TaxTMI Updates e-Newsletter
Sep 14,2026

Regular bail - parity with co-accused and period of incarceration

Entitlement to regular bail in proceedings for alleged offences under the Central Goods and Services Tax Act, 2017 - HELD THAT: - The Court took into account that a co-accused had been enlarged on bail, the period of incarceration already undergone by the appellant, and the stage of trial. [Paras 4]

The impugned order was set aside and regular bail was granted on such terms and conditions as the concerned Trial Court may impose.

Final Conclusion: The appeal was allowed and the appellant was granted regular bail, subject to the satisfaction of the concerned Trial Court.

Anticipatory bail - Custodial interrogation after completion of investigation and filing of charge-sheet

Entitlement to anticipatory bail where investigation was complete, charge-sheet had been filed, charges had been framed and trial was in progress - HELD THAT: - As the investigation had concluded and the matter had proceeded to trial after framing of charges, the Court found that custodial interrogation of the appellant was no longer required. [Paras 4]

Anticipatory bail was granted, subject to conditions imposed by the Investigating Officer, continued cooperation in the investigation, and furnishing of bail bonds before the jurisdictional court.

Final Conclusion: The appeal was allowed and the denial of anticipatory bail was set aside.

Bail after filing of charge-sheet - Further custodial interrogation - Entitlement to bail in prosecution for alleged unrecorded dry-fruit transactions and issuance of tax invoices

HELD THAT: - On a prima facie consideration of the material, the Court found that the charge-sheet had been filed and that no further custodial interrogation of the petitioner was required. [Paras 5, 6]

The petitioner was directed to be released on bail, subject to conditions imposed by the jurisdictional court, and to appear before that court within two weeks.

Final Conclusion: The Special Leave Petition was disposed of by directing release of the petitioner on bail subject to appropriate conditions.

Alternative statutory remedy against cancellation of GST registration - Maintainability of the writ petition against cancellation of GST registration and rejection of the application for revocation in the presence of a statutory appellate remedy

HELD THAT: - Since an appeal lay against both the cancellation order and the order rejecting revocation, the Court declined to adjudicate the factual dispute. As the rejection order was undated and was stated to have been served on the petitioner on 22.08.2026, that date was directed to be treated as the date of the order for pursuing the appellate remedy. [Paras 11, 12]

The petitioner was permitted to file appeals against both orders within two weeks, to be decided expeditiously; all factual contentions were left open before the appellate authority.

Final Conclusion: The writ petition was disposed of on account of the available statutory appellate remedy, with a direction permitting the petitioner to pursue appeals against the cancellation and revocation-rejection orders.

GST liability order passed without granting a personal hearing

HELD THAT:- The writ petition was decided in terms of the earlier judgment M/s Warmmax India [2026 (9) TMI 815 - UTTARAKHAND HIGH COURT] concerning the requirement of personal hearing before an adverse order under the Uttarakhand Goods and Services Tax Act, 2017.

Refund of accumulated ITC under the inverted tax structure - Inapplicability of rate-reduction circular to unchanged-rate supplies - Tax-period-wise computation of inverted-duty-structure refund - Verification of input tax credit refund claims

Inverted-duty-structure refund irrespective of manufacturing status - Eligibility for accumulated input tax credit refund under an inverted duty structure on supplies of finished apparel - relevance of the claimant's status as manufacturer or trader - HELD THAT: - GST is levied on the supply of goods or services and not on manufacture. Therefore, eligibility for the claimed refund could not be made dependent on whether the registered person was engaged in trading or manufacturing. [Paras 10]

The Revenue's objection founded on the claimant's manufacturing status was rejected.

Inapplicability of rate-reduction circular to unchanged-rate supplies - Accumulated input tax credit refund - Applicability of the circular excluding refund where input and output are the same goods to supplies of apparel where there was no reduction in the GST rate - HELD THAT: - The circular concerns accumulation arising from a reduction in the GST rate on the same goods at different points of time. As the final products were supplied at the same GST rate and no rate reduction was involved, the circular did not govern the refund claim. Accumulation attributable to other inputs taxed at higher rates remained computable under the prescribed refund formula. [Paras 10]

The circular did not disentitle the respondent to refund of accumulated input tax credit.

Tax-period-wise computation of inverted-duty-structure refund - Period-wise computation of refund of accumulated input tax credit under the inverted-duty-structure formula - HELD THAT: - The original authority had computed net input tax credit and the refund on the basis of period-specific data by applying the prescribed formula. The record therefore disclosed no violation of the requirement that refund be determined for each tax period rather than cumulatively for the year. [Paras 10]

The Revenue's challenge to the computation of the refund was rejected.

Verification of input tax credit refund claims - Adequacy of verification of the refund claims, including exclusion of ineligible credit, invoice reconciliation and treatment of input tax credit relating to zero-rated supplies - HELD THAT: - The appellate authority had examined the documents relevant to the refund claims, and the original authority had also considered their verification. The Revenue produced no evidence beyond oral submissions to displace the findings regarding such verification. [Paras 10]

No infirmity was found in the verification of the refund claims or in the orders allowing them.

Final Conclusion: The Revenue appeals were dismissed and the appellate orders allowing refund of accumulated input tax credit were sustained.

Deduction u/s 80IB(10) - calculating the eligible limit of 1000 sq. ft for the purpose of allowing the deduction - Calculation of “built up area” - habitable area - common areas exclusion - projections and balconies - inner measurements at the floor level

HELD THAT:- We find no good ground and reason to interfere with the impugned judgment/order passed by the High Court. [2025 (7) TMI 1060 - BOMBAY HIGH COURT]

The special leave petition is, accordingly, dismissed.

Opportunity of hearing before giving effect to appellate order - Validity of the order giving effect to the appellate order without affording the assessee the hearing expressly contemplated therein -

HELD THAT: - The operative portion of the order required that the assessee be afforded a reasonable opportunity of hearing. As the Revenue fairly conceded that no hearing was granted, the order could not be sustained. The merits of the controversy were left open for consideration by the Assessing Officer. [Paras 3, 4, 5]

The order giving effect to the appellate order and the impugned High Court judgment were set aside, and the matter was directed to be reconsidered by the Assessing Officer after hearing the petitioner.

Final Conclusion: The Special Leave Petition was disposed of by setting aside the impugned orders for denial of the stipulated opportunity of hearing. All contentions on merits were left open.

Writ of mandamus - Judicial restraint in disputed allegations - Exercise of writ jurisdiction - writ petition invoking Articles 14, 19(1)(a), 21, 261 and 265 of the Constitution seeking enforcement of statutory duties against alleged tax evasion based on judicially admitted unaccounted cash transactions of approximately ₹1.80 crores, supported by an FIR, sworn testimony before the Family Court, and affidavits reflecting disproportionate declared assets

HELD THAT:- We find no good ground and reason to interfere with the impugned judgment/order passed by the High Court.[2026 (4) TMI 1196 - CHHATTISGARH HIGH COURT]

The special leave petition is, accordingly, dismissed.

Section 10(38) exemption for long-term capital gains - computation of book profits under Section 115JB (MAT) - proviso to Section 10(38) regarding inclusion in book profits - interpretation of exclusion from total income versus inclusion for MAT

HELD THAT:- There is a delay of 469 days in filing this Special Leave Petition and we do not find any plausible and bona fide explanation to condone this inordinate delay.

