TaxTMI Updates e-Newsletter
Sep 09,2026

Proceedings against non-existent entity - Scope of liability in amalgamation or merger - Void ab initio - Principles of natural justice - Jurisdictional defect - Going concern - HELD THAT: - Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are not inclined to interfere with the impugned order passed by the High Court[2026 (5) TMI 162 - BOMBAY HIGH COURT] wherein held that 'the GST proceedings initiated against the amalgamating company after its merger were void ab initio, as they were taken against a non-existent entity. It further held that Section 87 of the CGST Act did not authorize such proceedings, and accordingly allowed the petition by setting aside the impugned order'

The Special Leave Petition is, accordingly, dismissed.

Pre-deposit in GST appeals-law applicable on commencement of adjudication - Proper officer for Section 122 penalty proceedings - Alternative statutory remedy and writ jurisdiction

Pre-deposit in GST appeals-law applicable on commencement of adjudication - Applicability of the substituted pre-deposit requirement to appeals arising from adjudicatory proceedings initiated before its commencement - HELD THAT: - The conditions governing the statutory appeal are governed by the law in force when the adjudicatory proceedings commenced. Since all the relevant show-cause notices had been issued before 01.10.2025, the substituted proviso to Section 107(6) could not govern the resulting appeals merely because the Orders-in-Original were passed after that date. [Paras 32, 33, 56]

The appeals shall be governed by Section 107(6) as applicable on the respective dates of the show-cause notices, and shall not be rejected by applying the substituted proviso.

Proper officer for Section 122 penalty proceedings - Alternative statutory remedy and writ jurisdiction - Exercise of writ jurisdiction against original adjudication imposing penalties for alleged fraudulent input tax credit despite the statutory appellate remedy - HELD THAT: - The status of a proper officer is function-specific; however, the statutory notifications investing Directorate General of GST Intelligence officers with powers corresponding to their rank and assigning functions under the Act did not disclose a patent or self-evident absence of authority to initiate the proceedings. The effect of the subsequent Circular, the officer's competence, and the interrelated objections concerning evidentiary material, hearing, cross-examination, penalty quantification and the role of each noticee require examination on the record. Such questions of fact and law are amenable to the complete and efficacious appellate remedy under Section 107. The question whether Section 122(1) applies to a person who is not a taxable person was left open. [Paras 51, 52, 53, 54, 55]

The writ petitions were disposed of with liberty to pursue statutory appeals, in which all objections, including the challenge to the officer's competence, may be raised and determined on their merits.

Final Conclusion: The writ petitions were disposed of on the ground that the statutory appellate remedy is efficacious. Appeals arising from show-cause notices issued before 01.10.2025 remain governed by the pre-deposit provision then in force.

Failure to consider material submissions - Speaking adjudication order

Validity of the GST adjudication order where the assessee's plea for exemption applicable to an SEZ and its detailed reply to the show-cause notice were not considered - HELD THAT: - The adjudicating authority did not advert to the SEZ exemption contention or the other contentions in the detailed reply, and merely stated that the contentions were unacceptable and that the scope of service was wide. Such cryptic disposal rendered the order non-speaking. See TATA ENGINEERING & LOCOMOTIVE CO. LTD. [2006 (9) TMI 185 - SUPREME COURT][Paras 6]

The impugned order was quashed and the matter remitted for fresh consideration after hearing the petitioner; all contentions were kept open.

Final Conclusion: The writ petition was disposed of by setting aside the non-speaking adjudication order and remitting the matter for a fresh order in accordance with law.

Service of GST show-cause notice after cancellation of registration - Ex parte GST adjudication

Electronic service after cancellation of GST registration - Opportunity of hearing in GST adjudication - Validity of an ex parte GST adjudication where the show-cause notice was issued only on the Common Portal after cancellation of the taxpayer's registration. - HELD THAT: - After cancellation of registration, the taxpayer may not be obliged to access the Common Portal and may consequently remain unaware of proceedings initiated through that portal. The departmental circular requiring physical service of notice in such cases was held to rest on sound common sense; the revenue did not dispute the proposition. [Paras 5, 6]

The ex parte adjudication order was set aside and the matter was restored for reply, consideration of any request for cross-examination or relied-upon documents, personal hearing on advance notice, and fresh reasoned adjudication.

Final Conclusion: The writ petition was disposed of by setting aside the ex parte adjudication and directing fresh proceedings after affording the petitioner a proper opportunity to respond and be heard.

Non-consideration of representation seeking GST payment - Consideration of pending representations seeking payment of GST in respect of road construction and improvement works

HELD THAT: - The claim required examination of the tender conditions, individual bills and invoices, payments already made, and the applicable GST liability. The respondents' assertion that the final bills already included GST had to be supported by a proper and intelligible breakup of the amounts paid. As the representations with supporting material remained undecided, the competent authorities were obliged to examine the records and communicate a reasoned decision. The Court did not adjudicate the petitioner's actual entitlement to the claimed GST. [Paras 8, 9, 10, 11]

The respondent-authorities were directed to independently consider the respective representations, examine the relevant records and pass reasoned speaking orders within the stipulated period, without any expression of opinion on the merits of the GST claim.

Final Conclusion: The writ petition was partly allowed by directing consideration and reasoned disposal of the pending GST-payment representations. The substantive claim was left open for determination by the competent authorities in accordance with law.

Demand exceeding show cause notice - Statutory limitation on adjudication under Section 75(7) of the UPGST Act

Validity of an adjudication order confirming demands exceeding those proposed in the single show cause notice - HELD THAT: - Section 75(7) mandates that the demand confirmed in adjudication cannot exceed the demand proposed in the show cause notice. Since the demands confirmed on both counts exceeded the proposed demands, the adjudication order suffered from a fundamental and incurable defect. [Paras 4, 5, 7]

The impugned order was set aside and the matter remitted for fresh adjudication, without permitting issuance of a fresh notice.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order for violation of Section 75(7) of the UPGST Act and remitting the matter for fresh adjudication.

Alternative statutory remedy under GST law - interim protection from coercive recovery pending filing of such statutory appeal

Availability of interim protection from coercive recovery where the challenged GST order is appealable before the GSTAT - HELD THAT: - As the impugned order was appealable and an efficacious statutory remedy was available, the writ petition was not entertained on merits. To preserve the appellate remedy, the period during which the writ petition remained pending was directed to be excluded in computing limitation, and coercive recovery was stayed pending disposal of the statutory appeal. [Paras 7, 8, 9]

The petitioner was directed to file an appeal before the GSTAT within four weeks; until disposal of that appeal, the authorities were restrained from giving effect to the recovery notice or taking coercive action. Failure to file the appeal within that period would leave the GSTAT at liberty to proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by relegating the petitioner to the statutory appellate remedy, with exclusion of the writ-pendency period for limitation and interim protection against coercive recovery pending the appeal.

Refund of accumulated input tax credit under inverted duty structure - Packing materials as eligible inputs - Applicability of circular concerning reduction in GST rate

Refund of accumulated input tax credit under inverted duty structure - Packing materials as eligible inputs - Refund of accumulated input tax credit on packaged tea where packing materials, taxed at a higher rate, are used along with bulk tea - HELD THAT: - Section 54(3)(ii) permits refund where credit accumulates because the rate of tax on inputs exceeds that on output supplies. The statutory expression "inputs" is plural and draws no distinction between principal and ancillary inputs. Packing materials 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 respondent was entitled to refund of the accumulated input tax credit attributable to eligible packing materials under the inverted duty structure.

Applicability of circular concerning reduction in GST rate - Statutory refund not curtailed by circular - Applicability of Circular No. 135/5/2020-GST to refund of input tax credit accumulated on packing materials used 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. A circular issued for uniform implementation cannot curtail a refund otherwise admissible under the Act.

We find merit in the submissions made by the respondent as in this case, the rate of tax on both bulk tea at the time of purchase and sale in small packages attract same rate of GST i.e., @ 5% and does not fall under the purview of the said circular No. 135/5/2020 GST. [Paras 13, 14, 15]

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 upholding refund of accumulated input tax credit was sustained.

