TaxTMI Updates e-Newsletter
Sep 15,2026

Constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - availment of input tax credit on the supplier having actually paid the tax to the Government - denial of input tax credit for non-payment by supplier - bona fide purchaser protection - reading down to save constitutionality - protection against double taxation - Article 14 of the Constitution

HELD THAT:- Issue notice. Dasti service, in addition, is permitted.

In the meantime, the judgment and order(s) passed by the High Court [2026 (1) TMI 385 - TRIPURA HIGH COURT] shall remain stayed.

List on 17.09.2026 for final disposal.

Statutory appeal against nil demand order - Access to justice through GST portal

Maintainability of a statutory GST appeal where the disputed demand had been deposited under protest and the portal reflected a nil demand - HELD THAT: - The GSTN informed the Court that filing of appeals against nil orders had been enabled on the GST portal. In view of that facility, the petitioner could file the appeal in Form GST APL-01; upon filing within the permitted period, it was to be treated as regularly filed without objection. [Paras 5, 6, 7, 8]

The petitioner was permitted to file the statutory appeal within two weeks, with regular treatment of the appeal on such compliance.

Final Conclusion: The writ petition was disposed of after the GSTN enabled filing of appeals against nil demand orders on the GST portal. The CBIC was directed to be communicated the order for appropriate administrative instructions to facilitate similarly situated assessees.

Foundational facts in GST notices alleging fraud, wilful misrepresentation or suppression

Validity of notices issued under the GST Act alleging availment of input tax credit through fake invoices without actual supply of goods - HELD THAT: - A notice seeking to proceed on allegations of fraud, wilful misrepresentation or suppression must itself disclose the foundational facts leading to that inference. Mere recitation of those expressions, without sufficient reasons demonstrating application of mind, cannot sustain the notice. The impugned notices failed to assign sufficient reasons. See M/S. TATA STEEL LIMITED [2026 (8) TMI 1587 - SUPREME COURT] [Paras 5, 6]

The notices were quashed, with liberty to the respondent authority to issue fresh notices in accordance with law.

Final Conclusion: The writ petitions were allowed and the impugned GST notices were quashed, subject to liberty to issue fresh notices in accordance with law.

Supplier certificate evidencing receipt of supplies and payment of GST - Reconsideration of the disputed GST demand where the supplier's certificate prima facie evidenced receipt of supplies and payment of tax, but omitted particulars of the GSTIN erroneously disclosed in the supplier's GSTR-1

HELD THAT: - Although the certificate did not identify the GSTIN of the person inadvertently recorded in the supplier's GSTR-1, it prima facie evidenced that supplies were received by the petitioner and that tax thereon had been paid. The petitioner was therefore permitted to furnish an amended certificate containing the omitted GSTIN particulars for reconsideration. [Paras 4]

Subject to the stipulated deposit, the impugned order was set aside and the matter remanded for fresh consideration after receipt of the amended certificate; the bank attachment was directed to be raised upon fulfilment of that condition.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order and remanding the disputed GST demand for fresh consideration subject to the stipulated deposit and production of an amended supplier certificate.

Pre-deposit for appeal against penalty order - Composite demand of tax, interest and penalty

Applicability of the statutory pre-deposit requirement for an appeal where tax and interest had been paid but the original order confirmed tax, interest and penalty - HELD THAT: - The proviso applies only where an order demands penalty without involving any demand of tax. The original order confirmed liability towards tax, interest and penalty, although it recorded payment of tax and interest. The subsequent recovery order being confined to penalty did not alter the character of the original composite order. [Paras 7]

The appellate order rejecting the appeal for non-payment of ten per cent of the penalty was set aside, and the appeal was restored for adjudication on merits.

Final Conclusion: The writ petition was disposed of by setting aside the appellate rejection and restoring the appeal for adjudication on merits.

Conditional remand for de novo GST adjudication - Pre-deposit of disputed GST - Quashing of the GST assessment and remand for fresh adjudication subject to the assessee's undertaking to make a partial pre-deposit and file a reply to the show-cause notice

HELD THAT: - Having regard to the stated inability to participate in the proceedings due to heart illness and the undertaking to deposit 10% of the disputed tax, the Court directed de novo adjudication. The impugned assessment was to be treated as an addendum to the show-cause notice, enabling the assessee to submit a reply and supporting documents. [Paras 8, 9, 10, 11, 12]

The assessment was quashed and remitted for fresh decision on merits upon deposit of 10% of the disputed tax in cash and submission of a reply within the stipulated time; on default, recovery could proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the assessment and remanding the matter for conditional de novo adjudication.

Constitutional validity of input tax credit conditional on supplier tax payment - Read-down of input tax credit conditions - Jurisdictional foundation for fraud-based input tax credit proceedings - Natural justice in GST adjudication - Alternative statutory remedy

Input tax credit conditional on supplier tax payment - Read-down of input tax credit conditions - Constitutional validity and proposed read-down of the condition requiring actual payment of tax by the supplier for availment of input tax credit - HELD THAT: - Input tax credit is a conditional statutory entitlement, not a vested or constitutional right. The conditions under section 16(2) are cumulative, and compliance with other conditions cannot dispense with the requirement of actual payment of tax under clause (c). Section 41 provides for reversal of credit where the supplier has not paid tax and its re-availment when the default is cured; section 155 places the burden of proving eligibility on the claimant. The statutory allocation of the risk of supplier default to the recipient, coupled with the reversal and re-availment mechanism, was held neither arbitrary nor unconstitutional. The plea for reading down stood expressly negatived by the binding speaking decision of the Supreme Court; moreover, the alleged fake invoices and bogus supplies required factual determination and did not warrant writ adjudication. [Paras 22, 27, 28, 30, 31]

The challenge to section 16(2)(c) failed, and no reading down was granted; the contention that the transactions were bona fide was left open for pursuit under the statutory remedies.

Jurisdictional foundation for fraud-based input tax credit proceedings - Jurisdictional foundation for invoking section 74 in respect of allegedly wrongful input tax credit - HELD THAT: - Invocation of section 74 requires prima facie satisfaction that credit was wrongly availed by reason of fraud, wilful misstatement or suppression of facts to evade tax; a bare statutory recital without supporting material would not suffice. The show cause notice, however, contained detailed allegations of layered transactions, fake invoices, bogus supplies and absence of movement of goods. If established, those allegations would fall within the statutory ingredients. The challenge consequently concerned adequacy of material and appreciation of the reply, which are matters on merits for the appellate forum rather than grounds to quash the proceedings in writ jurisdiction. [Paras 34, 35, 36, 37, 38]

The show cause notice was held not to lack jurisdictional foundation under section 74.

Natural justice in GST adjudication - Rule against bias - Alleged breach of natural justice arising from non-issuance of pre-notice intimation, investigation and adjudication by the same officer, and alleged non-consideration of the reply - HELD THAT: - Following the substitution of "shall" by "may", pre-notice intimation in Form GST DRC-01A is an enabling facility and not a condition precedent to proceedings under section 74. No prejudice was shown where the petitioner had participated in the proceedings, furnished records, replied to the notice and received a hearing. The statutory scheme entrusts investigation, issuance of notice and determination to the proper officer; therefore, performance of both investigative and adjudicatory functions by the same officer does not establish bias without cogent material showing personal interest, animus or a closed mind. Alleged inadequate appreciation of the reply, after notice and hearing, was at most an error within jurisdiction remediable in appeal. [Paras 43, 44, 46, 47, 48]

No breach of natural justice or disqualifying bias was made out.