The Special Leave Petition is, accordingly, dismissed on the ground of delay.

Condonation of inordinate delay in filing the income-tax appeal by revenue - Sufficient cause for condonation of inordinate delay - Bona fides and due diligence in pursuing appeal -

HELD THAT: - Although "sufficient cause" warrants a liberal construction where negligence, inaction or want of bona fides is absent, the explanation for delay remains decisive. Even after allowing the benefit of the Supreme Court's suo motu extension of limitation, substantial delay remained unexplained.

The departmental workload, difficulty in locating records and shifting responsibility to the office handling the matter did not establish due diligence or bona fides; moreover, no explanation was offered for the delay after the appeal papers had been finalised and forwarded to counsel. The explanation was consequently found to be a mere excuse rather than sufficient cause.

The Apex Court in Shivamma (Dead) By LRS vs. Karnataka Housing Board & Ors. [2025 (9) TMI 1721 - SUPREME COURT] observed that while there is no arithmetical formula, through decades of judicial application, certain yardsticks for judging the sufficiency of cause for condonation of delay have evolved. Mere good cause is not sufficient enough to turn back the clock and allow resuscitation of a claim otherwise barred by delay. The Court ought to be cautious while undertaking such an exercise, being circumspect against condoning delay which is attributable to the applicant. Although the actual period of delay might be instructive, it is the explanation for the delay which would be the decisive factor. [Paras 20, 23, 24, 25, 26]

The application for condonation of delay was dismissed, and the appeal was consequently dismissed as time-barred.

Final Conclusion: The appellant having failed to establish sufficient cause, bona fides or due diligence for the inordinate delay, the condonation application and the appeal were dismissed as time-barred.

Rectification application - non-consideration of additional evidence - Additional evidence before the Tribunal - compliance with Rule 29

Whether the rejection of the miscellaneous application concerning Paper Book No. II-A and the accompanying affidavit warranted interference and fresh consideration under Rule 29? - HELD THAT: - The affidavit accompanying Paper Book No. II-A and the paper book were prima facie filed before, and available in the records of, the Tribunal. The affidavit expressly sought permission under Rule 29. Consequently, the Tribunal's doubt whether those documents had been filed could not prima facie be sustained. Whether Paper Book No. II-A was duly filed in compliance with Rule 29, and, if so, whether its documents were relevant to the appeal, required fresh consideration. [Paras 10, 11, 12, 13]

The impugned order was partly set aside insofar as the concerned rectification application was dismissed, and that application was remitted for consideration of Rule 29 compliance and, if established, the relevance of Paper Book No. II-A and consequential relief.

Final Conclusion: The writ petition was disposed of by partially setting aside the impugned order and remitting the rectification application for limited fresh consideration. The findings concerning the other paper book and the remaining grounds were left undisturbed.

Revision of assessment for lack of inquiry into TDS compliance - Disallowance of production expenses for non-deduction or non-payment of TDS

Revision of the assessment for failure to verify tax deduction at source compliance in respect of remuneration and hire expenses incurred in producing motion pictures - HELD THAT: - The record did not establish either the extent of tax deducted at source on the claimed expenses or deposit of the reported TDS liability. The assessee's assertion that almost half of the expenditure represented reimbursements could not, without supporting documents and examination of evidence, substantiate the claim. An assessment made without the necessary verification on this factual issue was therefore erroneous and prejudicial to the interests of the Revenue, warranting revision and fresh assessment. [Paras 27, 28, 29, 30, 31]

The assumption of revisional jurisdiction was upheld; the issue was required to be examined afresh on the evidence and records after affording the assessee an opportunity of hearing.

Final Conclusion: The appeal was dismissed, the Tribunal's affirmation of revision in respect of the TDS-related expenses being held to be in accordance with law and not perverse.

Reassessment proceedings - opportunity to respond and consideration of reply - Principles of natural justice

Validity of the order initiating reassessment where the assessee's statutory time to reply was curtailed and its uploaded reply was not considered - HELD THAT: - Although the statute allowed 30 days for filing a reply, the Assessing Officer restricted the effective time available to the assessee and proceeded despite having sufficient time available. The assessee had sought further time before expiry of the stipulated date and had uploaded its reply before the order was made. Failure to afford reasonable time and to consider that reply caused prejudice and violated the principles of natural justice. [Paras 9, 10, 11, 12, 13]

The order under Section 148A(d) and the consequential notice under Section 148 were set aside, with a direction to pass a fresh order after considering the assessee's reply, independently and in accordance with law.

Final Conclusion: The writ petition was allowed and the reassessment-initiation order and consequential notice were set aside for violation of principles of natural justice. The Assessing Officer was directed to reconsider the matter without any finding on the merits or jurisdiction to initiate proceedings.

Notice u/s 143(2) issued before return in reassessment - Invalid reassessment for want of valid scrutiny notice

Validity of reassessment where the notice under section 143(2) was issued before the assessee filed its return in response to notice under section 148 - HELD THAT: - A notice under section 143(2) must be issued after the return in response to the reopening notice is filed. A notice issued before such return is invalid, and the absence of a valid notice under section 143(2) renders the reassessment order invalid. [Paras 5, 6]

The reassessment orders were invalid; no question of law arose from the Tribunal's order setting them aside.

Final Conclusion: The appeals were dismissed, as the notice under section 143(2) issued before the return filed pursuant to notice under section 148 could not sustain the reassessment.

Revision u/s 263 - Consequential assessment after quashing of revision order - Pendency of appeal against quashing order

Validity of an assessment made pursuant to a revision order which had been quashed by the Tribunal, notwithstanding the pendency of the Revenue's appeal against that quashing order - HELD THAT: - Once the revision order had been quashed, it ceased to exist and could not furnish a foundation for an assessment under Section 143(3) read with Section 263. The mere pendency of the Revenue's challenge to the order quashing the revision order did not restore the Assessing Officer's jurisdiction to make the consequential assessment. [Paras 8, 9, 10, 11]

The annulment of the consequential assessment was upheld and the Revenue's appeal was dismissed; if the Revenue succeeds in the pending appeal against the quashing of the revision order, consequential action may be taken in accordance with law.

Final Conclusion: The Revenue's appeal was dismissed as no substantial question of law arose. The consequential assessment could not survive after the revision order on which it rested had been quashed.

Limitation for tax recovery under Rule 68B of the II Schedule - Notice to partners in recovery sale of partnership-firm property - Validity of auction-sale valuation in tax recovery proceedings - Third-party funding of auction payments

Limitation for tax recovery under Rule 68B of the II Schedule - Prospective application of amendment extending limitation - Limitation for enforcing recovery certificates in respect of the partnership firm's assessment years 2007-08 to 2011-12 - HELD THAT: - The amendment to Rule 68B cannot apply where the original limitation period had expired before the amendment came into force, but applies where that period was still subsisting. Applying the earlier decision on the same recovery proceedings, enforcement was barred for assessment years 2007-08 and 2008-09, but remained within limitation for assessment years 2009-10 to 2011-12.

