TaxTMI Updates e-Newsletter
Aug 29,2026

Regular bail for alleged fraudulent input tax credit availment

Regular bail for alleged fraudulent input tax credit availment - Bail in economic offences - Entitlement to regular bail in prosecution for alleged fraudulent availment and utilisation of input tax credit on fake invoices. - HELD THAT: - In deciding bail, the severity of the allegation is not decisive by itself; the Court must consider the period of custody, the maximum punishment, the nature of evidence, the likelihood of interference with the trial, and the prospect of early conclusion of trial. The petitioner had remained in custody for about four months, had no antecedents, faced a maximum sentence of five years, and the evidence was documentary. There was no material indicating a likelihood of tampering with evidence, influencing witnesses, or non-cooperation in trial, while the trial was not likely to conclude shortly. [Paras 35, 36, 37]

The petitioner was held entitled to bail and was directed to be released on appropriate bonds, subject to conditions restraining interference with the proceedings, requiring disclosure of address changes, and prohibiting travel outside India without prior permission.

Final Conclusion: The bail petition was allowed, without commenting on the merits of the prosecution, subject to the conditions imposed by the Court.

Ex parte GST adjudication - Opportunity to contest show-cause notice - statutory appeal was dismissed only on limitation

HELD THAT: - The adjudication had proceeded ex parte as the petitioner had not replied to the show-cause notice or contested the proceedings, and the appellate authority had not examined the matter on merits. Having regard to the asserted health-related inability to participate in the proceedings, the Court adopted a justice-oriented approach and considered it appropriate to afford a fresh opportunity to submit a reply and supporting material. [Paras 6]

The adjudication and appellate orders were set aside and the matter was remitted to the adjudicating authority for fresh consideration from the stage of submission of reply to the show-cause notice, after granting reasonable opportunity of hearing.

Final Conclusion: The petition was allowed, the ex parte adjudication and the limitation-based appellate dismissal were set aside, and the matter was remitted for fresh adjudication after affording the petitioner an opportunity to reply and be heard.

Composite GST assessment for multiple tax periods - Validity of a common GST assessment order covering five distinct tax periods

HELD THAT: - The Court held that a composite assessment order covering distinct tax periods was unsustainable. It declined to examine the merits of the assessment and directed that any fresh action be taken only after issuing separate notices for the respective tax periods and affording the petitioner an opportunity of hearing. Case followed M/S. SRK ENTERPRISES [2023 (12) TMI 156 - ANDHRA PRADESH HIGH COURT] [Paras 8, 11, 12, 14]

The impugned assessment was set aside subject to deposit of 20% of the disputed tax within the stipulated period; upon default, the respondents were permitted to proceed in accordance with law.

Final Conclusion: The composite assessment order was set aside conditionally, with liberty to the competent authority to initiate fresh proceedings separately for each tax period in accordance with law.

E-Way Bill requirement for movement of goods other than supply - Short-distance exemption from E-Way Bill requirement - Penalty for transport of excavator without E-Way Bill

Liability to penalty for transporting an excavator returned from a work site without an e-Way Bill and without proof of the claimed exemption - HELD THAT: - An e-Way Bill is required for movement of goods, including movement for reasons other than supply, unless a specified exemption is established. Ownership of the excavator and its return to the registered premises did not by themselves dispense with that requirement. The appellant did not establish the applicable short-distance exemption or the tax treatment of consideration for use of the excavator; consequently, the lapse could not be regarded as merely technical and supported the inference of intent to evade tax.

The contention regarding the alleged 20-kilometre exemption also cannot be accepted in the absence of satisfactory evidence establishing that the present movement was specifically covered by the applicable statutory exemption under Rule 138(14) or any relevant notification issued by the competent authority.

Thus, we find that the appellant has failed to establish either a valid exemption from the e-Way Bill requirement or that the lapse was merely procedural and without revenue implications. The action under Section 68 read with Rule 138 and Section 129 of the CGST/UPGST Acts is therefore justified.[Paras 6]

The statutory action and penalty for transportation without an e-Way Bill were held justified.

Final Conclusion: The orders imposing penalty for transportation of the excavator without an e-Way Bill were upheld, and the appeal was rejected.

Transportation of taxable goods without an E-Way Bill, subsequently produced after interception - substantive non-compliance constituted establishing an intention to evade tax and justified tax and penalty proceedings.

Liability to tax and penalty for transportation of iron scrap without an E-Way Bill, where the E-Way Bill was produced only after interception and the lapse was repeated - HELD THAT: - An E-Way Bill is a mandatory component of the statutory mechanism for monitoring movement of taxable goods. Its non-generation, while the invoice is manually issued, left scope for subsequent manipulation of accounts. The subsequent production of the E-Way Bill after interception, coupled with repetition of the same lapse in a similar transaction, constituted substantive non-compliance and established a deliberate course of conduct indicating intention to evade tax.

This Appellate Tribunal, Lucknow Bench in Om Prakash v. M/s Islam Trading Company [2026 (8) TMI 1489 - GSTAT LUCKNOW] has considered a case involving the same nature of goods and a similar modus operandi, wherein the goods were being transported to the same location and the E-Way Bill was produced by the respondent only after interception by the Mobile Squad, Bareilly. The Tribunal, in the said case, also took note of the repetition of the same lapse in the present proceedings.

Thus, we are of the considered opinion that the conduct of the respondent cannot be treated as a mere procedural or technical lapse. The circumstances, particularly the production of the E-Way Bill only after interception by the Mobile Squad and the repetition of the same lapse, establish a deliberate course of conduct indicative of an intention to evade tax. [Paras 6]

The first appellate authority's order was set aside and the Proper Officer's order imposing tax and penalty was restored.

Final Conclusion: The Revenue's appeal was allowed. The order setting aside the tax and penalty was quashed, and the Proper Officer's order was restored.