Alternative statutory remedy - Maintainability of the writ petition against the adjudication order where the statutory appellate remedy was available - HELD THAT: - Once the constitutional and jurisdictional challenges failed, the grievances concerning the evidence, the alleged bona fides of the transactions and the adjudication on merits had to be pursued through the statutory appeal. Treating such merits grievances as violations of natural justice would defeat the statutory appellate hierarchy and its pre-deposit requirement. [Paras 49, 50, 51]

The petitioner was relegated to the statutory appeal, with the period spent in the writ petition excluded from limitation if the appeal is filed within the stipulated period; the deposit made through Form GST DRC-03 was directed to be adjusted towards the appellate pre-deposit, without prejudice to the rival contentions.

Final Conclusion: The writ petition was disposed of by rejecting the challenge to section 16(2)(c), the show cause notice and the adjudication order. The petitioner was relegated to the statutory appellate remedy, with all merits contentions kept open for appellate consideration.

Access to justice obstructed occasioned by technicalities - entire amount of disputed tax may have been pre-deposited, the petitioner is not able to file his appeal against the order giving rise to the disputed demand.

HELD THAT:- Prima facie, statutory right of appeal may not be obstructed and thereby access to justice may not delayed or declined.

Ld' Additional Chief Standing Counsel and Ld' counsel for the GSTN pray for and are granted ten days' time to obtain instructions as to the permanent measures put in place to allow for such appeals to be filed through online mode and failing that, measures may be put in place to allow for such appeals to be filed through offline mode. Even if the documents of such appeals are uploaded, the issue of maintainability may remain to be dealt with independent of filing of such appeals.

Put up as fresh on 20.08.2026.

Reassessment notice against amalgamated non-existing entity -entity that had ceased to exist upon merger with the petitioner - HELD THAT: - The merger had been sanctioned with effect from 01.04.2019, and the revenue authorities had been informed that the erstwhile entity had ceased to exist and that its business was thereafter carried on by the petitioner. The replies in the proceedings were also signed by officers of the petitioner. A notice issued under Section 148 in the name of the non-existing amalgamated entity was therefore unsustainable in law. [Paras 8]

The reassessment notice for assessment year 2022-23 was quashed, while reserving the respondents' right to initiate appropriate proceedings in accordance with law.

Final Conclusion: The writ petition was allowed and the reassessment notice issued against the non-existing amalgamated entity was set aside.

Survival of income-tax arrears before the committee of creditors after approval of a resolution plan - scope of Approved resolution plan - extinguishment of unclaimed statutory dues

HELD THAT: - The Hon'ble Supreme Court, in the case of Ghanshyam Mishra and Sons Private Limited Vs Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT] had considered the impact of a resolution plan once duly approved by the adjudicating authority in terms of Section 31(1) of the Insolvency and Bankruptcy Code, 2016

An approved resolution plan binds all stakeholders and is intended to enable the successful resolution applicant to take over the corporate debtor on a fresh slate. Since no claim relating to the impugned income-tax arrears had been placed before the Committee of Creditors or formed part of the approved scheme, the claims stood frozen and did not survive. [Paras 1, 5]

The income-tax claims not included in the approved resolution plan were held not to survive, and the writ petitions were closed.

Final Conclusion: Income-tax arrears not forming part of the resolution plan approved by the NCLT were held extinguished. The writ petitions were closed.

Waiver of interest under clause 2(c) of the waiver scheme - Payment of principal tax as condition for interest waiver - Entitlement to waiver of interest under clause 2(c) of the 2006 waiver/reduction order where the deduction claimed under section 80HHC was subsequently disallowed

Entitlement to waiver of interest under clause 2(c) of the 2006 waiver/reduction order where the deduction claimed under section 80HHC was subsequently disallowed - HELD THAT: - Clause 2(c) requires that non-payment of tax must have resulted from an order of the jurisdictional High Court [1997 (1) TMI 60 - KERALA HIGH COURT] governing the assessee when advance tax was paid or the return was furnished. As the jurisdictional High Court decision relied upon was rendered after the relevant returns of all but one petitioner had been filed, the essential requirement was not fulfilled. In the remaining case, even if clause 2(c) could otherwise apply, waiver was unavailable because the principal income-tax demand had not been paid, as mandatorily required by the scheme. [Paras 12, 13]

The rejection of the applications for waiver of interest was upheld.

Scope of interest-waiver proceedings - Availability of a challenge to interest liability based on section 234B(3) in writ petitions confined to rejection of applications for waiver - HELD THAT: - The applications and writ petitions sought only waiver under the 2006 order and did not challenge the orders imposing interest on the basis of section 234B(3). The Court further found that sub-section (3) of section 234A was inapplicable, since the original assessment had not allowed the section 80HHC deduction and the assessing authority's finding was ultimately upheld. [Paras 14]

The statutory plea concerning the imposition of interest did not warrant interference with the rejection of waiver.

Interest under section 220(2) - commencement upon demand default - Claim that interest under section 220(2) had been demanded from the date of filing the returns rather than upon default after service of demand - HELD THAT: - Interest under section 220(2) can arise only upon failure to pay the demand after service of notice under section 156 and expiry of the prescribed period. As the materials did not show that interest had in fact been demanded from the date of the returns, the Court left the factual claim open for consideration by the competent authority. [Paras 15]

The petitioners were permitted to submit applications for refund of any excess interest so demanded; applications made within one month of receipt of the judgment are to be treated as valid and decided after hearing them.

Final Conclusion: The writ petitions were dismissed, subject to liberty to seek refund of any excess interest under section 220(2) if it was demanded from the date of filing the returns.

Reassessment notice beyond three years- sanction of specified authority

Validity of a reassessment notice issued beyond three years where approval under section 151 was accorded by the PCIT instead of the PCCIT - HELD THAT: - Sanction of the specified authority is a precondition to assumption of jurisdiction for issuing a reassessment notice. Under the new regime, where more than three years have elapsed from the end of the relevant assessment year, approval must be obtained from the higher authority specified under section 151(ii). The Tribunal held, on the recorded position, that approval by the PCIT for the notice in question did not satisfy that requirement. [Paras 4, 6]

The reassessment notice was held to be bad in law, and the appeal was allowed.

Final Conclusion: The appeal was allowed after the reassessment notice was held invalid for want of sanction from the authority specified under section 151.

Revision for failure to initiate penalty proceedings - Jurisdiction to initiate penalty for contravention of cash loan or deposit restrictions

Whether the failure of the AO to initiate penalty proceedings u/s 271D of the Act will make the order liable for revision u/s 263? - HELD THAT: - Before 1 April 2025, the Assessing Officer lacked jurisdiction to impose penalty under section 271D and, consequently, could not initiate proceedings for that penalty. Therefore, in respect of an assessment order passed before that date, non-initiation of such proceedings could not render the assessment order erroneous and prejudicial to the interests of the Revenue so as to warrant revision. See Dilip Patel vs. PCIT, Central [2025 (5) TMI 2276 - GUJARAT HIGH COURT] [Paras 7]

The revisionary order was set aside and the assessee's appeal was allowed.

Final Conclusion: The revisionary order founded solely on the Assessing Officer's non-initiation of penalty proceedings under section 271D was set aside, and the appeal was allowed.

