TaxTMI Updates e-Newsletter
Sep 12,2026

Personal hearing before adverse GST order - Violation of principles of natural justice

Validity of the adverse GST order passed without affording the petitioner an opportunity of hearing - HELD THAT: - The State could not demonstrate that an opportunity of hearing had been granted. The petitioner's contention that the order was passed in breach of the principles of natural justice was therefore found sustainable. [Paras 3, 4]

The impugned order was quashed, with liberty to the Department to pass a fresh order after affording a proper opportunity of hearing.

Final Conclusion: The writ petition was allowed to the extent that the impugned GST order was quashed for want of a hearing, subject to liberty to the Department to make a fresh order after granting such opportunity.

Speaking orders in revocation of cancellation proceedings

Reasoned order for rejection of revocation of GST registration cancellation - Validity of rejection of the application for revocation of cancellation of GST registration without recording reasons. - HELD THAT: - An order determining civil rights must be speaking and intelligible. Unlike the related matter, the impugned order contained neither reasons for rejection nor any attached order disclosing such reasons; consequently, relegating the petitioner to the appellate remedy was not permissible. [Paras 4, 5, 6]

The rejection order was set aside and the matter was remitted to the competent respondent for a fresh order in accordance with law.

Final Conclusion: The writ petition was allowed; the unreasoned rejection of revocation of cancellation of registration was set aside and remitted for fresh adjudication.

Service of show-cause notice after cancellation of GST registration - Violation of principles of natural justice - Validity of an assessment order passed under the Uttar Pradesh Goods and Services Tax Act after cancellation of registration, where the show-cause notice was uploaded only on the GST portal - HELD THAT: - Upon cancellation of registration, the petitioner was not obliged to check the GST portal. A show-cause notice thereafter was required to be served through an alternative mode. The Court agreed with the principle stated in M/s Katyal Industries v. State of U.P. [2024 (2) TMI 1447 - ALLAHABAD HIGH COURT] and others and held that portal-only service resulted in denial of natural justice. [Paras 4, 5, 6]

The impugned assessment order was quashed for violation of natural justice, with liberty to the department to issue a proper notice and proceed in accordance with law. Any amount recovered pursuant to the earlier assessment remains subject to the final outcome.

Final Conclusion: The writ petition was disposed of by quashing the assessment order for failure to serve the show-cause notice through an appropriate mode after cancellation of registration. The department may commence proceedings afresh upon proper notice.

Rectification application - directory timeline for decision - Functus officio - expiry of period for deciding rectification application

Authority's power to decide a timely rectification application after expiry of the three-month timeline prescribed for its disposal - HELD THAT: - Where the rectification application was filed within the prescribed period, the stipulation that it be decided as far as possible within three months required the competent authority to endeavour to adhere to that timeline. It was not mandatory and did not render the authority functus officio or deprive it of power to decide the application on merits after expiry of three months. [Paras 5, 6]

The rejection of the rectification application as time-barred was quashed, and the matter was remitted for decision on merits within three months.

Final Conclusion: The writ petition was allowed. The competent authority was directed to decide the timely filed rectification application on merits within three months.

Conditional restoration of GST registration - Restoration of GST registration cancelled for non-furnishing of returns - HELD THAT: - Upon considering the parties' submissions and the order in Rakhe Achi Vs. Union of India & Ors [2026 (5) TMI 161 - GAUHATI HIGH COURT] the Court held that the petitioner was entitled to similar relief. Restoration was made contingent upon intimation and payment of all statutory outstanding dues and any applicable penalty or fine. [Paras 11]

The cancellation order was directed to be revoked and the GST registration restored upon proof of payment of the intimated dues within the stipulated period.

Final Conclusion: The writ petition was allowed subject to payment of the statutory dues intimated by the competent authority, upon which the cancelled GST registration was to be restored.

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

Validity of ex parte adjudication where the show-cause notice was issued only on the Common Portal after cancellation of the petitioner's GST registration - HELD THAT: - After cancellation of registration, a person may not be obliged to access the Common Portal and may consequently remain unaware of proceedings initiated thereafter. The Commissioner's binding circular requiring physical service of notices in such cases was founded on this practical necessity, and the revenue did not dispute the position. [Paras 5, 6, 8]

The ex parte adjudication order was set aside and the matter was restored for a fresh adjudication after permitting a reply, applications for cross-examination or relied-upon documents, and adequate advance notice of personal hearing.

Final Conclusion: The writ petition was disposed of by setting aside the impugned adjudication order and directing fresh proceedings in accordance with the stipulated opportunity of hearing.

Son of the deceased was desirous of seeking a refund, amongst others lying in excess deposit - Refund application could not be filed for the reason of the registration having been cancelled and the Common Portal being not enabled to allow for e-KYC in favour of the surviving partner, to apply for refund.

HELD THAT:- The writ petition was disposed of as the e-KYC process was completed and the refund claim had been entertained and allowed; the Commissioner, State Tax was requested to issue administrative instructions for similarly situated claimants.

Blocking of GST portal and restoration of GSTR-1 filing facility - Restoration of access to furnish Form GSTR-1 after adjudication of the taxpayer's representation concerning the blocked GST portal -

HELD THAT: - The Court held that the relevant documents required consideration for an effective adjudication of the request to restore the filing facility. The taxpayer was directed to submit a comprehensive representation in response to the information notice, and the issuing authority was required to decide it by a reasoned and speaking order after granting personal hearing, independently of the Court's observations. [Paras 16, 17, 18]

The representation shall be adjudicated within the stipulated time; if the authority finds the taxpayer to be a bona fide registered proprietor on the material produced, the GST portal shall be activated within 48 hours to enable furnishing of Form GSTR-1.

Final Conclusion: The writ petition was disposed of without adjudicating the merits, subject to a fresh reasoned determination by the competent authority and conditional restoration of the portal facility.

Mandatory personal hearing under Section 75(4) of the GST Acts - GST portal communication of notices and adjudication orders -

Denial of personal hearing before adverse GST adjudication where the show cause notices and adjudication order were uploaded under the 'Additional Notice and Orders' tab - HELD THAT: - Section 75(4) envisages grant of a hearing where a written request is received from the person chargeable with tax or penalty or an adverse decision is contemplated. The summaries of the show cause notices showed that personal hearing had been denied. The Court also observed that uploading the notices and adjudication order only under the specified portal tab, without separate intimation, had compelled the petitioner to submit the reply belatedly. [Paras 7, 8, 9, 10]

The adjudication order was quashed, and the adjudicating authority was directed to consider the reply, afford a personal hearing and pass a fresh reasoned adjudication order in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order and directing fresh adjudication after consideration of the reply and grant of personal hearing.

Anticipatory bail - cheating and forgery through fictitious firms - Custodial interrogation

Entitlement to anticipatory bail where the accused was alleged to have induced purchase of goods through non-existent firms and used forged invoices to evade deposit of collected tax - HELD THAT: - The accusations were grave and prima facie disclosed the accused's complicity in the alleged offences. As the investigation was at a nascent stage, custodial interrogation was necessary to ascertain the manner of commission of the offences and to obtain material connecting the accused with the fictitious firm. Pre-arrest bail is to be granted only in extraordinary and exceptional circumstances, which were not established. [Paras 7]

Anticipatory bail was refused and the petition was dismissed.

Final Conclusion: The petition for anticipatory bail was dismissed, without expression of opinion on the merits of the trial.

Proof of service of summons - Non-compliance with statutory summons

Alleged deliberate or wilful non-compliance with summons issued during investigation, in the absence of proof that the summons were duly served and acknowledged - HELD THAT: - Mere issuance of summons, unsupported by material establishing due service upon and acknowledgment by the respondent, could not sustain an allegation of deliberate or wilful disobedience or evasion of appearance. The Magistrate therefore committed no jurisdictional error in declining cognizance on the material placed before it. [Paras 8]

The refusal to take cognizance was not interfered with; however, the concerned authority may issue fresh summons, if permissible in law, and proceed with the investigation, subject to due service and maintenance of proof thereof.