Relying on the judgment of the Hon’ble Supreme Court in Union of India v. Uttam Steel Ltd, [2015 (5) TMI 214 - SUPREME COURT] it was concluded that the amendment would not apply in cases wherein the period of limitation had expired prior to the entry thereof, whereas it would apply to cases where the original limitation period was alive at the time of entry of the amendment.[Paras 7]

The limitation objection to the auction proceedings concerning assessment years 2009-10 to 2011-12 was rejected.

Notice to partners in recovery sale of partnership-firm property - Requirement of notice to individual partners before attachment and sale of immovable properties belonging to the defaulting partnership firm - HELD THAT: - Notices under the II Schedule are ordinarily required to be served on the defaulter named in the recovery certificate. While the contextual definition of defaulter includes an individual partner where recovery measures are directed against that partner's personal assets on account of joint and several liability, no such extended construction is warranted where the assets proposed for sale belong to the defaulting firm. In any event, the firm was served, copies of the relevant notices were sent to the partners, and the objecting partner had notice of and participated in the proceedings. [Paras 9, 10, 11, 13]

The Court held that the applicable rules and principles of natural justice were not violated in the sale of the firm's properties.

Validity of auction-sale valuation in tax recovery proceedings - Challenge to the valuation of the partnership firm's immovable properties in the recovery auction - HELD THAT: - The auction prices exceeded both the guideline value and the market value recorded in an affidavit executed by all the partners. In the absence of evidence that the properties were sold below fair market value, changes in the reserve prices in successive sale notices did not establish improper valuation. [Paras 14, 15]

The challenge to the valuation and auction prices was rejected.

Third-party funding of auction payments - Effect of demand drafts for the auction consideration being funded from a third-party bank account. - HELD THAT: - Where the earnest money and other payments are made in accordance with the terms and conditions of the auction by or for the successful bidder, the source bank account from which demand drafts are purchased does not vitiate the sale. [Paras 16]

The objection based on the funding of the demand drafts was rejected.

Final Conclusion: The objections to the recovery auction were rejected. The auction sale was confirmed, and the Tax Recovery Officer was directed to execute the sale certificate in favour of the auction purchaser.

Deduction of interest on borrowed capital for acquisition of subsidiary shares - Commercial expediency

Whether interest on borrowings used to acquire shares in a subsidiary for expansion of the assessee's business was deductible as business expenditure? - HELD THAT: - The question raised in this appeal is no more res-integra in view of the decision of Apex Court in case of Sharp Business System [2025 (12) TMI 1235 - SUPREME COURT] held that purpose for which the advances were made to the sister concern and its directors would also be covered by the principle of commercial expediency.

The undisputed findings established that the shares were acquired in a company engaged in the same business, with the object of expanding the assessee's multiplex operations and maximising its resources, and not merely for earning dividend income. The investment was consequently made on grounds of commercial expediency, rendering the interest on the borrowed funds allowable as business expenditure. [Paras 13, 14]

The interest expenditure was held deductible and the substantial question of law was answered in favour of the assessee.

Final Conclusion: The appeal was dismissed and the deduction of interest expenditure on borrowings utilised for acquiring the subsidiary's shares was sustained.

Penalty u/s. 271(1)(c) - disallowance of business interest on secured promissory notes

HELD THAT: - The earlier quantum decisions [2017 (11) TMI 327 - GUJARAT HIGH COURT] as following [2017 (11) TMI 63 - GUJARAT HIGH COURT] had held that interest on the secured promissory notes was incurred for business purposes and was not required to be disallowed. Consequently, the basis for the penalty did not survive; the Tribunal had rightly deleted the penalty, initially in view of the debatable nature of the issue, which had subsequently attained finality. [Paras 3, 4]

Both questions were answered in favour of the assessee and against the Revenue, and the appeals were dismissed.

Final Conclusion: The quantum disallowance of interest on secured promissory notes having been reversed, the penalty founded upon it could not survive. The Revenue's appeals were dismissed.

India-Ireland tax treaty benefit for income-tax refund interest - Credit of tax deducted at source - Beneficial treaty rate

Whether the assessee is eligible for the beneficial rate of tax @10% under Article 11 of the India-Ireland DTAA on interest on Income Tax refund received during the period relevant to the assessment year under appeal? - HELD THAT: - The facts were admittedly identical to those considered for the subsequent assessment year [2023 (10) TMI 699 - ITAT DELHI]. The earlier decision held that, where more beneficial, treaty provisions prevail over the Act and Article 11 limits Indian taxation of such interest to 10 per cent of its gross amount. That finding was held applicable mutatis mutandis. [Paras 6, 8]

The assessee was held entitled to tax the interest on income-tax refund at the beneficial rate of 10 per cent under Article 11 for both assessment years.

Credit of tax deducted at source - Allowance of credit for tax deducted at source while computing the tax payable - HELD THAT: - The claim required examination as to whether the tax deducted at source credit had already been allowed. The issue was therefore not adjudicated on merits and was restored for verification in accordance with law. [Paras 7, 8]

The Assessing Officer was directed to re-examine and allow the tax deducted at source credit, if not already allowed, in accordance with law.

Final Conclusion: The appeals were allowed insofar as the treaty rate on interest on income-tax refund was concerned, while the claim for tax deducted at source credit was restored to the Assessing Officer for verification.

Penalty u/s 271AAB - defective show-cause notice - Non Specification of applicable penalty clause

HELD THAT: - As the clauses of section 271AAB(1) operate in different factual circumstances and prescribe different rates of penalty, the assessee must be informed of the particular clause under which penalty is proposed. The reasonable opportunity contemplated by section 274 requires disclosure of the precise statutory basis for the proposed penalty. The notice and the subsequent notices did not specify either the applicable clause or the default alleged; participation in the proceedings could not cure this foundational jurisdictional defect. [Paras 11, 12, 13, 14, 15]

The initiation of penalty proceedings was vitiated, and the penalty imposed under section 271AAB(1) was quashed; the remaining grounds were left open.

Final Conclusion: The appeal was allowed, the appellate order was set aside, and the penalty under section 271AAB(1) was quashed for want of a valid notice initiating the penalty proceedings.

Classification of imported PCC Lime 0/20MM (Quicklime) - to be classified under Chapter Sub-Heading 2522 1000 or under Chapter Sub-Heading 2825 9090?

HELD THAT:- We are of the view that no error not to speak of any error of law could be said to have been committed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata [2025 (12) TMI 522 - CESTAT KOLKATA] in dismissing the appeal preferred by the appellant – Revenue wherein held that goods in question are rightly classifiable under Customs Tariff Item No. 2522 1000, as claimed by the appellant-assessee and the reclassification of the impugned goods under the Chapter Sub-Heading 2825 9090, by the Revenue rejected.

The Appeal is, accordingly, dismissed.