Concessional GST rate on job work in relation to brass and wooden handicraft goods - Classification of commercially produced resin statues and vases - GST exemption and classification of marble and wooden deities

Job work in relation to handicraft goods - Registered principal requirement - Concessional GST rate - GST rate applicable to processing of raw brass into brass statues and to job work on wooden handicraft items. - HELD THAT: - The substituted entry for manufacturing services on physical inputs owned by others continues the concessional rate for job work in relation to handicraft goods. Brass statues and carved wooden products may qualify as handicraft goods only if made by craftsmen predominantly by hand, which is a fact to be established for each supply. Further, treatment or processing constitutes job work only where the goods belong to a registered person; processing of goods belonging to an unregistered person falls under the residual entry for treatment or process on goods belonging to another person. [Paras 7, 8, 9, 10]

Job work in relation to the stated brass and wooden handicraft goods attracts GST at 5% only if the applicant is registered and the goods are predominantly handmade handicraft goods; otherwise, the services attract GST at 18% under the applicable residual entry.

Classification of resin statues and vases - Original sculptures and statuary - Classification of commercially produced resin statues and ornamental resin vases. - HELD THAT: - Heading 9703 is confined to original sculptures or statuary and excludes mass-produced reproductions and conventional commercial craftsmanship. Resin statues and vases commercially produced through casting or moulding cannot be treated as original works of art. Being articles of synthetic plastic, they fall under the tariff heading for articles of plastics, including statuettes and other ornamental articles. [Paras 11, 12]

Resin statues are classifiable under tariff item 3926 40 29 and ornamental resin vases under tariff item 3926 40 99, and not under tariff item 9703 00 90.

GST exemption for marble and wooden deities - Classification of marble and wooden deities - GST exemption and eight-digit tariff classification of deities made of marble and wood. - HELD THAT: - The exemption entry covers goods of Chapters 44 or 68 described as deities made of stone, marble or wood. The exemption is available only to an idol or murti of a god or goddess, and not to decorative statues or figures. Since the entry is framed at the Chapter level, entitlement does not depend on a particular eight-digit classification. Marble deities are worked marble articles, while wooden deities are statuettes and ornaments of wood, classified according to the species of wood used. [Paras 13, 14, 15]

Marble deities under Chapter 68 and wooden deities under Chapter 44 are exempt from GST when they answer the description of deities; marble deities fall under tariff item 6802 91 00, while wooden deities fall under tariff item 4420 11 00 or 4420 19 00, as applicable.

Final Conclusion: The advance ruling determined the conditional concessional rate for job work on qualifying handicraft goods, rejected classification of commercially produced resin articles as original sculptures, and confirmed exemption for genuine marble and wooden deities.

Classification of Psyllium seeds (Isabgol) supplied in their natural, raw and unprocessed form - GST exemption for fresh or chilled Psyllium seeds - Goods of seed quality exemption for Psyllium seeds

Classification of Psyllium seeds under heading 1211 - Classification of Psyllium seeds (Isabgol) supplied as raw seeds - HELD THAT: - The tariff description specifically covers Psyllium seed, and the HSN Notes also include Plantago psyllium herbs and seeds within heading 1211. The goods were therefore classifiable as Psyllium seeds under the applicable sub-heading. [Paras 6]

Psyllium seeds were held classifiable under sub-heading 1211 9013.

GST exemption for fresh or chilled Psyllium seeds - Drying of agricultural produce during storage - Eligibility of raw Psyllium seeds stored in dry and ventilated godowns for exemption as fresh or chilled seeds - HELD THAT: - Eligibility had to be determined with reference to the condition of the goods when supplied by the applicant, rather than the processes undertaken before their procurement. The absence of information on the storage period, coupled with storage in dry and ventilated godowns, led to the finding that the seeds acquired dried character. The clarification on fresh and dried fruits and nuts was applied by analogy: exemption is confined to products not dried in any manner. The seeds could therefore not be regarded as fresh or chilled at the time of supply. [Paras 12, 13, 14, 16, 18]

The seeds were not entitled to exemption as fresh or chilled goods and were held taxable at 5 per cent as dried seeds under the applicable rate notification.

Goods of seed quality exemption for Psyllium seeds - Eligibility of Psyllium seeds for the alternative exemption available to goods of seed quality - HELD THAT: - The alternative claim was rejected in view of the finding that the supplied seeds did not qualify as fresh seeds and were taxable as dried Psyllium seeds.

The alternative exemption claim as goods of seed quality was answered in the negative.

Final Conclusion: Psyllium seeds supplied by the applicant were classified under sub-heading 1211 9013 and held taxable at 5 per cent as dried seeds. The claimed exemptions for fresh or chilled seeds and for goods of seed quality were denied.

Alternative statutory remedy and election of remedies in writ jurisdiction

Maintainability of the writ challenge to the reassessment notice after completion of reassessment and pendency of the statutory appeal against the reassessment order - HELD THAT: - Exercise of writ jurisdiction is discretionary, and a party having pursued an efficacious statutory remedy for the same cause cannot be permitted to maintain parallel proceedings. The reassessment order was not challenged in the writ petition, while the assessee's statutory appeal against that order was pending.

The Hon’ble Supreme Court, in Satya Pal Anand v. State of Madhya Pradesh [2016 (10) TMI 1142 - SUPREME COURT] held that where a party has several remedies for the same cause of action, he must elect his remedy and cannot be permitted to indulge in multiplicity of proceedings. [Paras 9]

No case for writ interference was made out, and the petition was dismissed.

Final Conclusion: The writ petition challenging the reassessment notice was dismissed, the assessee having already pursued the statutory appellate remedy against the reassessment order.

DTAA rate of tax deduction on payments to non-residents - Higher withholding rate for non-furnishing of PAN - Applicability of the higher tax-deduction rate u/s 206AA to payments of royalty and fees for technical services to non-residents where tax was deducted at the beneficial rates prescribed by the respective DTAAs

HELD THAT: - Section 90(2) accords primacy to the provisions of a DTAA where they are more beneficial to the assessee. Section 206AA, being a procedural provision concerning collection and deduction of tax at source, cannot override the beneficial treaty rate applicable to payments made to non-residents under the respective DTAAs.

Tribunal have rightly arrived at concurrent findings to the effect that as per section 90(2) of the Act, the provisions of DTAA would override the provisions of the Domestic Act where the provisions of the DTAA are more beneficial to the assessee. Tribunal rightly affirmed the conclusion arrived at by CIT (Appeals) in deleting the tax demand relatable to difference between 20% and the actual tax rate at which tax was deducted by the respondent assessee in terms of the relevant DTAAS.[Paras 9]

The deletion of the demand for alleged short deduction and the consequential interest was upheld; the Revenue's appeals were dismissed.