Validity of Reassessment - addition on issue other than recorded reason - Sustainability of an addition relating to short-term capital gains on sale of shops, where the addition on the issue for which assessment was reopened had been deleted

HELD THAT: - It is a settled position of law that once the addition on the basis of which the case was reopened is not sustained, no addition or disallowance on any other ground can be sustained. The Hon’ble Gujarat High Court has held in the case of Commissioner of Income Tax v. Mohmed Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] that if no addition is made on the reopened issues, no other addition can be made by the Assessing Officer.

Since the addition concerning the land transaction, which was the recorded reason for reopening, stood deleted and the Revenue had not controverted that its deletion was unchallenged, the separate addition relating to sale of shops could not survive. [Paras 7]

The addition under section 50C in respect of short-term capital gains on sale of shops was deleted; the additional ground was allowed.

Final Conclusion: The assessee's appeal was allowed by deleting the surviving reassessment addition relating to short-term capital gains on sale of shops. The legal grounds challenging reopening were not adjudicated.

Unexplained money - cash deposits sourced from recorded business receipts - Demonetisation-period cash deposits - Recorded cash sales in paddy trading business

Whether Cash deposits made during the demonetisation period out of recorded cash sales of paddy were liable to be treated as unexplained money? - HELD THAT: - Concentration of cash sales immediately before demonetisation could not, by itself, establish that the sales were fictitious or that the cash was unexplained. The explanation had to be tested against the regular books, purchases, stock availability, sales, cash book and surrounding commercial circumstances.

As the books had not been rejected and the Revenue had produced no material to show that the recorded purchases, stock position, cash-book entries or sales were false, the recorded business receipts could not be treated again as unexplained money merely because the cash was deposited during demonetisation. The assessee's paddy-trading records and loan-related material furnished a commercially plausible nexus between the business operations and the deposited cash. [Paras 14, 15, 16, 17, 18]

The addition as unexplained money was deleted.

Final Conclusion: The appeal was allowed and the addition relating to the cash deposits was deleted.

Validity of section 143(1) intimation after commencement of scrutiny assessment - intimation u/s 143(1) issued after scrutiny proceedings had commenced upon notice u/s 143(2)

HELD THAT: - A summary processing under section 143(1) may be followed by regular assessment proceedings, but the converse is impermissible: once regular assessment proceedings have commenced under section 143(2), no summary proceeding is required. Applying CIT vs. Gujarat Electricity Board [2002 (10) TMI 5 - SUPREME COURT] the intimation issued after commencement of scrutiny was held void ab initio. [Paras 4, 5]

The intimation and the adjustments made thereunder were deleted; as no separate addition had been made in scrutiny assessment, the returned income was directed to be accepted.

Final Conclusion: The assessee's appeal was allowed, and the returned income was directed to be accepted.

Valuation of obsolete inventory at lower of cost or net realisable value - Substitution of inventory valuation without evidentiary basis

Allowability of the write-down of obsolete telecom-related inventory valued at nil under the consistently followed method of lower of cost or net realisable value - HELD THAT: - Inventory cannot be carried above the amount expected to be realised on sale or use. The assessee had consistently applied the recognised accounting method, physically verified the inventory, furnished item-wise details, disclosed the valuation policy in audited accounts, and explained that the relevant business had been discontinued.

Applying Alfa Laval (India) Ltd. [2007 (11) TMI 281 - SUPREME COURT] Tribunal held that the Revenue could not substitute an assumed scrap or realisable value without positive material such as an independent valuation, market quotation, comparable sale, or evidence of a purchaser. Neither the absence of a technical expert's certificate nor the bank's non-receipt of a separate communication displaced the otherwise supported valuation. Once the assessee reasonably demonstrated the basis of valuation, the burden lay on the Revenue to establish a higher net realisable value. [Paras 13, 14, 15, 16, 17]

The disallowance of the obsolete-stock write-down was deleted, and the Assessing Officer was directed to recompute the income or loss and the loss eligible for carry-forward.

Final Conclusion: The appeal was allowed. The obsolete-inventory valuation adopted under the consistently followed recognised accounting method was accepted, the addition was deleted, and consequential recomputation was directed.

Treatment to Survey surrender income - taxable at the enhanced rate u/s 115BBE or at the normal rate applicable to business income - Prospective operation of enhanced tax rate u/s 115BBE - Beneficial construction of ambiguous taxing provisions

HELD THAT: - The surrendered amount, disclosed in the profit and loss account as business income, related to discrepancies in cash and stock at the business premises; in the absence of an independent undisclosed asset or nexus with any source other than the business, it was assessable as business income.

Further, the enhanced rate under section 115BBE, effective from 01.04.2017 without express retrospective operation, could not govern FY 2016-17. In the absence of a jurisdictional High Court decision and where two reasonable constructions were possible, the construction favourable to the assessee was adopted. [Paras 3]

The surrendered income was directed to be taxed at the normal rate.

Final Conclusion: The appeal was partly allowed, and the Assessing Officer was directed to apply the normal rate of tax to the surrendered income.

Validity of Reassessment - addition beyond recorded reasons - Disallowance of deduction claimed by a co-operative credit society in reassessment, where no addition was made on the cash deposits and time deposits forming the recorded reasons for reopening

HELD THAT: - The Assessing Officer made no addition on either of the issues for which the assessment had been reopened.

It has been held in the case of Commissioner of Income Tax v. Mohmed Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] that if no addition is made on the reopened issue, no other addition can be made by the AO. Thus, disallowance made by the AO u/s. 80P, which was not part of the reason recorded by him, is deleted. [Paras 7]

The disallowance of the claimed deduction was deleted.

Final Conclusion: The assessee's appeal was allowed and the disallowance made in reassessment on an issue unconnected with the recorded reasons for reopening was deleted.

Deduction u/s 54F - Capital gains exemption for construction of residential house

Entitlement to exemption of capital gains for construction of a residential house after transfer of agricultural land, including the allowable extent of construction expenditure - HELD THAT: - The certificate of the local authority and the registered valuer's report established that the residential house had been constructed within three years of the transfer. The statutory conditions for the claimed exemption were therefore fulfilled. However, exemption could be allowed only with reference to the evidenced cost of construction; the claim towards furniture and fixtures was unsupported by sufficient evidence. [Paras 9, 10]

The exemption was allowed proportionately in respect of the evidenced residential-house construction cost, while the claim for furniture and fixtures was disallowed; the appeal was partly allowed.

Final Conclusion: The appeal was partly allowed by granting exemption for the evidenced cost of construction of the residential house and excluding the unsupported claim for furniture and fixtures.

Rebate u/s 87A on short-term capital gains taxable at special rate - Prospective operation of restriction on rebate for special-rate income

Availability of rebate u/s 87A against tax on short-term capital gains taxable under section 111A where total income was within the prescribed threshold and tax was computed under section 115BAC(1A) - HELD THAT: - For AY 2025-26, the first proviso to section 87A granted rebate to a resident individual taxable under section 115BAC(1A) whose total income did not exceed the prescribed limit, without excluding income taxable under section 111A. The restriction on rebate in respect of special-rate income was introduced by the Finance Act, 2025 only with effect from AY 2026-27 and could not be applied to the year in question. The Explanatory Memorandum could not override the statutory language.