Final Conclusion: The criminal petition was disposed of without interference with the dismissal of the complaint. No opinion was expressed on the merits of the ongoing investigation or on the existence of any liability or offence.

GST on actionable claims arising from betting and gambling - Games of skill played with stakes as betting and gambling - Actionable claims as goods under the GST framework - Supply of actionable claims in online gaming and fantasy sports - Valuation of betting and gambling transactions - Validity of Rule 31A, Rule 31B and Rule 31C

The affidavit of reply of Respondent Nos. 2 and 3 in which Authority has stated that the Authority would proceed with the adjudication proceeding in respect of the Petitioner and conduct the same strictly in accordance with law and following judgment Gameskraft Technologies Private Ltd. [2026 (5) TMI 1822 - SUPREME COURT] upheld the GST levy on actionable claims arising from betting and gambling transactions, including online gaming and fantasy sports played with stakes, and sustained the constitutional and statutory validity of the relevant provisions and rules. The 2023 amendments and Rules 31B and 31C were held clarificatory and retrospective; pending show cause notices and proceedings were directed to be decided accordingly, with casino valuation to be recomputed under Rule 31C.

HELD THAT:- In view of this statement recorded at Petitioner of the aforementioned affidavit, on instructions seeks to withdraw this Petition and does not press for the reliefs therein.

Opportunity of hearing before adverse GST adjudication - Validity of the adverse GST demand order passed without affording a hearing where the show-cause notice contemplated an adverse decision

HELD THAT: - The statutory scheme entitles a person chargeable with tax and penalty to an opportunity of hearing where an adverse decision is contemplated. Since it was undisputed that no such opportunity was afforded, the demand order could not be sustained. [Paras 5]

The demand order and consequential attachment were quashed, and the matter was remanded to the proper officer for fresh decision after permitting a response to the show-cause notice and granting a hearing; the amount already realised was made subject to that decision.

Final Conclusion: The writ petition was disposed of by setting aside the impugned demand and attachment and remanding the matter for fresh adjudication in accordance with the requirement of hearing.

Manual filing of GST appeal where order is unavailable on common portal - Availability of manual filing of an appeal against a rectification order unavailable on the common portal - HELD THAT: - The amendment to the appellate-filing rule permits manual filing of an appeal in FORM GST APL-01 with relevant documents where electronic filing is not possible because the decision or order appealed against is unavailable on the common portal. [Paras 5, 7]

The petitioner was permitted to file the appeal within four weeks; no objection on limitation shall be raised if it is so filed, and the appeal shall be decided on merits.

Final Conclusion: The petition was disposed of with liberty to file a manual appeal within four weeks, without a limitation objection, while keeping all contentions open.

Natural justice in customs classification adjudication - Supply of relied-upon material

Validity of a customs classification adjudication founded on an Analytics Report that was not supplied to the petitioner - HELD THAT: - The Analytics Report formed the basis of the impugned classification order. Extraction of its parameters, entries and core findings in the show cause notice could not substitute furnishing the report itself, particularly when the dispute concerned classification for basic customs duty under the competing tariff items. Non-supply of the relied-upon report failed to satisfy the requirements of natural justice. [Paras 4]

The impugned order was set aside and the matter remitted for fresh adjudication on merits in accordance with law, after furnishing the Analytics Report and the documents relied upon in the show cause notice.

Final Conclusion: The writ petition was disposed of by setting aside the classification order for breach of natural justice and remitting the matter for fresh adjudication after supply of the relied-upon material.

Retrospective validating legislation and separation of powers - Faceless reassessment notices through automated allocation - Jurisdiction - JAO versus FAO

Retrospective validating legislation - Separation of powers - Constitutional validity of the retrospective clarification excluding faceless Assessing Officers from issuing reassessment notices - HELD THAT: - A retrospective validating enactment can neutralise a judicial decision only by curing the defect or removing the foundation on which that decision rested, so that the earlier decision could not have been rendered under the altered law. Section 147A neither amended Section 151A nor the scheme framed thereunder, and did not address the requirement of randomised automated allocation; it also left the scheme under Section 130 untouched. The enactment thus directly conflicted with the subsisting statutory scheme and sought to substitute the legislative view for conclusions reached by constitutional courts, without removing their basis. [Paras 59, 60, 61, 62, 63]

Section 147A was declared unconstitutional and struck down.

Faceless reassessment notices - Randomised automated allocation - Validity of reassessment notices issued by jurisdictional Assessing Officers without faceless randomised automated allocation - HELD THAT: - Clause 3(b) of the scheme framed under Section 151A expressly applies to issuance of notices under Section 148 and, read with the object of eliminating interface and introducing dynamic jurisdiction, mandates issuance through randomised automated allocation and in a faceless manner. The expression linking the scheme to Section 144B concerns assessment or reassessment under Section 147 and cannot exclude notices under Section 148; such a construction would render the scheme purposeless. Notifications conferring jurisdiction cannot prevail over Section 151A and the Parliamentary-approved scheme, and cannot create concurrent jurisdiction once randomised allocation is mandated. [Paras 75, 76, 77, 78, 79]

The impugned notices issued by jurisdictional Assessing Officers were set aside as having been issued otherwise than through the mandated faceless and randomised automated allocation process.

Final Conclusion: Section 147A was declared unconstitutional. The reassessment notices issued by jurisdictional Assessing Officers were set aside for non-compliance with the mandatory faceless randomised automated allocation regime.

Limitation for reassessment notice - Exclusion of time under fifth and sixth provisos to Section 149 - Deemed date of reply u/s 148A proceedings

HELD THAT:- Having heard the learned counsel appearing for the petitioners and having gone through the materials on record, we are not inclined to interfere with the impugned judgment(s) and order(s) passed by the High Court.[2026 (6) TMI 47 - DELHI HIGH COURT]

The Special Leave Petitions are, accordingly, dismissed.

Penalty u/s 271(1)(c) requiring specification of limb

HELD THAT:- There is a gross delay of 201 days in filing the Special Leave Petition.

The reasons assigned for condonation of delay are neither satisfactory nor sufficient in law so as to condone the same. Hence, the application seeking condonation of delay is dismissed. Special Leave Petition is dismissed on the ground of delay leaving open the questions of law, if any.

Assessee in default under Section 201 - Binding effect of Tribunal rulings on Assessing Officer that the parent had no permanent establishment in India - Tax deduction at source where payment to non-resident is not chargeable to tax - Section 201 default for payments to non-resident without permanent establishment

Validity of treating the payer as an assessee in default under Section 201 despite Tribunal rulings that the recipient had no permanent establishment in India - HELD THAT: - The Tribunal had consistently held that the recipient did not have a permanent establishment in India and that its grading and management-fee income was not chargeable to tax in India; that position had also been upheld by the High Court for the earlier years. As the facts for the relevant year were identical, the Assessing Officer (TDS) acted without authority of law in passing an order contrary to the Tribunal's decisions. [Paras 12, 13]

The order under Section 201 for A.Y. 2020-21 was quashed and set aside.

Section 195(2) where remittance is not chargeable to tax - Requirement of an application u/s 195(2) for payments made to the non-resident recipient - HELD THAT: - Section 195 applies only where the sum paid to a non-resident is chargeable to tax in India. An application under Section 195(2) is required where the payer accepts that a part of the remittance is taxable but is uncertain about the taxable portion or the tax deductible; it has no application where the payment is not chargeable to tax. Since the recipient's income was held not chargeable to tax in India, the payer had no liability to deduct tax at source.