Final Conclusion: The appeals were dismissed, as the beneficial DTAA rates applied by the assessee governed the tax deduction on payments to non-residents notwithstanding section 206AA.

Exemption under sections 11 and 12 - Charitable purpose -statutory housing board - General public utility - commercial receipts

Whether a statutory housing board undertaking housing-development functions is disentitled to exemptions under Sections 11 and 12 because of Section 2(15) read with Section 13(8)? - HELD THAT: - The proposed question of law is no more res-integra in view of the decision of the Hon’ble Suprme Court in case of Ahmedabad Urban Development Authority[2022 (10) TMI 948 - SUPREME COURT]

Following the governing principles for statutory bodies engaged in housing development, charges collected in discharge of public functions are not, merely by resembling commercial activity, subject to the exclusion applicable to trade, commerce or business. The statutory housing board was consequently not hit by section 2(15) read with section 13(8). [Paras 4]

The assessee was held entitled to the benefit of sections 11 and 12.

Final Conclusion: The Revenue's appeal was dismissed, and the order granting the assessee exemption under sections 11 and 12 was sustained.

Penalty for inaccurate particulars in respect of disallowed bad debts - Deletion of quantum addition and consequential penalty

Sustainability of penalty for furnishing inaccurate particulars where the underlying disallowance of bad debts stood deleted - HELD THAT: - The penalty was founded solely on the addition made upon disallowance of bad debts. Since that quantum addition had been deleted by the Tribunal and its deletion was confirmed by the High Court, no tax liability survived in respect of that addition; consequently, penalty for concealment or furnishing inaccurate particulars referable thereto could not be levied. [Paras 6, 7]

The Tribunal was justified in deleting the penalty; the substantial question of law was answered in favour of the assessee and against the revenue.

Final Conclusion: The appeal was dismissed, affirming deletion of the penalty consequential upon deletion of the underlying bad-debt disallowance.

Expeditious disposal of pending statutory appeals - Time-bound disposal of the pending appeals against reassessment for the relevant assessment years - HELD THAT: - In view of the challenges raised in the pending appeals, including the alleged defect in sanction for one assessment year and the alleged absence of a Document Identification Number in the approval for the other, the Court considered it appropriate that the appellate authority decide the appeals promptly. All additional grounds were directed to be considered. [Paras 3, 4, 5]

The appellate authority was directed to hear and decide both appeals within 12 weeks; if the assessee succeeds, the recovered amount shall be refunded with applicable interest, if any.

Final Conclusion: The writ petition was disposed of with a direction for time-bound adjudication of the pending appeals and consequential refund with applicable interest if the assessee succeeds.

Revisionary jurisdiction for erroneous and prejudicial assessment - Deduction for interest on advances to members of a co-operative society

Invocation of revisionary jurisdiction in respect of deduction claimed on interest earned from advances to members by a co-operative agricultural and rural development bank - HELD THAT: - The interest disclosed by the assessee was interest on advances to its members, and the deduction claimed was restricted to its total income. The factual premise that the claim included interest on fixed deposits, or required allocation of expenditure as assumed in the revisional order, was therefore absent. Consequently, the assessment order was neither erroneous nor prejudicial to the interests of the Revenue so as to attract revisionary jurisdiction. [Paras 6]

The Tribunal was justified in holding that the revisional order could not be sustained.

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

Refund arising after assessment u/s 201 - Form 26B - non-applicability to post-assessment TDS refunds - Withholding of refund - requirement of statutory adjustment order

Entitlement to refund arising after assessment of TDS under section 201 and appellate orders, without furnishing Form 26B, and the validity of withholding such refund on account of outstanding demands - HELD THAT: - Section 201 concerns assessment of TDS, whereas section 200A, Rule 31A and Form 26B operate in the distinct sphere of CPC adjustment of TDS prior to assessment. Once an assessment or appellate order gives rise to a refund, the assessee acquires a vested and crystallised right to receive it with applicable interest. Form 26B cannot be compelled for such refund, and it can be withheld or adjusted only under a legally passed order under section 245. Outstanding demands against the assessee's PAN or sister TANs, absent such an order, could not justify withholding the refund. [Paras 19, 20, 21, 22, 23]

The writ petitions were allowed, with directions to release the refundable amount with applicable statutory interest; failure to credit it within the stipulated period would attract additional interest at the rate directed by the Court.

Final Conclusion: The Department was directed to release the refund arising from the section 201 assessments and appellate orders with applicable interest, as it had no statutory adjustment or withholding order under section 245.

Credit for tax deducted at source but not deposited by deductor - Enforceability of demand without service of intimation under Section 143(1)

Credit for tax deducted at source but not deposited by deductor - Entitlement to credit of tax deducted at source from the assessee's income for Assessment Year 2010-11, though not deposited with the Central Government by the deductor - HELD THAT: - Where the assessee establishes that tax was deducted at source from its income, credit cannot be denied merely because the deductor failed to deposit the tax with the Central Government. The objection that the assessee's admitted claim in the deductor's insolvency process precluded TDS credit was rejected, since that claim related to unpaid receivables and not to tax already deducted from payments made to the assessee. [Paras 6, 7]

The Assessing Officer was directed to verify the claim under the prescribed procedure and, upon verification, grant appropriate TDS credit with consequential reliefs in accordance with law.

Enforceability of demand without service of intimation under Section 143(1) - Adjustment of refunds against unenforceable demand - Validity of recovery and refund adjustment for Assessment Year 2011-12 where proof of service of the intimation under Section 143(1) was unavailable - HELD THAT: - An intimation under Section 143(1), being deemed to be a notice of demand, must be served upon the assessee for enforcement of the demand. Since the Revenue accepted that proof of such service was not traceable, the demand could not be enforced; consequently, its recovery and adjustment of refunds under Section 245 could not be sustained. [Paras 10]

The alleged demand was quashed, and the Revenue was restrained from recovering it or adjusting refunds against it; any amount already adjusted was directed to be refunded with applicable interest in accordance with law.

Final Conclusion: The petition was allowed. The TDS-credit claim for Assessment Year 2010-11 was directed to be verified and granted if established, while the unenforceable demand for Assessment Year 2011-12 was quashed with consequential refund directions.