We find force from the decision of Jayshreeben Jayantibhai Palsana [2025 (8) TMI 842 - ITAT AHMEDABAD] wherein ITAT held that “section 87A rebate for special-rate income was introduced only by the Finance Act 2025, prospectively w.e.f. AY 2026-27 and Explanatory Memorandum to Finance Bill cannot override statutory language.” The coordinate Bench also decided the issue in favour of the assessee in the case of Manan Anand vs ITO [2026 (3) TMI 1759 - ITAT DELHI] [Paras 8]

The restriction of rebate by excluding tax attributable to short-term capital gains was unsustainable; full rebate under section 87A was allowed and the consequential demand was deleted.

Final Conclusion: The appeal was allowed. The intimation restricting the section 87A rebate was set aside and the consequential demand was deleted.

Rejection of books of account on suspicion - Unexplained money where cash is recorded in books - Taxation of recorded business receipts as unexplained income

Rejection of books of account on suspicion - Validity of rejection of the books of account where the disclosed turnover and trading results were accepted and the computerised books and supporting records were offered for physical verification - HELD THAT: - Rejection of books under section 145(3) requires specific defects rendering the accounts incapable of determining business income correctly. The Assessing Officer neither disturbed the disclosed turnover or trading results nor estimated business income after rejecting the books. The assessee had furnished material and expressly offered the complete computerised books for verification, but no opportunity for physical production was shown to have been afforded. Suspicion concerning certain cash receipts, without further inquiry, was insufficient to reject the books. [Paras 30]

The rejection of books of account was held unjustified.

Unexplained money where cash is recorded in books - Taxation of recorded business receipts as unexplained income - Applicability of section 69A to bank deposits made from recorded cash balances stated to arise from disclosed cash sales and realisation from trade debtors - HELD THAT: - Section 69A requires, inter alia, that the money be not recorded in the books of account. Formal rejection of books does not by itself convert recorded receipts into unrecorded money.

The deposits were within the cash balance shown in the books; the sales formed part of the accepted turnover and the related business profits had been offered to tax. In the absence of inquiry from identified parties, a finding that sales were fictitious, or material showing a source outside the recorded business, commercial improbability of retaining cash could not establish unexplained money. A recorded business receipt cannot be assessed again as independent unexplained income unless its nexus with the recorded business is disproved. [Paras 38, 40, 43, 45, 46]

The addition under section 69A was deleted; the consequential application of section 115BBE and initiation of penalty proceedings founded on that addition did not survive.

Final Conclusion: The assessee's appeal was allowed. The rejection of books and the addition for the recorded cash deposit were set aside, and the Assessing Officer was directed to delete the addition.

Rectification of mistake - Refusal of an adjournment for oral arguments - Natural justice denied - written representation in lieu of oral hearing - mistake apparent from record

Whether refusal of an adjournment for oral arguments, despite consideration of the Revenue's written submissions, constituted a violation of principles of natural justice warranting recall or rectification under Section 254(2)? - HELD THAT: - Consideration of written submissions containing the material arguments of both sides constituted an effective opportunity of hearing. Absence of additional oral submissions does not, by itself, establish a breach of natural justice where no prejudice is shown and the submissions have been considered.

We place reliance on the decision of the Hon’ble Apex Court in the case of Madhya Pradesh Industries Ltd. vs. Union of India & Ors.. [1965 (8) TMI 103 - SUPREME COURT] wherein it was held that in case of personal hearing or written representation, it is not necessary that mere consideration of written representation without personal hearing would necessarily tantamount to violation of principles of natural justice unless the said decision is adverse to any of the parties without giving an effective opportunity of hearing. We also rely on the decision of Carborundum Universal Ltd. vs. Central Board of Direct Taxes, New Delhi [1989 (10) TMI 1 - SUPREME COURT] where the said proposition was reiterated.

The rectification power is attracted where the Tribunal's mistake has caused prejudice, such as failure to consider a material contention on record; it cannot be used to secure a review on merits. As the impugned order reproduced and considered the parties' written submissions, no mistake apparent from the record was established. [Paras 7, 8]

The Revenue's applications for recall or rectification were dismissed.

Final Conclusion: The Revenue's Miscellaneous Applications seeking recall of the appellate order were dismissed, as there was no denial of effective hearing or mistake apparent from the record.

Adjustment of SAD refund against non-final duty drawback demand - Interest on delayed refund

Adjustment of sanctioned SAD refund against a duty drawback demand that had not attained finality - HELD THAT: - The Department admitted that the duty drawback demand against which the SAD refund had been appropriated stood completely dropped under a fresh adjudication order.

Tribunal applied the principle that a refund cannot be adjusted against a demand at the initial stage of its confirmation, since an appealable demand does not constitute arrears until it attains finality. [Paras 5, 7]

The adjustment was held unsustainable; the appellate order was set aside and refund of the adjudged SAD amount was directed with applicable interest in accordance with law.

Final Conclusion: The appeals were allowed, the order sustaining appropriation of SAD refund was set aside, and refund with applicable interest was directed.

Rejection of declared transaction value in absence of evidence of misdeclaration - Bona fide wrong shipment by foreign supplier - Compliance with packaged-commodity labelling requirements before clearance

Rejection of declared transaction value in absence of evidence of misdeclaration - Bona fide wrong shipment by foreign supplier - Enhancement of the declared value of imported goods where men's underwear was wrongly shipped in place of the ordered children's garments - HELD THAT: - The supplier admitted that the goods had been mixed up in the container and that the men's underwear had been intended for another consignee. The declaration in the Bill of Entry conformed to the supplier's invoice and import documents, and the department produced no material establishing misdeclaration, fraud, suppression, wilful misstatement or intention to evade duty by the importer. The resultant change in classification could not, therefore, be treated as misclassification by the importer. [Paras 6, 10]

The upholding of the enhanced adjudged demand was held legally unsustainable; the goods actually received could be cleared on payment of appropriate duty.

Confiscation and penalty for bona fide wrong shipment - Compliance with packaged-commodity labelling requirements before clearance - Confiscation, redemption fine and penalty in respect of releasable imported goods alleged to be misdeclared and non-compliant with packaged-commodity labelling requirements - HELD THAT: - A bona fide supplier-induced mix-up, unsupported by evidence of deliberate misdeclaration by the importer, did not attract the ingredients required for confiscation and penalty. The mandatory declarations under the packaged-commodity rules were required to be complied with before clearance for home consumption and could be affixed with the prescribed permission; the premature physical examination prevented the importer from seeking such permission before examination. The Tribunal also treated the Board's instructions on re-export of goods imported through bona fide mistake as requiring consideration of the request on its merits. [Paras 6, 7, 8, 9, 10]

Confiscation of the releasable goods, the redemption fine imposed thereon and the penalty on the importer were set aside; the position regarding non-releasable BIS-non-compliant amplifiers subject to re-export was not disturbed.

Final Conclusion: The appeal was partly allowed by modifying the impugned order. The enhanced demand, confiscation and redemption fine relating to releasable goods, and the penalty imposed on the importer, were held unsustainable.

Redemption fine for declared goods used to conceal undeclared imports - Penalty for misdeclaration of imported goods

Confiscation of goods used for concealment - Redemption fine - Redemption fine on declared garments used to conceal undeclared imported goods - HELD THAT: - The declared goods had accompanied and been used for concealment of substantial quantities of undeclared goods sought to be imported in breach of trade and intellectual-property laws. Their confiscability and release on payment of redemption fine were therefore sustained; however, the fine imposed was found excessive in relation to the value of the goods released. [Paras 4]

The redemption fine was reduced to 10 per cent of the declared or assessed value of the goods.

