of the earlier Tribunal order [2022 (8) TMI 1155 - CESTAT MUMBAI] cited by the appellant if applicable, was therefore necessary. [Paras 4]

The matter was remanded to the Commissioner (Appeals) for fresh fact-finding on compliance with the prescribed refund conditions, without adjudication on merits.

Non-submission of copies of FIRCs and erroneous calculation of refund benefit - Consideration of foreign inward remittance certificates in CENVAT credit refund - Calculation of refund of accumulated CENVAT credit - HELD THAT: - As the appellant asserted that the relevant invoices and foreign inward remittance certificates had been produced but were not considered, the matter required fresh appreciation. Since no de novo order had been passed pursuant to the earlier remand to the original authority, all matters earlier remanded were directed to be examined by the Commissioner (Appeals) on merits. [Paras 5, 6]

The issue was remanded to the Commissioner (Appeals) for consideration of the documents, recalculation where required, and a fresh decision on entitlement to refund.

Final Conclusion: The denial of refund based on absence of nexus between input services and exported output services was set aside. The remaining issues concerning compliance with the refund formula, foreign inward remittance certificates and calculation of refund were remanded to the Commissioner (Appeals) for fresh decision.

Restoration of an appeal dismissed for non-removal of defects, including non-compliance with statutory pre-deposit - unexplained delay of about five years - HELD THAT:- The special leave petition was dismissed without interference with the impugned judgment and order of the High Court [2026 (4) TMI 1910 - RAJASTHAN HIGH COURT]

Rule 25 penalty for duty-paid goods - Section 11AC as condition precedent - Penalty under Rule 25 for incorrect or non-mentioning of buyer particulars in invoices relating to duty-paid raw materials and packing materials. - HELD THAT: - Rule 25 is expressly subject to Section 11AC; consequently, its invocation requires the existence of non-levy, non-payment, short-levy, short-payment or erroneous refund of duty, with the applicable statutory ingredients. Since the respondents had cleared their manufactured goods on payment of the requisite duty and had committed no act attracting Section 11AC, the condition precedent for Rule 25 penalty was absent. [Paras 8, 10, 11, 12]

The substantial question was answered against the Revenue; no penalty under Rule 25 could be imposed on the respondents.

Final Conclusion: The Revenue's appeals were disposed of after answering the admitted question against it. The deletion of penalties under Rule 25 in respect of goods cleared on payment of duty was sustained.

Assessable value - freight and loading charges in FOR sales - Extended limitation - bona fide interpretative dispute

Assessable value - freight and loading charges in FOR sales - Place of removal - FOR sale and ex-factory sale - Inclusion of freight and loading charges in the assessable value of fly ash bricks where the show-cause notice relied on sample purchase orders - HELD THAT: - The Department had relied only on sample purchase orders to allege that all sales were on FOR basis. The adjudicating authority was entitled to assess the nature of the transactions from those relied-upon documents and to distinguish sales in which the contractual terms established an FOR sale from those in which freight was separately indicated and the sale was ex-factory. The applicability of the principles governing place of removal depended upon the facts of each transaction, and the adjudicating authority could not travel beyond the explicit charge and relied-upon material in the show-cause notice. [Paras 15]

The finding restricting the demand to sales established on the relied-upon purchase orders as FOR sales was upheld.

Extended limitation - bona fide interpretative dispute - Penalty for alleged suppression of assessable value - Invocation of the extended period and imposition of penalty for non-inclusion of transportation and loading charges in the assessable value - HELD THAT: - The issue of inclusion of transportation charges and the buyer's premises as the place of removal had been subject to conflicting views. The respondent had disclosed the transportation activity in records examined during audit and had proceeded on a bona fide understanding that such charges were not includible.

This gets amply clear from instructions and clarification issued by the Board vide circular dt.08.06.2018, wherein it has been mentioned that due to conflicting views, the whole issue is that of interpretation and therefore, extended period could not be invoked. Thus, we find that even on the grounds of limitation, the findings of the adjudicating authority cannot be faulted with and he has rightly held that extended period cannot be invoked in the facts of the case. Similarly, as the extended period could not have been invoked, the penalty under section 11AC was also not imposable and therefore, we do not find any infirmity in holding that penalty under section 11AC is not imposable. [Paras 16]

The extended period was held inapplicable and penalty under section 11AC was consequently not imposable.