Port services - Storage and Warehousing - storage and warehouse keeper - incidental or ancillary services - vivisection of a composite activity - taxable service

Inordinate delay of 6752 days in filing the Civil Appeal by stating that appellant had moved the High Court assailing the order of CESTAT on misconception that since the dispute pertains to classification, the jurisdictional High Court would have the jurisdiction to entertain the appeal

HELD THAT:- Civil Appeal dismissed - delay was not condoned and the appeal was not entertained on merits.[2007 (11) TMI 75 - CESTAT, AHMEDABAD]

Limitation for refund of provisionally assessed customs duty - Communication and proof of service of assessment order

Whether the one-year limitation for a refund of duty paid under provisional assessment begins from the date of the finalisation order or from the date on which that order is communicated to the person entitled to refund? - HELD THAT: - A limitation prescribed for a party to pursue a remedy cannot commence before the party has actual or constructive knowledge of the order giving rise to that remedy. Consequently, the one-year period for refund of duty paid provisionally runs from communication of the order finalising assessment, not from its bare date. Service under the prescribed statutory mode must be established by the Revenue; despatch without proof of delivery is insufficient. As Revenue produced no evidence of despatch or delivery, while the respondent's unrebutted postal cover established receipt of the finalisation order, the refund claim was within time. [Paras 15, 16, 17, 18, 19]

The refund claim was not barred by limitation and the order directing its consideration was upheld.

Final Conclusion: Revenue's appeal was dismissed. The order holding the refund claim to be within limitation and directing its consideration was upheld.

Burden of proof for confiscation of Indian currency - Confiscation of sale proceeds of smuggled goods - Penalty for dealing with goods liable to confiscation - Remand after failure to establish statutory ingredients

Burden of proof for confiscation of Indian currency - Applicability of statutory presumption to notified goods - Applicability of the statutory burden of proof to seized Indian currency alleged to be sale proceeds of smuggled gold - HELD THAT: - The statutory exception concerning burden of proof applies only to specified or notified goods. In the case of Tulsi Das Agarwal [2003 (9) TMI 198 - CESTAT, NEW DELHI] the Tribunal held that section 123 does not apply to Indian currency and that the failure of a claimant to satisfactorily establish lawful acquisition of cash, does not, by itself, make the currency liable to confiscation under section 121. The Commissioner (Appeals) therefore correctly held that the burden rested upon the department.

As the seized property was Indian currency and not gold, the burden did not shift to the respondent to prove its lawful source; the department remained bound to establish the conditions for confiscation. [Paras 15, 16]

The appellate finding that the burden rested on the department was affirmed.

Confiscation of sale proceeds of smuggled goods - Identifiable nexus between sale and seized currency - Liability of Indian currency to confiscation as sale proceeds of smuggled gold - HELD THAT: - Confiscation requires cumulative proof of the smuggled character of identified goods, their sale by a person having the requisite knowledge, and a direct identifiable nexus between that sale and the currency. Suspicion arising from possession of cash or doubtful explanations cannot substitute such proof. No particular smuggled gold, sale, seller, buyer, consideration, or part of the currency relatable to an alleged sale was established; the business records and customer statements could not be discarded without contrary evidence. [Paras 17, 18, 19, 20]

The statutory requirements for confiscation were not proved, and the confiscation of the seized currency was set aside.

Penalty for dealing with goods liable to confiscation - Foundational requirements for penalty - Sustainability of penalties for alleged acts concerning smuggled gold when no particular goods liable to confiscation were identified - HELD THAT: - Penalty liability requires identification of particular goods liable to confiscation and proof of the person's relevant act, omission, or knowing dealing in relation to those goods. Confiscation of currency as alleged sale proceeds cannot replace these foundational requirements. An unconnected proceeding concerning seizure of gold could not supply proof in the present proceedings. [Paras 21, 22]

As neither identified smuggled gold nor any relevant act or knowing dealing was established, the penalties were unsustainable and were set aside.

Remand after failure to establish statutory ingredients - Adjudication confined to show-cause notice allegations - Propriety of directing de novo adjudication after categorical findings that confiscation and penalties lacked statutory foundation - HELD THAT: - Although the remand direction could not be sustained, it did not warrant revival of the original confiscation and penalties. Having found the statutory ingredients unproved, the appellate authority could not logically remit the same matter for further adjudication. Remand cannot enable the department to construct a deficient case by identifying new foundational facts absent from the show-cause notice, and the adjudicating authority remains confined to the notice allegations. [Paras 23, 24]

The remand direction was deleted; the merits findings were affirmed, the Revenue's appeal was dismissed, and the respondent's cross-objection was allowed.

Final Conclusion: The confiscation of Indian currency and the penalties were set aside for failure to establish the statutory prerequisites. The de novo remand direction was also set aside, with the Revenue's appeal dismissed and the respondent's cross-objection allowed.

Declared CIF transaction value of imported fresh apples - Freight and insurance addition to CIF value - Extended limitation for alleged customs undervaluation - Consequential confiscation and penalties for misdeclaration of value

Declared CIF transaction value of imported fresh apples - Freight and insurance addition to CIF value - Acceptance of the declared CIF transaction value for imported fresh apples and addition of freight and insurance based on upstream FOB documents - HELD THAT: - Transaction value is the primary basis of customs valuation and can be rejected only on cogent evidence that it does not represent the price actually paid or payable.

Hon’ble Supreme Court in South India Television [2007 (7) TMI 9 - SUPREME COURT] cautions against rejecting declared transaction value without establishing the real consideration and held that although the invoice price is not sacrosanct, before rejecting the same the Department is required to give cogent reasons and bring material on record to establish that the declared price does not represent the real transaction value. The burden is thus on the Department to establish that the apparent price is not the real price.

Department neither established any excess payment, flow-back or reimbursement by the importer nor identified an objective and quantifiable freight or insurance amount omitted from the CIF price. Freight was shown to have been prepaid by the foreign seller, and the upstream FOB transaction and Non-GMO certificates did not establish the consideration payable in the importer's distinct CIF transaction. Statements raising suspicion, without independent financial or documentary corroboration, could not fill that evidentiary gap. [Paras 30, 31, 34, 36, 37]

The declared CIF transaction value was liable to be accepted; no addition of freight or insurance was warranted, and the enhancement of assessable value was set aside.

Extended limitation for alleged customs undervaluation - Validity of invoking the extended period for alleged undervaluation of CIF-imported fresh apples - HELD THAT: - All primary import documents and the CIF Incoterm had been disclosed at assessment. A dispute over whether an upstream FOB figure could displace the disclosed CIF value, absent proof of additional consideration, did not amount to a positive and deliberate act of collusion, wilful misstatement or suppression with intent to evade duty. [Paras 38]

Invocation of the extended period was invalid, and the demand beyond the normal period was held time-barred.

Consequential confiscation and penalties for misdeclaration of value - Sustainability of confiscation, redemption fine and penalties founded on the rejected valuation and extended-period demand - HELD THAT: - As the declared value was wrongly rejected and the extended-period demand could not survive, the foundation for confiscation for misdeclaration of value failed. Penalty under section 114A was contingent upon the unsustainable extended-period duty determination, while penalties under section 112 rested on the same unsubstantiated premise. [Paras 39, 40]

The confiscation, redemption fine and penalties were set aside.

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

Forensic audit report - evidentiary value in insolvency proceedings - Fraudulent accommodation transactions and round-tripping of loan funds - Adequate opportunity of hearing

Adequate opportunity of hearing - Ex parte proceedings - Validity of the ex parte determination of the liquidator's application on the ground of alleged denial of opportunity to the suspended directors - HELD THAT: - The suspended directors had been afforded fullest possible opportunity before the Adjudicating Authority, but failed to contest the proceedings for reasons not found acceptable. They were also entitled to place material in support of their defence in appeal, but failed to produce reliable material sufficient to discredit the forensic audit report. [Paras 63, 64]

The ex parte determination was not vitiated for want of opportunity.