Pure-agent treatment of actual electricity - charge recovery - Composite supply of maintenance services and electricity

Whether recovery of electricity charges by the applicant at actual cost based on consumption, as charged by the electricity distribution company without any mark up including electricity attributable to Heating Ventilation and Air conditioning (HVAC) operations and common area consumption, qualifies as reimbursement in the capacity of a pure agent and whether GST would be leviable on the same, more specifically in terms with Circular No. 206/18/2023-GST dated 31.10.2023 issued in this regard by Ministry of Finance, Department of Revenue (TRU)? - HELD THAT: - Electricity supplied as part of maintenance and management of premises is ordinarily ancillary to the principal maintenance service and forms part of a composite supply, notwithstanding separate billing. However, clause 3.3 of Circular No. 206/18/2023-GST creates an exception: where electricity charges are recovered on an actual basis at the same amount charged by the electricity distribution company, the supplier is deemed to act as a pure agent. Although the applicant did not satisfy the independent pure-agent test on the factual matrix, the proposed separate recovery of actual metered HVAC and non-HVAC consumption and proportionately allocated common-area consumption, without markup or profit, attracted the circular's deeming provision. [Paras 4]

The actual electricity charges recoverable under the proposed billing pattern are deemed to be recovered in the capacity of a pure agent, are excluded from the value of the maintenance supply, and are not liable to GST.

Final Conclusion: The application was allowed on the basis of the proposed billing pattern. Actual electricity-charge recovery without markup, including HVAC and common-area consumption, was held not liable to GST.

Bar on advance ruling where question already decided in proceedings - Admissibility of the application seeking classification and rate determination for dried and cured tobacco leaves when the same questions had been decided in enforcement proceedings concerning the applicant

HELD THAT: - The first proviso to section 98(2) precludes admission where a question raised has already been pending or decided in proceedings under the GST Act in the applicant's case. On verification of the Revenue's information, the Authority concluded that the questions raised had undergone and been decided in prior proceedings under the Act.

Thus, as first proviso to sub-section (2) of Section 98 ibid clearly bars the admission of application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act, thus application for advance ruling is hereby rejected. [Paras 1]

The application for advance ruling was rejected as barred from admission.

Final Conclusion: The application was rejected because the classification and applicable-rate questions concerning the goods had already been decided in prior proceedings against the applicant.

Classification of ruled/lined loose paper sheets - End-use-based exemption for uncoated paper used in manufacture of notebooks - Recipient's tax liability and input tax credit on uncoated paper reels - Advance ruling jurisdiction over documentary requirements for exemption

Classification of ruled/lined loose paper sheets - Classification of uncoated paper reels converted into ruled or lined loose sheets - under Heading 4802 or Heading 4820 - HELD THAT: - Ruling or lining and cutting uncoated paper into loose sheets do not take the goods outside Heading 4802. Ruled or lined sheets are not excluded from that heading, while Chapter Note 10 to Chapter 48 excludes loose sheets or cards, cut to size, whether or not printed, from Heading 4820, which covers finished stationery articles. [Paras 4]

The goods are classifiable under tariff item 48026190 when supplied in rolls and under tariff item 48026290 when supplied in sheets.

End-use-based exemption for uncoated paper used in manufacture of notebooks - Availability of the exemption for uncoated paper supplied for exercise books, graph books, laboratory notebooks and notebooks - HELD THAT: - The exemption is governed by actual use of the paper under Heading 4802 and not by an intended downstream use. Actual use can be established at the point where the recipient manufactures the specified books. Each limb of the supply chain is an independent and distinct supply; consequently, the exemption cannot be claimed by every intermediary merely because the goods will ultimately be used for manufacture of notebooks. [Paras 4]

Supply of uncoated paper to an established manufacturer for actual use in manufacture of the specified books is exempt; supplies at intermediary stages are taxable independently.

Recipient's tax liability and input tax credit on uncoated paper reels - Tax liability of the recipient of uncoated paper reels supplied by paper mills and availability of input tax credit - HELD THAT: - Tax is ordinarily payable by the supplier on the incidence of supply. Since uncoated paper and paperboard have not been notified for reverse-charge payment by the recipient, the applicant does not incur liability as recipient. Input tax credit is governed by the statutory conditions for credit. [Paras 4]

The applicant is not liable to pay tax as recipient of the paper reels, and input tax credit is subject to section 16 of the CGST Act and the applicable rules and notifications.

Advance ruling jurisdiction over documentary requirements for exemption - Maintainability of questions seeking prescription of declarations, undertakings and documentary evidence for satisfaction of the exemption end-use condition - HELD THAT: - The notification did not refer to documentary mechanisms or prescribed evidentiary requirements. The authority could not extend an application concerning notification applicability by importing matters not specified in the notification or statute. [Paras 1]

The questions concerning documentary evidence and declarations were not admitted.

Final Conclusion: Ruled or lined loose paper sheets remain classifiable under Heading 4802. The exemption is confined to supplies to manufacturers establishing actual use in the specified books, while intermediary supplies are independently taxable and the recipient bears no reverse-charge liability on the paper reels.

Scope of advance ruling on applicability of notification - End-use-based GST exemption for uncoated paper - Actual use as basis of GST rate classification - Effective date of GST rate notifications

Scope of advance ruling on applicability of notification - Admissibility of questions concerning the supplier's verification of end use, documentary requirements and liability for the purchaser's subsequent misuse of exempt uncoated paper - HELD THAT: - The notification did not address the proposed requirements for verification, documentation or supplier liability. An advance ruling on the applicability of a notification cannot import concepts or mechanisms not expressed in that notification; those questions were therefore outside the permissible scope. [Paras 1]

The questions relating to verification, documentation and supplier liability were not admitted.

End-use-based GST exemption for uncoated paper - Actual use as basis of GST rate classification - GST treatment of uncoated paper and paperboard under tariff heading 4802 supplied for manufacture of exercise books, graph books, laboratory notebooks and notebooks - HELD THAT: - The exemption entry carves out uncoated paper and paperboard of the specified kind, in the prescribed forms, when used for exercise books, graph books, laboratory notebooks and notebooks, from the taxable entry for other uses. The classification is determined solely by actual use, not by intended use, paper grade or specifications. Actual use can properly be ascertained at the stage of manufacture, and the recipient's status as a manufacturer of the specified books must be established. [Paras 4]

Supply to a manufacturer established to have used the goods for the specified books is exempt; the same goods used for other purposes fall under the taxable entry.

Effective date of GST rate notifications - Existence of ambiguity concerning the rate transition for supplies of uncoated paper and paperboard under tariff heading 4802 - HELD THAT: - The relevant Central and corresponding State notifications expressly made the revised entries effective from 22.09.2025. Their stated commencement left no ambiguity concerning the date of rate transition. [Paras 4]

There is no ambiguity regarding the effective date of the revised rate notifications.

Final Conclusion: The application was partly admitted. The Authority held that the exemption for the specified uncoated paper depends upon its established actual use in manufacture of the specified books, while the questions concerning supplier compliance obligations were not admitted.

Limitation for reassessment notice for pre-2021 assessment year - Validity of reassessment notice issued for AY 2017-18 after expiry of the six-year period prescribed under the erstwhile reassessment regime

HELD THAT:- There is an inordinate delay in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner.

Even otherwise, we find no good ground to interfere with the impugned order(s) passed by the High Court [2024 (12) TMI 1797 - DELHI HIGH COURT]

Validity of Penalty notice - vagueness - Defective show-cause notice as foundation for penalty - Validity of penalty founded on a cyclostyled show-cause notice in which irrelevant particulars were not struck off

HELD THAT:- We are not inclined to interfere with the impugned order [2025 (11) TMI 2061 - BOMBAY HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India.

The Special Leave Petition is, accordingly, dismissed and the accompanying interlocutory application(s), if any, stands disposedof.

Validity of reassessment sanction under extended limitation - Jurisdiction to revive reassessment proceedings - Sanction by competent specified authority for reassessment

HELD THAT: - Where the three-year period from the end of the relevant assessment year expired during the period covered by TOLA, the authority specified under section 151(i) could grant sanction only up to 30th June 2021. The order under section 148A(d) and consequential notice having been issued thereafter, sanction from the authority specified under section 151(ii) was mandatory. Sanction by the Principal Commissioner under section 151(i) therefore vitiated the jurisdiction to revive reassessment proceedings. Case followed RAMESH BACHULAL MEHTA [2025 (8) TMI 1322 - BOMBAY HIGH COURT] [Paras 8, 9]

The impugned order reviving the reassessment proceedings was quashed and set aside.

Final Conclusion: The writ petition was allowed and the impugned order reviving reassessment proceedings was quashed and set aside for want of valid sanction from the competent specified authority.

Order fastening a company's tax liability upon its director under Section 179 - Denial of Natural justice - non-consideration of reply in director's liability proceedings

HELD THAT: - The respondent did not dispute that the reply and accompanying documents furnished by the petitioner were overlooked while passing the order. An order determining a Director's liability for company tax dues without considering the response and material produced is in breach of the cardinal principles of natural justice. [Paras 7]

The impugned order was quashed and set aside, and the matter was remanded for fresh decision in accordance with law and the principles of natural justice within 12 weeks.