Hon’ble Supreme Court in GE India Technology Cen. (P.) Ltd. [2010 (9) TMI 7 - SUPREME COURT] has held that Section 195(2) applies when the payer is in no doubt that tax is payable in respect of some part of the amount to be remitted but is not sure as to what should be the portion so taxable or is not sure as to the amount of tax to be deducted, and it is in such a situation that he is required to make an application to the ITO(TDS) for determining the amount. Therefore, there is no question of the Petitioner being liable to deduct tax at source from the payments made by it to GIA US or of treating the Petitioner to be an Assessee in default for failing to deduct tax at source from such payments in the instant case.[Paras 13]

The payer could not be treated as an assessee in default for not applying under Section 195(2) or for not deducting tax at source.

Final Conclusion: The writ petition was allowed and the order treating the petitioner as an assessee in default under Section 201 was quashed and set aside.

Assessment of a person other than the searched person on seized material - Special search-assessment procedure overriding general reassessment - Special assessment procedure under section 153C

Validity of reassessment proceedings under sections 148A and 148 founded on material seized during the search of a third party - HELD THAT: - The departmental record established that the alleged transactions, the identification of the petitioner and the inference of unaccounted income were all derived from material seized in the search of the Ramesh Manihar Group.

Subsequent analysis or corroboration of that material did not alter its character or source. Where seized material relating to a person other than the searched person forms the foundation of proceedings, the special machinery under section 153C applies; its non-obstante clause excludes recourse to the general reassessment mechanism under sections 147 and 148. The Revenue could not bypass that statutory route by characterising information derived from seized material as information suggesting escapement of income. [Paras 27, 29, 30, 31, 33]

The order under section 148A(d) and the consequential notice under section 148 were without jurisdiction and were quashed.

Final Conclusion: The writ petition was allowed and the reassessment order and consequential notice, having been initiated under the general reassessment provisions on the basis of third-party search material, were quashed.

Limitation for giving effect to appellate orders requiring verification - Deemed acceptance of return on time-barred consequential assessment

Validity of the consequential assessment order passed to give effect to the appellate directions after expiry of the extended statutory period of limitation - HELD THAT: - As the appellate order requiring verification and opportunity to the assessee had been received by the Assessing Officer during FY 2019-20, the second proviso to section 153(5) attracted the time-limit under section 153(3). Even after allowing the extension under TOLA, the consequential order had to be passed by 31st March 2022. An order passed thereafter was barred by limitation. Where a fresh assessment cannot validly be made, the return must be accepted as furnished and no further demand can be raised.

Recently this court in the case of Laqshya Media Ltd. [2026 (4) TMI 274 - BOMBAY HIGH COURT] has also applied the above principles and held that when the order giving effect is not passed within the limitation period, the Returned income of the Assessee ought to be accepted.[Paras 18, 19, 20, 21]

The consequential assessment order and the demand notice were quashed; the returned income was directed to be accepted and the amount deposited towards the demand was ordered to be refunded with interest.

Final Conclusion: The writ petition was allowed. The time-barred order giving effect to the appellate directions and the consequential demand notice were set aside, with acceptance of the returned income and refund of the amount deposited with interest.

TP comparability - functional dissimilarity - Working-capital adjustment - remand for factual verification - Foreign-exchange revenue filter-consistent comparability analysis - Transfer-pricing adjustment-restriction to international transactions - Appeal under section 260-A-interference with factual transfer-pricing findings

Transfer-pricing comparability-functional dissimilarity - Exclusion of Rallis India Ltd. from the manufacturing comparables on account of its materially different functional profile - HELD THAT: - The Tribunal compared the functions performed, products manufactured and raw materials used, and found that the assessee manufactured pesticides using imported chemical formulations whereas Rallis India Ltd. manufactured non-pesticide products, including products based on organic compost and other materials. The resulting conclusion on comparability was a factual finding founded on the record and was neither perverse nor amenable to fresh appraisal in an appeal under section 260-A. [Paras 12, 13]

The exclusion of Rallis India Ltd. as a comparable was upheld and no substantial question of law arose.

Working-capital adjustment-remand for factual verification - Working-capital adjustment in the manufacturing segment where the assessee had not initially furnished material showing the impact of working-capital differences on margins - HELD THAT: - The Tribunal did not grant a quantified or unconditional adjustment; it required the assessee to furnish relevant particulars and remitted the matter to the Assessing Officer/Transfer Pricing Officer to determine whether an adjustment was warranted and, if so, its reasonably accurate extent. The remand preserved the requirement that such adjustment be supported by relevant material. [Paras 16, 17]

The issue was remanded for fresh consideration upon furnishing of the requisite details, without final adjudication on entitlement or quantum.

Foreign-exchange revenue filter - consistent comparability analysis - Foreign-exchange revenue filter for selection of manufacturing comparables where the basis for the filter adopted by the appellate authority was not established - HELD THAT: - The Tribunal had not conclusively prescribed a particular foreign-exchange revenue threshold. Having found no proper basis for the filter adopted by the appellate authority, it directed reconsideration by the Assessing Officer/Transfer Pricing Officer through a consistent approach and after affording opportunity to the assessee. The direction was factual and procedural and did not give rise to a substantial question of law. [Paras 20, 21]

The issue was remanded for reconsideration of the appropriate filter in accordance with law.

Transfer-pricing adjustment-restriction to international transactions - Restriction of the transfer-pricing adjustment to international transactions concerning import of raw materials from Associated Enterprises - HELD THAT: - The transfer-pricing provisions concern determination of the arm's-length price of international transactions with Associated Enterprises. The Tribunal applied that principle to the transactions under examination and restricted the adjustment accordingly. The Revenue established neither perversity nor a patently unsustainable interpretation of the Act. [Paras 23, 24]

The direction to restrict the transfer-pricing adjustment to the relevant international transactions was upheld.

Final Conclusion: The Revenue appeals were dismissed, as the proposed questions sought reappreciation of factual transfer-pricing determinations or challenged remand directions that preserved examination by the competent authority. The Tribunal's common order was confirmed.

Reassessment based on alleged undisclosed bank remittances - Opportunity to furnish detailed explanation of receipts

Validity of reassessment treating bank remittances as undisclosed income without first considering the petitioner's detailed explanation of their source - HELD THAT: - The Court held that the assertions regarding the source and purpose of the receipts required consideration before any conclusion could be reached that they constituted undisclosed income. The petitioner was therefore required to be afforded an opportunity to submit a detailed response with supporting documents; all questions on the merits were left open. [Paras 6]

The order under section 148A(d), notice under section 148, reassessment order and consequential penalty and recovery notices were quashed, and the proceedings were restored for fresh consideration after permitting a detailed response.

Final Conclusion: The petition was allowed in part. The reassessment proceedings and consequential orders were quashed and restored for fresh consideration, with all merits left open.

Assessment addition without prior show-cause notice - Opportunity of hearing in faceless assessment

Addition as unexplained money without notice - Violation of natural justice - Validity of an addition as unexplained money where the show-cause notice had not proposed that addition - HELD THAT: - The proposed variations notified to the petitioner were different from the addition ultimately made as unexplained money. As the revenue did not dispute that no notice had been issued on that proposition, the petitioner had no opportunity to respond, warranting interference with the assessment. [Paras 4]

The assessment order and consequential penalty notices were quashed, without prejudice to the revenue's entitlement to initiate fresh proceedings in accordance with law.

Final Conclusion: The petition was allowed and the impugned assessment order and penalty notices were quashed for want of prior notice and opportunity on the addition ultimately made.

Credit and refund of prepaid taxes - Return filed in response to reassessment notice treated as regular return - advance-ruling application on the transaction's taxability was pending

Entitlement to credit and refund of tax deducted at source and other prepaid taxes where the return was filed in response to a reassessment notice while the assessee's application before the Authority for Advance Ruling was pending - HELD THAT: - The assessee's non-filing of the return by the due date was held bona fide, since the application before the Authority for Advance Ruling concerning taxability of the sole transaction was pending. A return filed pursuant to the reassessment notice was therefore directed to be treated as a regular return.