Final Conclusion: The Department's appeal was dismissed and the impugned order was upheld. The respondent's cross-objections were allowed.

Cenvat credit on photocopies of invoices - Refund of reversed Cenvat credit

Cenvat credit on photocopies of invoices - Substantive entitlement to Cenvat credit - Entitlement to Cenvat credit on capital goods supported by photocopies of invoices where the original invoices were unavailable - HELD THAT: - The documentary requirements under Rule 9 serve to establish duty payment, receipt and identity of the recipient, and to prevent duplicate or fraudulent credit. However, non-production of original invoices does not invariably defeat substantive credit where the reason for their non-availability is satisfactorily explained and the duty-paid nature, receipt and use of the capital goods, and eligibility to credit are independently established. In the absence of any allegation or evidence of fabrication, manipulation, fraud or duplicate availment, denial solely for want of original invoices would elevate the documentary requirement above the established substantive entitlement. The decisions concerning unverified photocopies or conditions governing fiscal concessions were distinguishable on their facts. [Paras 16, 17, 18, 19, 22]

The refund of the Cenvat credit reversed by the respondent was rightly allowed; the absence of original invoices did not warrant denial of otherwise admissible credit.

Refund of reversed Cenvat credit - Adjudication of refund claim on merits - Maintainability of refund of Cenvat credit reversed upon audit objection in the absence of an earlier appellate order - HELD THAT: - Reversal of credit upon an audit objection is not a final adjudication of its inadmissibility. Upon a subsequent claim for refund or re-credit, the claimant's substantive eligibility must be examined on merits under the applicable statutory provisions. The absence of an earlier appellate order, by itself, does not render the refund claim inadmissible. [Paras 20, 21]

The objection that the refund was inadmissible because it did not arise from an appellate order was rejected.

Final Conclusion: The Revenue's appeal was dismissed. The refund of reversed Cenvat credit was sustained as the substantive eligibility of the respondent stood established and was not displaced by the non-availability of original invoices.

Clandestine manufacture and clearance - evidentiary standard - Related-person valuation - mutuality of interest

Clandestine manufacture and clearance - evidentiary standard - Non-accountal of duty-paid inputs - Sustainability of the central excise duty demand for alleged clandestine manufacture and clearance of finished goods based on non-entry of duty-paid wire rods in RG-23A Part-I and variations in electricity and freight expenditure - HELD THAT: - Non-entry of inputs in RG-23A Part-I, where no CENVAT credit was availed, could not by itself establish their consumption in manufacture or clandestine clearance of finished goods. The dealer registration and trading documents supporting sale of the wire rods as such could not be rejected merely on limited discrepancies. Variations in electricity and freight expenditure, without independent evidence of unaccounted production, consumption of inputs, labour, transport, buyers or sale proceeds, raised at best a suspicion and did not satisfy the evidentiary burden for a charge of clandestine manufacture and removal. [Paras 14, 16, 18, 19, 20]

The demand for alleged clandestine manufacture and removal was held unsustainable and set aside.

Related-person valuation - mutuality of interest - Liability to differential duty on alleged undervaluation of clearances to a buyer treated as a related person - HELD THAT: - A familial connection between the buyer's proprietor and a director of the appellant, and the proprietor's position as the appellant's chief executive officer, did not by themselves establish a related-person relationship between the two distinct business entities. In the absence of evidence of mutuality of interest, reciprocal financial interest, flow-back of funds or commercial interdependence, the statutory foundation for adopting a higher assessable value was not established. [Paras 21]

The differential-duty demand founded on related-person valuation was set aside.

Final Conclusion: The appeal was allowed. Both excise-duty demands were set aside, and the consequential penalties were dropped.

Excisability of carbon dioxide generated during fermentation of beer - Captive consumption of by-product in manufacture of non-excisable final products

Liability to central excise duty of carbon dioxide generated as a by-product during fermentation of non-excisable beer and captively used in its manufacture - HELD THAT: - Carbon dioxide arose as an unintended by-product in the brewing process and was used only to efficiently manufacture beer, which was non-excisable. Consequently, the requirements for treating the carbon dioxide as excisable goods manufactured by the appellant were not fulfilled. The High Court and co-ordinate Bench decisions SABMILLER INDIA LTD. [2019 (11) TMI 558 - KERALA HIGH COURT] AND MOHAN BREWERIES & DISTILLERIES LTD. [1999 (1) TMI 153 - CEGAT, MADRAS]on materially similar facts were applicable, and no contrary view could be taken. [Paras 7, 8, 9]

The excise-duty demand and the consequential penalty, including the demand raised by invoking the extended period of limitation, were held unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed. The demand of duty on carbon dioxide arising during manufacture of beer and the consequential penalty were held unsustainable.