Final Conclusion: The petition was allowed to the extent that the impugned order was quashed for breach of natural justice and remanded for fresh consideration.

Eligibility for Direct Tax Vivad Se Vishwas Scheme, 2024 in respect of disputed interest - Pending writ challenging interest and rejection of waiver application - Scope of FAQ on interest waiver applications

Eligibility under the Direct Tax Vivad Se Vishwas Scheme, 2024 for disputed interest under sections 220(2) and 234B, where the waiver application had been rejected and a writ petition challenging the interest demand remained pending on the specified date - HELD THAT: - A harmonious reading of the definitions of "appellant", "disputed interest" and "tax arrear" establishes that a person who has challenged an interest demand by a pending writ petition on the specified date is an appellant and the disputed interest constitutes tax arrears. FAQ 15 concerns only a waiver application pending before the competent authority; it does not exclude a person whose waiver application has already been rejected and whose challenge to that rejection and the interest demand is pending before the High Court. A purposive construction of the Scheme, intended to resolve pending tax disputes, requires inclusion of such a genuine disputant. [Paras 19, 21, 22, 23, 24]

The petitioner was held to be an appellant under section 89(1)(a) of the 2024 Act; the rejection of the application under the Scheme was set aside and the authorities were directed to reconsider it accordingly.

Final Conclusion: The rejection of consideration under the Direct Tax Vivad Se Vishwas Scheme, 2024 was set aside, with a direction to reconsider the case by treating the petitioner as an appellant. The pending challenge to the interest determination was consequently disposed of as infructuous.

Section 14A disallowance in computation of book profit - Minimum Alternate Tax u/s 115JB computation - HELD THAT: - The settled legal position as relying on GUJARAT URJA VIKAS NIGAM LTD. [2020 (3) TMI 232 - GUJARAT HIGH COURT] is that no addition to book profit can be made merely on the basis of the disallowance computed under Section 14A. [Paras 5, 6]

The Tribunal's deletion of the addition from book profit was upheld; no substantial question of law arose.

Final Conclusion: The Tax Appeal was dismissed, as the Tribunal's view that a Section 14A disallowance cannot be added to book profit under Section 115JB was in conformity with the settled legal position.

Section 54F exemption for transfer of residential house - Section 54 exemption for investment in spouse's name

Section 54F exemption for transfer of residential house - Availability of capital-gains exemption u/s 54F where both the original asset and the new asset are residential properties - HELD THAT: - Section 54F applies where the long-term capital asset transferred is not a residential house. Since both the asset sold and the asset acquired were residential properties, the appellant could not claim exemption under that provision; the authorities had failed to notice this distinction. [Paras 8]

The claim for exemption u/s 54F was held unavailable.

Section 54 exemption for investment in spouse's name - Exemption u/s 54 for capital gain from a residential house reinvested in a residential property solely in the spouse's name - HELD THAT: - For exemption under section 54, the same assessee must execute both the sale of the original residential asset and the purchase or construction of the new residential asset within the stipulated period. Husband and wife are distinct legal entities, and a transaction undertaken by the husband cannot be clubbed with a purchase made solely by the wife.

The judgment of the Delhi High Court in Kamal Wahal’s case [2013 (1) TMI 401 - DELHI HIGH COURT] was considered by the Division Bench of this Court in Kamal Kant Kamboj’s [2017 (8) TMI 285 - PUNJAB AND HARYANA HIGH COURT] and disagreed with. Having gone through both the afore referred judgments, we respectively agree with the view taken in Kamal Kant Kamboj’s case (supra).

Gurnam Singh’s case [2008 (4) TMI 28 - PUNJAB AND HARYANA HIGH COURT], was also considered and distinguished in Kamal Kant Kamboj’s case (supra), which distinction, on facts, would also apply to the present appeal.

Jangpal Singh Tanwar’s case [2023 (8) TMI 1736 - PUNJAB AND HARYANA HIGH COURT] is a Division Bench judgment of this Court which is also distinguishable on facts because in the case in hand, the reinvestment of the capital gain is solely in the name of the assessee’s wife whereas in Jangpal Singh Tanwar’s case (supra), the reinvestment was jointly in the name of the assessee, his wife and his son, and that the joint owner(s) had also invested at the time of reinvestment of the capital gain arisen from the sale of the original asset.[Paras 11, 17, 19, 20, 21]

The appellant was held ineligible for exemption under section 54, and the appeal was dismissed.

Final Conclusion: The appeal was dismissed. The claim under section 54F was inapplicable, and exemption under section 54 was unavailable because the new residential property was acquired solely in the spouse's name.

Live sports broadcasting rights as royalty - Apportionment of composite media-rights consideration

Live sports broadcasting rights as royalty - Copyright in live telecast - Characterisation of consideration for live telecast rights of cricket matches under a composite media-rights agreement as royalty - HELD THAT: - Live telecast of a sporting event does not involve a copyright in a work capable of being transferred for the purpose of royalty. The Revenue having failed to dislodge the finding that the live broadcast rights did not carry copyright, the consideration attributable to live feed could not be treated as royalty; however, repeat or non-live telecast rights remained within the scope of royalty. [Paras 7, 10]

Consideration attributable to live broadcasting was held not to be royalty, while consideration for non-live broadcasting was held taxable as royalty.

Apportionment of composite media-rights consideration - Disallowance for non-deduction of tax on royalty - HELD THAT: - The composite consideration was apportioned according to the established viewership data, which showed 93 per cent live and 7 per cent non-live viewership. Since the payment allocable to non-live rights was royalty and tax had not been deducted, disallowance was sustainable only to that extent. [Paras 8, 10]

The allocation was modified to 93:7, and disallowance was confirmed in respect of 7 per cent of the composite payment, with consequential recomputation directed.

Final Conclusion: All three Revenue appeals were partly allowed. The disallowance was confined to the consideration allocable to non-live broadcasting rights in the ratio of 7 per cent.

Non deduction of TDS of payment of EDC charges to HUDA - demand u/s 201(1) and the levy of interest u/s 201(1A) - Deductee-paid-tax exception under first proviso to section 201(1) - Availability of relief from liability for non-deduction of tax on External Development Charges paid to HUDA, where the payee may have accounted for the receipts and paid tax thereon

HELD THAT:- This issue is covered by the decision of the coordinate Bench in the case of M/s. M3M India Pvt. Ltd. [2026 (3) TMI 795 - ITAT DELHI] the Tribunal held that the Assessing Officer must verify whether the conditions in the first proviso to section 201(1), including the payee's furnishing of return, inclusion of the relevant receipt in income and payment of due tax, were fulfilled. The Tribunal did not adjudicate the underlying liability on merits and directed verification of the statutory conditions. [Paras 7]

The impugned order was set aside and the matter remanded to the Assessing Officer; if the conditions of the first proviso to section 201(1) are satisfied, the assessee cannot be saddled with liability under sections 201(1) and 201(1A).

Final Conclusion: The appeal was allowed for statistical purposes by setting aside the order and remanding the matter for verification under the first proviso to section 201(1).

Addition towards difference in Long-Term Capital Gains by invoking section 50C - adoption of enhanced stamp valuation prevailing at registration - Stamp valuation on date of agreement for land transfer

Applicability of the proviso to section 50C(1) to land transferred under a rehabilitation arrangement where the consideration was fixed and partly acted upon before registration - HELD THAT: - The proviso to section 50C(1) is intended to prevent artificial enhancement of deemed consideration where stamp valuation increases after the consideration has been fixed and before registration. Though no conventional bilateral agreement for sale was executed, the statutory rehabilitation proceedings identifying the property and consideration, corresponding resolutions of the transferor and transferee, receipt of advance through banking channels, and the final sanctioned scheme constituted a continuous and contemporaneous chain establishing that the consideration had crystallised before registration. The subsequent enhancement of guideline value and the later determination by the stamp authority could not retrospectively alter that agreed consideration; nor was there independent valuation material establishing a higher actual fair market value.

The Hon'ble Madras High Court in the case of CIT v. Vummudi Amarendran [2020 (10) TMI 517 - MADRAS HIGH COURT] has held that the proviso to section 50C(1), which enables adoption of the stamp valuation as on the date of agreement where the date of agreement and registration are different, is a beneficial provision intended to relieve hardship and is to be given retrospective effect. The said principle supports the assessee's contention that the substance of the transaction and the date on which the consideration was fixed and acted upon are material considerations while applying section 50C of the Act.[Paras 70, 71, 72, 73, 74]

The assessee was entitled to adoption of the stamp valuation relevant to the date on which the consideration was fixed and acted upon, and the addition to long-term capital gains made under section 50C was deleted.

