TaxTMI Updates e-Newsletter
Sep 08,2026

Transmit the Petitioner’s withheld Integrated Goods and Services Tax [‘IGST’] refund - Refund has continued to be withheld on account of alerts inserted against the Import Export Code [‘IEC’] - HELD THAT:- It is noticed that the Petitioner’s refund has been kept pending for more than three and a half (3½) years.

Hence, as a last opportunity, the Competent Authority is directed to take a final decision within a period of one (01) week from today. In the event the decision is not taken within the aforesaid period, the salary of the Director General of Analytics and Risk Management shall not be released until a final decision is taken in the matter.

Expiry of prohibition order under the CGST Act - Release of detained goods - Continued detention of goods after expiry of the extended validity of a prohibition order issued under the CGST Act.

HELD THAT: - The respondents admitted that, upon expiry of the extended period of six months, the prohibition order automatically ceased to operate and required no separate revocation. The continued detention of the goods pursuant to that order could therefore not subsist. The release of the goods does not affect the legality of the departmental investigation or the evidentiary material collected during it. [Paras 3, 4]

The petition was allowed and release of the goods was directed; the investigation and material collected therein were left unaffected.

Final Conclusion: The goods were directed to be released as the prohibition order had automatically ceased upon expiry of its extended validity. The departmental investigation was not prejudiced.

Fraudulent GST registration by some other person by using the PAN Card and Aadhar Card numbers of the Petitioner - HELD THAT:- The respondents were granted a last opportunity to Commissioner, CGST, the Commissioner, DGST and the Commissioner of Delhi Police, devise an effective solution to curb fraudulent GST registrations obtained by misuse of PAN and Aadhaar particulars.

Composite show-cause notice for multiple financial years - Alternative remedy in cases of patent jurisdictional error

Composite show-cause notice for multiple financial years - Validity of a single show-cause notice under the 2017 Act for multiple financial years - HELD THAT: - A single show-cause notice covering multiple financial years was held impermissible. The limitation applicable to each financial year operates independently and cannot be circumvented by clubbing previous financial years with a relevant financial year in one notice. Separate demands raised for individual financial years pursuant to that notice could not cure its jurisdictional invalidity. [Paras 12, 18]

The composite show-cause notice, being without or in excess of jurisdiction and contrary to the statute, was quashed; the consequential order-in-original and all consequential steps were also set aside.

Alternative remedy in cases of patent jurisdictional error - Maintainability of the writ petition despite the availability of a statutory appellate remedy against a jurisdictionally invalid show-cause notice - HELD THAT: - This Court has held In the matter of State Bank of India [2026 (7) TMI 149 - CALCUTTA HIGH COURT] that such notice is not permitted to be issued under the 2017 Act and the same has been issued without and/or in excess of jurisdiction, hence, in exercise of power under Article 226 of the Constitution of India, the said notice can be examined under prerogative writ jurisdiction.

Where the jurisdictional defect in the notice was apparent on its face and required no factual inquiry, the availability of an appellate remedy did not bar recourse to writ jurisdiction. The decision referring the controversy to a Larger Bench laid down no applicable principle, while the coordinate Bench decision declining writ jurisdiction on account of an appellate remedy was distinguishable on the facts. [Paras 13, 14]

The writ petition was held maintainable and was disposed of without examination of the parties' rival contentions on merits.

Final Conclusion: The composite show-cause notice and the consequential order were quashed for patent jurisdictional invalidity. The revenue authorities were left at liberty to proceed afresh strictly in accordance with law.

Inverted duty refund for packaged tea - Packing materials as eligible inputs - Inapplicability of rate-reduction circular

Inverted duty refund for packaged tea - Packing materials as eligible inputs - Entitlement to refund of accumulated input tax credit on packaged tea where packing materials attract a higher rate of tax than the outward supply - HELD THAT: - The expression "inputs" in the refund provision is plural and does not distinguish between principal and ancillary inputs. Packing materials, labels, cartons and plastic containers used for marketing packaged tea are inputs used in the course or furtherance of business and are eligible for input tax credit. Their exclusion merely because bulk tea and packaged tea attract the same rate would be contrary to the statutory scheme. [Paras 9, 11, 15]

The accumulated credit attributable to eligible packing materials was refundable under the inverted duty structure provision, and the refund sanction was sustained.

Inapplicability of rate-reduction circular - Applicability of Circular No. 135/5/2020-GST to the refund claim for packaged tea - HELD THAT: - The circular concerns accumulation of credit caused by a reduction in the GST rate on the same goods at different points of time. Since bulk tea and packaged tea attracted the same rate and the accumulation arose from higher-taxed packing materials, the circular did not apply. Further, a circular issued for uniform implementation cannot curtail a refund otherwise available under the statute.

The argument of the Revenue that in view of Circular No. 135/5/2020, the respondent is not entitled for the refund claim has no force as the Hon’ble High Court of Delhi in the case of M/s. Indian Oil Corporation Limited[2023 (12) TMI 361 - DELHI HIGH COURT] [Paras 13, 14, 15]

The Revenue's reliance on the circular was misplaced and did not disentitle the respondent to refund.

Final Conclusion: The Revenue's appeal was dismissed, and the order sustaining refund of accumulated input tax credit was upheld. The parties were directed to bear their own costs.

Refund of unutilised input tax credit under inverted duty structure - Scope of circulars governing refund of accumulated input tax credit

Refund of unutilised input tax credit under inverted duty structure - Packing materials as inputs for packaged tea - Entitlement to refund of accumulated input tax credit on packaging materials used for supplying packaged tea, where bulk tea and packaged tea attracted the same rate of tax - HELD THAT: - Section 54(3)(ii) employs the expression "inputs" in the plural and draws no distinction between principal and ancillary inputs. Packing materials, labels, cartons and plastic containers, being used in the course or furtherance of business for marketing packaged tea, qualify as inputs; their eligibility for input tax credit was also recognised in the applicable circular. Comparing only bulk tea with packaged tea while disregarding packing materials was therefore held factually incorrect. See INDIAN OIL CORPORATION LIMITED [2023 (12) TMI 361 - DELHI HIGH COURT[Paras 9, 11, 15]

The respondent was entitled to refund of the accumulated input tax credit under the inverted duty structure.

Applicability of Circular No. 135/5/2020-GST - Administrative circulars cannot curtail statutory refund entitlement - Applicability of Circular No. 135/5/2020-GST to a refund claim concerning packaged tea supplied at the same rate as bulk tea - HELD THAT: - Paragraph 3 of the circular concerns accumulation of input tax credit resulting from reduction of the GST rate on the same goods at different points of time. As bulk tea and packaged tea attracted the same rate, the case did not fall within that clarification. Further, a circular issued for uniform implementation cannot add to or curtail the statutory entitlement to refund. [Paras 13, 14, 15]

The Revenue's reliance on the circular was misplaced and could not defeat the refund claim.

Final Conclusion: The Revenue's appeal was dismissed, and the order allowing refund of accumulated input tax credit was sustained.

Input tax credit denial on GSTR-2A/GSTR-3B mismatch - Demand beyond scope of show-cause notice - Reasoned quasi-judicial order - Temporal application of ITC verification Circulars

Input tax credit denial on GSTR-2A/GSTR-3B mismatch - Supplier-tax-payment condition for input tax credit - Denial of input tax credit solely on the difference between FORM GSTR-2A and FORM GSTR-3B for the relevant period - HELD THAT: - A GSTR-2A/GSTR-3B mismatch may warrant scrutiny and verification, but cannot by itself conclusively establish wrongful availment of input tax credit or breach of the condition that tax on the supply has been paid to the Government. Eligibility requires examination of the underlying transactions, reconciliation, invoices and relevant records. Section 16(2)(aa) was not applicable to the period in dispute; Rule 36(4) had to be applied only as operative during the respective portions of that period. [Paras 16]

The alleged breach of the input tax credit conditions was not established on the existing record and requires fresh verification.

Demand beyond scope of show-cause notice - Reasoned quasi-judicial order - Sustainability of the CGST and SGST demand founded on a computation not reconciled with the primary reconciliation and not proposed in the show-cause notice - HELD THAT: - The proceedings were initiated on an IGST discrepancy, whereas the final demand was confirmed under CGST and SGST on the basis of a separate working. The authorities did not explain the source of that working, the departure from the primary reconciliation, or the attribution of CGST and SGST figures to the appellant's reply when that reply was confined to IGST. The appellate order also failed to address these material inconsistencies. A demand cannot be confirmed on grounds or under heads not specified in the notice, and the order must disclose the factual and legal basis of its computation. [Paras 16]

The impugned orders were set aside and the matter remanded for fresh, reasoned adjudication confined strictly to the show-cause notice, without expansion or enhancement of the demand; consequential interest and penalty shall abide by the fresh determination.

Temporal application of ITC verification Circulars - Application of the CBIC verification Circulars to input tax credit mismatch for the relevant period - HELD THAT: - The verification mechanism under the Circulars applied only to the period from April 2019 to 8th October 2019. The period from 9th October 2019 to March 2020 could not be brought within that mechanism merely because the dispute covered the financial year as a whole. Non-production of the prescribed certificates may be relevant to verification where the Circulars apply, but does not dispense with determination of liability under the substantive provisions applicable to each period. [Paras 16]

The two periods require separate examination in the fresh adjudication.

Final Conclusion: The appeal was disposed of by setting aside the impugned orders and remanding the matter for fresh adjudication within the confines of the show-cause notice. The admissibility of the disputed input tax credit was left open.

Reference to Valuation Officer u/s 142A - colourable exercise to extend assessment limitation

Validity of the reference for valuation of the company's fixed assets made immediately before expiry of the assessment limitation period - HELD THAT: - The reference was not warranted for examining the alleged bogus depreciation claim, since such claim could be disallowed in accordance with law without obtaining a valuation. Nor did the record disclose a genuine valuation requirement concerning the alleged unaccounted payments: the material and the company's explanation regarding the assets were already available, the subsequent show-cause notices did not raise valuation of assets, and the Revenue offered no satisfactory explanation for its inaction. The reference was therefore an artificial cause created to invoke the exclusion of time under Explanation 1(v) to section 153 and to keep the assessment alive. [Paras 23, 25, 26, 27, 28]

The reference to the District Valuation Officer was held to be a colourable and illegal exercise of power and was quashed.

