TaxTMI Updates e-Newsletter
Sep 05,2026

Condonation of delay in filing GST appeal - Condonation of delay in filing an appeal against the GST demand order where the statutory appellate authority lacked power to condone the delay - HELD THAT: - Though the Appellate Authority was bound by the statutory limitation under Section 107 of the RGST/CGST Act, the delay was found to have occurred for reasons beyond the petitioner's control. Refusal to have the appeal decided on merits would cause grave injury and prejudice; accordingly, the Court followed its consistent view permitting such relief in writ jurisdiction in LUXMI TRADERS [2026 (7) TMI 1602 - PUNJAB AND HARYANA HIGH COURT]. [Paras 6, 9, 10, 11]

The delay was condoned, and the Appellate Authority was directed to entertain and decide the appeal on merits, subject to its filing within the stipulated period.

Final Conclusion: The writ petition was allowed to the extent of condoning the delay, with a direction to entertain and adjudicate the appeal on merits subject to the stipulated filing condition.

Excess input tax credit - consideration of reversal and electronic credit ledger balance

Reconsideration of the demand arising from excess input tax credit availed, where the disputed credit was subsequently reversed and excess credit remained available in the Electronic Credit Ledger - HELD THAT: - The Court noted that the disputed input tax credit had been reversed and that excess input tax credit was available in the Electronic Credit Ledger even as on 15.03.2022. It therefore considered it appropriate to quash the order confirming the show-cause notice without a reply and to permit fresh adjudication after the petitioner files a reply with supporting documents. [Paras 7]

The impugned order was quashed and the matter remitted for de novo adjudication, subject to the petitioner filing a reply to the show-cause notice with requisite documents within the stipulated period; failing such compliance, recovery could proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned demand order and remitting the matter for fresh adjudication on merits, subject to the stipulated opportunity and conditions.

Opportunity of personal hearing in GST adjudication - Non consideration of reply to show-cause notice

Validity of an adverse GST adjudication order passed after the assessee's reply to the show-cause notice without a further opportunity of hearing on that reply - HELD THAT: - The presence of inconsistent dates in the adjudication order and its annexure gave rise to the inference that the reply subsequently furnished by the petitioner had not been considered. Once that reply had been filed, an adverse order could be passed only after affording an opportunity of hearing in respect thereof. [Paras 3, 5, 6, 7, 8]

The adjudication and appellate orders were set aside, and the matter was remitted for fresh adjudication after personal hearing, subject to payment of the stipulated further deposit; the original adjudication order would revive if the petitioner failed to cooperate.

Final Conclusion: The writ petition was disposed of by setting aside the impugned orders and directing fresh adjudication after affording personal hearing, subject to the conditions imposed.

Jurisdictional error in time-barred GST assessment proceedings

Validity of the GST show-cause notice and assessment orders for the financial year 2020-21 issued and passed after the applicable cut-off date - HELD THAT: - The show-cause notice was issued contrary to the statutory time-limit under Section 73(2) of the Telangana Goods and Services Tax Act, 2017, and the assessment orders were passed after the cut-off date. Proceedings initiated and concluded beyond that period suffered from jurisdictional error. [Paras 5]

The show-cause notice, assessment orders and consequential recovery notice were set aside.

Final Conclusion: The writ petition was disposed of by setting aside the time-barred GST proceedings and the consequential recovery notice for the financial year 2020-21.

Appellate pre-deposit where IGST has already been paid - Requirement of statutory pre-deposit for an appeal against a CGST and SGST demand where the corresponding tax had already been paid as IGST - HELD THAT: - The Court noted that the controversy concerned the tax head applicable to the supplies, namely CGST and SGST as against IGST already paid, and did not concern excess availment of input tax credit. In those circumstances, while leaving the merits of the interstate or intra-state supply dispute open, the Court held that insistence on the statutory pre-deposit was unwarranted. [Paras 6]

The petitioner was granted liberty to appeal before the GSTAT without depositing 10% of the tax; the merits were left open.

Final Conclusion: The writ petition was disposed of by permitting the petitioner to pursue the statutory appeal without the pre-deposit requirement, without any adjudication on the merits of the tax liability.

Challenge to the assessment order should be entertained in writ jurisdiction when an appellate remedy is available - HELD THAT:- The writ petition was disposed of with liberty to file a statutory appeal, along with the prescribed pre-deposit and an application for condonation of delay; coercive action pursuant to the garnishee notice was stayed for the period allowed for filing the appeal.

Challenge to order in Form GST DRC-07 passed by the 1st respondent as illegal, arbitrary, against the provisions of the GST Act and also against the principles of natural justice

HELD THAT:- The writ petition was disposed of granting the petitioner liberty to file a statutory appeal with the prescribed pre-deposit and an application for condonation of delay; the appellate authority was left to consider delay and, if satisfied, decide the appeal on merits in accordance with law.

Challenge to the show cause notice and the tax demand -petitioner has approached this Court alleging that the demand confirmed was beyond the scope of the show cause notice and also on the ground that the impugned show cause notice was unsigned -petitioner seeks liberty to the petitioner to prefer an appeal against the impugned order-in-original and Form GST DRC-07

HELD THAT:- The writ petition was disposed of granting liberty to file a statutory appeal, with an application for condonation of delay and statutory pre-deposit; no merits were adjudicated.

Challenge to order in Form GST DRC-07 passed by the 1st respondent as illegal, arbitrary, against the provisions of the GST Act and also against the principles of natural justice

HELD THAT:- The writ petition was disposed of granting the petitioner liberty to file a statutory appeal with the prescribed pre-deposit and an application for condonation of delay; the appellate authority was left to consider delay and, if satisfied, decide the appeal on merits in accordance with law.

Mandatory pre-deposit for GST appeals - GST appellate remedy - Exemption from statutory pre-deposit for an appeal against tax and penalty on the ground that the tax dues had been paid during adjudication proceedings - HELD THAT: - There is no exemption under the GST regime from making the statutory pre-deposit for filing an appeal. The correctness of the imposition of tax or penalty is a matter for determination in the appeal on merits and cannot furnish a ground to dispense with the pre-deposit. [Paras 5]

The petitioner was permitted to file an appeal with the statutory deposit and an application for condonation of delay; the appellate authority was directed to consider the delay sympathetically and, if satisfied, decide the appeal on merits.

Final Conclusion: The writ petition was disposed of with liberty to pursue the statutory appellate remedy subject to the mandatory pre-deposit and consideration of the delay-condonation application.

Further demand of interest and penalty where the excess input tax credit had been voluntarily reversed with applicable interest before issuance of the demand-cum-show cause notice

HELD THAT:- Additional Commissioner, WBGST has been very fair to submit before us that she has scrutinized the record and examined the claim of the appellant-taxpayer in the light of the revenue records. Ms. Pal contends that on scrutiny the claim of the appellant-taxpayer has been found genuine. The entire amount of excess ITC was reversed by the taxpayer along with applicable interest prior to issuance of demand-cum-show cause notice and, therefore, the taxpayer is not liable to pay any interest as provided under Section 73 of the CGST Act, 2017.

In view of the fact that the case of the appellant-taxpayer has been admitted by the revenue, the present appeal stands allowed on admission by setting aside the impugned order of the first appellate authority. The order of the appropriation of demand if required, shall be issued by the proper officer within a period of one month from the date of communication of this order. Appeal is disposed off accordingly.