Final Conclusion: The appeal was allowed on merits and the addition to long-term capital gains under section 50C was deleted. The challenge to the reopening was left unadjudicated as academic.

TP Adjustment - Internal CUP for benchmarking interest on Masala Bonds - Arm's length price of intra-group technical consultancy services - Interest u/s 234C on returned income

Internal CUP for benchmarking interest on Masala Bonds - Fixed-rate unsecured borrowings - Benchmarking of interest paid on fixed-rate Masala Bonds by reference to internal comparable uncontrolled transactions - HELD THAT: - Where data concerning an internal comparable uncontrolled transaction is available, it has a higher degree of comparability and should be preferred to an external comparable. The fixed-rate Masala Bonds were issued in the same period in which the comparable borrowings were undertaken, and the adoption of a floating external benchmark was inconsistent with the strict comparability required under the CUP method. [Paras 20, 21]

The Internal CUP adopted for benchmarking the interest on Masala Bonds was accepted and the transfer-pricing adjustment was deleted.

Arm's length price of intra-group technical consultancy services - Shareholder activities - Nil ALP determination - Transfer-pricing adjustment for technical consultancy and intra-group services received from the associated enterprise - HELD THAT: - The specialised technical services relating to operation and maintenance of the power plants did not constitute shareholder activities. The assessee established the need for, rendition of, and receipt of the services through agreements and supporting material. Having accepted the CUP method, the Transfer Pricing Officer could not determine the ALP at nil without bringing comparable uncontrolled transactions on record; once services were received, their ALP could not be fixed at nil. [Paras 34, 35]

The transfer-pricing adjustment in respect of technical consultancy and intra-group services was deleted.

TDS credit subject to factual verification - Claim for credit of tax deducted at source - HELD THAT: - The grant of TDS credit required factual verification. [Paras 37]

The matter was restored to the Assessing Officer to grant TDS credit in accordance with law after verification.

Interest under section 234C on returned income - Levy of interest for deferment of advance tax on assessed income. - HELD THAT: - Interest under section 234C is chargeable only on the returned income and not on the assessed income. [Paras 38]

The ground concerning interest under section 234C was disposed of accordingly.

Prematurity of challenge to initiation of penalty proceedings - Challenge to the initiation of penalty proceedings under section 270A. - HELD THAT: - A challenge to the mere initiation of penalty proceedings was premature at this stage. [Paras 39]

The challenge to initiation of penalty proceedings was dismissed.

Final Conclusion: The transfer-pricing adjustments relating to interest on Masala Bonds and technical consultancy and intra-group services were deleted. The claim for TDS credit was restored for verification, while interest under section 234C was directed to be computed only on returned income.

Condonation of delay- unexplained delay of 87 days - sufficient cause - Locus standi of former director to appeal against company's assessment

Condonation of delay-sufficient cause - Maintainability of an appeal filed beyond limitation without an application or material showing sufficient cause for delay - HELD THAT: - The statutory power to admit a delayed appeal is exercisable only upon satisfaction that sufficient cause prevented timely filing. As no condonation application, explanation or supporting material was furnished despite notice of the defect, the delay remained unexplained. [Paras 3]

The appeal was held barred by limitation.

Locus standi of former director to appeal against company's assessment - Assessee aggrieved - Maintainability of an appeal by a former director in his individual capacity against an appellate order passed in the company's case - HELD THAT: - A right of appeal belongs to an assessee aggrieved, namely, a person against whom the challenged order operates or whose enforceable liability it determines. A former director acquires no independent right to contest the company's assessment merely because the company was struck off; personal liability must arise under a separate statutory order. No such order, nor any authority to prosecute the appeal for the company, was produced. The absence of the underlying assessment order and requisite clarifications further left the appeal fundamentally defective. [Paras 5, 6, 7, 8]

The appellant lacked locus standi, and the appeal was held not maintainable without examination of the assessment on merits.

Final Conclusion: The appeal was dismissed in limine as time-barred, fundamentally defective and not maintainable.

Jurisdictional validity of revision notice issued in incorrect official capacity - Revision for notional annual letting value of professionally used properties

Jurisdictional validity of revision notice issued in incorrect official capacity - Statutory exercise of power by designated authority - Validity of revision proceedings where the show-cause notice was issued in the capacity of Principal Commissioner after the officer had assumed formal posting as Chief Commissioner - HELD THAT: - Though a Chief Commissioner is empowered to exercise revisional power, the notice was issued under the designation of Principal Commissioner after the officer had ceased to hold that charge. An officer of a higher rank could perform the functions of the Principal Commissioner only pursuant to an express Board order under section 120(2), which was absent. Where the statute designates the authority and manner for exercise of power, the power must be exercised accordingly. [Paras 9, 10, 11, 12]

The notice was without jurisdiction and the consequential revisional order was quashed.

Revision for notional annual letting value of professionally used properties - Erroneous and prejudicial assessment order - Change of opinion in revision - Validity of revision of the assessment on the allegation that notional annual letting value had not been assessed in respect of properties claimed to have been used for professional purposes - HELD THAT: - The Assessing Officer had made specific inquiries into the disclosed properties, their use and their treatment under the head income from house property, and had adopted a plausible view that the properties were genuinely used for business or professional purposes. The properties transferred by gift were no longer owned by the assessee. The revisional authority neither conducted independent inquiry nor identified material showing why the Assessing Officer's view was erroneous or what further inquiry was required. Explanation 2 to section 263 could not be invoked where inquiry and verification had in fact been made; the revision was founded on a mere change of opinion. [Paras 27, 28, 29, 30, 31]

Independently on merits, the assessment order was neither erroneous nor prejudicial to the interests of the Revenue, and the revision was unsustainable.

Final Conclusion: The appeal was allowed and the revisional order was quashed for want of jurisdiction. It was also found unsustainable on merits because the assessment had been made after inquiry on a plausible view.

Disallowance of expenditure relating to exempt income-recording of satisfaction - Share valuation under discounted cash flow method

Disallowance of expenditure relating to exempt income u/s 14A -recording of satisfaction - assessee's suo motu disallowance rejected without recording dissatisfaction from examination of the accounts - HELD THAT: - Recourse to the prescribed method for computing disallowance is available only after the Assessing Officer examines the accounts and records satisfaction that the assessee's computation of expenditure attributable to exempt income is incorrect or inadequate. Mere computation of a different disallowance does not constitute the statutory satisfaction. As no such satisfaction was recorded, the assessee's suo motu disallowance was required to be accepted. [Paras 9, 10, 11]

The further disallowance under section 14A read with Rule 8D was deleted.

Addition for excess share premium u/s 56(2)(viib) - Share valuation under discounted cash flow method - Share premium addition based on subsequent actual results - Addition of share premium on conversion of share warrants by rejecting the discounted cash flow valuation on the basis of subsequent actual financial results and substituting the net asset value method - HELD THAT: - A valuation under the discounted cash flow method must be tested with reference to material and projections available on the valuation date; subsequent actual performance, by itself, cannot justify rejection of the valuation. Valuation is not an exact science and a valuation report cannot be displaced without identifying a specific discrepancy in the data or factors adopted. The past growth and later actual results also showed that the projections could not be treated as inherently aggressive or unrealistic. The Assessing Officer was therefore not justified in rejecting the discounted cash flow valuation and substituting the net asset value method.

Hon’ble Delhi High Court in the case of PCIT vs. A.H. Multisoft (P.) Ltd [2025 (6) TMI 245 - DELHI HIGH COURT] has held that the report of an expert cannot be rejected on the basis of general disclaimers without pointing out any material error in data as used by experts. It has further been held that DCF method of determining valuation of share is not an exact science and can never be done with arithmetic precision and therefore the valuation by the valuer has to be accepted unless specific discrepancy in the figures and factors taken are found.

Also in the case of PCIT v. Cinestaan Entertainment Pvt. Ltd.[2021 (3) TMI 239 - DELHI HIGH COURT] the attempt by the revenue to compare the projections made in the valuation report when compared with the actual results leading to additions u/s 56(2)(viib) of the Act was specifically rejected.[Paras 30, 31, 32, 33, 34]

The addition under section 56(2)(viib) was deleted.