Final Conclusion: The writ petition was allowed and the impugned valuation reference was quashed as an impermissible device to extend the time for completion of assessment.

Reassessment on incriminating material found in search - Assessment of other person u/s 153C - Inapplicability of reassessment notice to pre-March 2021 search

Assessment u/s 147 v/s 153C - Validity of reopening under Sections 147/148 on the basis of incriminating material found during a search of another person - HELD THAT: - Where reassessment of an other person is founded on incriminating material found in a search, the jurisdictional Assessing Officer can proceed only under Section 153C after recording the requisite satisfaction; recourse to Sections 147/148 is unavailable on the basis of such search material. [Paras 7]

The reopening under Sections 147/148 founded on the search material was held impermissible.

Inapplicability of reassessment notice to pre-March 2021 search - Applicability of Section 148 where the underlying search was initiated before 31.03.2021 - HELD THAT: - By virtue of the second proviso to Section 149, the reassessment-notice provisions do not apply where notice under Section 153A or Section 153C is required in relation to a search initiated on or before 31.03.2021. [Paras 9]

The notice under Section 148 and the order under Section 148A(d) were quashed.

Final Conclusion: The writ petition was allowed and the impugned reassessment notice and order were quashed, as the Revenue could not invoke Sections 147/148 on the basis of material found in the pre-March 2021 search.

Writ jurisdiction despite alternative remedy - Failure to consider relevant material in assessment - Assessment of postgraduate student's stipend as salary - Failure to consider relevant material

Whether relegation to the alternative statutory remedy was justified where the assessment treated payments received by a postgraduate medical student as salary without considering material supporting the claim that they were exempt stipend? - HELD THAT: - Though an efficacious alternative remedy ordinarily renders a writ petition untenable, an exception applies where the impugned order has been issued without adverting to relevant facts and law. The assessment proceeded solely on communications received from the University, without considering the material relied on by the assessee, including the certificate of postgraduate student status and the Government Order concerning admission to the course.

Since the assessment did not address the asserted exemption of stipend paid to a student and the character of the receipt required factual establishment, the assessee was entitled to an opportunity to produce relevant material before a conclusive assessment was made. [Paras 5, 6, 8, 9, 10]

The impugned judgment and assessment order were set aside, and the Assessing Officer was directed to reconsider the matter after affording the assessee an opportunity to produce necessary documents and inputs; the merits of the rival contentions were left open.

Final Conclusion: The appeal was allowed and the assessment was remitted for fresh consideration after due opportunity to the assessee, without any adjudication on the merits of the character or taxability of the receipt.

Scrutiny assessment on revised return - Weighted deduction for approved in-house research and development facility - Disallowance of expenditure relating to exempt income - Minimum alternate tax adjustment for exempt-income expenditure

Scrutiny assessment on revised return - Mandatory notice under section 143(2) - Jurisdictional defect - Validity of scrutiny assessments where the statutory notice preceded the operative revised return - HELD THAT: - A valid revised return substitutes the original return and becomes the operative return for assessment. Notice under section 143(2) is a mandatory jurisdictional requirement for scrutiny of that return.

As decided in LIC Mutual Fund Asset Management Ltd. [2024 (2) TMI 1682 - ITAT MUMBAI] notice is specific to the return, that the revised return substitutes the original, and that non-issuance of notice with reference to the revised return, is an incurable jurisdictional defect.

The Hon’ble Supreme Court in ACIT v. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] has held that issuance of notice u/s. 143(2) is mandatory, where the Assessing Officer proceeds to scrutinize the return of income. The requirement is not a mere procedural formality but a statutory condition governing assumption of jurisdiction for scrutiny assessment.

Where the assessments were completed after taking cognizance of revised returns but no fresh notice had been issued thereafter, participation by the assessee could not confer jurisdiction and section 292BB could not cure the complete absence of notice. [Paras 11, 17, 19, 20]

The assessments for A.Ys. 2012-13, 2014-15 and 2015-16 were held to be without jurisdiction and were quashed.

Depreciation on trademark - Opening block of intangible assets - Depreciation on the CEAT trademark forming part of the opening block of intangible assets for A.Y. 2012-13 - HELD THAT: - the acquisition and ownership of the very same trademark under the very same agreement already stood accepted in A.Y. 2011-12 [2019 (3) TMI 2114 - ITAT MUMBAI] No distinguishing fact, alteration in the agreement or subsequent event having the effect of divesting the Assessee of ownership has been brought to our notice for A.Y. 2012-13. Once the trademark stood acquired and depreciation thereon was allowed in the preceding year, it necessarily formed part of the opening block of intangible assets for the year under consideration.

Under the trademark assignment agreement, the transferor's limited post-assignment use was expressly as licensee of the assessee and therefore presupposed the assessee's ownership from the effective date. Ownership and depreciation on the same trademark had already been accepted in the preceding year. The restriction applicable where an asset is first acquired and used for less than 180 days could not be reapplied to an asset forming part of the opening written-down value in the subsequent year. [Paras 33, 36, 37, 38, 39]

As an alternative finding on merits, depreciation at the applicable rate on the opening written-down value of the trademark was allowed.

Nature of expenditure - professional fees for road access - Enduring benefit test - Character of professional fees incurred for facilitating access to an existing factory through a municipal road - HELD THAT: - Merely because the benefit of improved access may continue over a period of time, the expenditure cannot, for that reason alone, be regarded as capital expenditure. What is material, is the character of the advantage in a commercial sense.

The payment neither acquired the road or municipal land nor created an exclusive, transferable or proprietary right in favour of the assessee. Its purpose was to facilitate ingress and egress to the existing factory and improve the efficiency of ongoing business operations. The continuance of that benefit did not by itself render the expenditure capital where no asset or advantage in the capital field was acquired. [Paras 47, 48, 49, 50, 51]

As an alternative finding on merits, the professional fees were held to be revenue expenditure allowable u/s 37(1).

Weighted deduction for in-house research and development expenditure - Pre-amendment Form 3CL requirement - Substantive approval by prescribed authority - Weighted deduction for scientific research expenditure incurred in approved in-house research and development facilities for A.Ys. 2012-13, 2014-15 and 2015-16 - HELD THAT: - The annual quantification of eligible expenditure in Form 3CL, introduced with effect from 01.07.2016, could not be treated as a statutory precondition for the earlier assessment years. Delayed communication or non-production of procedural documentation could not defeat entitlement where substantive approval existed; however, recognition alone could not establish the statutory approval and agreement required for the deduction. Verification was necessary regarding the operative periods of recognition, approval and the statutory agreement, the status of prescribed forms, facility-wise expenditure where relevant, and statutory exclusions. [Paras 85, 86, 87, 88, 89]

The issue was remanded for limited verification and consequential quantification; the Assessing Officer was directed not to apply the post-01.07.2016 annual Form 3CL quantification requirement to these years.

Weighted deduction for in-house research and development expenditure - DSIR quantification in Form 3CL - Weighted deduction on balance research and development expenditure for A.Y. 2016-17 beyond the amount quantified in Form 3CL - HELD THAT: - For the relevant year governed by the pre-amended Rule 6(7A), the subsequently introduced requirement of annual quantification by the prescribed authority could not operate as an absolute ceiling. Since the facility stood recognised and approved and the expenditure had been accepted to the extent of 100 per cent, the balance claim could not be rejected merely because Form 3CL quantified a lower amount. Its eligibility nevertheless required verification as to its actual incurrence on the approved facility and the absence of expenditure falling within statutory exclusions. [Paras 104, 105, 106, 107, 108]

The matter was remanded for limited verification of the balance expenditure, with direction not to restrict the deduction merely to the amount quantified in Form 3CL.

Foreign-exchange fluctuation adjustment - Factual reconciliation - Correctness of the foreign-exchange fluctuation adjustment claimed on the basis of a revised reconciliation - HELD THAT: - The reconciliation furnished before the Tribunal had not been supported by complete details and documentation before the authorities below. The correct adjustment could therefore not be finally determined without verification of the ledger accounts, supporting documents and reconciliation of the return position with the claimed adjustment. [Paras 111, 112, 113, 114]

As an alternative finding on merits, the issue was remanded for limited factual verification and determination of the correct adjustment.

Double taxation of interest income - Pre-operative interest - Taxability of pre-operative interest already offered to tax in an earlier assessment year - HELD THAT: - The appearance of the residual interest amount in a later project-cost reconciliation could not create a second accrual when the entire interest receipt had already been offered to tax in the earlier year. The rule governing the head and year of taxation of interest on temporary deployment of funds did not authorise taxation of the same receipt twice. [Paras 119, 120]

As an alternative finding on merits, deletion of the addition for pre-operative interest was affirmed.

Interest on borrowed capital - Presumption of utilisation of interest-free funds - Disallowance of interest in respect of capital advances where identifiable borrowing cost had already been capitalised - HELD THAT: - A further interest disallowance required a demonstrated nexus between interest-bearing borrowings and non-allowable capital advances. Where mixed funds existed and sufficient interest-free funds were available, the advances could be presumed to have been made from those funds in the absence of contrary cash-flow evidence or a direct nexus. A formula based solely on aggregate figures did not establish such nexus. [Paras 123, 124, 125, 126]

As an alternative finding on merits, deletion of the further interest disallowance was affirmed.

Disallowance of expenditure relating to exempt income - Account-based satisfaction under section 14A - Investments yielding taxable income - Disallowance under section 14A read with Rule 8D in respect of investments yielding exempt and taxable dividend income - HELD THAT: - Resort to Rule 8D is not automatic and requires an objective, account-based satisfaction that the assessee's claim regarding exempt-income expenditure is incorrect. Availability of sufficient own funds raises a presumption that the relevant investments were made from such funds unless a nexus with borrowings is established. Investments yielding taxable foreign dividend cannot be included in the Rule 8D computation. The Finance Act, 2022 Explanation to section 14A, being operative from A.Y. 2022-23, could not govern A.Y. 2016-17. [Paras 152, 153, 154, 155, 156]

The deletions of the disallowances were affirmed; the findings for A.Ys. 2012-13 and 2015-16 operate alternatively, while the Revenue's challenge for A.Y. 2016-17 was dismissed on merits.