Penalty for improper importation - Misdeclaration of imported goods - Penalty for importing undeclared and misdeclared goods - HELD THAT: - The claim that the undeclared goods had been supplied by the foreign supplier without the appellant's knowledge was not accepted, there being no satisfactory material to establish bona fides. In the circumstances of gross misdeclaration and improper importation, no justification existed to interfere with liability to penalty, though the quantum imposed was excessive. [Paras 4]

The penalty was sustained but reduced.

Final Conclusion: The appeal was partially allowed. The impugned order was upheld subject to reduction of the redemption fine and penalty.

Rejection of declared transaction value under Customs Valuation Rules - Effect of acceptance of reassessed customs value on statutory appeal

Rejection of the declared transaction value of imported polyester knitted fabrics and enhancement based on alleged contemporaneous imports without written disclosure of the grounds and comparable data - HELD THAT: - The mandatory requirement to communicate in writing the grounds for doubting the truth or accuracy of the declared value cannot be waived. The importer's requests for clearance on payment of enhanced duty under protest showed that the acceptance was not simpliciter. Further, the acceptance letters did not disclose the alleged contemporaneous-import data or the relevant comparability particulars required for redetermining value.

The issue as to whether assessable value can be rejected without following the mandate of Section 14 of the Customs Act, 1962, read with Rule 12 of CVR, 2007 and the declared transactional value be re-determined following sequentially from Rule 4 to 5 of CVR, 2007, is no more res-integra as the Hon’ble Supreme Court in the case of Century Metal Recycling Pvt. Ltd. [2019 (5) TMI 1152 - SUPREME COURT] has held that the mandate of Rule 12(2) of CVR, 2007 to intimate the importer in writing the ground of doubting the truth of accuracy of the declared value cannot be ignored or waived. [Paras 13, 14, 15]

The enhancement could not be sustained merely on the basis of the acceptance letters, and the impugned appellate orders were set aside.

Effect of acceptance of reassessed value on statutory appeal - No estoppel against statutory rights in taxation - HELD THAT: - Written acceptance of reassessment under Section 17(5) relieves the proper officer only of the obligation to issue a speaking order; it does not amount to abandonment of the independent statutory right to appeal against the reassessment. Consent or acquiescence cannot defeat a statutory right in taxation.

It is our considered view that the issue involved in the present appeals are squarely covered by the judgment of the Hon’ble Delhi High Court in the case of Niraj Silk Mills [2024 (11) TMI 1361 - DELHI HIGH COURT] and therefore, the impugned Orders-In-Appeal are not sustainable in law [Paras 22, 23, 24, 25, 26]

The acceptance letters did not foreclose the statutory appeals against enhancement of value.

Final Conclusion: The impugned orders rejecting the appeals on the basis of written acceptance of enhanced value were set aside, with consequential relief in accordance with law.

Condonation of delay in filing appeal - Exclusion of time spent in bona fide proceedings before wrong forum

Whether the delay in filing the appeal should be excused after excluding the period spent bona fide in writ and special leave proceedings before other forums? - HELD THAT: - Section 14 of the Limitation Act permits exclusion of the period spent bona fide in prosecuting proceedings before a forum believed to be the appropriate remedy. The appellant had pursued writ jurisdiction and thereafter a special leave petition on jurisdictional grounds before being directed to avail the appellate remedy.

Though there was delay both before instituting the writ petition and after dismissal of the special leave petition, the appellant had continuously pursued the challenge to the impugned order.

We draw our support from the landmark decision of hon’ble Supreme Court of India decision in Collector, Land Acquisition, Anantnag v. Mst. Katiji [1987 (2) TMI 61 - SUPREME COURT] which is a cornerstone judgment on the law of limitation. It established that courts must adopt a liberal, pragmatic, and justice-oriented approach instead of a strict, technical one when dealing with the condonation of delay under Section 5 of the Limitation Act, 1963. [Paras 6]

The period spent before the superior courts was excluded and the remaining delay was condoned, subject to payment of costs.

Final Conclusion: The application for condonation of delay was allowed, subject to costs, enabling the appeal to be pursued on merits.

Burden of proof for notified gold - Confiscation of alleged smuggled gold - Proof of foreign-origin and illicit importation - Reliability of retracted statements - Cross-examination of relied-upon witnesses

Whether the seized re-melted gold was proved to be foreign-origin smuggled goods liable to confiscation, and whether consequential penalties could be sustained? - HELD THAT: - The statutory burden concerning notified goods arises only where seizure is founded on a reasonable belief, supported by objective material, that the particular gold is smuggled. Irregular re-melted gold without foreign refinery markings, mint marks or identifiable serial numbers, coupled with absence of evidence of its origin, illicit import, foreign supplier or route of importation, did not establish its foreign-origin or smuggled character.

The contemporaneous FASTag data materially contradicted the recorded time and place of seizure, and the discrepancy remained unexplained. The retracted statements lacked independent corroboration; their reliance was further impaired by denial of cross-examination of the persons whose statements and Panchanama were used against the respondent.

The contemporaneous tax invoice, supplier confirmation and banking evidence established domestic acquisition, and mere non-production of documents at interception or non-generation of an e-way bill could not, without further evidence, prove illicit importation. The foundational facts for confiscation under sections 111(d) and 111(o) were therefore not established.

As in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] held that denial of cross-examination of witnesses whose statements are relied upon amounts to serious violation of natural justice. [Paras 17, 18, 19, 20, 21]

The gold was not liable to confiscation, and the consequential penalties could not survive; the order setting aside confiscation and penalties was upheld.

Final Conclusion: The departmental appeal was dismissed, and the order setting aside confiscation of the gold and consequential penalties was sustained.

Confiscation of gold u/s 111(d) and 111(o), vehicle u/s 115(2), packing material u/s 119 and imposed penalty - Reasonable belief for reverse burden on re-melted gold - Retracted Customs Act statements and cross-examination - Confiscation and penalty for unproved gold smuggling

Reasonable belief for reverse burden on re-melted gold - Discharge of reverse burden by domestic procurement evidence - Invocation and discharge of the reverse burden for re-melted gold claimed to have been procured domestically - HELD THAT: - The reverse burden arises only upon a seizure founded on an honest and bona fide reasonable belief, supported by objective relevant material, that the particular gold was smuggled; suspicion or the mere fact that the goods are gold is insufficient. Fineness markings and purity did not establish foreign origin of re-melted pieces.

In any event, contemporaneous purchase invoices, supplier confirmation and subsequent banking-channel payment discharged the burden on a preponderance of probabilities, which the department failed to rebut through investigation of the supplier's records or procurement chain. [Paras 14, 15, 18, 19, 20]

Smuggling was not established; even assuming that the reverse burden applied, it stood discharged by the respondent.

Retracted Customs Act statements - Cross-examination of material witnesses - Evidentiary value of retracted statements relied on to establish foreign origin, ownership and identity of the seized gold - HELD THAT: - A statement recorded under the Customs Act is admissible but does not become conclusive merely because it was recorded under statutory powers. A promptly retracted statement requires assurance from independent corroborative circumstances. Here, there was no reliable evidence of illegal importation or any supporting trail connecting the gold to smuggling.