Final Conclusion: The appeal was allowed. The disallowance relating to exempt income and the addition of share premium were deleted.

MEIS rewards under the Foreign Trade Policy, 2015 - nature of benefit received - revenue or capital receipts - Scope of government assistance "by whatever name called" - Purpose test for export incentives

Taxability of duty credit scrips received as rewards under the Merchandise Exports from India Scheme under the amended definition of income - HELD THAT: - Under the purpose test, MEIS rewards offset costs and infrastructural inefficiencies incidental to export activity and enable exporters to carry on their business more profitably. The rewards are computed with reference to exports already made, are recurring, freely transferable and usable, and are neither linked to capital investment, establishment or expansion of a unit nor subject to mandatory application towards a capital purpose. Further, the expression "assistance ... by whatever name called" in section 2(24)(xviii) is deliberately wide and is not confined by ejusdem generis where the legislative intent is clear. A MEIS reward falls within the statutory descriptions of governmental assistance, including grant or cash incentive, and does not attract either specified exclusion. [Paras 80, 81, 82, 83, 84]

MEIS rewards are taxable as revenue receipts and form part of income under section 2(24)(xviii) from assessment year 2016-17.

Final Conclusion: The question was answered in the affirmative: MEIS assistance received under the Foreign Trade Policy, 2015 is taxable as a revenue receipt from assessment year 2016-17. The appeals were directed to be placed before the regular Bench for disposal according to law.

Customs exemption for specialised petroleum-operation equipment - Construction of exemption entry by description of goods

Eligibility of MEG Reclamation Plant for petroleum-operation exemption - Relevance of tariff heading in List 33 - Eligibility of a Mono Ethylene Glycol Reclamation Plant, imported for offshore and onshore petroleum operations, for exemption exemption in terms of S.No.4 of list 33 of Notification No. 50/2017-Cus dt.30.06.2017 (S.No.404), as amended or otherwise.

HELD THAT: - The exemption under Serial No. 404 extends to goods described in column 3 of List 33 which also fall within the chapters, headings, sub-headings or tariff items specified in column 2 of the main table. It does not require conformity with the heading shown in column 2 of List 33. The plant, falling within Chapter 84 and admittedly imported by a specified person for petroleum operations, answered the description of equipment or units for specialised services for offshore and onshore petroleum operations. The regulatory certification and the TRU clarification supported this construction. The subsequent creation of a specific entry for the plant did not exclude its earlier coverage under the general entry; nor was there any ambiguity attracting strict construction against the importer. The entry, intended to promote petroleum and natural-gas exploration, production and processing, was also held to be a beneficial exemption.

Reliance placed by the Original Authority as well as the department in the present appeal in the case of CC (Import), Mumbai Vs Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] is also not applicable to the facts of the case. [Paras 34, 35, 39, 42, 50]

The plant was eligible for the claimed exemption during the relevant period, and the departmental appeal was dismissed.

Final Conclusion: The departmental appeal was dismissed, and the respondent's entitlement to exemption for the imported MEG Reclamation Plant under Serial No. 404 read with List 33 was sustained.

Post-clearance amendment of Bills of Entry for preferential tariff benefit - Retroactively issued certificate of origin under India-Japan CEPA - entitlement to benefit of the Notification No.34/2018-Customs dated 27.03.2018.

Whether amendment to Bills of entries can be allowed to extend the benefit of exemption Notification if the certificate as required under the exemption notification is produced at a belated stage? - HELD THAT: - Appendix-A to Annexure-2 of the CEPA Rules permits an importer who did not possess a Certificate of Origin at importation to seek refund of excess duty upon producing the certificate and relevant documents. Section 149 of the Customs Act, 1962 must be read harmoniously with those Rules, which permit submission of the Certificate of Origin with retrospective effect from the date of clearance. [Paras 16, 17]

The matter was remanded to the adjudicating authority to consider the Certificate of Origin, reassess the Bills of Entry, and allow the claim for concessional duty under the exemption notification, if admissible.

Final Conclusion: The appeal was disposed of by remanding the matter for reassessment after consideration of the retroactively issued Certificate of Origin and the claimed preferential tariff benefit.

Status of Director Identification Number - deactivation under section 164 - Natural justice denied - hearing before DIN deactivation

Validity of showing the petitioner's DIN status as disqualified under section 164(2)(b), without notice or an opportunity of hearing and without compliance with the prescribed grounds for DIN deactivation - HELD THAT: - The website notice expressly reflected disqualification under section 164(2)(b). The authorities' assertion that the action was under section 164(2)(a) rested on an internal communication which was neither supplied to the petitioner nor uploaded on the Ministry's website. Section 164 concerns disqualification for appointment as director and does not provide for deactivation of DIN; such deactivation is governed by Rule 11 of the Companies (Appointment of Directors) Rules, 2014, compliance with which was not established. In the absence of a hearing, the impugned action could not be sustained.

In the case of Imraj Ali Molla [2020 (3) TMI 1060 - CALCUTTA HIGH COURT] and Jai Shankar Agrahari [2020 (4) TMI 354 - ALLAHABAD HIGH COURT] the Coordinate Bench and the Hon’ble Division Bench of Allahabad High Court held that an opportunity of hearing to the petitioner is required but in the present case admittedly no opportunity of hearing has been provided and it is the specific case of the respondent authorities that the opportunity of hearing is not required as the respondent authorities have invoked the provision of Section 164(2)(a).[Paras 13, 15, 16, 17, 18]

The impugned website notice showing the DIN status as disqualified under section 164(2)(b) was quashed, without prejudice to lawful action by the authorities.

Final Conclusion: The writ petition was disposed of by quashing the impugned DIN-disqualification notice, while leaving the authorities free to proceed in accordance with law.

Closure of CIRP where statutory withdrawal procedure is infeasible - Determination of CIRP costs - Closure of the CIRP where withdrawal u/s 12A read with Regulation 30A could not be effectuated because CIRP costs remained uncrystallised and the prescribed Form FA and bank guarantee could not be furnished

HELD THAT: - Though the statutory requirements for withdrawal could not ordinarily be disregarded, all creditor claims had been settled or were subject to an accepted full and final settlement, and the appellant had undertaken to pay the CIRP costs as determined by the Adjudicating Authority. As the operational creditor would not furnish the bank guarantee and the CIRP costs were pending determination, the statutory withdrawal mechanism was not feasible. In the absence of a resolution plan, continuation of the CIRP would serve no insolvency-resolution purpose and would only increase costs. [Paras 29, 30, 32, 33]

The CIRP was closed subject to payment of the agreed settlement to the operational creditor and payment of CIRP costs after their determination by the Adjudicating Authority.

Final Conclusion: The appeal was disposed of by closing the CIRP on the agreed settlement terms, while preserving determination and payment of the CIRP costs by the Adjudicating Authority.

Personal guarantor's insolvency resolution application - Misuse of interim moratorium to stall secured-asset enforcement

Bona fides of the personal guarantor's applications for insolvency resolution filed following possession notices for enforcement of secured assets - HELD THAT: - An application by a personal guarantor is intended to initiate a structured insolvency resolution process through a repayment plan, and cannot be used as a device to obtain an interim moratorium for frustrating creditor enforcement. The appellant had not attempted repayment after the demand notice or during the subsistence of the interim moratorium under the first application; both applications were filed immediately upon steps for taking physical possession. The timing and conduct established that the applications were intended to stall the secured creditor's recovery proceedings, rather than to secure genuine insolvency resolution.

The Appellant/Personal Guarantor has not attempted repayment in the two years after the demand notice sent by financial creditor, nor in the proceedings of first PIRP and It was only upon receipt of the possession notice, he rushed to file the Section 94 petitions on both occasions. This clearly shows that the petitions are not a bona fide attempt of resolution but an attempt to misuse the interim moratorium under Section 96 to stall SARFAESI proceedings and shield the secured asset.

Therefore, in our considered opinion, it has been rightly held by the learned adjudicating authority that the purpose of filing both the petitions under Section 94 of the Code by the applicant was not for repayment of the loan, rather, the same was for obtaining an interim moratorium to frustrate the possession-taking process initiated by the financial creditor and the Learned Adjudicating Authority has rightly held that the ratio of Syed Sirajis Salikin Khadari [2025 (4) TMI 1545 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI - LB] is squarely applicable to the facts of this case.

We recall that section 94 of the Code has been enacted for the benefit of those personal guarantors who are genuinely interested in the PIRP and in submitting repayment plan. However, the said process may not be allowed to be misused by those personal guarantors who are using the same only as a shield to frustrate the recovery proceedings initiated by the financial creditors for enforcement of their security interest. [Paras 30, 31, 32, 33, 34]

The rejection of the second application was upheld and the appeal was dismissed.