Reassessment against amalgamated company - incorrect PAN - Reassessment additions beyond recorded reasons

Reassessment against amalgamated company - incorrect PAN - Validity of reassessment where the notices and assessment order bore the predecessor PAN after amalgamation, although the assessee's name remained unchanged - HELD THAT: - The reasons for reopening showed that the Assessing Officer was aware of the amalgamation and had directed the proceedings against the surviving entity. Since the notices and assessment order carried the correct name of the amalgamated company, and only the old PAN was mentioned, the error was clerical and procedural, rectifiable under section 292B. The successor had responded to the notice and participated in the proceedings, with no prejudice or confusion shown; the case was therefore distinguishable from an assessment made against a genuinely non-existent entity. [Paras 14, 15, 16]

The reassessment was validly made on the amalgamated company, and the cross objection challenging jurisdiction was dismissed.

Reassessment additions beyond recorded reasons - Validity of an addition for unsecured loans in reassessment where the recorded reason concerned alleged commission income from accommodation entries and no addition was made on that reason - HELD THAT: - Though Explanation 3 to section 147 permits assessment of other escaped income noticed during reassessment, it does not permit an addition on a new issue where the recorded reason for reopening has resulted in no addition. The reassessment jurisdiction, assumed for the alleged commission income from accommodation entries, could not sustain an addition for unsecured loans as an entirely distinct matter.

Following CIT v. Jet Airways and Ranbaxy Laboratories [2010 (4) TMI 431 - BOMBAY HIGH COURT] we therefore, hold that addition so made, on an entirely new issue, is invalid and unsustainable in law.[Paras 17, 18]

The addition for unsecured loans was held invalid and unsustainable; the Revenue's appeal was dismissed.

Final Conclusion: The reassessment was upheld as having been made on the amalgamated company despite the clerical use of its old PAN. However, the addition on an issue unrelated to the recorded reason for reopening was invalid; consequently, both the Revenue's appeal and the assessee's cross objection were dismissed.

Deduction for political contribution through banking channel - Unexplained money - assessee-specific evidence of cash receipt

Deduction for political contribution through banking channel - Accommodation-entry allegation-assessee-specific nexus - Allowance of deduction for contribution to a registered unrecognized political party where the alleged cash-back arrangement rested only on general search material concerning the recipient party - HELD THAT: - The recipient's status as a registered unrecognized political party, payment through banking channels and issuance of the donation receipt stood established. Although banking payment and a receipt do not by themselves validate a sham transaction, a general modus operandi discovered in the affairs of the recipient party can only justify inquiry; it cannot prove that a particular donor received cash back without material establishing a transactional nexus.

The authorities neither identified material recording cash repayment to the assessee nor supplied the third-party material or afforded cross-examination. The presumptions concerning material found in search could not establish cash receipt by a person from whose possession or control such material was not found. Case followed Mukesh Somani v. Assessing Officer [2026 (7) TMI 542 - ITAT JODHPUR] [Paras 27, 28, 29, 43, 44]

The deduction claimed for the political contribution was directed to be allowed, the Revenue having failed to establish that the contribution was returned to the assessee in cash.

Unexplained money - assessee-specific evidence of cash receipt - Preponderance of probabilities-proved foundational facts - Addition as unexplained money on the inferred return of cash after deduction of commission from the political contribution - HELD THAT: - An addition for unexplained money required proof that the assessee was the owner of money not recorded in the accounts and that the explanation was unsatisfactory. No money was found with the assessee, and no statement, documentary material or digital evidence identified delivery of cash to him. The inferred cash receipt, calculated by reducing alleged commission from the contribution, was conjectural. Though preponderance of probabilities applies in income-tax proceedings, a probability must arise from proved foundational facts and cannot replace evidence. [Paras 40, 41, 42, 43, 44]

The addition as unexplained money was deleted for failure to establish the statutory ingredients, independently of the finding allowing the deduction.

Final Conclusion: The appeal was allowed by directing allowance of the deduction for political contribution and deletion of the addition as unexplained money. The challenge to reopening was left open as academic.

Deduction for credit facilities provided by co-operative societies u/s 80P(2)(a)(i) - Exclusion of co-operative banks from deduction - Statutory deduction and doctrine of mutuality

Eligibility of a co-operative credit society for deduction under section 80P(2)(a)(i) notwithstanding the exclusion applicable to co-operative banks - HELD THAT: - The exclusion under section 80P(4) applies to co-operative banks functioning at par with commercial banks. Mere acceptance of deposits from members and provision of credit facilities to them does not attract that exclusion. The Assessing Officer neither established that the assessee held a banking licence nor proved the statutory conditions required to treat it as a co-operative bank. [Paras 19, 20, 21, 22]

The assessee was not a co-operative bank, and section 80P(4) did not bar its claim for deduction.

Statutory deduction and doctrine of mutuality - Unsubstantiated dealings with non-members - Protective disallowance - Denial of deduction under section 80P on allegations of absence of mutuality, dealings with nominal or non-members, and diversion of funds through managerial remuneration - HELD THAT: - Deduction under section 80P is a statutory deduction whose admissibility must be tested against the conditions of section 80P(2)(a)(i), and the general doctrine of mutuality cannot replace those conditions. The assessment order did not identify the alleged nominal, non-member, dummy or fictitious persons, their transactions, or income attributable to them for the relevant assessment year. Nor was managerial remuneration found to be bogus, unsupported by services, prohibited by the bye-laws, or independently disallowable. The protective disallowance sustained by the appellate authority, despite no identified nominal member, did not constitute an affirmative finding of rupture of mutuality. [Paras 26, 27, 30, 31, 32]

The allowance of deduction, subject to the disallowance already sustained and not challenged by the assessee, was upheld.

Remand to enable a fresh factual enquiry into the claim for deduction u/s 80P - HELD THAT: - The Assessing Officer had adequate opportunity during both assessment and appellate proceedings to examine the material and place factual objections on record. The Tribunal's role as final fact-finding authority does not require it to permit a fresh or roving enquiry to supply particulars lacking in the assessment order, particularly where no specific material was produced to displace the appellate findings. [Paras 28, 29]

The request for remand was declined.

Final Conclusion: The Revenue's appeal was dismissed, and the allowance of the statutory deduction, subject to the disallowance already sustained by the appellate authority, was left undisturbed.

Deduction u/s 24(b) - Protection Insurance, processing fee and annual maintenance charges covered under the definition of “interest”

Allowability of protection insurance, processing fee and annual maintenance charges paid in respect of bank borrowings used to acquire a let-out property as interest on borrowed capital

HELD THAT: - The definition of interest includes service fees and other charges in respect of moneys borrowed, debt incurred or a credit facility. As the impugned charges were incurred in respect of the bank loan obtained for acquiring the let-out property, and their genuineness or nexus with the loan was not disputed, they fell within the extended meaning of interest and were deductible under the provision governing interest on borrowed capital. See PEEPUL TREE PROPERTIES P. LTD. [2016 (8) TMI 860 - ITAT MUMBAI] [Paras 8]

Protection Insurance, processing fee and annual maintenance charges in respect to the aforesaid loan, falls under the broad category of “interest”, and is allowable u/s 24(b) of the Act.

Final Conclusion: The appeal was allowed and the disallowance of protection insurance, processing fee and annual maintenance charges incurred in relation to the borrowing was deleted.

Penalty u/s 271(1)(c) for inaccurate particulars in respect of interest on enhanced land compensation - Debatable claim and penalty

HELD THAT: - The penalty proceedings proceeded on an erroneous factual premise, since the assessment order contained no addition under section 69 as recorded in the penalty order. Independently, the taxability of interest on enhanced compensation was a debatable issue on which divergent Tribunal views existed.

Hon’ble Apex Court in the case of Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] held that where the assessee made a claim which was not accepted revenue, that by itself would not attract penalty u/s 271(1)(c).[Paras 3]

The penalty imposed for furnishing inaccurate particulars was deleted.