Forensic audit report - evidentiary value - Fraudulent accommodation transactions - Round-tripping of loan funds - Reliance on the forensic audit report to sustain contribution liability for fraudulent property transactions and unsupported cash expenses of the corporate debtor - HELD THAT: - A forensic audit report is not conclusive proof of fraud; however, it cannot be disregarded where its conclusions are supported by reliable documentary material. The report was founded on sale deeds, bank records, sub-registrar records and title-verification material, and the former management failed to rebut its factual foundation despite the burden resting on it as to matters within its special knowledge. The transactions involving the properties were rightly found to be accommodation arrangements for raising loans, with substantial loan proceeds returning through the sellers to the corporate debtor and related entities, thereby constituting round-tripping intended to defraud creditors. [Paras 62, 64, 65, 66, 68]

The forensic audit report was accepted as reliable, and the finding of fraudulent transactions and the consequential contribution direction were sustained.

Final Conclusion: The appeal was dismissed. The finding that the transactions were fraudulent accommodation arrangements involving round-tripping of loan funds, and the consequential contribution direction, were upheld.

Prospective application of liquidation-process amendments - Liquidation commencement date for sale as a going concern

Applicability of the subsequent liquidation-process amendment to a sale of the corporate debtor as a going concern initiated under an earlier liquidation order - HELD THAT: - The liquidation order was a substantive order which made liquidation effective from its date and recorded the Committee of Creditors' decision that the liquidator should first explore sale of the corporate debtor as a going concern. The subsequent auction and sale steps were implementation of that existing liquidation process, and not commencement of a fresh process.

In the absence of express retrospective operation, the amendment notified after the liquidation order could not alter the rights and obligations arising under the regulatory regime prevailing on the liquidation commencement date. [Paras 14, 16, 19, 20, 21]

The impugned order was set aside insofar as it treated the subsequent amendment as governing the already commenced liquidation by sale as a going concern; the matter was remanded for consideration of the reliefs and concessions sought in accordance with law.

Final Conclusion: The appeals were disposed of by setting aside the impugned order to the extent it retrospectively applied the subsequent amendment and by remanding the request for consequential reliefs and concessions for fresh consideration in accordance with law.

Liquidation of corporate debtor - independent decision of resolution professional - Withdrawal of corporate insolvency resolution process by settlement under Section 12A - Extension of corporate insolvency resolution process for settlement

Liquidation application u/s 33(1) - Independent and objective decision of resolution professional - Validity of liquidation ordered on an application u/s 33(1) where the resolution professional acted on the Registry's advice and private communication from an individual Committee of Creditors member - HELD THAT: - A resolution professional must exercise an independent and objective judgment, consistently with the instructions of the Committee of Creditors or directions of the Adjudicating Authority, and cannot be guided by the Registry on the nature of relief to be sought. Once the decision to invoke Section 33(1) ceased to be independent, the resolution professional ought to have convened the Committee of Creditors rather than consult a member privately outside the Committee. The circumstances in which liquidation was sought, which were not before the Adjudicating Authority, rendered the liquidation order legally unsustainable. [Paras 10, 24, 25]

The order directing liquidation was set aside.

Section 12A settlement as insolvency resolution - Extension of CIRP for settlement - Availability of extension of the corporate insolvency resolution process for pursuing withdrawal by settlement u/s 12A while repayment under the one-time settlement was in progress - HELD THAT: - Withdrawal through settlement under Section 12A ends the insolvency condition and constitutes an exit route integral to insolvency resolution, alongside resolution through a plan or liquidation. The additional period up to the outer limit of 330 days remains capable of being utilised, in an appropriate case, through the inherent powers of the Adjudicating Authority notwithstanding the stipulation of a single application for extension. A resolution professional must objectively consider extension where a successful resolution through either the plan route or the Section 12A exit route is probable; failure to do so by disregarding material settlement circumstances taints the decision to invoke Section 33(1) with arbitrariness. [Paras 11, 19, 21, 22, 23]

The CIRP was restored and the resolution professional was directed to explore the Section 12A route.

Final Conclusion: The appeal was allowed, the liquidation order was set aside, and the CIRP was restored for exploration of withdrawal through settlement under Section 12A.

Ex parte adjudication suffered from denial of notice and opportunity of hearing - Natural justice in foreign-exchange adjudication - Director's liability for unrealised export proceeds - Penalty for unrealised export proceeds

Service of notice in foreign-exchange adjudication - Opportunity of hearing - Adequacy of opportunity afforded to the director in adjudication for non-realisation of export proceeds - HELD THAT: - The appellant was aware of the investigation, had sought time to respond to the directive, and thereafter neither responded nor notified any change of address. Repeated attempts to serve notices were made, and the appellant could not rely upon his own non-cooperation to plead denial of hearing. The Tribunal therefore found no breach of natural justice. [Paras 26]

The challenge to the ex parte adjudication on the ground of denial of opportunity was rejected.

Director's liability for unrealised export proceeds - Statutory presumption of failure to take reasonable steps - Liability of the director for non-realisation of the company's export proceeds despite the company's liquidation - HELD THAT: - Non-realisation of the export proceeds was not disputed. The appellant was in charge of the company throughout the period of contravention, and neither established realisation of the proceeds nor produced material showing efforts to obtain relevant information from the Official Liquidator. The statutory presumption of failure to take reasonable steps to recover the payments remained unrebutted; liquidation did not absolve the appellant of liability for the contravention committed while he was in charge. [Paras 21, 29]

The imposition of penalty for the contravention was upheld.

Quantum of penalty for unrealised export proceeds - Appropriate quantum of penalty imposed on the director for non-realisation of export proceeds - HELD THAT: - Though the penalty was not found excessive in relation to the contravention, the Tribunal considered the period of contravention, the time-frame of the adjudication proceedings, and the company's liquidation. In the interests of justice, the penalty was confined to the amount already deposited by the appellant. [Paras 27, 32, 33]

The penalty was sustained but reduced to the amount paid towards pre-deposit.

Final Conclusion: The appeal was disposed of by sustaining the penalty for contravention relating to unrealised export proceeds, while reducing its quantum to the amount already paid towards pre-deposit.

Supply of relied upon documents denied - no Opportunity of hearing in attachment proceedings - Alleged non-supply of relied upon documents and denial of adequate opportunity to contest the provisional attachment proceedings - HELD THAT: - The Tribunal found that the appellant had acknowledged receipt of the envelope containing the notice and relied upon documents while in custody. His subsequent denial, made after a substantial interval and unsupported by any complaint against the official alleged to have obtained the acknowledgement without delivery, was held to be an afterthought. Inspection of documents was also permitted, and the Tribunal found that sufficient time had been available for filing a reply; the later request for further copies and time was viewed as an attempt to delay completion of the proceedings. [Paras 19, 20, 21, 22, 23]

No violation of natural justice or denial of a fair opportunity was established; the challenge to the confirmation of the provisional attachment failed.

Final Conclusion: The appeal was dismissed, the Tribunal holding that the relied upon documents had been served and that the appellant had been afforded a fair opportunity to defend the attachment proceedings.