Minimum alternate tax adjustment for exempt-income expenditure - Self-contained code under section 115JB - Addition to book profit of the disallowance computed under section 14A read with Rule 8D - HELD THAT: - Section 115JB is a self-contained computational code. Clause (f) of Explanation 1 permits addition only of expenditure relating to exempt income actually debited to the profit-and-loss account and does not import the section 14A and Rule 8D computation. A notional Rule 8D figure could not automatically be added where no further debited expenditure relatable to exempt income was identified. [Paras 160, 161, 162, 163]

The deletion of the book-profit adjustments was affirmed, subject to the assessments for A.Ys. 2012-13 and 2015-16 having been quashed on the jurisdictional issue.

Consequential depreciation - Opening written-down value - Depreciation on a building asset where the qualifying cost and opening written-down value depended on the preceding assessment year - HELD THAT: - The disallowance was made solely as a consequence of the finding for the preceding year and without any independent basis peculiar to the year in question. The depreciation claim had consequently to follow the final determination of the qualifying cost and opening written-down value in that preceding year. [Paras 167]

As an alternative finding on merits, the Assessing Officer was directed to recompute and allow consequential depreciation after verification.

Final Conclusion: The assessments for A.Ys. 2012-13, 2014-15 and 2015-16 were quashed for want of a notice under section 143(2) on the operative revised returns. The assessee's A.Y. 2016-17 research and development claim was remanded for limited verification, while the Revenue's A.Y. 2016-17 appeal was dismissed on merits; the alternative findings on merits operate as stated.

Unexplained money u/s 69A - Ownership requirement for unexplained-money addition - Third-party loose documents and corroborative evidence - Cross-examination of third-party witnesses - unexplained money based on alleged over-invoicing and cash kickbacks reflected in documents seized from a customer - HELD THAT: - It is a well-settled proposition of law that loose sheets, rough diaries and digital excel entries recovered from third-party premises do not constitute conclusive evidence against an assessee in the absence of independent corroborative evidence.

Hon'ble Supreme Court in the case of CBI vs. V.C. Shukla [1998 (3) TMI 675 - SUPREME COURT] held that entries in third-party documents/scribblings cannot form the sole basis of making additions unless backed by tangible corroborative material proving actual flow of unaccounted funds. Here,AO failed to conduct any independent inquiry or verify the assessee's production, stock, or regular books of accounts, which stand fully audited and un-rejected under section 145(3).

Section 69A, being a deeming provision, requires proof that the assessee was the owner of money or other valuable article not recorded in its books. No search was conducted on the assessee, nor was any unexplained money, asset, or money trail linking it with the alleged kickbacks established. The allegation that the assessee returned cash to the customer could not establish ownership of that money by the assessee. Further, third-party diaries, loose sheets and digital entries, unsupported by independent corroboration, could not solely sustain the addition; the statements of the customer's officials were also relied upon without affording cross-examination. [Paras 5, 6, 7]

The conditions for invoking section 69A were not satisfied; the addition was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition under section 69A was deleted.

Territorial jurisdiction of Income-tax Appellate Tribunal - Ordinary jurisdiction determined by location of Assessing Officer

Maintainability of the Revenue's appeal and the assessee's cross-objection before the Mumbai Bench when the assessment order was passed by an Assessing Officer situated at Chennai - HELD THAT: - As decided in MSPL Ltd. [2021 (5) TMI 739 - BOMBAY HIGH COURT] after examining section 255 of the Act and the relevant provisions of the Income Tax Appellate Tribunal Rules held that the power of the President under section 255(5) of the Act to regulate the procedure of the Tribunal and its various Benches could not be construed as conferring a power to transfer a pending appeal from one Bench to another Bench situated in a different State. The Hon’ble Court also considered Rules 4, 13 and 28 of the ITAT Rules and observed that the ordinary jurisdiction of the Bench is determined by the location of the office of ld. Assessing Officer.

The ordinary territorial jurisdiction of a Bench is determined by the location of the Assessing Officer who passed the assessment order from which the appeal arises, and not by the location of the assessee or of the Commissioner (Appeals) passing the impugned order. Since the assessment order was passed by the Assessing Officer at Chennai, the Mumbai Bench lacked territorial jurisdiction; the cross-objection arising from the same assessment proceedings could likewise not be adjudicated by that Bench. [Paras 5, 6, 7, 8, 9]

The Revenue's appeal and the assessee's cross-objection were dismissed for want of territorial jurisdiction, with liberty to approach the appropriate Bench; all merits issues were left open.

Final Conclusion: The appeal and cross-objection were dismissed for want of territorial jurisdiction, subject to liberty to pursue the matter before the appropriate Bench. The merits of the respective grounds remain open.

Addition u/s 56(2)(x) - difference between the stamp-duty value of land and its agreed purchase consideration - land was converted from agricultural to non-agricultural use after the agreement to sell and the conversion expenses were borne by the purchaser

HELD THAT: - The presumption arising from stamp duty value under section 56(2)(x), like that under section 50C, is rebuttable and may be displaced by reliable evidence apart from a valuation reference. The agreement for purchase preceded the conversion; the purchaser bore the conversion expenses, and the sale was completed on the original agreed consideration despite reduction of the land area upon conversion. The higher stamp duty value resulted from the land's changed revenue character, without evidence of market-value appreciation or payment of consideration beyond that recorded in the sale deed. Thus, the purchaser established that it had not received property for inadequate consideration. [Paras 6, 7]

The invocation of section 56(2)(x) was unjustified and the addition was deleted.

Final Conclusion: The assessee's appeal was allowed and the addition under section 56(2)(x) was deleted.

Upward adjustment u/s. 92CA(4) rectified and reduced to “NIL” - HELD THAT:- A perusal of the records before us reveals that the grievance of the assessee is settled and therefore the grounds of appeal do not survive for any kind of adjudication. However, at this stage we would like to accede to the request of the Ld. AR to direct the Ld. AO to give effect to the rectification order passed by him.

Transfer of assessment case by incompetent authority - Jurisdictional validity of assessment - Consequential penalty on quashed assessment

Validity of the assessment completed by the transferee Assessing Officer following transfer of the case by the Joint Commissioner without affording the assessee an opportunity of hearing, and the consequential penalty for furnishing inaccurate particulars of income. - HELD THAT: - The Joint Commissioner had no power to transfer the case under section 127. Further, the record did not show that the assessee had been afforded an opportunity before the transfer from one Assessing Officer to another. Participation in the assessment proceedings and absence of an objection within thirty days could not validate a transfer made by an authority lacking statutory power. The assessment completed by the transferee Assessing Officer was therefore without jurisdiction; the penalty, being founded on that assessment, could not survive. [Paras 10]

The assessment order was quashed as non est, and the consequential penalty order was also held non est.

Final Conclusion: Both appeals were allowed. The jurisdictionally invalid assessment and the penalty consequential thereto were quashed.

Corpus exemption for infrastructure grants - Accumulation under section 11(2) - delayed Form No. 10 - Natural justice - addition without show-cause notice - Statutory 15% accumulation of charitable income - Charitable purpose - State cricket association activities

Corpus exemption for infrastructure grants - Eligibility of BCCI infrastructure grants for corpus exemption under section 11(1)(d) - HELD THAT: - The BCCI resolutions specifically earmarked the grants for infrastructure subsidy, and the amounts were credited to the corpus/infrastructure fund and deployed for construction of a cricket stadium. A specific direction for corpus purposes need not be issued in a separate written declaration for each contribution; the donor's intention may be established from its resolutions and the treatment and use of the funds. [Paras 12, 15, 16, 29]

The infrastructure grants were held to be corpus donations eligible for exemption under section 11(1)(d), and the related additions were directed to be deleted.

Accumulation under section 11(2) - delayed Form No. 10 - Denial of accumulation under section 11(2) because of delayed filing of Form No. 10 - HELD THAT: - The assessee had sought condonation before completion of assessment, while the beneficial CBDT circular extending condonation relief for the relevant assessment year was issued after the assessment had concluded. The benefit of accumulation could not be denied merely because of the timing of filing the form. [Paras 18]

The denial of accumulation under section 11(2) was set aside, and the Assessing Officer was directed to allow the accumulation in accordance with law.

Addition for alleged double claim of application of charitable income without a show-cause notice - denial of natural justice - HELD THAT: - The Assessing Officer made the addition without incorporating the issue in the show-cause notice or affording the assessee an opportunity to respond. This was held to violate the principles of natural justice and the mandatory procedure for issuing a show-cause notice. [Paras 20]

The addition was deleted.

Statutory 15% accumulation of charitable income - Allowance of the automatic statutory accumulation u/s 11(1)(a) - HELD THAT: - The statutory accumulation of 15% of income available for charitable purposes is automatic and unconditional, and does not require filing of Form No. 10 or fulfilment of the conditions governing accumulation under section 11(2). The Assessing Officer's computation showing such accumulation as nil was contrary to section 11(1)(a). [Paras 21]

The assessee was held entitled to the statutory 15% accumulation, subject to verification of the computation by the Assessing Officer.

Charitable purpose - State cricket association activities - Applicability of the commercial-activity proviso to a State cricket association receiving BCCI funds - HELD THAT: - The revenue-sharing arrangement concerning media rights and IPL matches in Punjab Cricket Association v. ACIT [2019 (9) TMI 681 - ITAT CHANDIGARH] was materially distinguishable. No comparable commercial activity, organisation or hosting of commercial cricket matches, or operation of an international-standard stadium was established in the present case; hence, there was no factual basis to characterise the assessee's activities as trade, commerce or business. [Paras 22]

The first proviso to section 2(15) and section 13(8) were held inapplicable.