Where statements of suppliers or other material witnesses are relied upon to prove disputed facts, denial of an effective opportunity of cross-examination causes material prejudice and diminishes their evidentiary value; exceptional statutory circumstances permitting reliance without such examination were not established.

In the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] the Hon’ble Supreme Court held that where statements of witnesses are made the basis of adverse order, denial of cross-examination amounts to a serious violation of natural justice.[Paras 17, 22, 23, 24, 25]

The uncorroborated retracted statements could not sustain the allegation of smuggling, and their reliance without cross-examination was prejudicial.

Confiscation and penalty for unproved gold smuggling - Sustainability of confiscation of the gold, vehicle and packing material and penalties where illegal importation was not proved - HELD THAT: - Confiscation required proof that the goods were imported or dealt with contrary to a statutory provision or condition. Penalty further required knowledge or reason to believe that the goods were liable to confiscation. As the foundational allegation of smuggling was not established, neither the ancillary confiscations nor the penalties could survive. [Paras 27, 28]

The setting aside of confiscation and penalties was upheld.

Final Conclusion: The departmental appeal was dismissed, and the appellate order setting aside the confiscation and penalties was sustained.

Reverse burden for notified gold - Retracted customs statements - Right to cross-examine material witnesses - Confiscation and penalty for alleged gold smuggling

Reverse burden for notified gold - Proof of lawful domestic acquisition - Invocation of the reverse burden for seized re-melted gold and discharge of that burden through evidence of domestic procurement - HELD THAT: - The reverse burden applicable to notified gold arises only upon seizure founded on an honest and bona fide reasonable belief, based on objective material, that the goods were smuggled; suspicion alone is insufficient. The absence of identifiable foreign refinery, mint or serial markings, and the purity of re-melted gold, did not establish unlawful importation. In any event, the contemporaneous invoice, supplier confirmation and banking evidence established domestic procurement on a preponderance of probabilities, which the department failed to rebut by investigating the supplier's records or procurement chain. [Paras 15, 16, 21, 22]

The statutory reverse burden could not sustain the allegation of smuggling and, even if attracted, stood discharged by the respondent.

Retracted statements under section 108 - Independent corroboration of confession - Evidentiary sufficiency of retracted statements recorded under section 108 for establishing smuggling - HELD THAT: - A statement under section 108 is admissible, but a retracted statement cannot be treated as conclusive regardless of its voluntariness, surrounding circumstances and want of corroboration. Though proof in smuggling matters proceeds on preponderance of probabilities, there must be proved facts from which smuggling reasonably follows. The retracted statements were unsupported by independent evidence of illegal importation, foreign source, border movement, financial trail or the alleged cash transaction. [Paras 17, 18, 27]

The retracted statements, substantially standing alone, were insufficient to establish smuggling.

Proof of seizure Panchanama - Reliability of electronic toll records - Reliability of the seizure Panchanama where independent FASTag records materially contradicted the recorded place and circumstances of interception - HELD THAT: - An unexplained contradiction concerning the place, date and circumstances of interception cannot be dismissed as a clerical irregularity when the Panchanama is the principal contemporaneous record of seizure. The independently generated electronic toll records materially contradicted its foundational narrative, and the department neither established that those records were unreliable nor satisfactorily explained the discrepancy. In those circumstances, the Panchanama could not safely be accepted without examining the Panch witnesses and officers concerned. [Paras 19, 20]

The discrepancy in the interception narrative was a material circumstance affecting the reliability of the department's case.

Cross-examination of material witnesses - Natural justice in customs adjudication - Effect of denying cross-examination of witnesses whose statements were relied upon to establish disputed facts concerning the seized gold and the Panchanama - HELD THAT: - Where a witness statement is relied upon to establish a disputed material fact, the affected person must ordinarily be afforded an opportunity to cross-examine that witness, unless statutory exceptional circumstances exist.

In the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] the Hon’ble Supreme Court held that where statements of witnesses are made the basis of adverse order, denial of cross-examination amounts to a serious violation of natural justice.

Cross-examination of a supplier whose statement was used to challenge the identity of the goods, or of Panch witnesses relied upon to prove a disputed seizure record, could not be rejected merely as a delaying tactic. The denial materially prejudiced the respondent and diminished the evidentiary value of the statements. [Paras 23, 24, 25, 26]

The denial of effective cross-examination vitiated reliance on the disputed statement evidence.

Confiscation for unproved smuggling - Penalty requiring knowledge of confiscability - Sustainability of confiscation of the gold, vehicle and packing material, and penalties, when illegal importation and the respondent's knowledge were not established - HELD THAT: - Confiscation required proof that the goods were imported or dealt with contrary to a statutory provision or condition. No specific act of illegal importation or contravention of a condition of lawful importation was established. Consequential confiscation of the vehicle and packing material could not survive, and the knowledge or reason to believe required for penalty could not be presumed when the foundational allegation of smuggling failed.

We also find support from the jurisdictional decision in the case of Shri Kishore Kumar Gilda Vs CC, Vijayawada [2026 (5) TMI 590 - CESTAT HYDERABAD] wherein it was held that mere markings of purity, in the absence of proper recording of reasonable belief and independent evidence of smuggling, cannot sustain confiscation. The decision also recognizes that retracted statements require dependable corroboration. The material facts in the present appeal stand on an even stronger footing, since gold is remelted and domestic procurement documents have been produced.[Paras 29, 30]

The setting aside of confiscation and penalties was upheld.

Final Conclusion: The departmental appeal was dismissed. The order setting aside confiscation of the seized goods and consequential penalties was sustained.

Refund of excess late presentation charges - Maintainability of refund claim for late presentation charges - Refund of late presentation charges recovered in excess of the duty payable through the EDI system

HELD THAT: - Late presentation charges are levied under section 46 of the Customs Act; consequently, a refund claim under section 27 is maintainable for excess recovery, there being no other provision for such refund.

We agree with the appellant that in view of the order passed in Baerocher India Additives Private Limited case [2020 (10) TMI 181 - CESTAT NEW DELHI], Jindal Stainless Limited [2023 (7) TMI 594 - CESTAT HYDERABAD] and Kirtilal Kalidas Jewellers Private Limited [2019 (7) TMI 11 - CESTAT CHENNAI] in appropriate cases, refund of late fee charges can be allowed by the Tribunal.

As the applicable Regulations cap the charges at the duty payable, the excess amount recovered could not be retained. [Paras 4, 5, 7]

The rejection of the refund claim was held erroneous; the impugned order was set aside and the adjudicating authority was directed to pass appropriate orders on the refund application in the light of this order.

Final Conclusion: The appeal was allowed and the impugned order was set aside. The adjudicating authority was directed to pass appropriate orders on the refund application.

Extension of time for compromise or arrangement in liquidation - Change in circumstances upon assignment of financial debt - Commercial wisdom of financial creditor and value maximisation

Rejection of the financial creditor's application for a further ninety-day period to consider a compromise or arrangement under Section 230, following assignment of the debt - HELD THAT: - The ninety-day period under Regulation 2B(1) for a compromise or arrangement is not inflexible and must be applied with due regard to the facts of the case. The assignment of debt after the earlier rejection materially changed the identity of the sole creditor and the commercial decision-making body; it could not be treated as inconsequential. An application for extension is procedural and does not constitute a collateral challenge to the earlier rejection of the scheme on merits.