Validty of Reassessment notice - disclosure of information suggesting escaped income - Reassessment order - failure to consider claim of prior taxation

Validity of reopening of assessment - Disclosure of information in reassessment notice - Compliance with the requirement to disclose information suggesting escapement of income in the reassessment show-cause notice - HELD THAT: - Section 148A requires that the assessee be furnished information suggesting that income chargeable to tax has escaped assessment; it does not require disclosure of the source of that information. The annexure to the show-cause notice specified the basis and reasons for proposed reassessment with sufficient particulars to enable the assessee to respond. [Paras 11]

The show-cause notice was held to conform to the requirement of Section 148A(1), and the challenge based on non-disclosure of the audit objection was rejected.

Failure to consider claim of prior taxation - Reconsideration under Section 148A(3) - Consideration of the assessee's claim that the marked-to-market valuation of hedge reserve had already been included as taxable income in the preceding assessment year. - HELD THAT: - The assessee did not dispute the taxability of the amount, but asserted that it had already suffered tax in the preceding assessment year. Though the material supporting that contention was acknowledged, the assessing authority considered only the taxability of the amount and failed to examine whether it had already been taxed and the consequences thereof. The authority was obliged to verify the claim, particularly when the relevant returns were available with it. [Paras 12, 13, 14]

The order under Section 148A(3) was quashed and the matter remanded for reconsideration after hearing the assessee and examining its claim of prior inclusion as taxable income; the assessee was permitted to furnish additional documents.

Final Conclusion: The reassessment notice was upheld, but the order passed under Section 148A(3) was quashed for failure to consider the claim of prior taxation and remanded for fresh consideration.

Mandatory draft assessment order for non-resident assessee - Validity of final assessment of a non-resident assessee made without first forwarding a draft assessment order u/s 144C - HELD THAT: - The Tribunal found that the assessee's status as a non-resident stood accepted and that the Assessing Officer had directly passed the final assessment under section 143(3), without following the procedure prescribed by section 144C. As the case was covered by that provision, the Tribunal found no infirmity in the appellate order holding the assessment void. [Paras 6]

The appellate order was sustained and the Revenue's appeal was dismissed.

Final Conclusion: The final assessment, having been made without the mandatory draft-order procedure applicable to the non-resident assessee, was held void. The Revenue's appeal was dismissed.

Disallowance for presumed cash purchases - Trade payables as unexplained cash credits

Cash-payment disallowance u/s 40A - Presumption of cash purchases - Disallowance of purchases on the presumption that garments exported by the assessee were acquired in cash from unidentified suppliers - HELD THAT: - Acceptance of the purchases, quantitative records, corresponding exports and books of account, without rejection of the book results, established that the goods had in fact been purchased. A disallowance for cash payments requires a finding, supported by material, that payment exceeding the prescribed limit was actually made to an identifiable person. The assumption that purchases from an unverified supplier must have been made in cash could not meet that requirement, particularly when the purchases remained outstanding during the relevant year. [Paras 9, 10]

The disallowance for presumed cash purchases was deleted.

Trade creditor liability - Unexplained cash credit - Addition of the outstanding trade payable relating to the disputed purchases as an unexplained cash credit - HELD THAT: - A credit arising from a purchase transaction is the accounting consequence of expenditure and is not a cash credit where no sum of money has been received from the supplier during the year. As the purchases and trading results stood accepted, the outstanding supplier liability could not be treated as unexplained cash credit; doing so, after disallowing the corresponding purchases, would also result in a double addition. [Paras 11, 13, 14]

The addition of the outstanding trade payable as unexplained cash credit was deleted.

Final Conclusion: The disallowance of the disputed purchases and the addition of the corresponding outstanding trade payable were deleted. The assessee's appeal was partly allowed.

Unsecured loans assessed as unexplained cash credits - Burden of proof for unsecured loan credits - Deductibility of delayed employees' PF/ESI contributions

Unexplained cash credits - unsecured loans - Initial onus and Revenue inquiry - Addition for unsecured loans as unexplained cash credits where the assessee produced primary documentary evidence but the Revenue made no meaningful further inquiry - HELD THAT: - Under section 68, the assessee is required initially to establish the identity of the creditors, the genuineness of the transactions and prima facie creditworthiness. On production of confirmations, tax particulars, bank statements and ledger accounts evidencing banking-channel transactions, the onus shifted to the Revenue. Low returned income of lenders, cash deposits preceding cheques, or incomplete documentation could justify further inquiry, but could not by themselves sustain the addition without material dislodging the evidence produced. Continuing accounts and repayments through banking channels were relevant circumstances supporting genuineness. The Revenue could not obtain a remand merely to cure deficiencies in the investigation which it had failed to undertake during assessment. [Paras 44, 45, 46, 47, 48]

The addition for unsecured loans was deleted.

Deductibility of employees' Provident Fund and Employees State Insurance contributions deposited after the due date under the relevant welfare enactments but before the return-filing due date - HELD THAT: - Hon’ble Apex Court [2022 (10) TMI 617 - SUPREME COURT (LB)] had observed that employees’ contribution to PF/ESI is allowable as a deduction under Section 36(1)(va) only if it is deposited by the employer within the due date prescribed under the relevant PF/ESI legislation. It was further observed that if the employees’ contribution is deposited after the due date under the respective welfare legislation, the deduction is not allowable even if the amount is deposited before the due date for filing the return of income under Section 139(1) of the Act.

Employees' PF/ESI contributions are allowable only where deposited within the due date prescribed by the relevant welfare legislation; payment before the due date for filing the return does not cure a delay under those enactments. [Paras 50]

The disallowance of delayed employees' PF/ESI contributions was upheld.

Final Conclusion: The appeal was partly allowed: the unsecured-loan addition was deleted, while the disallowance of delayed employees' PF/ESI contributions was sustained.

Unsigned assessment order - Validity of an assessment order issued without a digital signature in e-assessment proceedings - HELD THAT: - An assessment order issued through e-assessment proceedings is required to bear a digital signature under the applicable CBDT instruction. Signing is a mandatory requirement for completion of the assessment order and not a curable procedural omission. Following the coordinate-bench ruling on materially similar facts, the Tribunal held that the unsigned order was non est and invalid. [Paras 7, 9]

The unsigned assessment order was quashed and the assessee's appeal was allowed.