Depreciation as application of charitable income - Disallowance of depreciation as application of charitable income - HELD THAT: - The return reflected nil application towards acquisition of capital assets, and no material established that the cost of the relevant assets had previously been claimed as application of income. The disallowance was also inconsistent with the treatment in the assessee's earlier years. [Paras 22]

The disallowance of depreciation was held unsustainable; in any event, it stood covered by the statutory accumulation.

Section 13 addition - unspecified prohibited benefit - Addition under section 13 without identification of the alleged violation or prohibited benefit - HELD THAT: - The Assessing Officer did not record a specific finding identifying the provision violated, the specified person involved, or the nature of the prohibited benefit. The amount was also covered by the statutory 15% accumulation. [Paras 22]

The addition was held not liable to result in any further addition to total income.

Cricket association receipts - unsubstantiated enhancement - Enhancement of gross receipts without discrepancy in the books, audited financial statements or return - HELD THAT: - No discrepancy in the books of account, audited financial statements or return of income, and no cogent basis for enhancement, was recorded. The enhanced amount was also covered by the statutory 15% accumulation. [Paras 22]

The enhancement of gross receipts was deleted.

Final Conclusion: Both appeals were allowed, with corpus exemption and statutory accumulation granted, the impugned additions deleted or rendered tax-neutral as stated, and recomputation directed in accordance with law.

Under-reporting vis-a -vis misreporting of income - Penalty u/s 270A(7) for omission of interest income

Penalty u/s 270A(7) - Whether the omission of interest income constituted under-reporting simpliciter or under-reporting in consequence of misreporting? - HELD THAT: - Section 270A distinguishes under-reporting, penalised at 50%, from under-reporting in consequence of misreporting, penalised at 200%; the enhanced penalty requires facts establishing a specified circumstance of misreporting. Though the omitted interest income resulted in under-reporting, the assessee's non-resident status, entrustment of tax compliance to an accountant, limited technological knowledge and subsequent payment of tax and interest did not establish the factual ingredients for the more stringent charge. Detection by the Department and non-response to notices could not, without more, justify treating the omission as deliberate misreporting. [Paras 18, 19, 20, 21, 22]

The penalty was sustained for under-reporting of income but restricted to 50% of the tax payable on such income, with consequential recomputation.

Opportunity of hearing in reassessment proceedings - Denial of opportunity of hearing in reassessment proceedings - HELD THAT: - The record disclosed that statutory notices and show-cause notices were issued during reassessment proceedings, and opportunities were also granted in the penalty proceedings, in which the assessee furnished replies. Failure to avail the opportunities granted could not be equated with denial of opportunity. [Paras 23]

The challenge based on denial of opportunity was rejected.

Final Conclusion: The appeal was partly allowed. The enhanced penalty for misreporting was reduced to the penalty applicable to under-reporting, while the challenge alleging denial of opportunity was rejected.

Penalty u/s 271 (1)(c) for furnishing inaccurate particulars - bona fide legal claim - Slump-sale capital gains - treatment of negative net worth

Levy of penalty for the assessee's computation of capital gains on slump sale by treating the undertaking's negative net worth as nil - HELD THAT: - The assessee had disclosed the slump-sale transaction, consideration and negative net worth; the dispute concerned only the legal treatment of negative net worth in computing capital gains. Divergent Tribunal views and the admission of a substantial question of law by the jurisdictional High Court showed that the issue was genuinely debatable.

The Hon'ble Supreme Court in CIT v. Reliance Petroproducts (P.) Ltd., . [2010 (3) TMI 80 - SUPREME COURT] has held that a mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of income. The principle is particularly apposite where the material facts have been fully disclosed and the controversy concerns the legal interpretation of a statutory provision.

A disclosed claim founded on a legal interpretation cannot be treated as furnishing inaccurate particulars merely because the quantum addition was sustained or the corresponding quantum ground was not pressed. [Paras 6]

Penalty under section 271(1)(c) was not leviable, and deletion of the penalty was upheld.

Final Conclusion: The Revenue's appeal was dismissed and the deletion of penalty under section 271(1)(c) was sustained.

Associated enterprises u/s 92A - Associated-enterprise relationship based on business dependence - Selection of foreign associated enterprise as tested party - Characterisation of regulatory affairs services as KPO services - Comparability analysis for domain-specific regulatory affairs services

Associated-enterprise relationship based on business dependence - Existence of an associated-enterprise relationship between the assessee and its United States counterparty in respect of regulatory affairs and compliance support services - HELD THAT: - The counterparty's business was found to be fully dependent upon the regulatory affairs and regulatory-compliance processes carried out by the assessee. The relationship consequently fell within section 92A(2)(g); the assessee had also accepted the relationship in its transfer-pricing study documentation and Form 3CEB. [Paras 15]

The challenge to the associated-enterprise relationship was rejected.

Selection of foreign associated enterprise as tested party - Availability of reliable foreign comparable data - Selection of the foreign associated enterprise, rather than the assessee, as the tested party for benchmarking the regulatory affairs services transaction - HELD THAT: - Although the least-complex-entity principle was recognised, the foreign tested party and all comparables selected by the assessee were tax residents outside India, and reliable data concerning those comparables was not shown to be readily accessible. Selection of a foreign associated enterprise and foreign comparables in those circumstances was held inappropriate, having regard also to differing geographical and economic circumstances. [Paras 16, 17]

The assessee's selection of the foreign associated enterprise as tested party was rejected, and the selection of the assessee as tested party was upheld.

Characterisation of regulatory affairs services as KPO services - Comparable selection for domain-specific regulatory affairs services - Characterisation of domain-specific regulatory affairs and compliance services as KPO services and selection of comparables undertaking diverse activities. - HELD THAT: - Regulatory affairs services, comprising regulatory compliance, product filing, labelling, artwork information and product compliance management, were not specifically included in the exhaustive definition of KPO services under Rule 10TA(g). Companies engaged in R&D, engineering, IT and ITeS, advertising and gaming could not be selected by isolating descriptions from their annual reports and treating them as comparable KPO service providers. [Paras 18, 19]

The KPO characterisation and the comparable selection were set aside, and the matter was remanded to the Assessing Officer/TPO for fresh benchmarking and selection of appropriate comparables consistent with the assessee's FAR profile after granting opportunity of hearing.

Final Conclusion: The appeal was allowed for statistical purposes. The associated-enterprise relationship and selection of the assessee as tested party were sustained, while the transfer-pricing benchmarking and comparable selection were remanded for fresh consideration.

Unexplained money - trade discounts received by milk resale agent

Whether the trade and quantity discounts received by a resale agent of a dairy could be treated as unexplained money and subjected to an estimated addition? - HELD THAT: - The bank statements established that the assessee operated a joint account with the dairy, into which sale proceeds of milk, curd and related products were deposited and withdrawn by the dairy on the same day. The trade discounts received from the dairy constituted the assessee's explained source of income as resale agent and could not be treated as unexplained money. The estimation of profit at 70 per cent of the total discount, after allowing only 30 per cent towards storage and distribution expenses, was held to be based on an incorrect proposition. [Paras 7]

The addition sustained by the appellate authority was deleted and the appeal was allowed.

Final Conclusion: The addition made as unexplained money in respect of the discounts received by the milk resale agent was deleted. The assessee's appeal was allowed.

Unverified purchases - non-response to verification notices - Unexplained expenditure - source of expenditure

Addition as unexplained expenditure in respect of purchases from suppliers who did not respond to verification notices, where the difference with GST data was reconciled as arising from GST-inclusive book figures and GST-exclusive GST figures - HELD THAT: - Non-response by suppliers to notices cannot, by itself, justify an adverse inference where the assessee has discharged the primary burden through purchase invoices, banking-channel payments, confirmations, transport documents, e-way bills and other supporting material. The reconciliation of the GST difference was neither examined nor rebutted. Further, unexplained-expenditure provisions apply where the source of expenditure is unexplained; since the source and payments were not disputed, their invocation lacked foundation. [Paras 7]

The deletion of the addition was upheld.

Final Conclusion: The Revenue's appeal was dismissed and the deletion of the addition was sustained.

Reverse burden of proof for seized foreign-marked gold - Reasonable belief of smuggling for silver bullion - Confiscation of cash as sale proceeds of smuggled goods

Reverse burden of proof for seized foreign-marked gold - Perverse appreciation of evidence - Discharge of the statutory burden in respect of gold bars seized with foreign markings - HELD THAT: - Once the conditions for invoking Section 123 were satisfied, the burden lay on the persons from whom the gold was seized and the claimant-owner to establish lawful acquisition. That burden requires specific, relevant, credible and traceable material establishing a nexus with the particular seized articles; production of documents relating generally to business activity is insufficient. The invoices and records relied upon did not correspond to the seized bars, did not explain their foreign markings, and were inconsistent with the accounts of the claimant, the carriers and the refiner. The appellate authorities disregarded these material circumstances and treated the mere production of GST invoices as discharging the statutory burden, thereby committing a patent error and rendering their findings perverse. [Paras 27, 32, 34, 35, 36]

The findings of the Commissioner (Appeals) and the Tribunal concerning the gold bars were set aside, and confiscation of the gold bars was held justified.

Reasonable belief of smuggling for silver bullion - Applicability of the reverse burden under Section 123 to silver bullion seized from residential and business premises - HELD THAT: - The initial requirement of reasonable belief that the silver was smuggled had not been established. The silver was neither intercepted during clandestine transportation nor linked by carrier statements to smuggling, and it bore no foreign markings. A discrepancy between physical stock and the stock ledger, without a demonstrated nexus between the silver and smuggling, could not shift the burden under Section 123 to the claimant. [Paras 37, 38, 39, 40]

The burden under Section 123 did not shift in respect of the silver, and the setting aside of its confiscation was sustained.

Confiscation of cash as sale proceeds of smuggled goods - Confiscation of Indian currency on the allegation that it represented sale proceeds of smuggled gold and silver - HELD THAT: - Indian currency was not a notified item under Section 123. Its confiscation as sale proceeds of smuggled goods required cogent material linking it to such sale proceeds; suspicion based on the owner's antecedents was insufficient. The cash was not recovered in any clandestine manner and no evidence established the asserted nexus. [Paras 41]

The setting aside of confiscation of the cash was upheld.