Transfer of development rights as immovable property - CENVAT credit on services received by landowner - Extended limitation and penalty for wrongly availed CENVAT credit

Transfer of development rights as immovable property - Service tax on transfer of development rights - Taxability of transfer of land development rights to a developer in consideration of a share in the built-up area - HELD THAT: - Development rights are a benefit arising out of land and consequently constitute immovable property. Their transfer is therefore a transaction in immovable property and not a taxable service, whether characterised as construction of complexes or otherwise. [Paras 9, 12]

The service-tax demand on transfer of development rights and the connected penalties were set aside.

CENVAT credit on services received by landowner - Availability of CENVAT credit of service tax paid on works-contract and administrative services received from the developer - HELD THAT: - Since transfer of development rights was not an output service of the appellant, the works-contract and administrative services received from the developer could not qualify as input services in its hands. [Paras 10, 12]

Denial and recovery of the CENVAT credit were upheld, confined to the normal period of limitation.

Extended limitation and penalty for wrongly availed CENVAT credit - Invocation of the extended limitation period and imposition of penalty for CENVAT credit availed on services received from the developer - HELD THAT: - The appellant had treated transfer of development rights as taxable construction service and availed the credit on that basis. This understanding precluded invocation of the extended period and also warranted deletion of the penalty. [Paras 10, 12]

The extended period was held inapplicable and the penalty relating to the CENVAT credit was set aside.

Final Conclusion: The appeal was partly allowed. The service-tax demand and penalties were set aside, while recovery of the inadmissible CENVAT credit was sustained only for the normal limitation period.

Extended limitation for CENVAT credit reversal - Proportionate reversal of common CENVAT credit under Rule 6(3A) - Trading of goods as exempted service

Extended limitation for CENVAT credit reversal - Suppression of facts with intent to evade duty - Invocation of the extended period for alleged short reversal of CENVAT credit disclosed in service tax return - HELD THAT: - The extended period requires fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty; mens rea and positive conduct directed at evasion are essential. As the appellant had disclosed the reversals in its returns, the Department could have scrutinised the computation or sought further information. Failure to undertake such scrutiny could not establish deliberate suppression or intent to evade duty. [Paras 14, 15, 16]

The extended period was not invocable, the requisite suppression or intent to evade duty not having been established.

Proportionate reversal of common CENVAT credit under Rule 6(3A) - Clarificatory amendment to CENVAT credit reversal formula - Computation of proportionate CENVAT credit reversal where inputs and input services were used both for taxable output and exempted activities - HELD THAT: - A harmonious reading of Rule 6(1), (2) and (3) showed that total CENVAT credit in the Rule 6(3A) formula meant the total common credit and did not include credit exclusively attributable to taxable output services or dutiable goods. Otherwise, credit relatable exclusively to dutiable output would be disallowed without authority. The substituted reversal formula was held clarificatory and therefore applicable retrospectively. [Paras 17, 18]

The reversal could be computed with reference to common CENVAT credit and not the entire credit availed.

Trading of goods as exempted service - Sale of goods outside the scope of service - Treatment of trading in goods as an exempted service for CENVAT credit reversal - HELD THAT: - Services specified in the negative list were not, merely for that reason, exempted services under the definition in the CENVAT Credit Rules. Trading constituted transfer of title in goods for consideration and was a sale of goods, which lay outside the statutory definition of service. A transaction excluded from the definition of service could not be treated as a service under the negative-list provision. [Paras 19, 20, 21]

Trading in goods could not be treated as an exempted service on the basis adopted in the impugned order.

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

Works Contract Service and statutory definition of residential complex - Prospective operation of builder-construction deeming provision - Personal-use exclusion for residential units under individual construction agreements - Landowner's share in joint-development projects and double taxation - Extended limitation in interpretational Service Tax disputes - Penalty in absence of fraud or deliberate evasion

Works Contract Service and residential complex threshold - Taxability under Works Contract Service of composite construction contracts relating to a building or independently identifiable project having twelve or fewer residential units - HELD THAT: - The Hon’ble Supreme Court in Commissioner of Central Excise and Customs, Kerala Vs Larsen and Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] held that and indivisible composite works contract could not be subjected to Service Tax under the categories of Commercial or Industrial Construction Service or Construction of Complex Service prior to 01.06.2007. After 01.06.2007, such contracts could be taxed only under the specific taxable category of Works Contract Service, subject to satisfaction of its statutory requirements. However, mere existence of a composite contract does not conclude the question of taxability. To fall within Works Contract Service in relation to residential construction, the subject construction must satisfy the statutory description of a “Residential Complex”.

Although indivisible contracts involving supply of goods and construction services are works contracts and could, after the introduction of the specific taxable entry, be taxed only as Works Contract Service, that entry could not enlarge the statutory meaning of a residential complex. A building or independently identifiable project having twelve or fewer residential units, and not otherwise satisfying the statutory description of a residential complex, could not be subjected to Service Tax merely by characterising the activity as a works contract. [Paras 11, 12]

Construction of such buildings or projects was held outside the scope of taxable construction of residential complex service.

Prospective operation of builder-construction deeming provision - Service Tax liability on construction of residential flats by a builder for prospective purchasers before 01.07.2010 - HELD THAT: - The deeming provision treating construction by a builder as a taxable service upon receipt of consideration from a prospective buyer before grant of completion certificate came into force only from 01.07.2010. Being a statutory deeming fiction, it could not be retrospectively applied to the earlier period. [Paras 13, 14]

The demand relating to construction of residential flats before 01.07.2010 was set aside.

Personal-use exclusion for individually contracted residential units - Service Tax liability on completion and finishing of residential units under separate agreements with individual purchasers - HELD THAT: - Where, after transfer of the undivided land share together with partly constructed units, separate agreements were entered into with individual purchasers for completion of their respective residences, the construction fell within the personal-use exclusion. The exclusion was not displaced merely because several units formed part of one development, and personal use included allowing another person to use the unit as a residence without consideration or on rent. [Paras 15, 16]

Service Tax on consideration received under such individual agreements for residential units intended for purchasers' personal use was held not payable.

Landowner's share in joint-development projects and double taxation - Separate Service Tax demand on flats allotted to landowners under development agreements - HELD THAT: - A separate levy on flats allotted to landowners would amount to double taxation where the value of land or development rights was embedded in the assessable value of the developer's share sold to independent purchasers and tax had been discharged on that value. As the record did not establish that consideration received in kind from landowners had escaped taxation despite such inclusion, the separate demand could not stand. [Paras 17]

The Department's challenge to the dropping of the demand on the landowners' share was rejected.

Statutory abatement and cum-tax valuation - Valuation of any consideration ultimately found taxable under the construction arrangements - HELD THAT: - For any amount found taxable upon final verification, statutory abatement was required to be granted upon fulfilment of prescribed conditions. Further, where Service Tax had not been collected separately, the gross consideration had to be treated as inclusive of tax and valued on a cum-tax basis unless the Department established separate collection of Service Tax. [Paras 18]

Applicable abatement and cum-tax benefit were directed to be extended in respect of any otherwise taxable consideration.

Extended limitation in interpretational Service Tax disputes - Invocation of the extended limitation period for the demand arising from composite residential construction contracts - HELD THAT: - The controversy involved interpretation of composite contracts, the subsequent deeming provision, the personal-use exclusion, valuation and the landowners' share, on which divergent views had prevailed. In the absence of any identified positive act of fraud, collusion or deliberate suppression with intent to evade tax, mere non-payment arising from an interpretational dispute could not justify the extended period.