Final Conclusion: The appeal was allowed and the impugned penalty was deleted.

Reassessment beyond three years - statutory threshold of escaped income - Post-search assessment procedure - Cross-examination of third-party material - Time for filing return in reassessment notice - Unaccounted purchases - taxation of embedded profit

Reassessment beyond three years - statutory threshold of escaped income - Validity of reassessment notices for AY 2014-15 to AY 2018-19 where the alleged unaccounted purchases had corresponding sales and only the embedded profit represented escaped income - HELD THAT: - For reopening beyond three years, the extended period is available only where the income chargeable to tax escaping assessment meets the statutory threshold. Since the Assessing Officer accepted that the alleged unaccounted purchases resulted in corresponding sales and separately assessed the profit embedded therein, the escaped income was the embedded profit, which was below the prescribed threshold for each year. [Paras 9]

The notices issued under section 148 for AY 2014-15 to AY 2018-19 were without jurisdiction and were quashed.

Post-search assessment procedure - Validity of assessment for AY 2022-23 directly framed under section 143(3) on material seized during a search conducted on a third party - HELD THAT: - Where material seized in a search on a third party related to the assessee, the statutory mechanism required initiation of proceedings under section 148 and issuance of notice thereunder. An assessment could not be framed directly under section 143(3) without resort to that procedure. [Paras 13]

The assessment framed under section 143(3) for AY 2022-23 was void ab initio and was quashed.

Cross-examination of third-party material - Denial of cross-examination in respect of third-party digital material relied upon for the additions - HELD THAT: - The record did not show that the assessee had made a specific request during assessment proceedings to cross-examine the persons connected with the third-party material. The precedent relied on was distinguishable because, in that case, a specific request for cross-examination had been made on a disputed factual aspect. [Paras 15]

The challenge based on denial of cross-examination was rejected.

Time for filing return in reassessment notice - Validity of reassessment notices allowing thirty days for filing the return for AY 2014-15 to AY 2021-22 - HELD THAT: - Under the provision applicable before its amendment, the period for furnishing the return in response to a reassessment notice was left to the Assessing Officer's discretion. The later requirement of a three-month period did not govern the notices in question. [Paras 18]

No legal infirmity was found in the notices on account of the thirty-day period allowed for filing the returns.

Unaccounted purchases - taxation of embedded profit - Taxability of alleged unaccounted purchases of mustard oil for AY 2019-20 to AY 2021-22 where corresponding sales and profit had been accepted and separately assessed - HELD THAT: - Both the Assessing Officer and the appellate authority accepted that the alleged unaccounted purchases had corresponding sales. In that factual setting, the entire purchase value could not be treated as income when the profit embedded in those transactions had separately been brought to tax; only such profit was taxable. [Paras 20]

Deletion of the additions representing the entire unaccounted purchases was sustained, and the additions restricted to the profit determined by the Assessing Officer were upheld for AY 2019-20 to AY 2021-22 which ranges from 0.44% to 0.31% on unaccounted purchase.

Final Conclusion: The Revenue appeals were dismissed. The reassessment notices for AY 2014-15 to AY 2018-19 and the assessment for AY 2022-23 were quashed, while the additions restricted to embedded profit for AY 2019-20 to AY 2021-22 were sustained.

Income surrendered during survey on account of excess stock and cash - business income at normal rates or under the enhanced rate prescribed by Section 115BBE - Disallowance of expenditure relating to investments under section 14A - Ad hoc disallowance of business expenditure

Characterisation of income surrendered for excess stock and excess cash found during survey - Taxable as business income at normal rates or under the enhanced rate prescribed by Section 115BBE - HELD THAT: - The surrender was consistently offered as miscellaneous business income, and the assessee had no source of income other than its business. Since the excess stock related to the stock in which the assessee regularly dealt and no independent undisclosed asset was shown, the surrender could not be treated otherwise than as business income. [Paras 4]

The surrendered income was directed to be assessed as business income at the normal rate of tax.

Prospective operation of enhanced tax rate under section 115BBE - Applicability of the enhanced tax rate u/s 115BBE to the surrendered income for AY 2017-18 - HELD THAT: - Hon’ble Rajasthan High Court, in its recent decision titled as Deepak Maratha [2026 (6) TMI 371 - RAJASTHAN HIGH COURT] held that the amendment to Sec.115BBE prescribing higher rate of tax of 60% would apply only from 01.04.2017 i.e., Financial Year 2017-18 onwards

The enhanced rate introduced by the amendment to section 115BBE was held applicable from Financial Year 2017-18 onwards and, therefore, only from AY 2018-19. It could not govern the year under appeal. [Paras 5]

The surrendered income for AY 2017-18 could not be subjected to the enhanced rate under section 115BBE.

Disallowance of expenditure relating to investments under section 14A - HELD THAT: - The disallowance was computed in accordance with the statutory mandate.[Paras 6]

The disallowance was sustained.

Ad hoc disallowance of business expenditure - Ad hoc disallowance of salary and wages, power and fuel, and machinery-repair expenditure where only ledger extracts were furnished and certain payments were made in cash.- HELD THAT: - The Tribunal found the ad hoc disallowance reasonable and requiring no interference. [Paras 6]

The disallowance was sustained.

Final Conclusion: The appeal was partly allowed by accepting the survey surrender as business income not liable to the enhanced rate under section 115BBE for AY 2017-18. The disallowances under section 14A and of the specified business expenditure were sustained.

Rectification of intimation u/s. 143(1) - deduction u/s. 80C not claimed in return - Condonation for filing revised return - Allowance of deduction for fixed-deposit investment where the claim was omitted from the return of income and was sought through rectification

HELD THAT: - As no deduction had been claimed in the return, the intimation processing the return and the rectification order could not be faulted for declining it. However, since evidence of an eligible investment was placed on record, the assessee was permitted to seek condonation for filing a revised return; such application was directed to be considered sympathetically, and the deduction could be claimed in the revised return in accordance with law. [Paras 6]

The rectification claim was not accepted; liberty was granted to pursue condonation for filing a revised return and to claim the deduction therein as per law.

Final Conclusion: The appeal was dismissed for statistical purposes, while preserving the assessee's liberty to seek permission for filing a revised return and claim the deduction in accordance with law.

Rejection of books of account for unexplained bank credits - Presumptive computation of income from commission receipts

Rejection of books of account for unexplained bank credits - Estimated profit on undisclosed bank credits - Rejection of books of account and estimation of profit on bank credits not explained through the disclosed sales - HELD THAT: - The assessee had disclosed sales substantially lower than the bank credits, and no explanation was furnished for the balance credits. The books were consequently unreliable, justifying their rejection and estimation of profit on such credits. [Paras 7]

The rejection of books and estimation of profit at 8 per cent on the unexplained bank credits were upheld.

Presumptive computation of income from commission receipts - Deduction of expenditure against commission income - Computation of taxable income from commission receipts where the claim of expenditure exclusively incurred for earning the commission was unsupported - HELD THAT: - Assessee neither produced the agreement nor explained the services rendered for earning the commission, and the claimed indirect expenses were predominantly attributable to the regular business rather than exclusively to the commission receipts. Absence of substantiation did not justify treating the entire commission receipt as income without any expenditure. Since presumptive provisions had been applied for the regular business income, the commission income was directed to be computed at 50 per cent of the receipts in accordance with section 44ADA. [Paras 7]

The income from commission receipts was directed to be recomputed at 50 per cent of the receipts.

Final Conclusion: The appeal was partly allowed. The estimation on unexplained bank credits was sustained, while the commission income was directed to be recomputed at 50 per cent of the receipts.