Penalty for carriage and ownership of smuggled gold - Quantum of penalties after confiscation was sustained only in respect of the gold bars - HELD THAT: - As confiscation was upheld only in relation to the gold bars and not the silver or cash, the penalties imposed on the owner and the carriers required corresponding reduction. [Paras 43]

The penalties were reduced to 50 per cent.

Final Conclusion: The appeals were partly allowed. The order of confiscation of the gold bars was restored, while the relief granted in respect of the silver bullion and cash was maintained; the penalties were reduced to 50 per cent.

Writ jurisdiction in disputed questions of fact concerning Customs detention and notice - receipt of an oral Show Cause Notice - non-compliance with Sections 110(2) and 124 of the Customs Act, 1962

Whether a mandamus for release of detained gold could be granted on the alleged non-compliance with Sections 110(2) and 124 of the Customs Act, 1962, where the material record contained the passenger's signed statement and subsequent written acknowledgement of an oral show cause notice? - HELD THAT: - Although the statutory safeguards governing notice and release of seized goods must be observed and a mechanical pre-printed waiver cannot by itself establish compliance, the contemporaneous record included the petitioner's signed statement and subsequent written acknowledgment that an oral show cause notice had been received. The later allegations that the goods had been declared, and that the signed documents were coerced or fabricated, raised disputed factual questions requiring evidentiary appreciation. A writ court cannot grant mandamus by accepting that disputed version while disregarding contemporaneous documents bearing the petitioner's signatures. [Paras 25, 26, 32, 34]

No undisputed statutory violation warranting release of the goods was established; the petition was dismissed without adjudicating the ultimate question of confiscation or penalty.

Final Conclusion: The petition seeking release of the detained gold bars was dismissed, the alleged statutory breach depending upon disputed facts unsuitable for determination in writ jurisdiction. Remedies before the competent Customs authority or other appropriate forum were kept open.

Alternative remedy in baggage confiscation matters - Disputed questions of fact in writ jurisdiction - Exercise of writ jurisdiction against confiscation of a gold bar and consequential penalty, where the alleged waiver of written notice, oral notice and voluntariness of contemporaneous documents were disputed

HELD THAT: - Though availability of an alternative remedy does not absolutely bar writ jurisdiction where natural justice or jurisdictional defects are alleged, the controversy required examination of disputed facts concerning the alleged statement, request for oral notice, oral notice itself and subsequent communication. As a revisionary remedy is specifically available for baggage matters, those factual and legal questions were held appropriate for examination in the statutory revision; no opinion was expressed on the merits of confiscation, penalty or compliance with the procedural safeguards. [Paras 23, 24, 26, 32, 33]

The petition was not entertained, leaving all merits open for consideration in revision.

Final Conclusion: The petition was dismissed with liberty to pursue the statutory revision against the appellate order. The revisional authority was directed not to reject a revision filed within the stipulated period merely because the petitioner had approached the Court.

Provisional release of seized warp knitted fabrics - security conditions - Failure to adjudicate appeal on merits - Disposal of an appeal challenging the security demanded for provisional release of seized warp knitted fabrics merely because the goods were released upon provisional compliance with the conditions imposed

HELD THAT: - The discretion to require security for provisional release cannot be governed by a straight-jacket formula. Where imported goods are not prohibited and the dispute concerns their classification, security may be required proportionately to the disputed duty, subject to the facts of each case. The Tribunal was required to determine the challenge to the amount and form of security on its merits, including upon consideration of the test report relevant to the classification dispute; provisional compliance by the assessee to secure release of the goods could not render that challenge infructuous. The Court did not decide the classification dispute or the appropriate security on merits. [Paras 16, 17, 18, 19, 20]

The Tribunal's order was set aside and the matter was remanded for fresh adjudication after perusing the test report, without treating the provisional release of goods as a ground to decline adjudication of the appeal.

Final Conclusion: The appeal was allowed, the Tribunal's order was set aside, and the matter was remanded for a fresh decision on the challenge to the security conditions for provisional release.

Refund claim for excess export duty as barred by limitation - Limitation for export-duty refund following reassessment of steel-slab shipping bills - Interest on delayed customs-duty refund

Refund limitation after reassessment of export shipping bills - Excess export duty on steel slabs - Limitation for refund of excess export duty paid on steel-slab shipping bills following reassessment - HELD THAT: - A refund claim founded on an alleged mistake of law could not bypass the statutory refund limitation through general limitation law or Article 265. However, while the Let Export Order established assessment of the EDI-generated cum-duty liability, the additional amount paid by challan was not reflected in the shipping bills, Let Export Orders, or any contemporaneous assessment record. The departmental Note, issued pursuant to the remand and recomputing the duty in accordance with the Circular, constituted a reassessment; as assessment includes reassessment, the excess payment became ascertainable only upon that reassessment. The earlier refund application, read with the pending request for correction, could therefore not be treated as time-barred. [Paras 15, 16, 18]

The refund claim was held to be within time, and the original order sanctioning refund was restored.

Interest on delayed customs-duty refund - Commencement of interest on refund of excess export duty where the refundable excess was ascertained only on reassessment - HELD THAT: - Interest on delayed refund ordinarily runs after expiry of three months from receipt of the refund application. But where the claim was filed before the excess payment was ascertained and the cause of action arose only on reassessment, interest cannot run from the earlier application date. Applying the same reassessment date for limitation and interest avoided treating the claim as both premature and overdue. [Paras 19, 20, 21]

Interest was held payable from the day following expiry of three months from the reassessment date until actual refund, at the notified rate.

Final Conclusion: The impugned order was set aside, the refund sanction was restored, and interest was directed to be paid from the day following expiry of three months from reassessment until actual refund.

Personal penalty for participation in smuggling of prohibited goods - Jurisdiction of Directorate of Revenue Intelligence officers to issue show cause notice for customs-duty recovery

Personal penalty for participation in smuggling of prohibited goods - Personal penalties imposed on the appellant for conspiracy in the clearance of containers concealing prohibited R-22 gas - HELD THAT: - The Tribunal noted its earlier finding that the appellant and the customs broker had conspired with the de facto importers to clear the contraband and had admitted their agreement to do so for monetary consideration. Such participation established the appellant's serious role in the smuggling of prohibited R-22 gas. [Paras 6, 7]

The personal penalties imposed on the appellant were upheld.

Jurisdiction of Directorate of Revenue Intelligence officers to issue show cause notice for customs-duty recovery - Jurisdiction of Directorate of Revenue Intelligence officers to issue the show cause notice for customs-duty recovery - HELD THAT: - The Tribunal applied the reviewed position that Directorate of Revenue Intelligence officers, when appointed as customs officers and assigned the functions of a proper officer, are competent to issue show cause notices for recovery under section 28 of the Customs Act. Assessment and recovery of short-paid duty are distinct statutory functions; hence, the earlier contrary view did not invalidate the notice. [Paras 6, 7]

The jurisdictional objection to the show cause notice was rejected.

Final Conclusion: The appeal was dismissed. The appellant's personal penalties were sustained and the challenge to the jurisdiction of the Directorate of Revenue Intelligence to issue the show cause notice failed.

Invoking of Extended limitation - suppression and prior departmental knowledge - Classification of woven warp cut-pile fabrics - Alternative exemption claim at adjudication stage - Confiscation and penalty for non-deliberate misclassification

Invoking Extended limitation - suppression and prior departmental knowledge - Invocation of the extended period for duty demand on imports of Article No. 65111 fabrics despite prior departmental test reports and acceptance of the declared classification - HELD THAT: - The Department had itself obtained test reports identifying the composition of identical goods and had nevertheless accepted their classification under CTH 5408, including before the self-assessment regime. In the absence of a deliberate failure to disclose material facts with intent to evade duty, the importer could not be faulted for following the earlier departmental assessment practice. Departmental knowledge of the relevant facts negatived suppression for invoking the extended period. [Paras 5, 8]

The extended-period demand for duty and interest was set aside.

Classification of woven warp cut-pile fabrics - Classification of rayon, polyamide and silk woven warp cut-pile fabrics under CTH 5801 v/s claimed headings for silk or rayon fabrics - HELD THAT: - The Textile Committee reports identified the goods as woven warp cut-pile fabrics. CTH 5801 specifically covers woven pile fabrics and, under the General Rules for Interpretation, prevails over the more general headings claimed by the importer. The essential character of the composite fabrics was that of warp pile fabric; consequently, classification based merely on the predominance of rayon was inapplicable. [Paras 6, 8]

The classification under CTH 5801, as finalised for the seven live Bills of Entry, was upheld.

Alternative exemption claim at adjudication stage - Entitlement to claim alternative CVD and SAD exemptions after reclassification of the imported fabrics, though the notifications had not been claimed at clearance - HELD THAT: - Except in cases of fraud, an assessee is not barred from claiming an exemption notification at a later stage if otherwise entitled to it. A benefit available on fulfilment of the substantive and procedural conditions cannot be denied solely because it was not claimed initially, particularly where the claim arises from a changed classification. As the foundational facts for examining the conditional exemptions had not been properly determined, the claim required adjudication on merits by the Original Authority. [Paras 6, 8]

The alternative exemption claim was remanded, limited to its determination on merits; duty and applicable interest for the normal period were to be determined thereafter.

Confiscation and penalty for non-deliberate misclassification - Liability to confiscation and penalty where the importer adopted a classification previously accepted by the Department despite available test reports - HELD THAT: - Since the Department had accepted the declared classification despite possessing the relevant test reports, no deliberate or blameworthy conduct could be attributed to the importer in adopting that classification. The incorrect classification, in those circumstances, did not justify confiscation or penalties. [Paras 7, 8]

The goods were held not liable to confiscation and the appellants were held not liable to penalty.