The Court held that, once prepaid taxes could be adjusted against the outstanding demand, there was no statutory basis or logical justification to deny refund of the excess amount. The precedent relied on by the Revenue was confined to substantive computation items concluded in an earlier assessment and did not concern credit of prepaid taxes. [Paras 11, 12, 13, 14, 17]

The Assessing Officer was directed to make a fresh assessment after treating the reassessment return as a return under Section 139 and, upon verification, to allow credit of tax deducted at source and refund any unutilised prepaid taxes with applicable interest.

Final Conclusion: The departmental appeal was allowed on the assessee's concession and the matter was restored to the Assessing Officer for fresh assessment with credit and refund of prepaid taxes as directed. The penalty order was consequentially quashed, without prejudice to fresh penalty proceedings if warranted.

Insolvency moratorium - continuation of income-tax revisional proceedings - Overriding effect of the Insolvency and Bankruptcy Code

Validity of a revisional order under the Income-tax Act passed against a corporate debtor during the subsistence of the moratorium under the Insolvency and Bankruptcy Code - HELD THAT: - Section 14, read with the overriding provision in section 238 of the Insolvency and Bankruptcy Code, prohibits institution or continuation of proceedings against the corporate debtor during the moratorium. Following the jurisdictional High Court decision Smaaash Entertainment Pvt. Ltd [2025 (7) TMI 1241 - BOMBAY HIGH COURT] the Tribunal held that income-tax proceedings cannot be initiated or continued during that period. Since the revisional order was passed after commencement of the moratorium, it could not be sustained; the merits of the proposed revision were not examined. [Paras 7, 8, 9]

The revisional order was set aside and the matter restored for revival and reframing after cessation of the moratorium, if permissible in law; all merits issues were kept open.

Final Conclusion: The appeal was allowed for statistical purposes. The revisional proceedings may be revived after the moratorium ceases, subject to applicable law and a reasonable opportunity of hearing.

Unexplained share capital and share premium u/s 68 - Reassessment on the basis of material already on record

Unexplained share capital and share premium u/s 68 - Discharge of initial onus by documentary evidence - Addition under section 68 in respect of share capital and share premium received by a listed company from share subscribers - HELD THAT: - The first proviso to section 68, imposing the additional obligation to explain the source of the shareholders' funds, did not apply to a company in which the public were substantially interested; nevertheless, the assessee remained obliged under the main provision to establish the identity and creditworthiness of the subscribers and the genuineness of the transactions. The assessee furnished supporting documents for the share subscriptions, allotment, banking and demat transactions, and the listing approvals. As the Assessing Officer neither identified any defect in that evidence nor conducted an independent enquiry after the assessee discharged its initial onus, the addition could not be sustained. [Paras 7, 9, 10, 11]

Deletion of the addition under section 68 was upheld and the Revenue's appeal was dismissed.

Validity of reassessment notice - Fresh tangible material for reopening - Validity of reassessment initiated on allegations concerning short-term capital loss and share premium - HELD THAT: - No disallowance was ultimately made in respect of the short-term capital loss forming one of the recorded reasons. The allegation regarding share premium arose solely from the balance sheet already filed with the original return, and no fresh tangible material was shown to exist. Further, the eventual addition under section 68, based on alleged non-establishment of certain subscribers' creditworthiness, rested on a footing different from the allegation in the recorded reasons. The recorded reasons were therefore invalid. [Paras 15]

The reassessment proceedings and the impugned reassessment order were quashed ab initio, and the assessee's appeal was allowed.

Final Conclusion: The Revenue's appeal challenging deletion of the addition under section 68 was dismissed. The assessee's appeal was allowed and the reassessment proceedings and reassessment order were quashed ab initio.

Jurisdiction to cancel charitable registration - Centralisation of assessment jurisdiction - Principal Commissioner of Income Tax (Central), Jodhpur's territorial and subject-matter jurisdiction

Competence of the Principal Commissioner (Central) to cancel the assessee's charitable registration in the absence of proof that exemption and registration jurisdiction had been transferred - HELD THAT: - The expression "Principal Commissioner or Commissioner" identifies the rank of the authority empowered to cancel registration but does not dispense with the requirement of territorial and subject-matter jurisdiction. The exemption jurisdiction remained with the designated exemption authority unless lawfully transferred. Notification No. 70/2014 could operate only upon proof of assignment under section 127 to an Assessing Officer subordinate to the concerned Central Commissioner.

Mere recital that the group cases had been centralised for coordinated investigation could not establish the terms or effect of such transfer, particularly when the Revenue produced no transfer order, notification or other jurisdictional instrument. [Paras 67, 68, 69, 70, 71]

The cancellation order was without jurisdiction and was quashed; the original registration stood restored. The merits of the allegations and the challenge to retrospective cancellation were left open.

Final Conclusion: The appeal was allowed. The cancellation of registration was quashed for want of jurisdiction, and the registration was restored in accordance with its original terms.

Rectification of mistake apparent from record - Section 68 cash credit confined to year of credit

Rectification of prior-year share capital and securities premium - Scope of record in rectification proceedings - Rectification of the addition of share capital and securities premium claimed to have been received in an earlier assessment year - HELD THAT: - For an addition under section 68, the credit must have been received in the year concerned. The record for rectification is not confined to the assessment order and may extend to the assessee's records for other assessment years. If the claimed share capital and securities premium were received in the earlier assessment year, they could not be added in the impugned year; the claim, however, required verification of the evidence and the record. [Paras 10, 11]

The appellate order was set aside and the matter was restored for decision of the rectification appeal after considering the evidence, together with or in light of the outcome of the pending appeal against the assessment order.

Rectification of addition for current-year share application money - Rectification of the addition for share application money received during the impugned assessment year - HELD THAT: - The addition rested on the assessee's failure to furnish satisfactory evidence of the creditor's identity, source of credit and genuineness of the transaction during assessment. Its rectification would require a long-drawn process of reasoning and appreciation of evidence, and was not based on a prima facie mistake apparent from the record. [Paras 10]

The addition for share application money received during the year was held not rectifiable under section 154.

Final Conclusion: The appeal was partly allowed for statistical purposes. The rectification appeal was remanded for verification of the claim concerning prior-year share capital and securities premium, while the current-year share application money addition was held not amenable to rectification.

Ad hoc disallowance of referral-based commission expenditure - Non identification of non-genuine payments - Sustainability of an estimated disallowance from commission expenditure incurred under a referral-based business model - HELD THAT: - Although the initial burden to establish business expenditure rests on the assessee, the documentary material, including recipient details, PAN and TDS particulars, Form No. 26Q and payment details furnished before the Assessing Officer, had to be considered as a whole. No particular recipient was found non-existent and no identified payment was held bogus or non-business. An estimated disallowance founded on an assumed industry commission range, without comparable cases, market data or other cogent material, could not be sustained; nor could the commission-to-sales ratio alone justify the disallowance when comparable ratios existed in the assessee's own earlier years. [Paras 9, 10, 11, 12, 13]

The ad hoc disallowance of commission expenditure was deleted.

Final Conclusion: The appeal was allowed and the estimated disallowance from commission expenditure was deleted.

Prohibited goods - unauthorised import of gold - Penalty for improper importation of prohibited goods

Prohibited goods - unauthorised import of gold - Gold imported otherwise than through agencies authorised by Reserve Bank of India circulars or in accordance with the Baggage Rules constituted prohibited goods under the Customs Act, 1962. - HELD THAT: - The definition of prohibited goods includes goods whose import is subject to a prohibition under the Customs Act or any other law in force; it is not confined to a prohibition notified under Section 11. Since import of gold was subject to restrictions imposed through Reserve Bank of India notifications and circulars, and the writ petitioners did not fall within the authorised bulk-import agencies or the passenger-import regime, the seized gold fell within the statutory definition of prohibited goods. [Paras 44, 45, 48, 49, 55]

Gold was held to be a prohibited item within the meaning of the Customs Act, 1962.