Rebate under section 87A on short-term capital gains taxable under section 111A - Prospective operation of statutory restriction on rebate - Administrative circular cannot curtail statutory rebate

Availability of rebate under section 87A against tax payable on short-term capital gains chargeable under section 111A for A.Y. 2025-26 - HELD THAT: - For A.Y. 2025-26, the first proviso to section 87A allowed rebate from income-tax computed on total income within the prescribed threshold and contained no express exclusion of tax payable on short-term capital gains under section 111A. Section 111A prescribed only the applicable tax rate and did not prohibit rebate. The later amendment restricting rebate to tax computed at the rates under section 115BAC(1A) was expressly operative from A.Y. 2026-27 and could not be applied retrospectively. A procedural utility or an administrative circular could not impose a substantive restriction absent from the governing statutory provision. [Paras 6, 7, 8]

Restriction of the claimed rebate by excluding tax attributable to short-term capital gains under section 111A was held unsustainable; the Assessing Officer/CPC was directed to recompute tax and allow the full rebate, subject to verification of other statutory conditions.

Final Conclusion: The appeal was allowed and the demand arising from the restricted rebate was deleted, subject to verification of the assessee's eligibility under the remaining statutory conditions.

Appellate duty to decide appeal on merits despite non-prosecution - Dismissal of an income-tax appeal for non-prosecution without adjudicating the grounds challenging reassessment and the addition for unexplained bank credits

HELD THAT: - The appeal had not been withdrawn. Even if the assessee did not make further compliance, the appellate authority was obligated to determine the issues raised in the statement of facts and grounds of appeal. Its order did not address the challenges to the reassessment proceedings or the assessee's contentions concerning audited books, business history and bank withdrawals. [Paras 6]

The matter was restored to the appellate authority for a fresh decision in accordance with law after considering the grounds raised and affording the assessee an opportunity to substantiate the contentions and furnish material.

Final Conclusion: The assessee's appeal was allowed for statistical purposes and remitted for fresh appellate adjudication on the grounds raised.

Addition for unverified trade creditors - Disallowance of unsupported business expenditure - Evidentiary basis for appellate relief - Appellate deletion of the addition for unverified sundry creditors and substantial reduction of the disallowance of direct business expenditure without supporting evidence

HELD THAT: - The categorical view that sundry creditors, merely because so classified, could not be added under section 68 was held unsustainable. Likewise, deletion of most of the disallowed expenditure without evidence supporting the expenditure was not sustainable. Since the assessee claimed exemption under section 10(23B) and sought an opportunity to produce evidence both for that claim and for the accounting entries forming the subject of the additions, a fresh factual examination was warranted in the interest of justice. [Paras 6]

The appellate relief was set aside and the matter was restored to the Assessing Officer to consider the evidence produced by the assessee and revisit the additions and exemption claim; no conclusion was reached on their merits.

Final Conclusion: The Department's appeal was allowed for statistical purposes, and the disputed additions and the assessee's claimed exemption were remitted to the Assessing Officer for fresh consideration on evidence.

Revisionary jurisdiction u/s 263 - assessment after specific enquiry into deduction u/s 80G claimed in respect of CSR contribution

HELD THAT: - The assessment record established that the Assessing Officer had specifically called for section-wise details, eligibility particulars, bank statements and documentary evidence concerning the Chapter VIA deduction, and that the assessee had furnished the donation receipt, supporting note and bank extracts. An assessment order's failure to contain an elaborate discussion does not establish absence of enquiry where the enquiry and response are borne out by the record. Revisionary jurisdiction cannot be invoked merely because the Principal Commissioner considers further enquiry desirable or prefers another possible view; the assessment order must be both erroneous and prejudicial to the interests of the Revenue.

We further note that in the case of Here Solutions India Pvt. Ltd. [2026 (1) TMI 1677 - ITAT MUMBAI] and Firemenich Aromatics Production(India) Pvt. Ltd. [2025 (9) TMI 162 - ITAT MUMBAI] on materially identical facts concerning deduction u/s 80G claimed in respect of CSR contribution, quashed the revisionary order passed u/s 263 of the Act and noted that the Ld.AO made specific enquiry regarding deduction claimed u/s 80G and the assessee had furnished supporting documentary evidences. The revisionary order was accordingly held to be unsustainable.[Paras 4]

The twin conditions for exercise of revisionary jurisdiction were not fulfilled; the revisionary order was quashed. The merits of the deduction claim were consequently left unadjudicated as academic.

Final Conclusion: The appeal was allowed and the revisionary order was quashed, since the assessment had been preceded by a specific enquiry into the deduction claim and no error prejudicial to the Revenue was established.

Exemption for charitable trust denied - belated furnishing of audit report in Form 10BB - Form 10BB was furnished belatedly after Form 10B had been uploaded - HELD THAT: - Following the jurisdictional High Court decision KHANDELWAL VAISHYA SAMAJ CHARITABLE TRUST [2025 (9) TMI 913 - RAJASTHAN HIGH COURT], the Tribunal held that belated furnishing of the prescribed audit report did not justify denial of the claimed exemption. The report in Form 10BB was required to be properly verified before granting the exemption. [Paras 6]

The orders of the lower authorities were set aside and exemption was directed to be allowed after proper verification of the belatedly filed Form 10BB.

Final Conclusion: The appeal was allowed for statistical purposes, with a direction to allow the claimed exemption after verification of Form 10BB filed belatedly.

Revisionary jurisdiction to direct initiation of penalty proceedings u/s 271AAD - Penalty for false entries in books of account represented by disallowed contract expenditure

HELD THAT: - Section 271AAD confers power to direct penalty only upon the Assessing Officer, the Joint Commissioner (Appeals) and the Commissioner (Appeals), and does not empower the Principal Commissioner or Commissioner to initiate or levy that penalty. Further, penalty under that provision is not automatic and depends on a final determination that a false entry exists. The Principal Commissioner could not, through revisionary jurisdiction, require the Assessing Officer to initiate such penalty proceedings when the alleged contract expenditure was pending appellate consideration. See Air Wind Green Energy Limited [2025 (9) TMI 844 - ITAT AHMEDABAD] and Dr. Suresh G. Shah [2006 (8) TMI 101 - HIGH COURT, GUJARAT] [Paras 7, 8, 14]

The assumption of revisionary jurisdiction to direct initiation of penalty under section 271AAD was held bad in law, and the revision order was quashed.

Final Conclusion: The assessee's appeal was allowed and the revision order directing initiation of penalty proceedings under section 271AAD was quashed.

Provisional release of seized prohibited goods - Import prohibition on national-security grounds - Provisional release of seized dry dates alleged to have been imported by misdeclaring their Pakistani origin as United Arab Emirates origin - HELD THAT: - Section 110A permits provisional release pending adjudication upon such bond, security and conditions as the adjudicating authority may require. The goods were seized on the basis that their import was prohibited in the interests of national security and public policy, and the statutory process for issuance of show-cause notice and adjudication had been followed. In view of the strategic nature of the prohibition and the issuance of the show-cause notice, no ground existed to interfere with the refusal of provisional release. [Paras 8, 9]

The refusal of provisional release was sustained and the appeal was dismissed.

Final Conclusion: The appeal seeking provisional release of the seized goods was dismissed; the Revenue's miscellaneous application was also dismissed.

Extended limitation for SAD demand on FTWZ stock transfers - Suppression of facts - Invocation of the extended period for recovery of Special Additional Duty on goods transferred from the FTWZ to the appellant's domestic tariff area unit

HELD THAT: - The practice of claiming SAD exemption on such clearances had been adopted pursuant to directions and decisions of the concerned SEZ and FTWZ authorities, including the requirement of a chartered accountant's certificate. The Tribunal held that the appellant's adoption of that practice did not disclose mala fides or suppression of facts with intent to evade duty. As the entire demand fell beyond the normal period of limitation, the extended period was unavailable; consequently, the Tribunal found no occasion to examine the merits of exemption under the notification. [Paras 11, 12]

The duty demand, confiscation and penalties founded on the extended period were set aside; the Revenue appeal seeking enhancement of penalty was dismissed.