Final Conclusion: The extended-period demand, confiscation and penalties were set aside, while the classification of the seven live Bills of Entry under CTH 5801 was sustained. The alternative exemption claim was remanded for fresh determination, with consequential duty and interest, if any, confined to the normal period.

Redemption fine in lieu of confiscation of restricted second-hand goods - Penalty under Section 114AA for import of restricted second-hand goods

Absolute confiscation of the imported Posalux Machine DLR Measuring Unit found to be restricted second-hand goods - HELD THAT: - The examination report and the Chartered Engineer's report established that the imported goods were second-hand parts of capital goods and were consequently restricted under the Foreign Trade Policy. The appellant, having forgone the show-cause notice and personal hearing, could not dispute that position. However, the goods were restricted only, and the appellate authority had assigned no specific reasons warranting absolute confiscation. The precedent concerning imports beyond a licensed quantitative restriction, involving public-interest considerations, was held inapplicable. [Paras 6, 7]

The direction for absolute confiscation was unsustainable; the original authority's order permitting redemption on payment of fine was upheld.

Enhancement of penalty under an inapplicable penal provision - Enhancement of the penalty under Section 114AA when the original authority had imposed penalty under Section 112(a) for import of restricted second-hand goods - HELD THAT: - The penalty imposed by the original authority was under Section 112(a), whereas the appellate authority enhanced it under Section 114AA. As the two provisions operate on entirely different premises, enhancement under Section 114AA was misplaced. [Paras 7]

The enhanced penalty under Section 114AA was set aside and the original authority's order was restored.

Final Conclusion: The appeal was allowed, the impugned appellate order was set aside, and the original authority's order permitting redemption of the goods and imposing penalty under Section 112(a) was upheld.

Investigation into company affairs - statutory satisfaction and reasonable opportunity of hearing - Preliminary investigative directions under Section 213(b) - recorded satisfaction and prior hearing - Natural justice in requisitioning investigation-agency information

Validity of directions requiring the Enforcement Directorate and the CBI to furnish tracking information in proceedings concerning investigation into the affairs of the company, without recorded satisfaction or prior hearing - HELD THAT: - Before directing an investigation, or taking steps towards it, the statutory conditions under Section 213(b) must be satisfied, reasons demonstrating application of mind must be recorded, and the affected parties must receive a reasonable opportunity of hearing. The directions seeking tracking information from external investigative agencies were issued at the initial stage without recording the requisite satisfaction, rational basis, or hearing the appellant, and were therefore contrary to natural justice. [Paras 21, 23, 24, 25, 26]

The impugned directions to issue notices to the Enforcement Directorate and the CBI were quashed, with liberty to pass a fresh order after hearing the appellant and considering the requirements of Section 213(b).

Final Conclusion: The company appeals were allowed to the extent indicated. The impugned directions were quashed and the matter was left open for fresh consideration in accordance with law after affording an opportunity of hearing.

Consequential reliefs in going-concern liquidation sale - Residuary jurisdiction over liquidation proceedings - Clean slate protection for going-concern purchaser - Binding effect of e-auction terms - Continuity of licences and contractual rights on going-concern sale

Consequential reliefs in going-concern liquidation sale - Residuary jurisdiction over liquidation proceedings - Jurisdiction to grant consequential shareholding, fresh-equity and securities-market directions required to implement the going-concern sale of a listed corporate debtor - HELD THAT: - The residuary jurisdiction extends to questions having a direct nexus with liquidation and to incidental, ancillary and consequential directions required to give commercially effective implementation to a going-concern sale. Recognition of the revised capital structure, extinguishment of existing shareholding, fresh issue and listing of shares does not amount to the exercise of the independent statutory powers of securities regulators or stock exchanges. A restrictive approach would frustrate revival, particularly where the proposed public shareholding structure accords with the applicable regulatory requirement. [Paras 22, 24, 27, 28, 29]

The consequential reliefs concerning shareholding and securities-market compliance were allowed, subject to compliance with applicable procedures, filings, fees, securities laws and stock-exchange regulations.

Release of historical financial encumbrances after going-concern sale - Clean slate protection for going-concern purchaser - Directions to financial creditors for removal of historical credit classifications, charges, liens and restrictions consequential upon the going-concern sale - HELD THAT: - The purchaser did not seek adjudication of inter se disputes with financial creditors, but recognition of the legal consequences of an encumbrance-free going-concern sale. Requiring separate negotiations with every lender for release of securities, closure of loan accounts, satisfaction of charges and related acts would render the sale commercially ineffective and defeat certainty, timeliness and value maximisation under the Code. [Paras 35, 36, 37]

Financial creditors were directed to undertake necessary ministerial and consequential acts, subject to their independent statutory powers and prescribed procedure; any balance in bank accounts as on the sale date remains part of the liquidation estate for distribution.

Corporate debtor's receivables and limitation claims after liquidation sale - Preservation of all existing and future receivables and claims of the corporate debtor, coupled with a fresh limitation period from the transfer date - HELD THAT: - The requested sweeping concession was neither contemplated by the e-auction process document nor the sale certificate. Granting it could affect contractual rights of parties and would fall outside the statutory framework governing a going-concern sale. [Paras 40]

The refusal of this relief was affirmed, leaving the matter open for consideration by the parties.

Immunity from pre-sale liabilities in going-concern liquidation sale - Continuity of legal proceedings under new management - Protection of the corporate debtor and the successful auction purchaser from pre-sale liabilities and recognition of the new management's authority to conduct pending legal proceedings - HELD THAT: - A corporate debtor sold as a going concern in liquidation is entitled to protection analogous to the clean-slate immunity available under Section 32A. Once the sale is completed and liquidation proceeds are distributed under the statutory waterfall, past unpaid or outstanding dues cannot be asserted against the purchaser. Continuity of pending proceedings in the corporate debtor's name under new management must be distinguished from adjudication of their merits, which remains with the competent forum. [Paras 45, 47, 52, 53]

The reliefs concerning pre-sale offences, liabilities and proceedings were allowed, with directions to concerned authorities and persons to recognise the legal consequences of the sale while retaining their independent statutory powers.

Liability for stamp duty and acquisition-related taxes under e-auction terms - Binding effect of e-auction terms - Waiver of stamp duty, registration charges, taxes and other acquisition-related statutory levies assumed by the successful auction purchaser under the sale documents - HELD THAT: - Having participated in the auction with knowledge of the process document, letter of intent and sale certificate, the purchaser remained bound by the commercial terms undertaking liability for applicable duties, taxes, charges and fees. The Adjudicating Authority cannot rewrite those terms or confer extra-contractual exemptions. [Paras 56, 57, 58]

The refusal to grant tax and duty waivers was upheld, and the purchaser was left to approach the competent statutory authorities.

Continuity of licences and contractual rights on going-concern sale - Continuance of subsisting consents, licences, approvals, contractual rights and statutory entitlements following the going-concern sale - HELD THAT: - The lawful change in ownership and management pursuant to the sale requires legal recognition by the concerned authorities without displacing their independent statutory jurisdiction. Subsisting rights and licences remain vested in the corporate debtor as a going concern, but compliance triggered by the change in management, including renewal fees, remains the purchaser's responsibility. [Paras 62, 63, 64]

The requested continuity of subsisting rights, licences and entitlements was allowed subject to statutory compliance by the successful auction purchaser.

Change of corporate status from liquidation to active - Incidental reliefs under sale certificate - Conversion of the corporate debtor's status from liquidation to active and the scope of other incidental concessions not provided in the sale documents - HELD THAT: - The sale certificate specifically contemplated action for updating the corporate debtor's status from liquidation to active; withholding that direction would impede the procedural implementation of the completed going-concern sale. Conversely, reliefs not contemplated by the process document, letter of intent or sale certificate could not be granted. [Paras 69, 70, 71]

The Liquidator, in consultation with the Registrar of Companies, was directed to take action for updating the corporate debtor's status to active in accordance with established procedure; the remaining incidental concessions were declined.

Final Conclusion: The appeal was partly allowed. Consequential reliefs necessary to operationalise the going-concern sale were granted to the specified extent, while reliefs inconsistent with the sale terms or not contemplated by the sale documents were refused and the remaining impugned directions were affirmed.

Anticipatory bail in money-laundering offence - Necessity of arrest under the Prevention of Money Laundering Act

Whether the petitioner was entitled to anticipatory bail in connection with an investigation under the Prevention of Money Laundering Act, 2002? - HELD THAT: - The Court held that, for arrest under Section 19(1) of the Prevention of Money Laundering Act, satisfaction of the formal statutory parameters alone is insufficient and the necessity and need for arrest must also be examined. Pre-arrest bail is an extraordinary discretionary remedy, to be granted sparingly, particularly in economic offences, after balancing personal liberty with the investigating agency's need for effective interrogation and collection of material. On the material before it, the Court found prima facie evidence of the petitioner's involvement in the alleged offence.

The Apex Court has consistently held that economic offences constitute a distinct class of offences, and bail should be granted with caution, taking into account the nature of the allegations.

In P. Chidambaram [2019 (9) TMI 286 - SUPREME COURT] Supreme Court held that granting anticipatory bail in serious economic offences, such as money laundering, may frustrate the investigation and make it challenging for the investigating agency to collect evidence. Therefore, bail should only be granted when reasonable grounds exist regarding the innocence of the accused.

This Court further notes that the Hon’ble Supreme Court in Siddharam Satlingappa Mhetre vs. State of Maharashtra [2010 (12) TMI 1085 - SUPREME COURT] laid down several factors to be considered while granting anticipatory bail, including the nature and gravity of the accusation, the antecedents of the applicant, the possibility of the applicant fleeing from justice, and the impact of granting anticipatory bail on the investigation.[Paras 7, 8, 11]

Anticipatory bail was refused and the criminal petition was dismissed.

Final Conclusion: The criminal petition seeking anticipatory bail in connection with the money-laundering investigation was dismissed.