Penalty for improper importation of prohibited goods - Jurisdictional error - incorrect statutory provision - The adjudicating authority was empowered to impose penalty applicable to prohibited goods under Section 112(i) of the Customs Act, 1962, notwithstanding the asserted non-specification of the particular clause. - HELD THAT: - Section 112 separately prescribes penalties for prohibited goods and for dutiable goods other than prohibited goods. Once the seized gold was held to be prohibited goods, Section 112(i) was attracted. An order is not rendered without jurisdiction merely because of an incorrect or unspecified statutory provision where the adjudicating authority possesses the power to make the order; moreover, the adjudication order was a speaking order treating the gold as prohibited goods and imposing penalty accordingly. [Paras 51, 52, 53, 54, 55]

The penalty imposed under Section 112(i) was upheld.

Final Conclusion: The writ petitioners' appeals were dismissed and the Customs appeals were allowed. The impugned judgment was set aside and the adjudicating authority's order was upheld.

Target Plus Scheme - broad nexus between imported inputs and exported product groups - Extended limitation for customs duty demand-wilful suppression and intent to evade

Target Plus Scheme - broad nexus requirement - Eligibility for duty-free import of continuous cast copper rods under the Target Plus Scheme on the basis of broad nexus with the relevant exported product group - HELD THAT: - The Policy did not require a strict product-to-product nexus between imported goods and the very goods exported. The expression "broad nexus" was satisfied where the imported goods could be used as inputs in manufacture of goods falling within the defined product group specified in the duty credit certificate. However, the nexus had to be established separately with the relevant product group and could not justify duty-free imports against the entire certificate merely because nexus existed with one of several product groups. [Paras 19, 20, 21]

The Tribunal's construction was upheld: broad nexus existed between the imported copper rods and exports falling under the Engineering Products group, but not with the other product group; a strict one-to-one nexus was not required.

Extended limitation - absence of wilful suppression - Penalty for duty-free import-absence of intent to evade duty - Invocation of the extended limitation period and consequential customs penalties for duty-free import of continuous cast copper rods under the Target Plus Scheme - HELD THAT: - The ambiguity in the Policy concerning the required broad nexus, coupled with the interpretation subsequently upheld by the High Courts, supported the assessee's bona fide understanding of the exemption. Intent to evade duty is essential for invoking the extended period and for penalty under Section 114A; the alleged utilisation of the certificates did not by itself establish fraud, collusion, wilful misstatement or suppression. The certificates had neither been shown to be fraudulently obtained nor cancelled, revoked or amended, and the export documents formed part of the Customs records. [Paras 23, 24]

The extended period was not invocable, and the setting aside of the duty demand and consequential penalties was upheld.

Final Conclusion: The appeals of the Customs Department were dismissed. The order allowing the assessees' appeals was upheld.

Conditional customs duty exemption for imported aircraft - Post-import breach of exemption conditions and customs duty recovery - Valuation based on actual freight and transit insurance - Penalty for unauthorised commercial operation of exempt aircraft

Conditional customs duty exemption for imported aircraft - Unauthorised non-scheduled charter operations - Confiscation for breach of exemption condition - Eligibility for duty exemption on an aircraft imported for non-scheduled charter services where it was commercially operated without a valid approval or permit - HELD THAT: - Condition 104 required the aircraft to be used only for non-scheduled charter services, which, under its Explanation, meant services provided by an operator registered with and approved by the DGCA. As no authorisation for the relevant period was produced, the commercial flights could not be treated as authorised non-scheduled charter services. Customs was competent to determine the availability of the exemption and its breach; only a dispute concerning the scope or validity of an existing DGCA or MCA permit would fall for consideration by the issuing authority. The conscious commercial operation without authorisation was not a minor infraction capable of being sanctioned by the proper officer. [Paras 24, 41, 42, 43, 44]

The breach of the exemption condition rendered the aircraft liable to confiscation; the confiscation and redemption fine were upheld.

Duty recovery upon redemption of confiscated goods - Inapplicability of limitation for post-import breach of exemption conditions - Applicability of the limitation prescribed for recovery of unpaid customs duty to duty recoverable after confiscation for post-import breach of an exemption condition - HELD THAT: - Where goods are confiscated for violation of a post-import condition of an exemption notification and are permitted to be redeemed on payment of fine, the liability to duty arises as a consequential liability under section 125(2), forming an integral part of the confiscation proceedings. Such recovery is not a demand for non-levy or short-levy under section 28; consequently, neither the normal nor the extended limitation under that provision applies. [Paras 25, 26, 27, 46]

The duty demand consequent upon confiscation was sustainable and was not barred by limitation.

Valuation of imported aircraft - Actual freight and transit insurance - Computation of duty on an imported aircraft by adopting notional freight and transit insurance despite availability of their actual costs - HELD THAT: - When the actual cost of transporting the aircraft into India and the actual transit-insurance cost were available, notional additions could not be adopted. Although an assessment is ordinarily modified only through the recognised statutory modes, the departmental proceedings had reopened the matter; adoption of notional amounts instead of actual costs was a clerical and arithmetical error requiring correction. [Paras 29, 30]

The duty was directed to be recomputed on the basis of the actual transport and transit-insurance costs, and the matter was remanded for that limited purpose.

Penalty for unauthorised commercial operation of exempt aircraft - Penalty on managing personnel for acts rendering goods confiscable - Sustainability of penalties on the importer and its managing personnel for commercial operation of the duty-exempt aircraft without the required authorisation - HELD THAT: - The importer's unauthorised commercial operation of the aircraft in breach of condition 104 rendered it liable to confiscation and attracted penalty. The Chief Executive Officer and Managing Director had taken the decisions resulting in the unauthorised use and were consequently liable to penalty for their role in the acts rendering the aircraft confiscable. [Paras 52, 53]

The penalties imposed on the importer and its managing personnel were upheld.

Final Conclusion: The importer's appeal was partly allowed only for recomputation of duty using actual transport and transit-insurance costs. The confiscation, redemption fine, duty liability and penalties were otherwise upheld, and the appeals of the managing personnel were dismissed.

Statutory ceiling on penalty under Handling of Cargo in Customs Area Regulations - Penalty for acts of omission and commission by a cargo handling operator - whether it could exceed the maximum prescribed under Regulation 12(8) of the Handling of Cargo in Customs Area Regulations, 2009? - HELD THAT: - On a plain reading of Regulation 12(8), the Tribunal held that the provision fixes a maximum penalty of Rs. 50,000. The adjudicating authority could not impose a higher penalty under that Regulation. The earlier order cited by the Department was held inapplicable in view of the clear statutory provision. [Paras 5, 6]

The penalty was reduced to Rs. 50,000, being the maximum permissible under Regulation 12(8).

Final Conclusion: The appeal was partly allowed by modifying the impugned order and restricting the penalty to the statutory maximum under Regulation 12(8).

Newsprint import policy - Actual User condition - Prospective operation of amended import condition - Burden of proving illicit import

Actual User condition for warehoused newsprint - Prospective application of import policy amendment - Customs exemption for newsprint - Validity of pre-amendment warehoused newsprint imports and availability of customs exemption in the absence of RNI registration of the importer - HELD THAT: - The policy was expressly amended only with effect from 03.06.2016 to require an importer seeking warehousing of newsprint to itself be an RNI-registered Actual User. That requirement could not be retrospectively applied to imports made earlier. Further, the applicable customs exemption for newsprint contained no RNI-registration or Actual User condition. In the absence of a reference to the DGFT on the disputed policy interpretation, Customs could not independently treat the imports as policy-violative. [Paras 10, 12]

The pre-amendment imports could not be held contrary to the Foreign Trade Policy or the customs exemption notification merely because the importer was not RNI-registered.