The Hon’ble Supreme Court in Uniworth Textiles Ltd., Vs Commissioner of Central Excise[2013 (1) TMI 616 - SUPREME COURT] held that mere non-payment of duty does not amount to suppression and that something more indicating a deliberate act with intent to evade payment must be established for invoking the extended period. [Paras 19, 20]

Invocation of the extended period was set aside, and any otherwise surviving liability was confined to the normal period.

Penalty in absence of fraud or deliberate evasion - Penalty for non-payment of Service Tax in an interpretational dispute concerning residential construction - HELD THAT: - The dispute concerned complex and frequently amended statutory provisions, without fraud or deliberate evasion by the appellant. Penalty could not therefore be sustained. [Paras 21]

All penalties imposed on the appellant were set aside.

Final Conclusion: The appellant's appeal was allowed and the Department's appeal was dismissed. The impugned demand and penalties were set aside to the extent determined, subject to the direction concerning any liability otherwise surviving within the normal period.

Commercial or Industrial Construction Service - staff quarters for factory workforce - Extended limitation - sub-contractor's service-tax liability amid conflicting judicial views

Commercial or Industrial Construction Service - staff quarters for factory workforce - Binding precedent of jurisdictional High Court - Taxability of construction of residential staff quarters for the workforce of a cotton mill as Commercial or Industrial Construction Service - HELD THAT: - Construction of a residential colony for a factory workforce is a welfare activity and does not acquire a commercial or industrial character merely because the employees work in a commercial or industrial establishment. The jurisdictional High Court's decision MANIKGARH CEMENT [2010 (10) TMI 10 - BOMBAY HIGH COURT] on this point was binding on the Tribunal and authorities within its jurisdiction. [Paras 8]

The service-tax demand on construction of staff quarters was set aside.

Extended limitation-sub-contractor's service-tax liability amid conflicting judicial views - Suppression with intent to evade tax - Validity of invoking the extended period for service-tax demand on construction work executed as a sub-contractor where the main contractors had discharged tax on the activity - HELD THAT: - A sub-contractor remains liable to service tax notwithstanding payment by the main contractor. However, invocation of the extended period requires a positive act of suppression or wilful misstatement with intent to evade tax; mere non-payment is insufficient. As the sub-contractor's liability was genuinely debatable amid conflicting decisions during the relevant period, the appellant's ultimately erroneous belief did not establish mala fide intent. The issue of divergent judicial opinion, being a matter of record bearing on limitation, could be raised at that stage. [Paras 9, 10]

As the demand was raised solely by invoking the extended period, it was barred by limitation and was set aside.

Final Conclusion: The service-tax demands were set aside: the staff-quarters construction was not taxable under Commercial or Industrial Construction Service, and the sub-contractor demand was time-barred. Consequential interest and penalties were also set aside, and the appeal was allowed.

Extended limitation for excise duty demand - suppression of facts - Penalty for duty short-levy - prerequisite of fraud, suppression or intent to evade

Extended limitation for excise duty demand - suppression of facts - Departmental knowledge of statutory records - Specific pleading of suppression in show cause notice - Invocation of the extended period for CENVAT credit demand founded on shortages reflected in the assessee's statutory Cost Audit Report - HELD THAT: - The proviso to Section 11A(1) involves a prior jurisdictional enquiry into whether the non-levy or short-levy resulted from fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty; only upon satisfaction of those conditions does the question of reckoning the five-year period from the relevant date arise. Departmental knowledge cannot curtail a valid statutory limitation period, but contemporaneous knowledge of the relevant facts is material in determining whether there was deliberate suppression.

The shortages and excesses were recorded during stock verification attended by departmental officers, and the demand rested wholly on a statutory Cost Audit Report which the assessee was obliged to maintain and produce when called for. As the prescribed returns required no such disclosure, the notices contained no particulars of any fact suppressed or duty to disclose that was breached, and the Department delayed issuance of notices after obtaining the records, no positive and deliberate concealment or intent to evade duty was established. [Paras 24, 26, 27, 28, 29]

The extended period was unavailable and the notices were barred by the ordinary period of limitation.

Penalty for duty short-levy - prerequisite of fraud, suppression or intent to evade - Imposition of penalty under Section 11AC where the conditions for invoking the extended period were not established - HELD THAT: - Penalty under Section 11AC is not free-standing and is attracted only where the conditions of the proviso to Section 11A(1) are satisfied. Since fraud, suppression, wilful misstatement, or intent to evade duty was not made out, the statutory basis for penalty failed. [Paras 25, 30]

The penalty under Section 11AC was set aside.

Final Conclusion: The appeal was allowed, the Tribunal's order was set aside and the appellate orders were restored. The demand, interest and penalty were set aside as barred by limitation, without examination of the merits of the demand.

Excisability of incidental waste arising in sponge iron manufacture - Manufacture and marketability as distinct conditions for levy - Extended limitation - suppression with intent to evade duty

Excisability of incidental waste arising in sponge iron manufacture - Manufacture and marketability as distinct conditions for levy - Liability of dolochar, fly ash, iron ore fines and other waste materials arising incidentally during manufacture of sponge iron to Central Excise duty on the basis of marketability and tariff coverage - HELD THAT: - Manufacture or production is the foundational taxable event, and marketability under the inclusive definition of goods cannot dispense with that independent requirement. The Department did not establish any process undertaken to manufacture the disputed materials or the emergence of a new and distinct commodity. Dolochar and fly ash were unavoidable residues of the manufacturing process and combustion of coal respectively, while iron ore fines resulted from handling, screening or segregation without beneficiation or enrichment. Their saleability, commercial utility or tariff specification could not, in the absence of manufacture, sustain the levy.

The issue is directly covered by the decisions in M/s Alok Steel Industries Pvt Ltd. [2020 (1) TMI 581 - CESTAT KOLKATA] and M/s kaushal Ferro Metals (P) Ltd [2026 (3) TMI 904 - CESTAT KOLKATA]

The decision of this Tribunal in Principal Commissioner of Central Tax, Rangareddy – GST [2026 (8) TMI 515 - CESTAT HYDERABAD] also reiterates that fly ash emerging from the burning of coal in a captive power plant is not excisable.

In Tarini Prasad Mohaty [2026 (7) TMI 84 - CESTAT KOLKATA] it was held that crushing and screening of iron ore, resulting merely in size reduction an segregation without beneficiation or enrichment, does not amount to manufacture of iron ore concentrated. The same principle applies to the iron ore fines involved in the present proceedings. [Paras 13, 14, 15, 16, 17]

The disputed materials were held not excisable, and the demand of duty could not be sustained.

Extended limitation - suppression with intent to evade duty - Penalty for non-payment of duty on incidental waste materials - Validity of invoking the extended period and imposing penalties for non-payment of duty on incidental waste and residues arising during manufacture of sponge iron - HELD THAT: - The controversy concerning excisability of the waste materials was interpretational, as reflected by divergent administrative views, withdrawal of the earlier Board Circular and judicial debate. In the absence of evidence of fraud, collusion, wilful misstatement or suppression with intent to evade duty, mere non-payment could not justify the extended period. The failure of the demand on merits and limitation also excluded interest and penalties, including penalties on the company's officers.