Final Conclusion: The assessment order, having been issued without a digital signature, was held non est and invalid. The appeal was allowed.

Independent exercise of quasi-judicial assessment discretion - On-money addition based on uncorroborated electronic evidence

Independent exercise of quasi-judicial assessment discretion - Validity of the assessment where the Assessing Officer incorporated directions and inputs of the superior authority in the assessment proceedings - HELD THAT: - While administrative supervision may ensure proper conduct of proceedings, evaluation of material and determination of issues in assessment are quasi-judicial functions entrusted exclusively to the Assessing Officer. The assessment order expressly acknowledged that directions and inputs received from the superior authority were incorporated during assessment, demonstrating surrender of the Assessing Officer's statutory discretion and absence of independent application of mind.

Similar views have also been expressed in Proform Interiors Pt. Ltd. [2026 (3) TMI 174 - ITAT DELHI] and Hydrise Foods Pvt. Ltd. [2025 (12) TMI 661 - ITAT AGRA] wherein it has been held that the statutory obligation of the AO to independently examine the facts and evidence cannot be delegated, surrendered or exercised under external influence. Thus this additional ground deserves to be sustained and appeal be allowed.[Paras 11]

The assessment was held legally unsustainable for want of the Assessing Officer's independent satisfaction, and the additional ground was allowed.

On-money addition based on electronic communications - Cross-examination of third-party evidence - Sustainability of the addition for alleged undisclosed consideration on sale of undeveloped industrial plots based on WhatsApp chats, images and a third-party statement - HELD THAT: - The electronic material was interpreted as representing actual sale consideration without affording the assessee an opportunity to confront the author of the communications or cross-examine the witness. The statutory presumption concerning seized material was rebuttable and operated against the person from whom it was found. The communications and stated rates related to developed plots, whereas the transactions under scrutiny concerned undeveloped plots. Purchaser statements denying cash payment, the unrebutted valuation report and comparable sale instances supported the disclosed consideration. In the absence of cash, a cash trail, acknowledgments, purchaser admissions or other corroborative evidence, isolated electronic communications relating substantially to earlier transactions could not support extrapolation to all plots sold during the relevant year. [Paras 14, 15, 16, 17, 18]

The addition for alleged on-money receipt was deleted.

Final Conclusion: The appeal was allowed. The assessment was held vitiated by the absence of independent application of mind, and the addition for alleged undisclosed consideration was deleted independently on merits.

Time-barred reassessment notice - First proviso to section 149(1) - Validity of reassessment notice issued for Assessment Year 2009-10 after expiry of the limitation preserved by the first proviso to section 149(1) - HELD THAT: - The amended reassessment provisions did not permit issuance of notice where such notice could not have been issued under the pre-amendment limitation. The notice was issued after the period contemplated by the amended provisions and was also barred by the explicit first proviso to section 149(1). The reopening was founded on the same issue that had earlier arisen in proceedings under sections 153A read with 153C and had been decided in favour of the assessee. [Paras 7]

The reassessment notice was without jurisdiction; the order holding it invalid was sustained and the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal was dismissed, sustaining the finding that the reassessment notice for Assessment Year 2009-10 was barred by limitation and without jurisdiction.

Delay in pronouncement of reserved judgments - Release of a reserved indirect-tax writ petition owing to the delay in pronouncement of judgment - HELD THAT: - In view of the principle stated in Pila Pahan alias Peela Pahan & Ors. V/S State of Jharkhand & Anr. [2026 (5) TMI 1852 - SUPREME COURT] concerning timely pronouncement of reserved judgments, and as the Bench could not adhere to the stipulated timelines, it considered it appropriate to release the matter for hearing before the regular Bench. [Paras 2, 3, 4]

The matter was released for placement before the regular Bench hearing indirect-tax writ petitions, with status quo directed to continue for four weeks.

Final Conclusion: The reserved writ petition was released for hearing before the regular Bench, and interim status quo was continued for four weeks.

Revocation of Customs Broker licence for procedural contraventions - Subletting of Customs Broker licence-proof - Customs Broker's client-verification obligations - Customs Broker's liability for exporters' excess RoSL

Revocation of Customs Broker licence for procedural contraventions - Change of address and Customs Station intimation - Revocation of the Customs Broker licence for non-intimation of change of address, operation at ICD Loni without requisite intimation, and irregularities concerning authorised signatories - HELD THAT: - Non-intimation of a changed address is a regulatory contravention attracting penal action, and failure to comply with the intimation requirement for operation at ICD Loni is a compliance failure. Such failures could not be equated with breach of the primary obligations under the Regulations. Though the records disclosed procedural lapses concerning signatures on documents, no serious breach of the Customs Act was established to warrant the extreme measure of licence revocation. [Paras 6]

The revocation of the licence and forfeiture of security deposit were set aside, while the penalty for the procedural violations was upheld.

Subletting of Customs Broker licence-proof - Customs Broker's client-verification obligations - Alleged subletting of the Customs Broker licence based on clearances at several ports, and alleged failures concerning client verification and disclosure of DRI show-cause notices - HELD THAT: - Electronic filing and processing through ICEGATE does not require the physical presence of the Customs Broker at every port; consequently, clearances at different ports on the same day, without concrete supporting evidence, do not establish subletting of the licence. A Customs Broker is not expected to physically verify the client's premises. The alleged non-disclosure of DRI show-cause notices was also not established in the absence of evidence that the notices had been received. Non-cooperation in investigation, however, remained a lapse inviting penal consequences. [Paras 6, 7]

The allegations of subletting, failure of physical client verification, and concealment of DRI notices were not sustained.

Customs Broker's liability for exporters' excess RoSL - Independent application of mind in licence proceedings - Liability of the Customs Broker for excess RoSL availed by exporters and for alleged non-cooperation in relation to such exporter conduct - HELD THAT: - The Customs Broker's obligation to advise compliance is confined to matters emerging from documents handled at the point of entry or departure and does not extend to downstream or post-clearance misconduct of an exporter. The Commissioner had mechanically adopted the inquiry report without independent application of mind. Since the Customs Broker could not be held responsible for the exporters' excess RoSL, the alleged contraventions could not justify the penalty originally imposed. [Paras 10, 11]

The Customs Broker was held not liable for the exporters' lapses, and the penalty in the second appeal was reduced.