The proposed scheme, being supported by the sole financial creditor and offering value exceeding liquidation value, advanced value maximisation; in the absence of an auction notice, extension would cause no prejudice. The NCLT could not substitute its view for the commercial wisdom of the financial stakeholder. [Paras 16, 17, 18, 19, 20]

The rejection of the financial creditor's application for extension was held untenable, and the impugned order was set aside.

Final Conclusion: The writ petition was allowed, and the impugned order rejecting extension for consideration of the compromise or arrangement was set aside.

Limitation for quarterly refund claims of CENVAT credit on export of services - Relevant date for quarterly refund claims - Export of services

Whether limitation period runs from the end of the quarter in which the FIRC is received? - HELD THAT: - Rule 5 permitted refund within one year, while the governing notification permitted only one refund application for a quarter. Computing limitation separately from each FIRC receipt would curtail the claimant's quarterly filing right where a remittance was received near the close of the quarter. The Larger Bench principle in Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE - LB] that the relevant date is the end of the quarter in which the FIRC is received remained unaltered by the amended notification. As the appellant filed quarterly returns, the claim was within limitation. [Paras 5]

The rejection of the refund claim as time-barred was set aside; the appellant was held entitled to the refund with applicable interest.

Final Conclusion: The appeal was allowed and the rejection of the quarterly refund claim on limitation was set aside, with consequential refund and applicable interest.

Delayed-payment surcharge as consideration for tolerance of an act - Naturally bundled services in electricity distribution - Extended limitation for service-tax demand

Delayed-payment surcharge as consideration for tolerance of an act - Additional charges or surcharge recovered for delayed payment of electricity bills as consideration for agreeing to tolerate an act or situation - HELD THAT: - A declared service of tolerating an act or situation requires an express or implied agreement under which the service provider assumes an obligation to tolerate the act for consideration. A charge arising upon breach of the consumer's obligation to pay by the due date does not satisfy that requirement. The surcharge was intended to secure timely payment and discourage default, had a direct nexus with the electricity bill, and did not arise from any reciprocal arrangement to tolerate delayed payment. [Paras 21, 22]

The delayed-payment surcharge was not consideration for a declared service under Section 66E(e), and the demand on this count was rightly dropped.

Naturally bundled services in electricity distribution - Meter-testing charges - Meter-testing charges recovered by an electricity distribution utility as an independent taxable service or as part of electricity distribution - HELD THAT: - Meter testing is inseparable from measurement of electricity consumption and billing, and is undertaken by the distribution utility in discharge of its statutory functions. Separate pricing does not alter the essential character of an activity which is ancillary to and naturally bundled with the principal service. Such an activity takes the tax treatment of electricity distribution, which is in the negative list.

In Torrent Power Ltd [2019 (1) TMI 1092 - GUJARAT HIGH COURT] meter-related activities were specifically considered to have a direct and close nexus with transmission and distribution of electricity. The Hon’ble Gujarat High Court treated such activities as naturally bundled with the principal service under Section 66F(3) of Finance Act 1994. Likewise, the Delhi Tribunal in Madya Pradesh Vidyut Vitaran Company Ltd [2021 (2) TMI 155 - CESTAT NEW DELHI] applied Torrent Power Ltd.[supra] to the charges collected by distribution companies in connection with their statutory electricity distribution activities. [Paras 23, 24]

Meter testing was held to be naturally bundled with distribution of electricity and not liable as an independent taxable service.

Extended limitation for service-tax demand - Suppression of facts with intent to evade tax - Invocation of the extended limitation period for demand on charges collected under regulated electricity-distribution tariffs - HELD THAT: - The extended period requires positive evidence of fraud, collusion, wilful misstatement, suppression, or contravention with intent to evade tax; mere non-payment or an erroneous interpretation is insufficient. The charges were collected under publicly available tariff orders and regulations, recorded in the accounts, and had already been investigated in connection with an earlier notice covering an overlapping period. In the absence of evidence of deliberate suppression, the extended period could not be invoked. [Paras 25]

The demand beyond the normal period was barred by limitation; consequently, no interest or penalty was recoverable.

Final Conclusion: The Department's appeal was dismissed and the order dropping the service-tax demand was upheld. The cross-objections were disposed of accordingly.

Late payment charges as declared service - Consideration for declared service

Taxability of late payment charges, received as interest on delayed payment for supplies of industrial gases, as a declared service - HELD THAT: - Following Commissioner of Central GST and Central Excise, Vadodara-II Vs. Lanxess India Pvt. Ltd. [2026 (3) TMI 21 - CESTAT AHMEDABAD] Tribunal held that payments in the nature of damages, though described as interest, lack the consideration essential for a service or declared service. Such charges therefore do not fall within the category of declared services. [Paras 4]

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

Final Conclusion: The appeal was allowed on the basis that the late payment charges in question were not taxable as a declared service.

Service tax refund - unjust enrichment - Passing on incidence of tax

Entitlement to refund of service tax paid on members' subscriptions where the incidence of tax had been recovered from some members - HELD THAT: - A refund claim under Section 11B is subject to the doctrine of unjust enrichment, and the claimant must establish that the duty burden was not passed on. Though an auditor's certificate is a relevant document, its evidentiary value depends upon its veracity and contents.

As held by the Hon’ble Supreme Court in Mafatlal Industries Ltd. [1996 (12) TMI 50 - SUPREME COURT], the doctrine of unjust enrichment is a just and salutary principle, and no person can claim a refund when he has already collected the tax amount from other persons. If that be so, the right of the taxpayer to seek refund would stand eclipsed to the extent of the amount already recovered from others.

The certificate showed that the appellant had recovered part of the tax from its members, while the balance remained unrecovered. The refund claim was therefore barred to the extent of the amount recovered from members, but allowable to the extent that the incidence had not been passed on. [Paras 9, 10, 11, 12, 13]

Refund was directed only for the unrecovered portion, together with applicable interest under Section 11BB of the Central Excise Act, 1944.

Final Conclusion: The appeal was partly allowed and the impugned order was set aside. Refund was confined to the portion of service tax whose incidence had not been passed on to members, with applicable statutory interest.

Cenvat credit on factory set-up services - Cenvat credit on common industrial infrastructure services - Cenvat credit on goods used as factory inputs - Transitional supplementary invoice for differential duty - Appropriation of reversed Cenvat credit - Interest on unutilised wrongly availed Cenvat credit - Extended limitation in interpretational Cenvat credit disputes

Cenvat credit on factory set-up services - Admissibility of Cenvat credit on input services used for setting up the manufacturing facility before commencement of commercial production - HELD THAT: - Deletion of the expression "setting up" from the inclusive limb of the definition of input service does not exclude every service connected with setting up a manufacturing facility. Services having a direct and demonstrable nexus with creation or installation of the facility fall within the substantive part of the definition, unless covered by an exclusion; commencement of production on the date of receipt is not determinative.

This issue has been considered in Pepsico India Holdings Pvt Ltd. [2021 (7) TMI 1094 - CESTAT HYDERABAD] wherein, it was held that services used for setting up the factory can qualify as input services even after 01.04.2011, if they fall within the main part of the definition. Similar view was taken in Mangalam Cement Ltd [2023 (4) TMI 601 - CESTAT NEW DELHI] [Paras 9, 10, 11, 12]

The denial of Cenvat credit on services used for setting up the manufacturing facility was set aside.