Burden of proving illicit import of newsprint - Confiscation for alleged clearance to dummy units - Confiscation of newsprint and penalties on the allegation of its clearance to dummy RNI units for illicit consideration - HELD THAT: - The initial burden lay on the Department to establish foundational facts showing illicit or improper import and clearance to dummy units, before any evidentiary burden could shift. The record did not disclose evidence of blameworthy conduct, duty-evasion intent, or clearance to dummy units for illicit consideration; the alleged procedural irregularities had been rebutted with admissible import and clearance documents. The absence of the show cause notice and relied-upon documents also left the allegations and their evidentiary basis unsubstantiated. [Paras 9, 11, 12]

The Department failed to prove illicit import or unlawful clearance; consequently, confiscation and the connected penalties did not survive.

Final Conclusion: The Revenue appeals were rejected, and the order setting aside confiscation of the newsprint and penalties was upheld.

Social Welfare Surcharge on imported PET coke where basic customs duty is exempt under the MEIS Scheme

Levy of Social Welfare Surcharge on imported PET coke where basic customs duty was exempt under Notification No. 24/2015-Cus. by debit of MEIS duty credit scrip - HELD THAT: - The Tribunal followed the decisions settling the identical controversy that, where basic customs duty is exempt under Notification No. 24/2015-Cus. issued under the MEIS Scheme, the importer is not liable to pay Social Welfare Surcharge.

Issue was also considered by the Tribunal in Appellant’s own case in Dalmia Cement (Bharat) Ltd. [2024 (5) TMI 632 - CESTAT HYDERABAD] wherein on the identical issue, it was held that the assessee is not liable to pay Social Welfare Surcharge (SWS) when BCD is exempted in terms of Notification No. 24/2015-Cus dated 08.04.2015 issued under the MEIS Scheme. The said decision also was followed in the case of M/s. Emami Agrotech Limited [2025 (3) TMI 788 - CESTAT KOLKATA][Paras 8]

The demand of Social Welfare Surcharge was unsustainable; the impugned order was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The appeal was allowed, holding that no Social Welfare Surcharge was payable on the imported goods where basic customs duty stood exempt under the MEIS notification.

Dissolution of partnership at will-settlement of partnership assets - Liquidation of immovable partnership property

Rights of partners on dissolution - Valuation and liquidation of partnership assets - Entitlement of a partner of a dissolved partnership at will to a proportionate share in the value of the immovable partnership asset, valued at the time of settlement rather than at its historical value on the date of dissolution - HELD THAT: - Upon dissolution, the partnership property must be applied towards discharge of its liabilities and the surplus distributed among the erstwhile partners according to their shares. The date of dissolution fixes the point up to which profits and losses of the business are to be ascertained; it does not confine a partner's entitlement in the residue of the partnership assets to their value on that date.

The reconstituted firm could not lawfully retain the land belonging to the dissolved firm without purchasing it. In the absence of a consensual settlement or payment of the partner's share, the asset is liable to be liquidated and the proceeds distributed after meeting partnership liabilities. [Paras 60, 61]

The direction for sale of the land through public auction and distribution of the sale proceeds in accordance with the partner's share, after discharge of liabilities, was upheld; the appeal was dismissed.

Final Conclusion: The civil appeal was dismissed, affirming the liquidation of the immovable asset of the dissolved firm and distribution of the net sale proceeds among the erstwhile partners according to their respective shares.

Without-prejudice deposit in insolvency proceedings - Adjudication of debt, default and maintainability under Section 7 of the Insolvency and Bankruptcy Code

Closure of a Section 7 insolvency application solely on the basis of a without-prejudice deposit, without deciding objections to maintainability, debt and default - HELD THAT: - A deposit expressly made without prejudice to rights, remedies and contentions cannot, by itself, be treated as an unconditional admission of liability, particularly where objections to maintainability and to the existence of debt and default were already raised.

Though the deposit could be taken into account, it could not substitute the determination required in a Section 7 proceeding; at most, it indicated that the appellant was solvent. The subsequent demand, containing materially different components, could not by itself establish a financial debt, and the liberty to pursue legally maintainable claims did not amount to adjudication of those claims. [Paras 7, 8, 9, 10, 11]

The closure of the application without adjudicating the objections was unsustainable; the impugned order was set aside and the matter remanded for fresh consideration, subject to re-deposit of the released amount.

Final Conclusion: The appeal was allowed and the Section 7 application was remanded for fresh consideration. No opinion was expressed on the merits of any subsequent claim that may otherwise be legally pursued.

Death of resolution applicant - continuance of corporate insolvency resolution process - Liquidation under corporate insolvency resolution-statutory preconditions - Withdrawal of corporate insolvency resolution process-pending settlement application

Death of resolution applicant-effect on approved resolution plan - Liquidation under corporate insolvency resolution-statutory preconditions - Death of a natural-person resolution applicant after approval of the resolution plan by the committee of creditors and before approval by the Adjudicating Authority-whether it renders the plan unimplementable and permits liquidation - HELD THAT: - A resolution applicant is not an office-holder with non-heritable obligations, but occupies the position of a promisor in the statutory resolution process. Section 33(1) permits liquidation only in the contingencies specified therein and does not contemplate liquidation merely because the resolution applicant has died. The plan must not be abandoned automatically: the request for resolution plan may govern, followed by the terms of the plan; where both are silent, inherent power may be exercised to require the committee of creditors to examine whether the plan can be sustained, including through an heir who satisfies the requisite eligibility, competence and willingness to implement it. Earlier submitted plans may also be reconsidered to avert forced liquidation. [Paras 7, 17, 18, 19]

The death of the resolution applicant did not by itself render the resolution plan unimplementable or justify liquidation under Section 33(1).

Withdrawal of corporate insolvency resolution process-pending settlement application - Pending application for withdrawal of the corporate insolvency resolution process pursuant to settlement with the sole-member committee of creditors-whether it could be dismissed as infructuous upon ordering liquidation - HELD THAT: - Even if rejection of the resolution plan were sustainable, liquidation could not have been ordered mechanically while an application for withdrawal of the corporate insolvency resolution process was awaiting consideration. The statutory exit route for withdrawal could not be denied to the parties without considering that application. [Paras 21]

The liquidation order was set aside, the corporate insolvency resolution process was revived, and the pending withdrawal application was directed to be considered in accordance with law.

Final Conclusion: The appeals challenging liquidation were allowed; the liquidation order was set aside and the corporate insolvency resolution process was revived. The pending withdrawal application was directed to be considered in accordance with law, while the remaining appeals were closed.

Section 32A immunity on liquidation sale of corporate debtor as a going concern - Clean slate theory in liquidation - Statutory waivers and concessions

Statutory waivers and concessions - Availability of waivers and concessions concerning the past liabilities of a corporate debtor sold as a going concern in liquidation - HELD THAT: - The Court held that, insofar as waivers and concessions are concerned, the purchaser must approach the respective statutory authorities. [Paras 5]

The claim for waivers and concessions was left to be pursued before the concerned statutory authorities.

Section 32A immunity on liquidation sale of corporate debtor as a going concern - Clean slate theory in liquidation - Entitlement of the purchaser of a corporate debtor as a going concern in liquidation to protection under Section 32A of the Code for past actions, proceedings and non-compliances - HELD THAT: - The clean slate theory applies not only upon approval of a resolution plan but also where the corporate debtor is sold as a going concern during liquidation. Past liabilities that remain unclaimed during CIRP or liquidation cannot survive after successful completion of CIRP or sale of the corporate debtor as a going concern; this is a legal consequence of such sale and not, strictly, a waiver or concession. Protection u/s 32A is consequently available during liquidation, subject to fulfilment of its prescribed conditions. [Paras 5, 6, 7]

The denial of protection for the claims relating to pending or future proceedings and pre-existing non-compliances was set aside, and the appellants were granted the benefit of Section 32A, subject to fulfilment of its conditions.