CENVAT credit on erection, commissioning and installation services - Services used for setting up a cement plant - Input service having direct nexus with manufacture

Entitlement to CENVAT credit on erection, commissioning and installation services used for setting up a new cement plant after the amendment with effect from 01.04.2011 - HELD THAT: - We find that in the case of Brahmani River Pellets Limited [2023 (10) TMI 287 - CESTAT KOLKATA] it was held that the services used for setting up the new plant had a direct nexus with the appellant's manufacturing activity. Such services qualified as input services under the main clause of Rule 2(l) of the CENVAT Credit Rules, 2004, notwithstanding that setting up of a factory was not retained in the inclusive part of the definition after the amendment. [Paras 4, 5]

The appellant was held entitled to CENVAT credit on the services used for setting up the new plant; the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief, and the order denying CENVAT credit on services used for setting up the new cement plant was set aside.

Sales tax exemption for compound rubber as a finished rubber product - Eligibility of compound rubber manufactured by the industrial unit for exemption under S.R.O. No. 1729/1993 despite clause (h) of the negative list introduced by S.R.O. No. 38/1998

HELD THAT: - The exclusion in clause (h), which concerns treatment of raw rubber with chemicals to form a compound of rubber, was materially similar to the earlier exclusion considered by the Division Bench. That precedent had held compound rubber to be a finished rubber product, and not merely the result of a process of mixing with chemicals or a similar process. The same principle applied to the later notification; consequently, compound rubber could not be brought within the negative list so as to deny exemption. [Paras 8, 10, 11, 13]

The denial of exemption for compound rubber was set aside, and the petitioner was held entitled to exemption under S.R.O. No. 1729/1993 without curtailment by clause (h) introduced by S.R.O. No. 38/1998.

Final Conclusion: The writ petition was allowed to the extent of the denial of sales tax exemption for compound rubber. Consequential orders were directed to be issued by the competent authority.

Presumption of legally enforceable liability from signed cheque - Territorial jurisdiction where part of cause of action arose - Pendente lite and post-decree interest without contractual rate

Presumption of legally enforceable liability from signed cheque - Rebuttal of presumption by drawer of cheque - Liability under a signed cheque asserted to have been misplaced and not issued towards repayment of the friendly loan - HELD THAT: - The cheque was admitted to belong to the defendant and to bear his signatures. The assertion that it had been misplaced was unsupported by any cogent evidence, particulars of its loss, explanation of the plaintiff's possession, or material from the relevant cheque book. A signed cheque, including a voluntarily delivered blank signed cheque, attracts the statutory presumptions of consideration and discharge of liability unless rebutted by cogent evidence. The defendant's employment, claimed financial sufficiency, and discrepancy as to the timing of delivery of the cheque did not displace those presumptions or discredit the underlying liability. [Paras 48, 50, 51, 52, 56]

The defendant failed to rebut the presumption arising from the signed cheque, and the recovery decree was upheld.

Territorial jurisdiction where part of cause of action arose - Territorial jurisdiction of the trial court in the suit for recovery of the friendly loan - HELD THAT: - The objection had not been raised before the trial court. In any event, the loan was collected from the plaintiff's residence within the trial court's jurisdiction and the cheque was presented at a branch situated there; consequently, part of the cause of action arose within that jurisdiction. [Paras 57, 58]

The objection to territorial jurisdiction was rejected.

Pendente lite and post-decree interest without contractual rate - Award of pendente lite and future interest despite absence of an agreed rate of interest - HELD THAT: - The power under Section 34 CPC to award pendente lite and post-decree interest is discretionary and independent of a contractual stipulation, but must be exercised fairly and judiciously. The trial court had reduced the interest claimed and awarded simple interest at a rate not shown to be arbitrary or improperly fixed. [Paras 59, 60]

The award of pendente lite and future interest was sustained.

Final Conclusion: The appeal was dismissed, and the trial court's recovery decree with pendente lite and future interest was upheld.