Final Conclusion: The impugned order was set aside as the demand was wholly barred by limitation. The appellant's appeals were allowed and the Revenue's appeal was dismissed.

Penalty on Customs Broker for knowing misclassification and under-valuation - Admissibility of voluntary statements to Customs officers

Voluntary statements u/s 108 of the Customs Act - Substantive evidentiary value of Customs statements - Admissibility and evidentiary value of the unretracted statement of the Customs Broker's director recorded u/s 108 of the Customs Act - HELD THAT: - A statement voluntarily made before a Customs officer is admissible as substantive evidence, since such officer is not a police officer and the statutory bar applicable to police confessions does not apply. The statement had not been retracted, no coercion was established, and its contents were corroborated by the laboratory reports and the unretracted statements of the importers. [Paras 7, 8, 9, 10]

The statement was validly relied upon for determining the appellants' role in the improper imports.

Penalty on Customs Broker for abetment of improper import - Knowing misclassification of areca nuts - Liability of the Customs Broker and its director for penalties for knowingly advising importers to classify areca nuts under CTH 21069030 instead of CTH 08028090 and to claim an inapplicable exemption - HELD THAT: - Custom House Agents are otherwise the representatives not only of the importers/ exporters but they are the agents for the custom department also. The Hon’ble High Court Bombay in the case of World Wide Areca Manufacturer [2006 (11) TMI 281 - BOMBAY HIGH COURT] has upheld the liability of the CHA wherein it was held that irrespective it is the right of a citizen to carry on his business of profession but the right is subject to reasonable restrictions and conditions. Where the CHA appears to have brazenly acted even while defending the acts of his employees and simultaneously supporting the importers to make illegal imports, the Tribunal is not supposed to interfere with the order of departmental authorities passed against the CHA.

The voluntary and corroborated evidence established that the appellants knowingly recommended the incorrect classification of areca nuts to enable the importers to claim the exemption benefit and clear prohibited goods. A Customs Broker is entrusted with safeguarding the interests of both importers and Customs; the Tribunal found the requisite knowledge and intention for imposition of penalties to be established. [Paras 10, 11, 12]

The penalties imposed on the Customs Broker and its director were upheld.

Final Conclusion: The Tribunal upheld the penalties upon the Customs Broker and its director, holding that their knowing and intentional role in the misclassification and improper importation of areca nuts stood established. All three appeals were dismissed.

Extended period of limitation - suppression of material facts

Invocation of the extended period for recovery of differential customs duty on imported LPG - HELD THAT: - The normal period had expired before issuance of the show cause notice. In the absence of deliberate non-disclosure of material facts constituting suppression, and where a show cause notice had been issued on the same facts, the extended period could not be invoked following the ratio of the judgment of the Hon’ble Supreme Court in the matter of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT]. [Paras 8]

The demand, interest and penalties confirmed by invoking the extended period of limitation were held unsustainable and the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief, as the demand and allied liabilities founded on the extended period of limitation could not be sustained.

Absolute confiscation after redemption of goods - Enhancement of penalty for import of used/refurbished computer parts

Absolute confiscation after redemption of goods - Absolute confiscation of imported computer hard discs after their redemption on payment of fine - HELD THAT: - The merits of confiscation had attained finality as no appeal against the adjudication order had been filed before the lower appellate authority.

Since the goods are not available for redemption, the order issuing absolute confiscation is non-est in law. Further we find that Adjudication Authority relied on the ratio of the decision of Hon’ble Supreme Court in the case of Atul Automations Pvt. Ltd.[2019 (1) TMI 1324 - SUPREME COURT] to allow redemption of the goods. Considering the same the order of absolute confiscation is set aside without going into the merits of the confiscation.[Paras 9]

The order of absolute confiscation was set aside without examining the merits of confiscation.

Enhancement of penalties imposed on the importer and its business head for the import of used/refurbished computer parts - HELD THAT: - The penalties imposed by the adjudicating authority were found proportionate to the gravity of the offence. The market value had not been ascertained for determining the margin of profit, and the appellate enhancement of penalties was therefore unsustainable. [Paras 9, 10]

The enhancement of penalties was set aside and the penalties imposed by the adjudicating authority were sustained.

Final Conclusion: The impugned appellate order directing absolute confiscation and enhancing penalties was set aside, and the adjudication order permitting redemption and imposing the original penalties was sustained.

Leave to appeal against acquittal - Computation of limitation-exclusion of time for certified copy

Leave to appeal against acquittal - Prima facie case and arguable points - Grant of leave to appeal against the respondent's acquittal - HELD THAT: - At the stage of considering leave against an acquittal, the Court must apply its mind to ascertain whether a prima facie case or arguable points arise; it is not required to undertake a minute evaluation of the evidence or finally decide whether the acquittal is perverse. Where the record warrants deeper scrutiny, reappreciation, review or reconsideration of the evidence, leave should be granted and the matter decided on merits. The double presumption of innocence does not warrant refusal of leave at that stage. [Paras 5, 6]

Leave to appeal was granted, leaving the merits of the acquittal for decision in the appeal.

Computation of limitation - exclusion of time for certified copy - Limitation for filing the application seeking leave to appeal against acquittal - HELD THAT: - The period consumed in processing and obtaining the certified copy of the impugned judgment was excluded in computing the statutory period. After that exclusion, the effective period was within the prescribed 180 days. [Paras 7]

The leave petition was held to be within limitation and no condonation of delay was required.

Final Conclusion: The leave petition was held to be within limitation. Leave to appeal against the acquittal was granted, and the matter was directed to be registered and admitted as a criminal appeal.

Retroactive application of statutory amendment to pending insolvency applications - Interim measures for disclosure and preservation of guarantors' assets pending arbitration

Applicability of the exclusion from the interim moratorium to insolvency applications against personal guarantors that were filed before the amendment came into force and remained pending - HELD THAT: - The expression "where an application is filed" encompasses applications already filed and pending adjudication. Applying the amended provision to such continuing proceedings is retroactive, not retrospective, since it operates prospectively upon an existing and continuing status without impairing vested rights. The amended exclusion is indifferent to the identity of the applicant who initiated the personal insolvency process. [Paras 11, 14, 15, 16, 17]

The interim moratorium in respect of the individual guarantors ceased to operate upon the amendment taking effect, and the petition was not barred by the Insolvency and Bankruptcy Code.

Interim measures for disclosure and preservation of guarantors' assets pending arbitration - Entitlement to limited interim protection pending commencement and conduct of arbitration after the cessation of the moratorium - HELD THAT: - The reliefs confined to asset disclosure and restraint against dissipation, without a direction for deposit, were held to be benign and reasonable. In the equitable exercise of jurisdiction, such limited protection was appropriate pending arbitration, particularly as the petition had remained unconsidered because of the moratorium. [Paras 18, 19, 20, 21, 22]

The petition was disposed of by directing asset disclosure and restraining alienation or dissipation of the disclosed assets, subject to vacation if arbitration-appointment proceedings were not initiated within the stipulated period and to modification by the arbitral tribunal.

Final Conclusion: The exclusion from the interim moratorium was held applicable to pending personal-guarantor insolvency applications from the date of its commencement. Limited protective measures preserving the guarantors' assets pending arbitration were granted.