Final Conclusion: The licence revocation and forfeiture of security deposit were set aside, while the penalty for procedural contraventions was maintained. In the connected appeal concerning excess RoSL availed by exporters, the penalty was reduced.

Evidentiary value of voluntary statements under Section 108 of the Customs Act - Admissibility of original electronic records - Rejection of declared transaction value for under-invoiced imports

Voluntary statements under Section 108 of the Customs Act - Denial of cross-examination - Admission of under-invoicing and misdeclaration of retail sale price - Reliance on the investigation statements of the importer and its agents, notwithstanding denial of cross-examination - HELD THAT: - Statements recorded during inquiry may be relied upon in the stipulated circumstances. As the statements were of the importer, its proprietor and its own agents, they could not be compelled to depose against themselves; denial of their cross-examination, therefore, did not violate natural justice. The statements admitting substantial under-invoicing and misdeclaration of retail sale price were held admissible and constituted admissions requiring no further proof. [Paras 5]

The statements were validly relied upon as substantive admissions, and the plea of breach of natural justice was rejected.

Primary electronic evidence - Certificate for secondary electronic record - Evidentiary status of original supplier invoices retrieved from the importer's laptop - HELD THAT: - The electronic data comprising original invoices was retrieved from the importer's own laptop and forensically examined in the importer's presence. It was consequently treated as primary electronic evidence. A certificate for electronic evidence was required only where a secondary copy of the original record was produced, and not where the original electronic record itself was produced. [Paras 5]

The recovered electronic invoices were held admissible as primary evidence.

Rejection of declared transaction value - Sequential redetermination of customs value - Under-invoicing and misdeclaration of retail sale price of imported food products - Validity of rejection and sequential redetermination of the declared value of imported food products - HELD THAT: - The search records and electronic documents established misdeclaration of value and retail sale price. The findings on the importer's conduct and the evidentiary material justified rejection of the declared transaction value under the Customs Valuation Rules. The redetermination was found to have been undertaken by following the valuation rules sequentially. [Paras 5]

The rejection of the declared value and its redetermination under the Customs Valuation Rules were upheld.

Final Conclusion: The rejection and redetermination of the declared customs value, consequential duty demand, confiscation and penalty were sustained. The appeal was dismissed.

Compliance with subsisting judicial order pending review - Registrar of Companies requirement to implement the restoration direction despite the stated intention to file a review petition - HELD THAT: - A subsisting judicial judgment must be complied with by the concerned Ministry and parties. The mere intention to file a review petition does not constitute a ground for withholding compliance with that judgment.

Respondent is directed to forthwith restore the petitioner-company’s name in the ROC and show the status of the petitioner-company as an active company on the website of the MCA.

In order to safeguard the interest of the respondent, it is directed that such action shall be done, subject to any order that may be passed in the review application, which may be filed on behalf of the respondent, if so deemed appropriate and if so advised. Accordingly, let the needful be done forthwith. [Paras 13, 14, 15]

The respondent was directed to forthwith restore the petitioner-company's name and reflect it as active on the Ministry's website, subject to any order passed in a review application.

Final Conclusion: The contempt petition was disposed of with a direction for immediate compliance with the subsisting restoration judgment, subject to the result of any review application.

Service of notice in insolvency proceedings - Limitation against corporate guarantor - Acknowledgment of debt by principal borrower - Financial debt and default under section 7

Service of notice in insolvency proceedings - Natural justice - Ex parte proceedings - Whether admission of the insolvency application was not vitiated by denial of notice or breach of natural justice? - HELD THAT: - The record showed repeated attempts over several hearings to serve the Corporate Debtor by speed post and e-mail, fresh particulars having been obtained after initial postal failure, followed by further opportunities to respond. A Corporate Debtor which admittedly kept its registered office non-functional could not found a plea of denial of natural justice on its own failure to maintain an office capable of receiving communications. The Appellant neither impeached the e-mail service nor established that the fresh particulars were incorrect or that the allegation of mala fides had any evidentiary basis. The opportunities afforded satisfied the requirement of reasonable opportunity before proceeding ex parte. [Paras 23, 24]

The plea of violation of natural justice was rejected.

Limitation against corporate guarantor - Acknowledgment of debt by principal borrower - Contractual extension of limitation - HELD THAT: - The guarantee was payable on demand and expressly stipulated that an acknowledgment or balance confirmation by the Principal Borrower would operate as an acknowledgment by the guarantor. The written settlement proposals made by the Principal Borrower before expiry of the applicable limitation periods acknowledged the subsisting liability and, by the contractual stipulation read with the law governing acknowledgment, extended limitation against the Corporate Debtor. The insolvency application was filed within the extended period. The alleged non-service of the earlier guarantee-invocation notice did not affect this independent basis for limitation. [Paras 25, 26, 27, 28, 29]

The application was held not barred by limitation.

Financial debt and default u/s 7 - Corporate guarantee - Whether a bona fide defence to the existence of financial debt and default was disclosed? - HELD THAT: - In a section 7 proceeding, the inquiry is confined to the existence of financial debt and default. The sanction and disbursement of the loan, execution of the corporate guarantee, classification of the loan account as non-performing, and subsequent written settlement proposals acknowledging liability were not denied. No case was pleaded that the debt had been discharged, the guarantee was unenforceable, or the claimed liability was incorrect. [Paras 30]

The Adjudicating Authority's satisfaction as to financial debt and default was upheld.

Final Conclusion: The appeal was dismissed. The admission of the insolvency application and commencement of the corporate insolvency resolution process were sustained.

Substitution of attached proceeds of crime with bank guarantee - Release of immovable property attached as proceeds of crime on furnishing a bank guarantee equivalent to its value - HELD THAT: - The object of the PMLA is to prevent persons from benefiting from assets derived from illegal activity and to preserve such assets for confiscation or restitution. Where the attached property is identifiable and available, its substitution and release for use or transfer could facilitate depletion of the asset, generation of further funds and legitimisation of income derived from it, thereby defeating the statutory object. [Paras 19, 20, 22, 23, 24]

The request for de-attachment and substitution by a bank guarantee was rejected, and the writ petition was dismissed.