Provisional attachment of proceeds of crime held by non-accused persons - Proof of legitimate source of attached properties

Attachment of proceeds of crime held by non-accused persons - Provisional attachment of properties held by a person not named in the FIR or ECIR - HELD THAT: - Attachment under the Act is not confined to a person named as an accused in the scheduled offence. It extends to any person in possession of proceeds of crime; otherwise, the statutory object of reaching such proceeds in whosever name they are held would be defeated. The appellant was found to be a recipient of proceeds of crime. [Paras 12, 13, 14]

The challenge founded on the appellant not being named in the FIR or ECIR was rejected.

Proof of legitimate source of attached properties - Properties acquired from proceeds of scheduled offences - Confirmation of attachment of properties alleged to have been acquired from disclosed or ancestral sources - HELD THAT: - The appellant produced no material to establish either a legitimate source for acquisition of the attached properties or their ancestral character, despite being called upon to disclose the source. In the absence of proof of legitimate income or acquisition, the Tribunal found that the properties acquired in the names of the main accused, the appellant and their son were derived from proceeds of scheduled offences. The earlier order relied upon by the appellant did not direct release of the attached properties. [Paras 15, 16, 17, 18]

The attachment was sustained and release of the properties was declined.

Final Conclusion: The appeal was dismissed and the confirmation of provisional attachment of the properties was sustained.

Attachment of property of equivalent value under the Prevention of Money-Laundering Act - Provisional attachment-likelihood of concealment, transfer or dealing with proceeds of crime

Attachment of property of equivalent value under the Prevention of Money-Laundering Act - Whether properties of the appellant companies could be attached as proceeds of crime or property of equivalent value without a money trail linking them to the alleged kickback? - HELD THAT: - Property of equivalent value could be attached only where the proceeds of crime had been passed on or layered and were unavailable with the person or company to whom they had been laundered. The appellant companies were subsidiaries of a separate holding company which had not received any part of the alleged kickback, and the respondent failed to establish a money trail connecting the attached properties with the laundering of proceeds of crime. [Paras 24]

The provisional attachment of the properties as equivalent value was not justified.

Condition for provisional attachment - Likelihood of frustration of confiscation proceedings - HELD THAT: - The properties had been mortgaged before the attachment and were already subject to proceedings initiated by the financial institution. Following admission of the insolvency proceedings, any sale or transfer could occur only under the order of the National Company Law Tribunal; hence, no apprehension of alienation or transfer sufficient to invoke section 5(1)(b) of the Prevention of Money-Laundering Act was made out. [Paras 25, 26]

The confirmation order was set aside, while clarifying that the properties would be dealt with in accordance with the order of the National Company Law Tribunal.

Final Conclusion: The appeals were disposed of by setting aside the impugned confirmation order. The properties remain governed by the orders passed in the admitted insolvency proceedings.

Prevention of Money Laundering - retention of the documents seized from the possession of the appellant during the course of search - denial of fair opportunity of hearing - relied upon documents (RUDs) were not served on it so as to give a detailed reply to the notice.

HELD THAT: - Where a party relies on documents in its pleadings and the adjudicatory order is founded on them, copies of those documents must be supplied to the affected party; service of the panchnama alone is insufficient. However, remand for that procedural lapse would further delay determination of retention. Continued retention is justified only where the seized documents have been relied upon in the prosecution complaint or supplementary prosecution complaint and are required to prove the case against the accused; otherwise, their retention is unjustified. [Paras 12, 13, 14]

The seized documents were directed to be released within a reasonable time if not relied upon in the prosecution complaint or supplementary prosecution complaint, subject to authenticated photocopies being retained; if required as evidence against the accused, they may continue to be retained.

Final Conclusion: The retention order was modified by directing release of the seized documents unless they are relied upon and required as evidence in the prosecution proceedings.

Clinical Research Organisation exemption for technical testing of newly developed drugs - Employee bond-deposit forfeiture as consideration for taxable service - Extended limitation for suppression with intent to evade service tax - Service-tax penalties in absence of intent to evade

Clinical Research Organisation exemption for technical testing of newly developed drugs - DCGI approval of sponsor-conducted clinical trials - Entitlement of a Clinical Research Organisation conducting sponsor-approved clinical trials to exemption from service tax on technical testing and analysis of newly developed drugs - HELD THAT: - The regulatory scheme granted permission for clinical trials to the Sponsor and did not provide for a separate institutional approval of a Clinical Research Organisation. The assessee performed trials under written agreements with Sponsors holding DCGI permissions for the concerned trials and had registered the trial activity with the Clinical Trials Registry of India. The exemption was therefore available to the entity actually performing the CRO function. Strict construction of an exemption did not warrant importing an impossible requirement of a separate approval which the regulator did not issue. [Paras 17, 18, 19, 20, 21]

The technical testing and analysis service was exempt, and the demand under that head was set aside.

Employee bond-deposit forfeiture as consideration for taxable service - Commercial training or coaching service - Taxability of deposits forfeited or recovered from employees upon premature resignation before completion of the stipulated minimum service period - HELD THAT: - The recovery was not a fee charged to trainees for imparting skill or knowledge, but security retained or recovered upon breach of an employment undertaking. Training was imparted in the employer-employee relationship for the employer's business purposes. Such recovery was compensation for breach of the employment contract and was neither consideration for commercial training or coaching nor consideration for agreeing to tolerate an act or situation.

The Hon'ble Madras High Court in GE T & D India Limited [2019 (12) TMI 1566 - MADRAS HIGH COURT] held that notice pay recovered by an employer from an employee who leaves without completing the notice period does not give rise to the rendition of any service, by either the employer or the employee, and does not attract Section 66E(e). This view has since been consistently followed.

The Lalit Mumbai v. Commissioner of CGST & Central Excise-Delhi East [2025 (3) TMI 680 - CESTAT NEW DELHI] and in Cosmo First Limited [2025 (10) TMI 9 - CESTAT AHMEDABAD] this Tribunal, extended the same reasoning to amounts recovered by an employer from an employee on premature resignation before completion of a minimum agreed period of service, holding such amounts to be compensation for breach of the employment contract and not consideration for any agreement to tolerate an act or situation. This reasoning applies with equal force to a deposit taken from an employee and forfeited on premature resignation, which is compensation of precisely this character.[Paras 22, 23, 24]

The demand under the head of commercial training or coaching was unsustainable on merits.

Extended limitation for suppression with intent to evade service tax - Invocation of the extended period of limitation where the Department had previously inquired into and received disclosures concerning the assessee's clinical research activities - HELD THAT: - The extended period requires a deliberate positive act of suppression or other specified conduct with intent to evade tax; mere non-payment or omission is insufficient. The Department had elicited and received full information concerning the relevant activities several years before issuance of the notices. The assessee's non-registration and non-filing of returns proceeded from a disclosed and tenable belief that its testing services were exempt, and did not establish deliberate concealment with intent to evade. [Paras 25, 26, 27, 28]

The extended period was not invocable; the commercial training or coaching demand was also barred by limitation, while the technical testing demand independently failed on merits.

Service-tax penalties in absence of intent to evade - Sustainability of interest and penalties after the service-tax demands and the ingredients required for the extended period were found absent - HELD THAT: - As no principal service-tax demand survived, interest could not subsist. The penalty for suppression-based non-payment required the same elements of fraud, wilful misstatement, suppression or contravention with intent to evade that were found absent; the remaining penalties were likewise untenable. [Paras 29]

Interest and all penalties were set aside.

Final Conclusion: The impugned order was set aside in its entirety. The appeals were allowed with consequential relief in accordance with law.

Service tax on sub-letting of advertisement hoardings - Extended period of limitation - absence of suppression

Advertising Agency Service - sub-letting of advertisement hoarding sites - Liability to service tax under Advertising Agency Service on consideration received for sub-letting advertisement hoarding sites to advertising agencies - HELD THAT: - Mere sub-letting of a site to an advertising agency, without providing a service of the nature defined under the Finance Act, does not render the hoarding owner liable to service tax.

As in show cause notice does not allege any positive act of concealment, and the entire demand is derived from statutory records maintained by the Appellant. [Paras 8]

The demand for the period up to 30.04.2006 under Advertising Agency Service was unsustainable.

Extended period of limitation - absence of suppression - Revenue neutrality in sale of advertising space - Invocation of the extended period for service tax on leasing hoardings or advertising space to advertising agencies after introduction of Sale of Space or Time for Advertisement Service - HELD THAT: - The arrangement was revenue-neutral, since the advertising agencies paid service tax on the consideration received from their clients, including the amount paid for leasing the hoardings or space. The show-cause notice alleged no positive act of concealment and the demand was derived from statutory records.

As held in the matter of Pushpam Pharmaceuticals Co. [1995 (3) TMI 100 - SUPREME COURT] a mere bald allegation of suppression cannot be ground to invoke the extended period. Further we find that the issue is one of interpretation and not solely procedural. There were conflicting judicial views as regards the question of tax liability on this issue. Since SCN was issued on 04.10.2010 for the period 2005-2007, the demand is beyond the normal period of limitation. Hence demand confirmed along with interest and imposition of penalty by invoking the extended period of limitation by Adjudication Authorities are unsustainable, hence the impugned order is liable to be set aside. . [Paras 8]

The demand raised beyond the normal limitation period, together with interest and penalties imposed by invoking the extended period, was held unsustainable.

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

Refund of service tax under non-levy notification - Unjust enrichment in service tax refund

Refund of service tax under non-levy notification - Entitlement to refund of Service Tax already collected and paid on cable-laying services under the notification concerning transmission and distribution of electricity. - HELD THAT: - The notification recognised the prevalent practice of non-levy and exempted Service Tax not levied during the specified period from recovery; it did not confer an unconditional right to refund tax already collected and deposited. A refund claim remained subject to the statutory requirement that the claimant establish absence of unjust enrichment. [Paras 13, 20]

The notification did not entitle the appellant to refund of the Service Tax already collected and paid.