Final Conclusion: The appeal was partly allowed. The appellants were held entitled to Section 32A protection in respect of the declined reliefs concerning proceedings and pre-existing non-compliances, subject to statutory conditions, while waivers and concessions were left to the concerned statutory authorities.

Seizure of equivalent assets for suspected foreign exchange held abroad - Prospective application of FEMA seizure provisions to continuing possession of foreign exchange - Person resident in India under FEMA

Seizure of equivalent assets for suspected foreign exchange held abroad - Confirmation of seizure of domestic shares equivalent to foreign exchange suspected to have been held abroad in contravention of FEMA - HELD THAT: - The information emerging from the foreign proceedings, coupled with the deceased's predominant ownership and control interests in the overseas entities, furnished reasons to believe that foreign exchange derived through the overseas iron-ore trading entities was held abroad in contravention of FEMA. The pending appeal against the foreign judgment did not displace the acquisition and ownership found in favour of the Estate. A confirmed seizure is an interim protective measure pending adjudication, and the foreign exchange had neither been disclosed as repatriated nor brought back to India. [Paras 12, 13, 14]

The statutory conditions for seizure of equivalent domestic assets under Section 37A(1) were satisfied.

Prospective application of FEMA seizure provisions to continuing possession of foreign exchange - Applicability of Section 37A to foreign exchange generated before its commencement but continuing to be held abroad thereafter - HELD THAT: - Although the profits arose from earlier trading activities, the foreign proceedings resulted in their acquisition by the Estate after Section 37A came into force, and the foreign exchange continued to be held abroad. The seizure provision was therefore invoked in respect of a continuing suspected contravention, not retrospectively for a concluded past event. [Paras 15, 16]

The objection that Section 37A had been applied retrospectively was rejected.

Person resident in India under FEMA - Residential status of the deceased and relevance of the administratrix's residential status for the alleged holding of foreign exchange abroad - HELD THAT: - Employment permits issued abroad, without evidence of the deceased's year-wise stay in India or of an intention to remain abroad for an uncertain period, did not establish that he was a person resident outside India during the relevant period. The administratrix acted for the Estate, whose alleged foreign holding could not be excluded by reference to her personal residential status. [Paras 17]

The challenge founded on non-residential status was rejected.

Final Conclusion: The impugned order confirming seizure and the underlying seizure order were upheld. The appeal was dismissed.

Bail under the Prevention of Money-Laundering Act - prolonged incarceration and serious illness - Grant of bail under the Prevention of Money-Laundering Act despite the statutory restrictions, on account of serious chronic illness and prolonged custody

HELD THAT: - Although the statutory restriction on bail could not be surmounted on merits, prolonged incarceration can, in appropriate cases, outweigh its rigour. The petitioner's chronic obstructive pulmonary disorder, repeated need for hospitalisation and medical consultations while in custody, nearly ten months of incarceration, and the fact that he had not been made an accused in the predicate-offence cases warranted grant of bail. [Paras 7, 8, 10, 11]

The bail application was allowed subject to the stipulated safeguards, including surrender of passport, restrictions on foreign travel, regular appearance, and non-interference with witnesses.

Final Conclusion: The petitioner was granted bail upon consideration of his serious chronic illness, prolonged custody and the circumstances concerning the predicate offences, subject to protective conditions.

Effect of prior release of frozen property - Attachment of equivalent value of proceeds of crime

Effect of prior release of frozen property - Quashing of proceedings against individual accused - Effect of earlier orders setting aside freezing of the properties and quashing proceedings against other partners on the subsequent attachment and the present appeals - HELD THAT: - The earlier order setting aside the freezing and seizure had not adjudicated the matter on merits; it rested on the failure to file the prosecution complaint within the then stipulated period. It therefore did not preclude a subsequent attachment. The High Court orders quashing predicate-offence and money-laundering proceedings were confined to the concerned individuals, whereas proceedings against the firm were expressly permitted to continue. The earlier Tribunal order concerning another partner likewise did not bar adjudication of the firm's and the present individual appellants' appeals on merits. [Paras 12, 13, 14]

The prior orders did not invalidate or preclude consideration of the impugned attachment.

Attachment of equivalent value of proceeds of crime - Compensation for environmental violations - Continuation of attachment of bank deposits as the available proceeds of crime or their equivalent value arising from alleged illegal mining despite payment of compensation for environmental and forest-law violations - HELD THAT: - The Adjudicating Authority had considered the complaint, the appellants' submissions and the estimate of proceeds of crime, and had made the requisite finding on the available movable properties. Payment of compensation for violations of environmental clearances and forest law could not compound money-laundering offences or be set off against proceeds of crime arising from illegal mining. In view of the investigation material indicating production beyond approved quantities and deposits stated to represent sale proceeds of minerals, the available proceeds of crime or their equivalent value were required to remain secured pending final findings in the PMLA trial. [Paras 15, 16]

The attachment was upheld and directed to continue until the trial court's findings attain finality.

Final Conclusion: The appeals were dismissed. The attachment of the identified bank deposits and fixed deposits was sustained pending final adjudication in the PMLA trial.

Attachment of alleged proceeds of crime - Layering of bribe proceeds through share transactions

Continuation of attachment of alleged proceeds of crime represented as long-term capital gains from sale of shares - HELD THAT: - The material on record indicated that the purchasers of shares held by the appellant and family members were funded from sources other than their own, and that funds were routed through banking channels for purchase of shares of non-functioning companies at highly appreciated prices. The Tribunal found the claimed investment explanation unconvincing, particularly because the companies had no apparent basis for such appreciation and the appellant, as President of the trust running the university, could not disclaim influence over it. Since the scheduled-offence and money-laundering trials were pending, attachment was required to secure the alleged proceeds of crime until conclusion of trial. [Paras 10]

The attachment was not liable to be set aside and the appeal challenging its confirmation was dismissed.

Final Conclusion: The appeal was dismissed, leaving the confirmation of the provisional attachment undisturbed.

CENVAT credit on group insurance services - CENVAT credit on club services - Rule 5 refund confined to the relevant refund period

Group Insurance as input service - Pre-01.04.2011 definition of input service - Eligibility of Group Insurance services for CENVAT credit and consequential refund for the pre-01.04.2011 period - HELD THAT: - The pre-amendment definition of input service, containing the expression "activities relating to business", had a wide ambit. Group Insurance could not be excluded merely because it covered employees or was characterised as employee welfare, nor was a direct nexus with the exported output service required. [Paras 8, 14]

The rejection of the Group Insurance component was set aside and the matter was remanded solely to verify the precise eligible amount and grant consequential refund, subject to the remaining statutory requirements.

Club services as input service - Proof of business use - Eligibility of Club Services for CENVAT credit where the services were stated to have been used for employee health, fitness and recreational activities - HELD THAT: - Club membership was not per se excluded under the pre-01.04.2011 definition; however, eligibility required evidence of actual business use. As no material established use for customer entertainment, business meetings, sales meetings or comparable business activities, the claimed credit was not established. [Paras 10, 14]

The rejection of the Club Service component was upheld.

Refund-period eligibility of accumulated CENVAT credit - Inclusion in the refund claim of credit relating to services pertaining to a period after 31.03.2010 - HELD THAT: - A refund claim for January 2010 to March 2010 could cover only eligible accumulated credit available for that refund period. The appellant did not establish that credit relating to subsequent services formed part of the eligible accumulated balance for the relevant period. [Paras 12, 14]

The rejection of credit relating to services after 31.03.2010 was upheld.

Final Conclusion: The appeal was partly allowed by remand for verification and consequential refund of the eligible Group Insurance credit. The rejection of the Club Service claim and credit relating to services after the refund period was sustained.