Section 10A - defaults arising during protected period - Cash credit facility - deferment of interest recovery and default - Ad hoc cash credit facility-computation of repayment period - Amendment of insolvency application-proof of substituted default

Cash credit facility - deferment of interest recovery and default - Debt due and payable - Section 10A bar - whether alleged default under the Cash Credit Facility fell within the period protected by Section 10A? - HELD THAT: - A default requires non-payment of a debt which is both legally due and presently payable. Though the RBI measures governing term loans and cash credit facilities respectively employed the expressions moratorium and deferment, the distinction did not establish an actionable default where recovery of the relevant cash-credit interest stood deferred. The entire outstanding was also repayable on demand under the governing agreement, but no demand preceded the alleged default. The Bank's conversion of interest into FITL, its subsequent renewal of the facility, and its contemporaneous treatment of the account did not support the claimed default date. [Paras 93, 94, 109, 119]

The Bank failed to establish that the Cash Credit Facility had defaulted before commencement of the Section 10A protected period.

Ad hoc cash credit facility-computation of repayment period - Exclusion of first day in computation of time - Section 10A bar - HELD THAT: - The contractual period of 90 days ran from the date of availment. Applying the rule that, where a period runs from a specified day, that day is excluded, the period commenced on the following day and expired on 25.03.2020. The facility could become overdue only upon non-payment after that day, namely on 26.03.2020. The Bank's contemporaneous communication and the earlier order in the proceedings also contradicted the pleaded date of 24.03.2020. [Paras 121, 122, 125, 127]

The Ad Hoc Cash Credit default could not be relied upon to initiate CIRP, since it arose during the Section 10A protected period.

Amendment of insolvency application - proof of substituted default - Materially altered date of default - Section 10A-permanent statutory bar - whether amended dates of default in the Section 7 application could not be accepted without supporting facts and evidence merely because amendment of the application was permissible? - HELD THAT: - A financial creditor may amend a Section 7 application and place additional material on record, but the substituted date of default must withstand scrutiny where that date determines maintainability under Section 10A. Flexibility concerning an imprecise date in limitation cases cannot be mechanically extended to a case involving the permanent statutory bar for defaults arising during the protected period. The amended dates, introduced after the Section 10A objection and contrary to the original Form-1 and information-utility record, were unsupported by the material relied on by the Bank. Subsequent notices or events not pleaded as the default in the amended application could not validate those defective dates. [Paras 134, 135, 136, 138, 141]

Although amendment was not barred, the amended defaults were not proved and both correctly determined defaults fell within Section 10A.

Final Conclusion: The appeal was allowed and the admission of the Section 7 application was set aside, as neither of the defaults relied upon by the Bank could sustain CIRP in view of Section 10A. The Bank was left at liberty to pursue such other remedies, including proceedings founded on any fresh default, as may be available in law.

Retention of seized property under the Prevention of Money Laundering Act - Recorded reasons to believe and nexus with proceeds of crime - Natural justice in retention proceedings - Writ jurisdiction despite alternative statutory remedy

Retention of seized jewellery, cash and foreign currency under the Prevention of Money Laundering Act - Recorded reasons to believe and prima facie nexus with proceeds of crime - Validity of the continued retention of seized jewellery, cash, foreign currency and documents without recorded reasons founded on cogent material, a prima facie nexus with proceeds of crime, and meaningful consideration of the explanation and documents produced by the petitioners - HELD THAT: - The statutory safeguards governing search, seizure and retention require recorded reasons to believe based on material in possession and satisfaction that the property is prima facie involved in money laundering and required for adjudication. Suspicion, conjecture or unsubstantiated allegations cannot replace those requirements. The retention order neither disclosed reasons or material linking the seized assets to proceeds of crime nor considered the documentary material concerning loan repayment, ownership and acquisition of the properties. The order could not be supplemented by new grounds in the counter affidavit. [Paras 17, 19, 21, 22, 24]

The retention order was held unsustainable and was set aside, without any final opinion on the allegations under investigation.

Natural justice for persons claiming ownership of seized jewellery - Retention of jewellery claimed by petitioners who were neither accused in the proceedings nor served with independent notices - HELD THAT: - Persons whose property rights are directly affected by retention proceedings must receive reasonable notice and an opportunity of hearing. Retention of jewellery claimed by petitioners who were not accused and were not independently notified offended procedural fairness. [Paras 20, 24]

The absence of notice and opportunity to the affected claimants was a ground for setting aside the retention order.

Writ jurisdiction despite alternative remedy - Maintainability of the writ petition despite the statutory appellate remedy against the retention order - HELD THAT: - Availability of an alternative remedy is not an absolute bar where the impugned proceedings are alleged to be without jurisdiction, in breach of natural justice, or contrary to mandatory statutory requirements. The challenge to the absence of compliance with the safeguards for search and retention was amenable to judicial review. [Paras 23]

The objection based on the alternative appellate remedy was rejected.

Final Conclusion: The writ petition was allowed and the order permitting retention of the seized properties was set aside. The investigating agency was left free to continue the investigation and take appropriate steps in accordance with law.

Auction of property subject to confirmed money-laundering attachment

Whether purchasers of properties whose attachment under the Prevention of Money-laundering Act had been confirmed could resist their auction on the basis of subsequent sale deeds, without a no-objection certificate from the Enforcement Directorate? - HELD THAT: - The attachment had been confirmed before the appellants purchased the properties, and no no-objection certificate had been issued by the Enforcement Directorate for their registration or alienation. The orders relied upon did not establish that the confirmed attachment had been lifted.

The purchasers could not claim exemption from the auction merely on the basis of the sale deeds, the seller's affidavit, the auction conditions, or the assertion that the properties were agricultural, particularly when the auction was being conducted pursuant to orders of the Supreme Court. [Paras 5, 6]

The refusal to interfere with the auction was upheld and the writ appeal was dismissed.

Final Conclusion: The writ appeal was dismissed, the Court holding that the appellants were not entitled to obstruct the auction of properties purchased after confirmation of their attachment and without the requisite clearance.

Return of complaint after issuance of process - Belated territorial-jurisdiction objection in money-laundering proceedings

Return of complaint after issuance of process - Functus officio Magistrate - Maintainability of an application for return of the complaint after cognizance had been taken and process issued - HELD THAT: - Sections 200 to 204 Cr.P.C. form a complete framework governing cognizance and issuance of process. Once cognizance is taken and process is issued under Section 204 Cr.P.C., the Magistrate becomes functus officio regarding that stage and cannot recall, review, or return the complaint by resort to Section 201 Cr.P.C. The accused had also participated in the proceedings for several years before invoking that provision. [Paras 9, 10, 11]

The application under Section 201 Cr.P.C. was held not maintainable at the post-cognizance stage.

Belated territorial-jurisdiction objection in money-laundering proceedings - Continuing offence of money laundering - Territorial jurisdiction of the Special Court where properties alleged to represent proceeds of crime were situated in another State - HELD THAT: - An objection to territorial jurisdiction must be raised at the earliest opportunity and could not be raised after prolonged participation in the proceedings without demur. Money laundering is a distinct and continuing offence involving activities connected with proceeds of crime and their projection as untainted property; consequently, the location of certain properties in another State did not, by itself, oust the Special Court's jurisdiction. [Paras 11, 12, 13, 14]

The belated territorial-jurisdiction objection was rejected as untenable.

Final Conclusion: The Criminal Petition was dismissed and the impugned order was upheld, as no jurisdictional error, illegality, or perversity was established.