Cenvat credit on common industrial infrastructure services - Admissibility of Cenvat credit on common services for approach roads, street lighting, drainage and allied industrial infrastructure situated outside the factory boundary - HELD THAT: - The location of common infrastructure beyond the physical factory boundary is not by itself determinative. The governing test is its direct or indirect nexus with manufacture or the manufacturing business. Infrastructure facilitating ingress and egress of goods and operation of industrial premises cannot be treated as unrelated to manufacture merely because it is common or outside the factory gate; no excluded residential or personal use was established.

The appellant has rightly relied upon by the decisions in Mahale Engine Components Pvt Ltd [2019 (1) TMI 771 - CESTAT NEW DELHI] RSPL Ltd., (Dhar Unit-IV) [2022 (1) TMI 710 - CESTAT NEW DELHI] Heidelberg Cement India Ltd [2017 (7) TMI 980 - CESTAT MUMBAI] and Facor Alloys Ltd [2016 (10) TMI 1245 - CESTAT HYDERABAD] [Paras 14, 15]

The denial of credit on the common infrastructure services was set aside.

Cenvat credit on goods used as factory inputs - Admissibility of Cenvat credit on stools, buckets, containers, drum racks, cable trays, ladders, fire extinguishers, glass fittings and similar goods used in the factory - HELD THAT: - Credit could not be denied solely because the goods were not capital goods or were not directly used as components in the finished product. Their independent eligibility as inputs had to be examined. Since receipt and use within the factory were undisputed and no statutory exclusion was found, denial for want of direct use in production was unsustainable. [Paras 17, 18, 19]

The denial of Cenvat credit on the disputed goods was set aside.

Transitional supplementary invoice for differential duty - Appropriation of tax paid through a supplementary GST invoice towards differential duty on related-unit clearances requiring adoption of 110% of CAS-4 value - HELD THAT: - The transitional provisions permit issuance of a supplementary invoice where the price of pre-GST supplies is revised upwards after the appointed day. Payment of IGST on an inter-State supplementary invoice, or a clerical reference to an incorrect sub-clause, cannot by itself establish that the earlier differential liability remains unpaid. Appropriation, however, requires correlation of the original clearance, differential assessable value and supplementary invoice. [Paras 21, 22, 23, 24]

The issue was remanded for limited verification of the supplementary invoice and corresponding payment; where payment of the differential liability is established, it must be appropriated and no double recovery made.

Appropriation of reversed Cenvat credit - Appropriation of Cenvat credit reversed through the statutory return where part of the reversal resulted in a negative electronic credit ledger balance - HELD THAT: - The relevant inquiry is whether the entire reversal was accounted for in the statutory records and whether any consequential liability arising from a negative balance was discharged, rather than merely the positive balance appearing in the electronic credit ledger on the reversal date. A reversal that reduces available credit or correspondingly increases output-tax liability cannot be recovered again merely because it produced a negative figure. Reconciliation of the pre-GST Cenvat records, TRAN-1, statutory return and electronic credit ledger is factual. [Paras 26, 27]

The issue was remanded for reconciliation and verification, with credit to be given for reversal or payment established from the statutory records and without duplication of recovery.

Interest on unutilised wrongly availed Cenvat credit - Liability to interest on wrongly availed Cenvat credit that remained unutilised until reversal - HELD THAT: - Under the applicable provision, interest was recoverable where wrongly taken Cenvat credit had also been utilised. Credit merely taken but remaining unutilised until reversal does not attract interest for that period; utilisation must be established. [Paras 28]

Interest was confined to credit found to have been actually utilised, subject to verification of the admitted credits.

Extended limitation in interpretational Cenvat credit disputes - Penalty for suppression or wilful mis-statement - Invocation of the extended limitation period and imposition of penalties for disputed Cenvat credit involving interpretation of the input and input-service definitions - HELD THAT: - The credit disputes were interpretational, as demonstrated by decisions of different Benches on the relevant questions. Regular statutory filings, departmental access to information during audit or investigation, and reversals made in respect of admitted matters were inconsistent with deliberate suppression intended to evade duty. In the absence of positive material establishing fraud, collusion, wilful mis-statement or suppression with such intent, the ingredients for the extended period were not made out. [Paras 30, 31, 32, 33]

The extended period of limitation was held not invokable for the interpretational demands, and penalties founded on suppression or wilful mis-statement were set aside.

Final Conclusion: The appeal was partly allowed. The credit demands and the invocation of the extended period with consequential penalties were set aside, while the differential-duty payment, credit-reversal reconciliation and interest issues were remanded for limited verification.

Priority of charge - security interest realised under SARFAESI Act, 2002 - registration of security under Section 26B of the SARFAESI Act, 2002 - priority contemplated by Section 26E of the SARFAESI Act, 2002 - crown debt including Sales Tax, Commercial Tax and Income Tax - power of Registering Authority to register sale certificates notwithstanding attachment - remittance of surplus proceeds from auction sale to tax departments

Delay of 878 days in filing this Special leave Petition - HELD THAT:- The reasons assigned for seeking condonation of delay are neither satisfactory nor sufficient in law so as to be condoned. Hence, the Special Leave Petition is dismissed on the ground of delay.

However, the question of law, if any, is left open to be raised in any other appropriate case.

We pass this order by following our earlier Tax Recovery Officer Income Tax Department vs. Devaki Thirunavakkarau & Ors [2025 (2) TMI 1996 - SC ORDER] where there was only 326 days of delay arising from the very same impugned order and we had passed the similar order.

Jurisdiction of the Joint Commissioner (Executive) - Jurisdictional objection at any stage - Delegation of revisional powers

Exercise of revisional power by the Joint Commissioner (Executive) under Section 56(1) of the U.P. VAT Act without authorisation by the Commissioner - HELD THAT: - A plea that the revisional authority lacked jurisdiction goes to the root of the matter and may be raised at any stage, notwithstanding that it was not raised before the authorities below. The record disclosed no authorisation by the Commissioner after implementation of the U.P. VAT Act delegating the power under Section 56(1) to the Joint Commissioner (Executive), and the State failed to establish such delegation through any notification, Act or circular. [Paras 8, 11, 12]

The revisional proceedings initiated by the Joint Commissioner (Executive) were without jurisdiction and void ab initio and were set aside.

Final Conclusion: The revision was allowed in favour of the revisionist, and the revisional proceedings initiated without delegated authority were set aside.

Alternative statutory remedy under the SARFAESI Act - Forfeiture of auction purchaser's earnest money deposit

Challenge by a prospective auction purchaser to forfeiture of earnest money deposit on the basis of alleged non-disclosure of an attachment over the secured property - HELD THAT: - The statutory remedy before the DRT was held to be efficacious and required to be exhausted. Whether non-disclosure of the subsisting attachment was a fact required to be disclosed under Rule 8(7)(f), and whether it was material to an intending purchaser's decision to participate in the auction, were left for determination by the DRT.

Having regard to the appellant's diligent pursuit of the writ remedy, the arguable nature of the claim, and the absence of a limitation objection before the Single Judge, the appellant was granted liberty to approach the DRT without being required to file an application for condonation of delay. [Paras 14, 15, 16, 17]

The appellant was permitted to file an application before the DRT within three weeks, which the DRT shall accept and decide in accordance with law without insisting on an application for condonation of delay.

Final Conclusion: The appeal was disposed of by modifying the impugned judgment and granting the appellant liberty to pursue the statutory remedy before the DRT. The merits of the alleged non-disclosure and forfeiture were left open for the DRT.