There is no evidence of any positive act of fraud, collusion, wilful, mis-statement or suppression of facts with intent to evade duty. Mere non-payment of duty without proof of requisite intent, cannot justify the extended period, as held in CCE Vs Chemphar Drugs & Liniments [1989 (2) TMI 116 - SUPREME COURT] and Continental Foundadtion Jt. Venture [2007 (8) TMI 11 - SUPREME COURT] [Paras 20, 21]

The extended period was held unavailable, and the interest and penalties were held unsustainable.

Final Conclusion: The Department's appeal was dismissed. The order setting aside the duty demand, interest and penalties was sustained.

Cenvat credit for depot clearing and forwarding services - Place of removal under FOR-destination contracts - Extended limitation for Cenvat credit demand - Penalty for wrongly availed Cenvat credit

Input services at depots and warehouses - Depot as place of removal - Admissibility of Cenvat credit on clearing and forwarding services used for receipt, unloading, storage, handling and loading of cement at depots or warehouses from which the cement was sold - HELD THAT: - A depot, premises of a consignment agent, or other premises from which excisable goods are sold after factory clearance falls within the place of removal. Services used at such depots for receiving, storing, handling and loading cement are not rendered beyond the place of removal and have a direct nexus with its manufacture and sale. [Paras 10, 18]

Cenvat credit on the clearing and forwarding services rendered at the depots or warehouses was held admissible.

Place of removal under FOR-destination contracts - Cenvat credit on post-depot delivery services - Admissibility of Cenvat credit on transportation, delivery and unloading services used after clearance of cement from the depot up to the customer's premises under FOR-destination sales - HELD THAT: - The expression FOR-destination in an invoice or contract is not conclusive of the place of removal. The actual terms of sale must establish where title and risk passed, who bore freight and insurance, whether freight formed part of the assessable value, and whether delivery at the customer's premises was an essential condition of sale.

The Larger Bench of the Tribunal in The Ramco Cement Ltd.[2023 (12) TMI 1332 - CESTAT CHENNAI-LB] has held that where clearances are made under FOR-destination contracts, the place of removal must be determined after examining the terms of the contracts and applying the principles laid down by in Roofit Industries Ltd. [2015 (4) TMI 857 - SUPREME COURT] and Emco Industries Ltd.[2015 (8) TMI 200 - SUPREME COURT] the judgment of Bharat Fritz Warner Ltd. [2022 (7) TMI 352 - KARNATAKA HIGH COURT] and CBEC Circular No. 1065/4/2018 – CX dated 08.06.2018. It follows that the mere use of expression “FOR-destination” in invoices or contract is not, by itself, conclusive.

Credit is admissible up to the customer's premises only where ownership and risk remained with the appellant until delivery and the sale was completed there; it is not admissible where title and risk passed at the factory or depot and onward transport was merely an additional facility. [Paras 12, 13, 14, 18]

The issue was remanded for limited factual verification of the relevant contracts, invoices and related records, followed by re-quantification, if any, within the normal period.

Extended limitation for Cenvat credit demand - Suppression with intent to evade duty - Invocation of the extended period for recovery of allegedly inadmissible Cenvat credit on clearing and forwarding services - HELD THAT: - The dispute arose from the interpretation of input service and place of removal. As the credit was recorded in statutory records and returns, and no positive act of fraud, collusion, wilful misstatement or deliberate suppression with intent to evade duty was established, an incorrect or disputed interpretation of law could not justify the extended period. [Paras 15, 16, 18]

The demand falling beyond the normal limitation period was set aside.

Penalty for wrongly availed Cenvat credit - Intent to evade duty - Imposition of equivalent penalty for allegedly inadmissible Cenvat credit on clearing and forwarding services - HELD THAT: - The absence of fraud, collusion, wilful misstatement or suppression with intent to evade duty also meant that the statutory ingredients for imposition of penalty were not established. [Paras 17, 18]

The equivalent penalty was set aside in its entirety.

Final Conclusion: Cenvat credit for services used at depots or warehouses was allowed, while eligibility of credit for post-depot delivery services was remanded for transaction-specific verification. The extended-period demand and equivalent penalty were set aside, and the appeal was partly allowed and partly remanded.

Challenge to amendment of concessional VAT entry - absence of prejudice - Alternative statutory appellate remedy against assessment orders

Challenge to the notification substituting the concessional VAT entry for Digital Still Image Cameras, asserted to be IT products, was academic in the absence of prejudice - HELD THAT: - The petitioner's claim rested solely on Digital Still Image Cameras being covered by the expression "IT Products". That expression continued in both the original and substituted entries; the enumerated goods in either entry were not the basis of the claim. The notification, therefore, did not affect the asserted claim, and its validity need not be examined. [Paras 8, 9]

The challenge to the notification was not entertained and the writ petition was consigned to the records.

Alternative statutory appellate remedy against assessment orders - connected challenges to assessment orders were to be pursued through statutory appeals - HELD THAT: - As the connected writ petitions had been filed because the lead case was pending, the petitioner was directed to avail the appellate remedy against the assessment orders. All questions concerning those orders were expressly left open for examination in appeal. [Paras 12, 13]

The connected writ petitions were disposed of, with a direction that appeals filed within 30 days be entertained without objection as to limitation.

Final Conclusion: The challenge to the notification was held academic because the substituted entry retained the expression "IT Products". The assessment-related challenges were relegated to the statutory appellate remedy, with protection against limitation objections for appeals filed within the stipulated period.

VAT on custom-made software development - Transfer of property in goods - VAT on issuance of Digital Signature Certificates

Custom-made software development as service contract - Transfer of property in goods - Levy of VAT on consideration for development, customisation, maintenance and support of customer-specific software - HELD THAT: - The agreements disclosed rendition of outsourced IT and software-development services, without transfer of title in software by the petitioner for consideration. The software was tailor-made on a work-for-hire basis for particular customers, could not be marketed or sold to others, and the intellectual property either vested in the customer from inception or was licensed to the customer solely in connection with the services.

High Court of Andhra Pradesh in the case of Tata Consultancy Services vs. State of Andhra Pradesh [1996 (12) TMI 364 - ANDHRA PRADESH HIGH COURT] categorically held that “unbranded software” shall not be deemed to be as goods.

The Hon’ble Supreme Court in the case of Tata Consultancy Services v. State of A.P. [2004 (11) TMI 11 - SUPREME COURT (LB)] conclusively held that even “unbranded software” may be “goods” when marketed or sold in the market.

In the absence of transfer of property in goods, the transactions remained service contracts and could not be equated with software marketed or sold as goods. [Paras 18, 21, 22]

The service turnover could not be treated as sale of software, and the VAT levy thereon was held unsustainable and quashed.

Digital Signature Certificates as service - VAT on issuance of Digital Signature Certificates - Levy of VAT on issuance of Digital Signature Certificates by a licensed Certifying Authority - HELD THAT: - Issuance of Digital Signature Certificates was held to be a service performed in the capacity of a licensed Certifying Authority under the Information Technology Act, 2000, involving no sale of goods. [Paras 21, 22]

The issuance of Digital Signature Certificates was not exigible to VAT, and the levy was quashed.

Final Conclusion: The VAT assessments treating the petitioner's service turnover as sale of software or other goods were quashed, and the writ petitions were allowed.