Saleable title to property under money-laundering attachment - Challenge to inclusion in the auction catalogue of property purchased from an erstwhile owner whose property remained under enforcement custody - HELD THAT: - It is apparent that the subject properties are under ED custody, pursuant to the case registered against the erstwhile owner under Section 5(5) of the PMLA, 2002. It is noteworthy that vide Orders [2022 (12) TMI 1614 - SC ORDER] and [2022 (12) TMI 1615 - SC ORDER], the Hon’ble Supreme Court clearly ordered to lift the attachment of ED in respect of subject property, only when there is valid salable title in transparent manner.

Pertinently, the erstwhile owner has not obtained any NOC from the ED as to register or alienate and detach the subject property. Furthermore, a Money Laundering Case is pending against the erstwhile owner who sold the subject property to the petitioners. In view of the peculiar facts and circumstances of the case, this Court is of the considered opinion that the prosecution against the erstwhile owner of the subject property is pending before ED in a Money Laundering case and that at this juncture, it cannot be determined whether the erstwhile owner sold the subject property to the petitioners in a transparent manner.[Paras 7, 8, 9]

Relief against inclusion of the property in the auction catalogue was refused and the writ petition was dismissed.

Final Conclusion: The writ petition was dismissed because transparent saleable title in favour of the purchasers could not be determined while the property remained under enforcement custody and proceedings against the erstwhile owner were pending.

Service tax exemption for municipal water-supply services - Operation of tube wells for supply of water

Eligibility of operation of tube wells for water supply, rendered to municipal water authorities, for exemption under Serial No. 25 of Mega Exemption Notification No. 25/2012-ST - HELD THAT: - The prescribed consideration, being fixed per tube well, per shift and per day, established that the services were solely for operation of tube wells and pertained to supply of water. Such services, rendered to the concerned municipal water authorities, were activities relating to water supply and consequently fell within Serial No. 25 of the notification. [Paras 9, 10]

The consideration received for the services was held exempt from service tax, and the appeal was allowed with consequential benefit.

Final Conclusion: The Tribunal held that operation of tube wells for supply of water to the concerned municipal water authorities qualified for the claimed service-tax exemption. The appeal was allowed with consequential benefit in accordance with law.

Secondment of employees by overseas group company as manpower supply service - Extended limitation for service tax demand-absence of wilful suppression

Secondment of employees as manpower supply service - Reverse-charge service tax liability - Taxability of personnel seconded by the overseas group company to the Indian group entity as manpower recruitment or supply agency service - HELD THAT: - Applying the Supreme Court ruling Continental Foundation Joint Venture [2007 (8) TMI 11 - SUPREME COURT] on substantially similar secondment arrangements, the Tribunal held that the overseas entity remained the employer which deployed the personnel, paid their salaries and retained their employment terms, with the personnel returning to that entity after secondment. The Indian entity was therefore the recipient of taxable manpower supply service and was liable in principle under the reverse-charge mechanism. [Paras 6]

The secondment arrangement was held to constitute taxable manpower supply service received by the respondent.

Extended limitation - wilful suppression - Service tax demand on secondment expenses - Validity of invoking the extended period for the service tax demand on expenses reimbursed to the overseas group company for seconded personnel - HELD THAT: - The extended period requires fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax. The secondment expenses were recorded in the respondent's books, remitted through banking channels and reimbursed without markup. In the absence of the requisite intent or wilful suppression, and consistently with the Supreme Court's ruling M/S NORTHERN OPERATING SYSTEMS PVT LTD. [2022 (5) TMI 967 - SUPREME COURT] on similar facts, invocation of the extended period was unjustified. [Paras 6]

As the entire demand fell outside the normal period and rested solely on the extended period, the service tax demand, interest and penalties could not be sustained.

Final Conclusion: Though the secondment arrangement was taxable as manpower supply service, the entire demand rested on an unsustainable invocation of the extended period of limitation. The Revenue's appeal was dismissed and the cross-objection was disposed of.

Entitlement of an SEZ unit to refund of service tax paid on services used for authorised operations despite filing beyond the period stipulated in Notification No. 9/2009-ST - HELD THAT: - The substantive exemption for services used in authorised SEZ operations flows from section 26 of the SEZ Act, and the overriding provision in section 51 prevents that entitlement from being curtailed by a procedural limitation in a notification issued under another enactment. Since the services were admittedly used for authorised operations, the notification constituted only the machinery for grant of refund and could not be applied so as to wholly defeat the statutory exemption. The authorities relied on by Revenue concerned refunds or benefits arising under the relevant statutory mechanism or notification and did not displace this principle. [Paras 9, 10, 11, 12, 13]

The refund could not be rejected solely because the claim exceeded the six-month period under Notification No. 9/2009-ST; the alternative contention concerning applicability of the later notification was left undecided.

Final Conclusion: The Revenue's appeal was dismissed and the order allowing refund to the SEZ unit was upheld, subject to consequential relief in accordance with law.

Limitation for statutory appeal where adjudication order was dispatched to incorrect address - Mandatory pre-deposit for appeal

Rejection of the statutory appeal as time-barred despite dispatch of the show-cause notice and adjudication order to an incorrect address - HELD THAT: - The Department had dispatched the show-cause notice and the adjudication order to an incorrect address. The appellant acquired knowledge of the proceedings only upon initiation of recovery proceedings and received the adjudication order thereafter; the appeal was consequently filed within the statutory period of 60 days from such receipt. [Paras 13]

The appeal could not be rejected on limitation; the matter was remanded for decision on merits without revisiting limitation.

Mandatory pre-deposit for appeal - Compliance with the mandatory pre-deposit requirement for the appeal before the Commissioner (Appeals) - HELD THAT: - The deposit made by the appellant for pursuing the appeal before the Tribunal exceeded the statutory pre-deposit required for the appeal before the Commissioner (Appeals). [Paras 14]

The pre-deposit requirement stood satisfied, and the matter was remanded for a decision on merits without further examination of pre-deposit.

Final Conclusion: The impugned rejection was set aside and the appeal was remanded to the Commissioner (Appeals) for adjudication on merits, without reconsidering limitation or pre-deposit.

Service tax valuation of reimbursed expenses - Extended limitation for service tax demand

Service tax valuation of reimbursed expenses - Validity of Rule 5(1) of the Service Tax Valuation Rules, 2006 - Inclusion of staff-related expenses reimbursed by the client on actual basis in the taxable value of manpower recruitment and supply service - HELD THAT: - We find that the issue on levy of service tax on reimbursable expenses is no more res-integra in view of the decision of Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which affirmed the decision of Intercontinental Consultants & Technocrats Pvt Ltd v[2012 (12) TMI 150 - DELHI HIGH COURT] wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

The demand was founded on Rule 5(1) of the Service Tax Valuation Rules, 2006. Since that provision, insofar as it required inclusion of expenditure or costs incurred by the service provider in the value of taxable service, had been held to travel beyond the scope of Sections 66 and 67, reimbursed expenses could not be subjected to service tax. The contemporaneous departmental circular and trade notice also clarified exclusion of actual reimbursements incurred on behalf of the client. [Paras 9, 10]

The service tax demand on reimbursed expenses was held unsustainable; consequential interest and penalty were consequently untenable.

Invocation of the extended period for demanding service tax on reimbursed staff-related expenses - HELD THAT: - The show cause notice contained no evidence of a positive act of wilful suppression or misstatement with intent to evade payment of duty. The appellant had also been subjected to earlier show cause notices for the same period, and the Department was required to raise all available grounds when initiating proceedings rather than institute successive proceedings on different grounds for that period. [Paras 10]

Invocation of the extended period was held erroneous and the demand was independently untenable on limitation.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential reliefs.