Unjust enrichment in service tax refund - Refund of Service Tax paid on the composite contractual consideration inclusive of Service Tax, without proof that its incidence was not passed on to the service recipient. - HELD THAT: - The contractual stipulation that the price was inclusive of Service Tax supported the inference that the tax burden formed part of the consideration. The appellant produced no invoices, accounting records, credit notes, or other primary material establishing that it had borne the tax or returned its incidence to the recipient. Mere assertion could not rebut the statutory presumption of passing on of tax; refund to a person who had passed on the burden would result in unjust enrichment, notwithstanding that the levy was subsequently found inapplicable. [Paras 14, 15, 16, 20]

The appellant failed to discharge the burden of proving that the incidence of Service Tax had not been passed on, and the refund claim, including the consequential interest claim, was barred by unjust enrichment.

Final Conclusion: The Order-in-Appeal was upheld and the appeal was dismissed, as the appellant failed to establish that it had borne the incidence of the Service Tax claimed as refund.

Service tax on composite works contracts prior to introduction of Works Contract Service - Composite works contract involving supply of materials

Whether service tax could be demanded on composite construction contracts involving supply of materials for the period before works contract service became taxable on 01.06.2007? - HELD THAT: - The contracts admittedly involved supply of materials and were composite works contracts. Since service tax on works contracts was introduced only with effect from 01.06.2007, no demand could be sustained for the period before that date. The amount already paid with applicable interest for the period from 01.06.2007 to March 2008 was liable to be appropriated. [Paras 7]

The demand for the period prior to 01.06.2007 and the penalties imposed were set aside; appropriation of tax and interest paid for the subsequent period was upheld.

Final Conclusion: The appeal was partially allowed by setting aside the demand for the pre-01.06.2007 period and the penalties, while upholding appropriation of tax and interest paid for the period after introduction of Works Contract Service.

Manpower recruitment or supply agency service - scope - Taxable value - reimbursement of wages

Liability of a workers' organisation to service tax as a provider of manpower recruitment or supply agency service, and inclusion of members' reimbursed wages in the taxable value - HELD THAT: - The appellant organised its women members to secure full employment and was not engaged in rendering a service of supplying manpower. The workers, forming part of the organisation, directly undertook assignments with clients. Further, even if the activity were treated as manpower supply, a substantial part of the collections was reimbursed to members as wages; assessment on the gross amount without excluding such reimbursable expenses was unsustainable. The negligible registration fee was also found not to fall within the monetary limit of taxable service. [Paras 8]

The service tax demand was unsustainable and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The appeal was allowed, as the appellant was not found to be providing manpower recruitment or supply agency service; independently, the gross collections could not be assessed without excluding reimbursed wages.

Composite works contract - taxability under management, maintenance or repair service - Extended limitation - absence of suppression - Manpower supply service - taxable threshold exemption

Composite works contract - taxability under management, maintenance or repair service - Taxability of canal reconstruction, repair and maintenance contracts involving transfer of property in goods under Management, Maintenance or Repair Service - HELD THAT: - The contracts were composite works contracts, involving both services and materials, with VAT having been paid on the goods component. The charging provisions governing the specified taxable services covered service contracts simpliciter and not composite works contracts, for which no mechanism existed to exclude the value of goods transferred in execution of the contract. Such contracts could not, therefore, be taxed under Management, Maintenance or Repair Service.

As in the matter of M/s Agarwal Engineering Works [2018 (12) TMI 18 - CESTAT HYDERABAD] the contracts clearly indicated that they would have to render services as well as provide materials related to those services. As far as materials are concerned, the Indian Railways have deducted an amount of 4% from their bill towards VAT and credited the same to the Government of Andhra Pradesh. Considering the issue, the appeal was allowed insofar as the demand on "Management, Maintenance & Repair Services".[Paras 10, 11]

The demand under Management, Maintenance or Repair Service was held unsustainable.

Invocation of the extended period for the service-tax demand on the canal works - proof of suppression of facts or intent to evade tax - HELD THAT: - The first appellate authority had found no deliberate suppression of facts or intent to evade tax, and the VAT certificate evidenced payment of tax on the goods involved. In these circumstances, there was no justification for invoking the extended period of limitation. [Paras 12]

The demand raised by invoking the extended period was held unsustainable.

Manpower supply service - taxable threshold exemption - Sustainability of demand on the one-time manpower supply activity - HELD THAT: - Although manpower recruitment and supply agency service was a taxable activity, the value of the activity was below the taxable limit. [Paras 12]

The demand under Manpower Recruitment and Supply Agency Service was held unsustainable.

Final Conclusion: The impugned orders confirming service-tax demands were set aside, and the appeals were allowed with consequential relief in accordance with law.

CENVAT credit on the input services claimed as Group Mediclaim Policy and Group Personal Accident Policy

Employee group insurance as input service - Exclusion of insurance primarily for personal use or consumption - HELD THAT: - The exclusion under clause (C) of the definition of input service covers life insurance, health insurance and vacation travel benefits when used primarily for the personal use or consumption of employees. The impugned order contained no finding that the insurance policies were for employees' vacation.

The Revenue's cited decisions Bharat Fritz Werner Ltd. [2019 (6) TMI 67 - CESTAT BANGALORE] and Sasken Technologies Ltd. [2019 (12) TMI 181 - CESTAT BANGALORE] concerned SBI Life Insurance, which was specifically excluded, and were distinguishable from the group mediclaim and personal accident policies in question. The decisions concerning group insurance policies also supported the availability of credit where insurance coverage was connected with employment obligations. [Paras 7, 9]

CENVAT credit on the Group Mediclaim Policy and Group Personal Accident Policy was allowable; the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief in accordance with law, as CENVAT credit on the employee group mediclaim and personal accident insurance policies could not be denied.

Excise duty on interface SKO intermingled with HSD/MS

Differential excise duty on interface SKO - Intermixing of SKO with HSD/MS - Liability to differential central excise duty on SKO intermingled with HSD/MS during pipeline transfers - HELD THAT: - The Tribunal followed the decisions rendered in the appellant's own cases [2025 (7) TMI 1407 - CESTAT MUMBAI], [2025 (11) TMI 1434 - CESTAT MUMBAI], [2025 (11) TMI 829 - CESTAT MUMBAI], [2025 (10) TMI 1466 - CESTAT MUMBAI] for identical earlier periods and the settled position in the analogous case concerning interface SKO. The co-ordinate Bench had held that a Board circular unsupported by statutory provisions could not create the differential duty liability and that intermixing of SKO with HSD/MS did not amount to manufacture in the circumstances considered. As the present controversy was identical, the issue was held to be no longer res integra as in the case of Indian Oil Corporation [2019 (8) TMI 1910 - CESTAT KOLKATA] [Paras 8, 9]

The differential duty demand was held unsustainable; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The appeal was allowed and the demand of differential excise duty on the interface quantity of SKO was set aside.

Penalty for abetting clandestine removal of excisable goods - Proof of clandestine removal of CTD/TMT bars - Penalty under Rule 26 for dealing in goods liable to confiscation

Admissibility of statements under Section 9D of the Central Excise Act - Opportunity for cross-examination - Compliance with the remand direction requiring adherence to the procedure for relying upon statements recorded during investigation - HELD THAT: - The adjudicating authority afforded opportunity for examination and cross-examination after remand, but the appellant and the witnesses did not avail it. The Tribunal held that, in these circumstances, the statements recorded under Section 14 could be read in evidence and the appellant could not allege breach of natural justice.

The apex court in the case of Kanugo and Company [1972 (2) TMI 35 - SUPREME COURT] in Surjit Singh Chabra vs Union of India [1996 (10) TMI 106 - SUPREME COURT] and in Laxman Export Limited vs of Collector of Central Excise [2002 (4) TMI 66 - SC ORDER] and Sushil Aggarwal [2025 (2) TMI 322 - DELHI HIGH COURT] has held that it is only when the Show Cause Noticee demands cross-examinations and the same is not provided for by the adjudicating officer that indicate the violation of principles of natural justice.[Paras 8, 9]

The plea of non-compliance with Section 9D and violation of natural justice was rejected.

Proof of clandestine removal of CTD/TMT bars - Penalty under Rule 26 for dealing in goods liable to confiscation - Liability of a purchaser-brokered trader to penalty for alleged abetment of clandestine removal of CTD/TMT bars by the manufacturer. - HELD THAT: - Penalty under Rule 26 requires proof that the person acquired possession of, or dealt with, excisable goods with knowledge or belief that they were liable to confiscation. The diary and notepad established only their recovery, not the truth of their contents. In the absence of affirmative evidence of unaccounted procurement and production, actual transportation and clearance, identified buyers acknowledging receipt, and flow of unaccounted consideration, the allegation of clandestine removal was not proved. The proceedings against the alleged manufacturer having also been set aside, there was no evidence that the goods purchased through the broker were liable to confiscation.

While following the decision of Continental Cement Company Vs Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] and also in the case of M/s Arya Fibres Pvt Ltd vs CCE [2009 (4) TMI 148 - CESTAT, AHMEDABAD] this tribunal has held that the revenue must produce affirmative evidence addressing the entire chain of production and supply. [Paras 6, 10, 11]

The penalty imposed under Rule 26 was held not imposable and was set aside.

Final Conclusion: The penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 was set aside for want of evidence establishing clandestine removal or that the goods were liable to confiscation. The appeal was allowed.

Classification of CNG/LPG gas kits, cylinders and containers as motor vehicle accessories - Multi Valve CNG, LPG Gas Kit, Cylinder and Container

Whether multi-valve CNG/LPG gas kits, cylinders and containers, exclusively used in motor vehicles, are taxable as motor-vehicle accessories rather than under the entry for LPG cylinders and containers? - HELD THAT: - The undisputed exclusive use of the goods in motor vehicles precluded their classification under the entry relating to LPG cylinders and containers. Applying the test governing accessories in MEHRA BROS. [1990 (11) TMI 144 - SUPREME COURT], namely whether the article is an adjunct, accompaniment or addition for the convenient use, comfort or effectiveness of a motor vehicle, the Court held that the goods were motor vehicle accessories. [Paras 8, 10, 11]

The revision was allowed, the impugned appellate order was set aside and the assessment order was restored.

Final Conclusion: The substantial question of law was answered in favour of the revisionist. The goods were held classifiable as motor vehicle accessories and the assessment order was restored.