Final Conclusion: The appeal was dismissed, the applications having been found to be a misuse of the interim moratorium mechanism to obstruct enforcement of the secured assets rather than a bona fide attempt at insolvency resolution.

Regular bail to woman accused under PMLA - First proviso to section 45(1) PMLA - Exemption from twin conditions - Discretionary bail - General bail considerations

What are the parameters for granting regular bail to a woman – accused under the PMLA? - HELD THAT: - The first proviso to section 45(1) exempts every woman accused from the statutory twin conditions, without permitting sub-classification based on education, social standing or professional status. The proviso is, however, enabling and discretionary; it does not create an automatic or indefeasible right to bail.

Upon displacement of the twin conditions, the Court must apply the ordinary principles of bail, including the prima facie case, attributed role, gravity, likelihood of absconding, witness influence and the prospect of trial concluding within a reasonable time. In the present case, the prosecution complaint had been filed, further custodial interrogation was not required, the material was substantially documentary and electronic, and no tangible basis was shown for flight risk or witness influence. The prolonged custody and the remote prospect of an early trial, having regard to the extensive prosecution material and witnesses, warranted release. [Paras 15, 16, 17, 18, 19]

Regular bail was granted subject to conditions intended to secure the petitioner's presence, prevent misuse of liberty or tampering with evidence, and preserve the integrity of the trial.

Final Conclusion: The petition for regular bail was allowed on the basis of the statutory dispensation available to a woman accused, the completed investigation, prolonged custody, and absence of tangible material establishing flight risk or likelihood of witness influence.

Provisional attachment - likelihood of concealment, transfer or dealing with proceeds of crime

Validity of provisional attachment of mortgaged properties where an interim restraint against creation of third-party rights was already operative and no recovery action for their sale had been commenced - HELD THAT: - Provisional attachment requires recorded material establishing that the proceeds of crime are likely to be concealed, transferred or otherwise dealt with so as to frustrate confiscation. The existing restraint against creation of third-party rights, coupled with the absence of any auction notice under the secured-recovery process or execution order for sale in arbitration proceedings, did not support the requisite apprehension. The Tribunal confined its determination to this statutory defect and left the issue whether the attached properties constituted proceeds of crime to the separate appeals of the respondent companies. [Paras 19, 21, 22]

The confirmation order and provisional attachment were set aside, subject to the properties remaining governed by the final outcome of the insolvency proceedings.

Final Conclusion: The appeals were disposed of by setting aside the impugned order for non-fulfilment of the statutory condition for provisional attachment, while preserving the effect of the pending insolvency proceedings.

Provisional attachment of the mortgaged property - apprehension of alienation to frustrate confiscation proceedings

Validity of provisional attachment of the mortgaged property in the absence of apprehension that it would be dealt with or alienated so as to frustrate confiscation proceedings - HELD THAT: - Provisional attachment may be invoked only where there is a likelihood that the person concerned will deal with or alienate the property so as to frustrate confiscation proceedings. A pre-existing interim restraint against creation of third-party rights, followed by admission of proceedings before the NCLT, negatived such apprehension in respect of the property. [Paras 33, 34]

The confirmation of the provisional attachment was set aside; however, the property remains subject to the final outcome of the proceedings before the NCLT.

Final Conclusion: The appeal was disposed of by setting aside the impugned order confirming the provisional attachment, subject to the property's continuing subjection to the final outcome of the NCLT proceedings.

Consistency in Revenue litigation - Extended limitation for service-tax demand

Consistency in Revenue litigation - Revenue challenge to the Tribunal's limitation ruling after acceptance of an identical ruling concerning a similarly situated assessee - HELD THAT: - The material dates, demand period, computation and the Tribunal's ground for allowing the appeals were substantially identical in both matters. Having accepted the Tribunal's decision in the analogous case, the Revenue could not adopt a contrary stand in the present case; such inconsistency would offend fairness and equity in revenue matters. [Paras 10, 12]

The Revenue was not permitted to challenge the identical Tribunal ruling in the present case after accepting it in the analogous case.

Extended limitation for service-tax demand - Invocation of the extended limitation period for service-tax demand arising from manufacture of alcoholic beverages under the arrangement with the brand owner - HELD THAT: - Invocation of the extended period requires proof of fraud, collusion, or suppression of facts with intent to evade duty. As the Revenue failed to establish any such conduct by the assessee, the extended limitation period was unavailable and the demand notice was time-barred. [Paras 15, 16, 17]

The Tribunal's finding that the demand was barred by limitation was upheld.

Final Conclusion: The Revenue appeal was dismissed, the demand having been held time-barred and the Revenue having impermissibly taken an inconsistent stand in an identical matter. No substantial question of law arose.

Service tax on sale of goods in works contracts - Exemption for lift irrigation works rendered to governmental authority - Extended limitation for wilful suppression

Service tax on sale of goods in works contracts - Valuation of service portion in works contracts - Levy of service tax on the sale-of-goods component of lift irrigation works and supply-and-installation contracts - HELD THAT: - A transfer of title in goods, including a deemed sale in a works contract, falls outside the definition of service. Service tax is confined to the service portion of a works contract, and the valuation mechanism specifically excludes the value of goods transferred, on which sales tax or VAT is payable. The material showed that sales tax had been paid on the goods component and, where a service component existed, service tax had been discharged; the authorities had ignored the invoices, returns and reconciliation produced by the petitioners. [Paras 8]

The sale-of-goods component could not be subjected to service tax, and the demands founded on inclusion of that component were unsustainable.

Exemption for lift irrigation works rendered to governmental authority - Interpretation of exemption notifications - Eligibility of lift irrigation works for exemption as services rendered to a governmental authority - HELD THAT: - A body established by Government with the requisite Government participation or control, which performs functions entrusted to municipalities under Article 243W, is a governmental authority for the exemption. The notification does not require that such body itself be a municipality. Lift irrigation projects intended to foster economic and social development fall within the relevant municipal functions, including planning for economic and social development and water supply. Once the project was found to fall within the exemption, the notification was to receive a workable and liberal application. [Paras 9]

The lift irrigation works were held exempt from service tax.

Extended limitation for wilful suppression - Limitation for service tax demand - Invocation of the extended limitation period for service tax demands founded on the claimed exemption and information reflected in Form 26AS. - HELD THAT: - A claim to exemption involves an interpretative question and does not, by itself, establish fraud, collusion, wilful misstatement or suppression with intent to evade tax. The extended period requires wilful suppression or another specified positive act; it cannot be invoked merely because the department relied upon Form 26AS or alleged non-payment. In the first petition, the notice was issued beyond the normal period of thirty months. In the second petition, following remand, the surviving question concerned inclusion of the value of pumps on which VAT had been paid, and the ingredients for the extended period were absent. [Paras 9]

The extended period was unavailable, and the show-cause notice and consequential demands were barred by limitation.

Final Conclusion: The writ petitions were allowed. The impugned service-tax orders and show-cause notice were set aside and quashed.

Service tax demand based on accounting discrepancies - Extended period for suppression with intent to evade service tax - Penalty for suppression of service tax

Service tax demand based on accounting discrepancies - Identification and classification of taxable service - Sustainability of service tax demand founded on differences between the Balance Sheet, Income Tax records and ST-3 Returns - HELD THAT: - Service tax liability can be confirmed only after identification and classification of the taxable service and determination of its taxable value. Accounting differences may warrant investigation but cannot, without correlation to the underlying agreements, invoices, work orders and contemporaneous records, establish that the receipts were consideration for taxable services.

The earlier decision in the appellant's own case [2023 (11) TMI 15 - CESTAT CHENNAI]on materially identical facts was followed, no material distinction having been shown.

Revenue’s approach is directly contrary to the decision of this Tribunal in CCE & ST, Pondicherry v. A.M. Manickam & Others [2017 (6) TMI 57 - CESTAT CHENNAI] wherein it was held that a Show Cause Notice must clearly identify the taxable services, specify the appropriate taxable category and disclose the basis of computation of the demand. A vague or omnibus demand founded merely on financial statements without proper classification cannot be sustained. The ratio squarely applies here, where the Department has proceeded on consolidated figures derived from the Balance Sheet and Income Tax records without first determining the taxable value relatable to each taxable service. [Paras 12, 13, 14, 15, 16]

The disputed service tax demand was set aside; the service tax liability recorded as admitted was sustained with applicable interest, subject to adjustment of any amount already paid.