Final Conclusion: The writ petition seeking release of the attached property against a bank guarantee was dismissed.

Subsistence of scheduled offence for PMLA attachment - Confirmation of provisional attachment on subsequent scheduled offence

Confirmation of provisional attachment on subsequent scheduled offence - Confirmation of a provisional attachment by reference to a subsequent FIR which was not part of the reasons to believe, the provisional attachment order or the original complaint - HELD THAT: - A subsequent FIR, though capable of furnishing a fresh cause for action and a separate provisional attachment, could not be considered for confirming an attachment made before that FIR was registered. The FIR had not been referred to in the reasons to believe, the provisional attachment order or the original complaint. [Paras 10, 12]

The subsequent FIR could not sustain confirmation of the provisional attachment.

Subsistence of scheduled offence for PMLA attachment - Sustainability of attachment of alleged proceeds of crime when the scheduled offences forming its foundation no longer survive - HELD THAT: - Attachment of property alleged to be proceeds of crime cannot continue where the scheduled offence is not established or no longer survives. Since the FIRs forming the foundation of the scheduled offences had been quashed or closure reports had been filed, the basis for proceedings and consequential attachment under the PMLA stood extinguished. [Paras 13, 15]

The provisional attachment and its confirmation were set aside.

Final Conclusion: The appeals were disposed of by setting aside the provisional attachment of the properties and its confirmation.

Reverse charge liability on foreign bank charges deducted from export proceeds - Classification of regulatory dossier preparation as Scientific or Technical Consultancy Service

Reverse charge liability on foreign bank charges deducted from export proceeds - Service provider-recipient relationship - Liability under reverse charge for charges deducted by foreign or intermediary banks while transmitting export proceeds - HELD THAT: - Reverse-charge liability requires establishment of the taxable service provider-recipient relationship. Foreign or intermediary banks involved in transmitting export consideration under the foreign buyer's banking arrangements cannot be regarded as having rendered services to the exporter merely because their charges reduce the amount ultimately credited to the exporter. In the absence of evidence that the exporter engaged those banks or was obliged to pay them consideration, no such relationship was established.

We also find support for this proposition from the subsequent decision relied upon by the appellant, including Eastman Exports Global Clothing Pvt Ltd. [2024 (5) TMI 417 - CESTAT CHENNAI] wherein, the Tribunal hold that amounts with held/deducted in the course of receipt of export proceeds would not attract Service Tax in the absence of the requisite service provider-recipient relationship. [Paras 7, 8, 9, 10,11, 12]

The demand under Banking and Other Financial Services on the foreign or intermediary bank charges was set aside.

Classification of regulatory dossier preparation as Scientific or Technical Consultancy Service - Essential character of taxable service - Classification of services for preparation and compilation of regulatory dossiers and assistance in obtaining overseas pharmaceutical approvals - HELD THAT: - The essential character of a service is determined by the activity actually undertaken, and not by the scientific or technical qualifications of the service provider. Compilation and preparation of regulatory documentation from information available with the assessee or published literature, for obtaining overseas marketing approvals, does not by itself constitute advice, consultancy or scientific or technical assistance in a discipline of science or technology. The earlier decision in the assessee's own case applied, there being no change in the nature of services or material facts. [Paras 18, 19, 20, 21, 22]

The services were held not classifiable as Scientific or Technical Consultancy Services, and the demand under that category was set aside.

Final Conclusion: The impugned order was set aside and the appeal allowed. The substantive service-tax demands, and the consequential interest and penalties, were held unsustainable.

Extended period of limitation for service-tax demand based on third-party income-tax data - Suppression of Facts - Third-Party Information - maintainability of Time-Barred Demand

HELD THAT: - Where the show-cause notice was founded entirely on third-party information, with no evidence of suppression, misstatement, fraud or collusion, the extended limitation period could not be invoked. The Tribunal followed its earlier ruling that income-tax data by itself does not establish suppression so as to justify the extended period. As decided in M/S ANTARES SERVICES PVT. LTD. [2024 (1) TMI 1120 - CESTAT CHANDIGARH] in such cases, invoking the extended period is not sustainable in law. [Paras 6, 7]

The demand was held barred by limitation; the impugned order was set aside and the appeal was allowed without examination of the merits.

Final Conclusion: The service-tax demand, having been raised beyond the normal period solely on third-party income-tax data without material establishing suppression or like conduct, was held time-barred. The appeal was allowed on limitation.

Limitation for appeal from communication of order - Limitation for appeal against the order-in-original where postal delivery at the appellant's place of residence occurred after receipt at the local post office - HELD THAT: - Limitation for an aggrieved party commences upon communication of the order, requiring actual or constructive knowledge of its contents. The postal acknowledgement showed that, although the parcel reached the local post office earlier, it was delivered at the appellant's place of residence only on 20/01/2019. That delivery date, and not the date of receipt by the post office, was material for computing limitation under section 85. [Paras 7, 8, 9]

The appeal before the Commissioner (Appeals) was within time; the limitation dismissal was set aside and the matter was remanded for fresh adjudication on merits after affording reasonable opportunity of hearing.

Final Conclusion: The order dismissing the appeal as time-barred was set aside. The matter was remanded to the Commissioner (Appeals) for decision on merits.

Exemption for boulder transportation under original works entry - Taxability of subcontracted taxable services

Exemption for boulder transportation under original works entry - Eligibility of transportation, fixing and levelling of boulders for exemption available for construction or original works provided to Government or governmental authority - HELD THAT: - The exemption covers construction of a civil structure or other original works. The appellant's activity under its work order was transportation of boulders and not construction or execution of original works; it was therefore outside the exemption entry. [Paras 6]

The claimed exemption was rightly denied and the appellant was held liable to service tax.

Taxability of subcontracted taxable services - Service-tax liability of a subcontractor undertaking transportation work forming part of a railway-track project - HELD THAT: - A subcontractor remains a taxable service provider, and the use of its services by the main contractor as input services does not alter their taxability. Though the principal work related to laying railway tracks, the appellant's own work order was confined to transportation. [Paras 7]

The appellant's status as a subcontractor did not exclude service-tax liability.