Electronic auto/taxi fare meters as automobile parts for MRP valuation

Whether the electronic auto / taxi fare meters manufactured by the Appellant falling under Central Excise Tariff Heading (CETH) 90291010 can be considered as 'parts or components or assemblies' of automobiles? - HELD THAT: - A part, component or assembly of an automobile must be necessary for its functioning. Electronic auto/taxi fare meters are used to calculate fares in call taxis and auto rickshaws and are subject to inspection and sealing for that purpose; however, an automobile remains functional without them. The meters therefore do not constitute parts, components or assemblies of automobiles and are outside the notification entry requiring valuation on the maximum retail price basis.

Thus, goods manufactured by the Appellant cannot be considered as Parts or components or assemblies of automobiles and following the ratio of the decision of the Hon'ble Apex Court in Insulation Electrical (P) Ltd[2008 (3) TMI 22 - SUPREME COURT] and the Tribunal in the matter of RC Edwards & Company Pvt., Ltd [1984 (2) TMI 340 - CEGAT NEW DELHI] the demand of differential duty by considering the electronic auto / taxi fare meters, the impugned goods as parts / components / assemblies for automobiles leviable to duty under section 4A Central Excise Act, 1944 is unsustainable and the impugned order is liable to be set aside. [Paras 16, 17]

The differential-duty demand founded on MRP-based valuation was unsustainable; the impugned order was set aside and the appeal allowed with consequential relief.

Final Conclusion: Electronic auto/taxi fare meters were held not to be parts, components or assemblies of automobiles and consequently not liable to MRP-based valuation under the notification entry. The demand was set aside and the appeal allowed with consequential relief.

SARFAESI enforcement by assignee bank - Restoration of securitisation application for merits adjudication

SARFAESI enforcement by assignee bank - Assigned secured debt - Applicability of the SARFAESI Act to secured loan accounts assigned by a non-notified non-banking financial company to a bank covered by the Act. - HELD THAT: - The definition clauses, purposively construed in M.D. Frozen Foods Exports Private Limited and others vs. Hero Fincorp Limited [2017 (9) TMI 1266 - SUPREME COURT] and Indiabulls Housing Finance Limited vs. Deccan Chronicle Holdings Limited and Others [2018 (3) TMI 118 - SUPREME COURT] establish that the Act applies to existing loans which are live and owing when it becomes applicable to the institution holding them. The status of the original lender at the inception of the loan does not prevent a bank already governed by the Act from enforcing an acquired non-performing secured loan; upon acquisition, the loan account assumes the attributes of a secured debt under the Act. [Paras 33, 34, 35, 36, 37]

The bank was entitled to invoke the SARFAESI Act, including the power to seek physical possession under Section 14, in respect of the assigned loan accounts; the challenge in the appeal concerning the property already sold was accordingly rejected.

Restoration of securitisation application for merits adjudication - Restoration of the securitisation application where the challenge to SARFAESI measures had been allowed at the threshold without consideration of the remaining factual and legal issues - HELD THAT: - As the threshold objection to the bank's recourse under the SARFAESI Act was rejected, and the other issues raised in the securitisation application had not been examined on merits, the borrowers were required to be afforded an opportunity to pursue those issues before the competent Tribunal. [Paras 38]

The orders allowing the threshold challenge were set aside and the securitisation application was restored for adjudication in accordance with law, subject to the directed further deposit without prejudice to the parties' rights.

Final Conclusion: The appeal by the bank was allowed and the threshold orders denying SARFAESI recourse were set aside, with restoration of the pending securitisation application for merits adjudication. The other appeals were dismissed.

Stock, sale and transport of codeine-based cough syrups- stock, sale and transport of codeine-based cough syrups (like New Phensedyl, Eskuf, Codectus, Lykarex-T, Phencypink-T, Rexley-T) -narcotic drug v/s simply a drug - diversion for intoxication - Whole-mixture rule for narcotic preparations - applicants entitlement to bail on the material attributed to them

Codeine cough syrup - medicinal use exemption - Therapeutic practice - Whether the codeine-based cough syrup having permitted quantity of codeine as mentioned in Entry 35 of Notification dated 14.11.1985 would attract the provisions of the NDPS Act, if the same has been sold or transported by the drug licence holder to another drug licence holder or any person for medicinal purposes? - HELD THAT: - Entry 35 of the notification requires that the codeine preparation be compounded with other ingredients, contain codeine within the prescribed dosage and concentration limits, and be established in therapeutic practice. The expression "established in therapeutic practice" concerns a preparation accepted and routinely used for treatment of disease, and not its particular use by an end consumer. Codeine cough syrup satisfying these conditions is exempt from the category of manufactured drugs when dealt with in the ordinary course of medicinal business. A routine sale without medical prescription or other ordinary breach of drug-licence conditions is actionable under the Drugs and Cosmetics Act, unless the circumstances establish non-medicinal diversion.

Hon’ble Apex Court in the case of Raj Kumar Arora’s case [2025 (4) TMI 1179 - SUPREME COURT] observed that unnecessary benefit of exception under NDPS Act should not be given to a person who misuses the narcotic drugs or psychotropic substances merely because drugs can potentially be used for medicinal or scientific purposes. Also it is clear that the violation of the condition of license issued under Drugs and Cosmetics Act and its rule regarding the narcotic drug or psychotropic substance would amount to contravention of Section 8 of NDPS Act itself. In such circumstances, apart from proceeding under Drugs and Cosmetics Act, prosecution under NDPS Act will also be permissible.[Paras 27, 28, 34, 55, 56]

Permitted-quantity codeine cough syrup dealt with for medicinal use does not attract the NDPS Act merely because of a breach of drug-licence conditions.

Codeine cough syrup-non-medicinal diversion - Compliance with drug-licence conditions - Whole-mixture rule - whether Codeine-based cough syrup containing the permitted quantity of codeine, when stocked, sold or transported for intoxication or another non-medicinal purpose, loses the benefit of the Entry 35 exemption and attracts the NDPS Act? - HELD THAT: - The statutory exemption is conditional upon the preparation being dealt with for medicinal use and in substantial compliance with the applicable licence and statutory requirements. A person without authority to deal in the syrup, or a licence holder who diverts it for intoxication, cannot claim that exemption. The NDPS Act operates in addition to the Drugs and Cosmetics Act; hence, circumstances may give rise to offences under both enactments. Once the exempt preparation is diverted for a non-medicinal purpose, it is to be treated as a codeine preparation falling within manufactured drugs. For determining small or commercial quantity, the whole syrup mixture, and not merely the actual codeine content, is to be reckoned. [Paras 49, 51, 52, 54, 55]

Diversion of permitted-quantity codeine cough syrup for intoxication attracts the NDPS Act, and its entire mixture is relevant for quantification.

Regular bail - prima facie involvement in codeine cough syrup diversion - Conscious possession - whether connected bail applications arising from alleged illegal dealing in codeine-based cough syrup were decided according to the prima facie material showing knowledge, conscious possession, or participation in non-medicinal diversion? - HELD THAT: - At the regular-bail stage, the Court declined to make definitive findings upon disputed commercial transactions. Bail was granted where sealed consignments, mere employment, ownership of premises or vehicles, or uncorroborated statements did not prima facie establish conscious possession, trafficking, or conspiracy. Bail was declined where the material prima facie indicated diversion through fictitious firms, false transport records, non-delivery of consignments, forged documents, unexplained transactions, or sale on a scale indicating non-medicinal use. [Paras 57, 58]

The applications were allowed or rejected on their respective prima facie facts, without expressing a final opinion on the merits.

Final Conclusion: The Court held that permitted-quantity codeine cough syrup remains outside the NDPS Act when lawfully dealt with for medicinal use, but its diversion for intoxication attracts the Act. The connected bail applications were allowed or rejected according to the respective prima facie material.