Extended period for suppression with intent to evade service tax - Penalty for suppression of service tax - Invocation of the extended period and imposition of penalty for the alleged short-payment of service tax - HELD THAT: - The extended period requires proof of fraud, wilful misstatement or suppression with intent to evade tax, the burden of which rests on the Department. As the demand was founded on the appellant's disclosed Balance Sheet, Income Tax records and ST-3 Returns, without independent evidence of deliberate concealment, the statutory ingredients for invoking the extended period were not established. The admitted liability and delay in filing returns did not, by themselves, establish the requisite intent for penalty. [Paras 19, 20, 21, 22, 23]

The extended period was held inapplicable and the penalty under Section 78 was set aside; interest remained payable on the admitted service tax liability.

Final Conclusion: The appeal was partly allowed. The admitted service tax liability with applicable interest was sustained, while the balance demand and the penalty under Section 78 were set aside.

CENVAT credit of concessional CVD on imported steam coal - Importation of central excise exemption conditions into customs notifications

Eligibility to CENVAT credit of 1%/2% CVD paid on imported steam coal under a Customs notification, notwithstanding restrictions applicable to specified central excise exemptions - HELD THAT: - Additional duty of customs paid on imported steam coal is creditable under Rule 3(1)(vii) of the CENVAT Credit Rules, 2004. The restriction in the proviso to Rule 3(1)(i) is confined to duty of excise paid under the specified central excise notifications; it cannot be imported into a Customs notification which contains no condition prohibiting credit. Following the coordinate-Bench decision M/s Seshasayee Paper and Boards Ltd. [2026 (1) TMI 508 - CESTAT CHENNAI] on the identical issue, in the absence of any material that it had been varied or set aside, judicial consistency required adoption of that view. [Paras 6]

The denial of CENVAT credit was unsustainable; the Department's appeal was rejected.

Final Conclusion: The Department's appeal was rejected, and the cross-objection was disposed of accordingly.

Excise duty on scrap generated at job worker's premises - Liability of the principal manufacturer to pay excise duty on waste and scrap generated during job work and retained by the job worker

HELD THAT: - The Tribunal held that the CENVAT provisions did not require the principal manufacturer either to bring back scrap generated at the job worker's premises or to discharge duty thereon. Where the job worker retained and sold the scrap, the job worker was its manufacturer; consequently, excise duty could not be demanded from the principal manufacturer. Case followed M/s Rocket Engineering Corporation Ltd. [2005 (6) TMI 184 - CESTAT, MUMBAI] [Paras 9, 10]

The appellant was held not liable to pay excise duty on the scrap generated at the job workers' premises; the impugned order was set aside and the appeal allowed with consequential relief.

Final Conclusion: The appeal was allowed, holding that excise duty on scrap retained by job workers could not be recovered from the principal manufacturer.

Legislative competence for retrospective exclusion of revision limitation under the Gujarat VAT Act - Validity of Section 84A of the Gujarat VAT Act, retrospectively excluding the period spent in higher-court proceedings while computing limitation for revision notices

HELD THAT: - The issue stood governed by the Supreme Court decision State of Telangana and others Vs. Tirumala Constructions [2023 (10) TMI 1208 - SUPREME COURT] holding that amendments to the Gujarat VAT Act made after 1 July 2017 were void for want of legislative competence. The Court also noted that the earlier High Court decision on the same issue had been accepted by the State. [Paras 4, 5]

The writ petitions were allowed in terms of the Supreme Court decision, and the impugned revision notices were quashed and set aside.

Final Conclusion: The writ petitions succeeded in accordance with the binding Supreme Court decision, and the impugned notices were quashed and set aside.

Dishonour of cheque - Inquiry before issue of process against accused residing outside territorial jurisdiction - Non-compliance with the mandatory inquiry u/s 200 and 202 - Statutory presumption on admitted execution of cheque - Quashing of cheque dishonour complaint at pre-trial stage - Presumption of legally enforceable debt or liability - Rebuttable presumption - Inherent jurisdiction

HELD THAT:- The Special Leave Petition was dismissed without interference; the High Court's [2026 (8) TMI 89 - ORISSA HIGH COURT] observations were directed not to affect the trial, and all contentions were kept open.

Presumption of legally enforceable debt on admitted cheque execution - Successor Magistrate deciding summons trial

Presumption of legally enforceable debt on admitted cheque execution - Rebuttal of presumptions under the Negotiable Instruments Act - Conviction for dishonour of a cheque where the accused admitted the signatures on the cheque and money receipt, but questioned the complainant's financial capacity and the loan transaction - HELD THAT: - Admission of execution and signature on the cheque attracted the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act. The complainant's financial capacity and the asserted breach of the income-tax provision concerning cash loans did not dislodge those presumptions, as the accused failed to rebut them through cogent and reliable evidence. [Paras 13, 14, 16]

The concurrent conviction under Section 138 of the Negotiable Instruments Act was upheld.

Successor Magistrate deciding summons trial - Inapplicability of Section 326(3) of the Code of Criminal Procedure - Validity of the judgment delivered by a succeeding Magistrate on evidence recorded by a predecessor in the cheque-dishonour prosecution - HELD THAT: - The trial court record showed that the case had been conducted as a summons trial and not as a summary trial. Consequently, the bar invoked under Section 326(3) of the Code of Criminal Procedure was inapplicable, and no prejudice or illegality was established. [Paras 15]

The challenge to the mode of trial and the succeeding Magistrate's decision was rejected.

Final Conclusion: The criminal revision was dismissed, as no material illegality, impropriety, perversity, or jurisdictional error was found in the concurrent conviction and sentence. The petitioner was directed to surrender for serving the remaining sentence.

Remuneration of Panel Valuer - Post-assignment sanction of professional fees exceeding prescribed ceiling - Interest on delayed payment of professional fees - Recovery of professional fees from assets in liquidation - Personal liability for corporate debts

Applicable guidelines for valuation in aid of sale - Sanction of professional fees exceeding prescribed ceiling - Applicability of the 1994 Guidelines and sanction of a Panel Valuer's fees exceeding the prescribed ceiling for separate valuation reports concerning distinct immovable properties - HELD THAT: - The assignment concerned inspection and valuation of immovable properties in aid of their proposed sale, and not determination of royalty or compensation; consequently, the 1994 Guidelines, being in force when the Valuer was appointed and performed the work, governed the claim. The requirement of prior sanction for fees exceeding the ceiling relates to payment and does not mandate sanction before appointment. Where distinct properties are separately valued, the ceiling ordinarily applies to each valuation exercise. Since the work was accepted without any finding of deficiency, inflation of bills or unreliability of the reports, post-assignment sanction of the higher fees was justified. [Paras 34, 35, 36, 38, 39]

The revised principal professional fees were sanctioned in full.

Interest on delayed payment of professional fees - Overlapping compensation for delay - Entitlement of the Panel Valuer to interest for prolonged non-payment and to a further inflation-linked enhancement for the same period - HELD THAT: - Though the Guidelines contain no express provision for interest, reasonable compensation may be awarded where fees earned under a Court-authorised assignment remain unpaid for an extraordinary period without fault of the professional. Interest at 6% per annum, being the rate claimed, was fair and reasonable. Interest compensates for deprivation of money and its time value; a further enhancement for erosion in purchasing power for the identical period, particularly when calculated on principal and interest together, would amount to overlapping compensation. [Paras 41, 42, 43, 44, 45]

Interest at 6% per annum was awarded on the principal fees, including continuing interest until payment, while the inflation-linked enhancement was rejected.

Recovery of professional fees from assets in liquidation - Discharge of Court Receiver - Manner of recovery of the sanctioned professional fees where the suit account held by the Court Receiver contains no available funds and the company is stated to be in liquidation - HELD THAT: - Under the applicable declaration, a Panel Valuer must claim fees from funds available in the concerned proceedings and cannot look personally to the Court Receiver or the State Government. As no fund or asset under the Court Receiver's control was identified, payment could not be directed from the Court Receiver's general or office accounts or from public funds. The claim was therefore required to be lodged before the competent Official Liquidator; the priority and satisfaction of that claim were left to be decided under the applicable liquidation law. As the assigned functions had substantially been completed, no further action by the Court Receiver was necessary. [Paras 47, 48, 49, 51, 52]

The Valuer was granted liberty to lodge its sanctioned claim before the competent Official Liquidator, with the Court Receiver directed to forward the relevant material and thereafter discharged without passing accounts.