Service tax on interest on EMI-based loans through credit-card accounts - Penal interest and declared service of tolerating an act - Extended limitation and penalty for suppression

Taxability of interest and additional or penal interest on EMI-based loans extended to credit-card holders - HELD THAT: - The EMI facilities involved disbursement of specified amounts repayable with interest and were, in substance, loans and advances; use of the credit-card account for disbursal, accounting or recovery did not convert them into credit-card services. Interest was the return for the use and time value of money and was excluded from service tax under the applicable pre-negative-list and negative-list provisions. Additional or penal interest upon delayed EMI payment was compensatory interest arising from the underlying loan and could not be re-characterised as consideration for tolerating an act.

We also find merit in the appellant’s reliance upon the decisions of the Tribunal in Bajaj Finance Ltd. [2023 (8) TMI 473 - CESTAT MUMBAI], Ashiana Housing Ltd. [2024 (5) TMI 795 - CESTAT NEW DELHI] and Balajee Loha Pvt. Ltd [2025 (6) TMI 186 - CESTAT NEW DELHI] wherein it has been consistently held that penal or additional interest charged on delayed payments retains the character of interest and cannot be treated as consideration for any taxable service.[Paras 17, 18, 19, 20, 22]

Interest, including additional or penal interest, on the EMI-based loan facilities was not liable to service tax, and the demand founded on its treatment as consideration for credit-card services or for tolerating an act was unsustainable.

Extended limitation and penalty for suppression - Invocation of the extended period and imposition of penalty for non-payment of service tax on interest from EMI-based loan transactions - HELD THAT: - Mere non-payment in a self-assessment regime does not establish suppression; invocation of the extended period requires wilful suppression or misstatement with intent to evade tax. The dispute was interpretational, the transactions were recorded in the appellant's books and statutory records, and the Department had knowledge of the activities through prior proceedings and audits. No fraud, wilful misstatement, suppression or intent to evade was established. [Paras 23, 24, 25, 26, 27]

The extended period was not invocable, and the penalty imposed under Section 78 was liable to be set aside.

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

Appellate jurisdiction over questions relating to rate of duty and taxability - Maintainability before the High Court of the Department's appeal concerning liability to cess on coal held in closing stock

HELD THAT: - The proposed questions concerned the liability to cess, which related to the determination of taxability or excisability of goods for assessment. Such determination falls within the scope of appeals directly maintainable before the Supreme Court under the statutory appellate scheme, and not an appeal to the High Court. [Paras 6]

The appeal and connected application were dismissed, with the Court holding that the appeal ought to be preferred before the Supreme Court.

Final Conclusion: The Department's appeal was dismissed as the controversy relating to cess liability involved a question falling within the Supreme Court's appellate jurisdiction.

Clandestine removal - reliability of seized records - SSI exemption - turnover based on reliable evidence - central excise duty and penalty

Central excise duty demand for alleged clandestine clearances of evaporating air coolers founded on seized records, and the consequential availability of SSI exemption - HELD THAT: - The Panchnama was rendered unreliable by the material contradiction between the Panch witness and the officer who prepared it regarding the time at which it was concluded. The documents allegedly seized under that Panchnama were neither made available nor their contents established. The proprietor's statement was not inculpatory, since the underlying documents had not been shown to him and the Revenue did not rebut his explanation with cogent evidence.

On exclusion of the unreliable clearance values based on the Neel Gagan Ledger and the dispatch record, the turnover for both periods remained within the SSI exemption limit. [Paras 13, 15, 17, 18]

No duty was payable for either period; consequently, the interest and penalty could not survive, and the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief after the seized records supporting the alleged clandestine clearances were held unreliable and the turnover was found to fall within the SSI exemption limit.

Condonation of delay - delay of 483 days beyond the prescribed limitation period - HELD THAT:- As rightly submitted by the learned AGA, the period of limitation prescribed is 180 days which is quite sufficient for preferring this petition raising a challenge to the impugned order passed by the Tribunal.

Moreover, the impugned order is passed in an appeal filed by the petitioner and, therefore, the petitioner should have been more prudent and alert in pursuing the remedy within the time prescribed. We are also of the considered opinion that the huge delay of 483 days not including the 180 days prescribed in the statute, will make the appeal delayed by more than two years. That being the position, we are unable to accept the submissions made by the learned counsel for the petitioner.

Refund of excess tax retained by State-duty to rectify assessment - Claim for refund of excess tax retained by the State-whether the six-month period prescribed for a dealer's refund claim precludes refund where the Assessing Authority, during assessment or reassessment, discovers that the dealer was entitled to a larger deduction or exemption

HELD THAT: - The Court held that, upon discovery during assessment or reassessment that a dealer has claimed a lesser deduction than lawfully available, the Assessing Authority has a duty to determine and refund the dealer's rightful dues. That duty is not avoided by the six-month period applicable to a refund claim, particularly where deductions and exemptions arise under statutory notifications. A construction enabling the State to retain money legitimately due to the dealer was held legally impermissible. [Paras 5, 6]

The appeal was dismissed, and the State authorities were directed to refund the amount due to the respondent within three months.

Final Conclusion: The appeal was dismissed on the basis that the assessing authority must refund tax rightfully due to the dealer when the entitlement is discovered in assessment or reassessment.

Leasehold transfer of land for SEZ fiscal incentives - Promissory estoppel in enforcement of SEZ policy incentives

Leasehold transfer of land for SEZ fiscal incentives - Availability of exemption from stamp duty and registration fee for a leasehold transfer of land to an approved unit in a Special Economic Zone - HELD THAT: - The fiscal incentives under the SEZ policy and the Ordinance were intended to promote industrial establishment in the SEZ. A lease transfers an interest in land for its enjoyment for the stipulated duration and cannot be excluded from the expression "transfer of land" by confining that expression to an outright sale. [Paras 9]

The lease deed was held covered by the promised fiscal benefits, and exemption could not be denied merely because the land was transferred by lease.

Promissory estoppel in enforcement of SEZ policy incentives - Entitlement to SEZ fiscal benefits where the lease deed was executed after the State policy promising the incentives but before promulgation of the Ordinance giving effect to that policy - HELD THAT: - The State's SEZ policy had already held out fiscal incentives to attract industrial investment, and the subsequent Ordinance merely gave statutory shape to that policy. Denial of the benefit solely because the lease pre-dated the Ordinance would defeat the governmental promise and create hostile discrimination between similarly situated units established immediately before and after the Ordinance. [Paras 13, 14]

The pre-Ordinance execution of the lease deed did not disentitle the petitioners from the promised exemption.

Final Conclusion: The appeal was dismissed. The directed refund of stamp duty and registration fee was required to be processed and paid within the stipulated further period.

GST reimbursement under ongoing works contract - Pre-bid clarification inconsistent with tender conditions

Entitlement to reimbursement of GST arising during execution of a construction contract awarded before GST came into force, notwithstanding tender clauses requiring quoted rates to include applicable taxes and a pre-bid clarification concerning future taxes - HELD THAT: - The tender clauses required rates to be inclusive of taxes applicable at the time of bidding and did not extend to a tax subsequently imposed during the subsistence of the contract. The Government circular and resolution contemplated compensation of the net additional GST burden on ongoing works, and the respondents had themselves caused the claim to be verified. A pre-bid clarification contrary to the tender conditions could not override them.

The judgment in the case of B. Rugmini Amma and anr. [2013 (5) TMI 1084 - SUPREME COURT] is helpful which says that effect of a clarification would not surpass the main order and cannot, by any means, supersede or override the terms of the main order.

Denial of reimbursement after verification was arbitrary; differential treatment of similarly situated contractors would also offend Article 14. [Paras 25, 27, 29, 30, 31]

The petitioner was held entitled to GST reimbursement to the extent verified by the respondents' Chartered Accountant, and the denial communication was quashed.

Final Conclusion: The writ petition was allowed, the denial of GST reimbursement was set aside, and payment of the verified reimbursement was directed within the stipulated period.