Final Conclusion: The order confirming service-tax liability was upheld and the appeal was dismissed.

Penalty for service tax paid before show cause notice - Extended period where service tax was discharged under different taxable service heads

Penalty for non-payment of service tax on Manpower Recruitment and Supply Service where tax had been paid under other service heads and the balance tax with interest was paid before issuance of the show cause notice - HELD THAT: - The show cause notice itself and the jurisdictional Range Officer's communication constituted incontrovertible evidence of payment of the applicable service tax and interest. Since the appellant had been discharging service tax, though under different service headings, and the demand arose from audit of the service recipient's records, the extended period could not be invoked. In these circumstances, issuance of the show cause notice was unnecessary under section 73 and penalty was unwarranted. [Paras 8]

The penalties imposed were set aside.

Final Conclusion: The appeal was partly allowed and the penalties imposed were set aside.

Demand of service tax under the category of Business Auxiliary Service - Whether services rendered by the assessee were covered under Rule 3(1)(iii) of the Export of Service Rules, 2005 and Board Circular No.111/05/2009-ST dated 24.02.2009?

HELD THAT:- This Court is of the view that no ground is made out for interference with the order passed by the Tribunal. The grounds urged are substantially a reiteration of the contentions urged before the authorities below. The decision in the case of M/s. Microsoft Corporation (India) Pvt. Ltd., Managing Director Diary [2015 (7) TMI 1330 - SC ORDER] which is decided on the similar issue, also does not assist the Revenue, having regard to the outcome which is disposed of in favour of the assessee.

Appealability of Annual Production Capacity determination - exclusion of stenter galleries - Refund of unconstitutional excise levy on stenter galleries - Unjust enrichment in refund claims

HELD THAT: - The determination of Annual Production Capacity under the applicable Rules was an administrative exercise and did not give rise to an appealable order. Consequently, failure to challenge that determination could not defeat the refund claim. Since the finding that levy of duty on galleries was unconstitutional remained unreversed, the Tribunal erred in applying the bar of unjust enrichment and in refusing redetermination of the Annual Production Capacity after excluding the galleries.

In view of the above dictum of law, more particularly when there is finding of fact that the appellants were not required to pay the duty in view of the Rules subjected to levy of duty, as the levy itself was unconstitutional, provisions of Section 11B of the Act would not apply. The Tribunal has not disputed the finding that levy of duty on galleries which is part of the stenter was unconstitutional as has been clarified by the Hon’ble Apex Court in case of Sangam Processors Bhilwara Ltd. [2001 (1) TMI 110 - CEGAT, NEW DELHI] which is referred to and relied upon by the appellants, and as noted by the Commissioner (Appeals) levy of duty would not be applicable as the appellants were required to discharge the burden casted under Section 12B of the Act.[Paras 12, 13, 14, 15, 17]

The Tribunal's order was quashed and the order of the Commissioner (Appeals) was restored, with directions to redetermine the Annual Production Capacity excluding the galleries, determine the consequential duty, and process the refund claim; no interest is payable until determination of the refund claim.

Final Conclusion: The Tribunal's order was quashed and the refund claim was directed to be processed after redetermination of Annual Production Capacity excluding the stenter galleries. The questions concerning the rectification applications were left unanswered.

Limitation for recovery of erroneous excise-duty refund - Suo Motu Credit - Procedural Non-Compliance

Limitation for recovery of erroneous excise-duty refund - Recovery of suo motu credit treated as erroneous refund under Notification No. 39/2001-CE was barred by limitation - HELD THAT: - Paragraph 2C(g) of the notification provides that irregular or excess credit not reversed is recoverable as excise duty erroneously refunded. Consequently, the limitation governing recovery of erroneous refund applied. As the notice for recovery of the credit taken in April 2010 was issued after expiry of five years, the proceedings founded on it were unsustainable. [Paras 5]

The demand, interest and penalty proceedings were held time-barred.

Suo motu credit of annual differential excise-duty refund - HELD THAT: - The appellant had submitted the statement for annual differential duty and awaited a decision from the jurisdictional officer, who was required to determine the claim within the stipulated time. Upon no decision being communicated for almost a year, the appellant took the credit. In these circumstances, the Tribunal held that the appellant had acted in accordance with the notification; the decisions cited by the Revenue concerned materially different forms of suo motu adjustment or refund and were inapplicable. [Paras 5]

The impugned order was unsustainable on merits as well.

Final Conclusion: The impugned order was set aside and the appeal was allowed, the recovery being barred by limitation and unsustainable on merits.

Vicarious liability of company Directors for cheque dishonour u/s 141 of the Negotiable Instruments Act - Specific averments u/s 141 of the Negotiable Instruments Act - Prosecution of a company Director for dishonour of cheque where the complaint contains only general allegations and neither attributes a specific role nor identifies the signatory to the cheque

HELD THAT: - Vicarious liability u/s 141 is attracted only where the complaint specifically avers that, at the time of the offence, the Director was both in charge of and responsible to the company for the conduct of its business. Mere designation as Director, or a general assertion that all Directors managed the day-to-day affairs, does not satisfy this conjunctive requirement. The complaint did not attribute any individual act to the petitioner or disclose which accused had signed the cheque; continuation of the prosecution would therefore amount to abuse of process.

It is clear from the materials on record, that the statements in the petition of complaint are only general in nature. It has also not been stated as who/which of the accuseds signed the cheque in this case. Disclosure of the name of the person drawing the cheque is one of the factual allegations which a complaint is required to contain in N. Harihara Krishnan vs. J. Thomas [2017 (9) TMI 1 - SUPREME COURT]

From the petition of complaint it is clear that the requirements under Section 141 of the Negotiable Instruments Act as laid down by the Supreme Court in Pawan Kumar Goel v. State of U.P & Anr. [2022 (11) TMI 855 - SUPREME COURT] are totally absent in this case and allowing the proceedings to continue in respect of the petitioner in such circumstances, would clearly amount to abuse of the process of law.[Paras 19, 20, 21, 22, 23]

The proceedings under Sections 138 and 141 of the Negotiable Instruments Act were quashed as against the petitioner.

Final Conclusion: The revisional application was allowed and the cheque-dishonour proceeding was quashed as against the petitioner.