Personal liability for corporate debts - Freezing of assets of separate corporate entities - Request to fasten personal liability upon an individual associated with the company and to freeze assets of separate companies for satisfaction of the Valuer's claim - HELD THAT: - Mere association with the company, or relationship with a person formerly associated with it, does not establish personal liability for the company's debts or justify proceeding against assets of distinct corporate entities. Such relief requires substantive material, legally sustainable pleadings and an opportunity of hearing to the affected persons or entities. [Paras 50]

The requested personal-liability and asset-freezing reliefs were rejected, without prejudice to independent proceedings permissible in law.

Final Conclusion: The Valuer's revised professional fees and interest were sanctioned, but the further inflation-linked claim was rejected. Recovery was directed to be pursued before the competent Official Liquidator, and the Court Receiver was discharged.

Vicarious liability of company officers for cheque dishonour - Pre-summoning verification of corporate accused

Vicarious liability of company officers for cheque dishonour - Unimpeachable corporate records - Liability of a person impleaded as Joint Managing Director in a cheque-dishonour complaint despite uncontroverted corporate records showing that he was never an officer of the accused company - HELD THAT: - Vicarious liability under Section 141 depends upon the person's actual role in, and responsibility for, the conduct of the company's business at the relevant time, and not merely on the designation attributed in the complaint. The corporate records available from the Ministry of Corporate Affairs, showing that the petitioner was never a Director of the accused company, remained uncontroverted; nor did the complaint or the hearing disclose any role played by him in its affairs. Such unimpeachable material could be considered at the threshold, and requiring him to face trial would amount to abuse of process. [Paras 20, 21, 22, 23]

The complaint, summoning order and consequential proceedings were quashed qua the petitioner.

Pre-summoning verification of corporate accused - Corporate records in cheque-dishonour complaints - Prospective procedural safeguards for arraigning officers of a corporate accused in cheque-dishonour complaints - HELD THAT: - To prevent erroneous impleadment of persons who had ceased to hold office or never held responsibility for the company's affairs, the Court directed that a complainant proceeding against a company must annex the corporate identification particulars and a certified copy of Form DIR-12. Registration without those documents is permissible only where their non-availability despite due diligence is specifically affirmed, and the Magistrate records reasons before taking cognizance. [Paras 24]

The directions were made applicable prospectively to complaints under Sections 138 and 141 of the Negotiable Instruments Act against corporate accused.

Final Conclusion: The complaint and consequential proceedings were quashed qua the petitioner, as the record conclusively established that he was never connected with the accused company's affairs. Prospective directions were also issued to ensure verification of corporate status and responsible officers before cognizance in cheque-dishonour complaints against companies.

Judicial review of tender decisions - Post-bid alteration of tender quotation - Outstanding contractual dues and fresh tender process - inclusion or exclusion of GST in the base price

Validity of rejection of a catering-services tender quotation based on the bidder's stated GST treatment and subsequent request to alter the quotation - HELD THAT: - The Hon'ble Supreme Court in Banshidhar Construction Pvt. Ltd. [2024 (10) TMI 213 - SUPREME COURT] after considering the earlier decisions in Sterling Computers Limited [1993 (1) TMI 300 - SUPREME COURT] Tata Cellular [1994 (7) TMI 307 - SUPREME COURT] ABL International Limited [2003 (12) TMI 584 - SUPREME COURT] Jagdish Mandal [2006 (12) TMI 447 - SUPREME COURT] and other judgments, has reiterated that although the Government and its instrumentalities have freedom of contract, their decision must be free from arbitrariness, bias and mala fides and the bidding process must be fair and transparent. At the same time, judicial interference is warranted only where the decision-making process is shown to be arbitrary, irrational, mala fide or contrary to public interest.

Judicial review in tender matters is confined to the legality, fairness and reasonableness of the decision-making process; the Court cannot sit in appeal over the tendering authority's decision or substitute its assessment of bids. A bidder who participated without seeking clarification regarding the GST treatment could not, after rejection, seek alteration of the quotation or reopening of the concluded process on the basis of a subsequent offer at a different rate. No material established discrimination, favouritism, mala fides, arbitrariness, or departure from the notified tender conditions. [Paras 28, 29, 30, 31, 32]

No ground for interference with the rejection of the quotation or for reopening the tender process was made out.

Outstanding contractual dues and fresh tender process - Effect of alleged dues under an earlier catering contract on the validity of a subsequent tender process - HELD THAT: - Alleged non-payment of dues under an earlier contract is a distinct contractual claim and does not invalidate a fresh tender process or confer a right to be awarded the fresh contract. [Paras 26, 33]

The petitioner was left at liberty to pursue any legally recoverable contractual dues before the competent authority or forum in accordance with law.

Final Conclusion: The writ petition was dismissed, as no arbitrariness, discrimination, mala fides or procedural infirmity in the tender decision-making process was established. The petitioner may pursue any independent claim for alleged contractual dues in accordance with law.

Duty to give reasons in FCRA renewal refusal - National-security non-disclosure of reasons - Peaceful protest as an undesirable purpose under FCRA

Reasoned orders in FCRA renewal proceedings - Non-disclosure based on security-agency reports - Refusal of renewal of an FCRA certificate without recording and furnishing reasons, on the basis of a security-agency report claimed to be secret - HELD THAT: - Renewal may be refused only for violation of the FCRA or the rules. The requirement in the proviso to section 16(3) to communicate reasons cannot be confined to delay in disposal while permitting refusal without reasons. A bare reference to statutory provisions is not a reasoned order. Further, the discretion not to communicate reasons under section 12(5) is not automatically attracted merely because a security-agency report is described as secret; the State must justify non-disclosure. The report placed before the Court disclosed no confidential or sensitive material warranting secrecy. [Paras 17, 18, 23, 24, 25]

The refusal and the revisional order were held unsustainable for want of reasons and for unjustified withholding of the material relied upon.

FCRA renewal and peaceful protests - Diversion of foreign contribution for undesirable purposes - Denial of FCRA renewal on the allegation of financial support for protests against the Vizhinjam Port project - HELD THAT: - The security report recorded no violation of the statutory conditions and did not trace any financial support from the petitioner to the protestors. The inference of such support merely from the association of some protestors with the Catholic community or support by the Bishops Council was perverse. In any event, financial support for peaceful protests by persons affected by a project cannot be characterised as diversion of foreign contribution for an undesirable purpose or as conduct prejudicial to public interest, since peaceful protest is protected by the constitutional freedoms of speech, expression and peaceful assembly. [Paras 26, 28, 29, 31, 33]

The refusal of renewal was held arbitrary and illegal; the impugned orders were set aside and the competent authority was directed to pass fresh orders in accordance with the Court's observations.

Final Conclusion: The writ petition was allowed. The orders refusing renewal and dismissing the revision were set aside, with a direction to the competent authority to pass fresh orders in accordance with the observations made.

Liability of auction purchaser for erstwhile consumer's electricity dues - Statutory conditions for fresh electricity connection

Electricity arrears of erstwhile consumer - Fresh connection to SARFAESI auction purchaser - Liability of a purchaser of property in a SARFAESI auction to clear the erstwhile consumer's electricity dues as a condition for obtaining a fresh electricity connection - HELD THAT: - The liability of an auction purchaser depends upon the governing statutory framework, the conditions of supply and the auction terms. The auction condition placed all liabilities attached to the property upon the purchaser; the secured creditor's statement that no encumbrance was known to it was not an absolute warranty and could not curtail the distribution licensee's statutory powers. The two-year restriction under the Supply Code regulates recovery from the consumer and does not extinguish liability; nor did the appellants establish that the statutory conditions for a fresh connection prohibited insistence on clearance of earlier dues. The requirement, having statutory force, could not be invalidated as an unconscionable contractual term. [Paras 16, 17, 18, 19, 22]

The Distribution Company's insistence on clearance of the outstanding dues before release of a fresh electricity connection was upheld as lawful.

Secured creditor's liability for electricity dues - Liability of the secured creditor conducting the auction for the electricity dues claimed from the auction purchaser - HELD THAT: - The Bank exercised its statutory power to realise its secured debt and neither demanded nor received electricity charges from the appellants. The dispute over electricity dues lay between the purchaser and the distribution licensee. The sale was conducted on "as is where is", "as is what is" and "whatever there is" basis, subject to the conditions incorporated in the auction notice. Consequently, no independent cause of action survives against the respondent-Bank.[Paras 21]

No independent cause of action survived against the Bank.

Final Conclusion: The writ appeal was dismissed, the requirement of clearing the erstwhile consumer's electricity dues for a fresh connection being upheld. No relief was available against the Bank.