TaxTMI Updates e-Newsletter
Sep 16,2026

Effective opportunity of personal hearing in GST assessment proceedings - Breach of principles of natural justice

Validity of a GST assessment order where the personal hearing was fixed before the expiry of the time granted for submitting a reply to the show-cause notice - HELD THAT: - A personal hearing scheduled before the last date for filing a reply does not afford an effective opportunity of hearing. The undisputed procedure therefore resulted in a breach of the principles of natural justice. [Paras 7, 8]

The assessment order was quashed and the matter was remitted to the Assessing Officer to proceed from the show-cause notice stage, permit filing of reply, and thereafter fix a date for personal hearing.

Final Conclusion: The writ petition was disposed of by quashing the assessment order for denial of an effective hearing and remitting the matter for fresh proceedings from the show-cause notice stage.

Input tax credit-retrospective regularisation of delayed GSTR-3B returns under section 16(5)

Entitlement to input tax credit for the financial year 2018-2019 where GSTR-3B returns were filed beyond the prescribed due date but before 30 November 2021 - HELD THAT: - The insertion of section 16(5) was held to be curative and retrospective from 1 July 2017. It regularises input tax credit for the specified financial years where the return was filed by 30 November 2021; consequently, the benefit could not be denied solely because the GSTR-3B returns were filed after the original due date. The ratio in HIRANMOY DUTTA VERSUS THE STATE OF WEST BENGAL & ORS. [2025 (3) TMI 487 - CALCUTTA HIGH COURT] is squarely applicable. Once returns are filed by 30.11.21, input tax credit for April, 2018 to March, 2019 is regularized.[Paras 13, 14, 15, 16]

The adjudication order was quashed and the matter remitted for re-adjudication after verification of the date of filing of GSTR-3B returns, with no coercive steps to be taken until such re-adjudication.

Final Conclusion: The writ petition was allowed, the impugned adjudication order was quashed, and the claim for input tax credit was directed to be reconsidered in accordance with section 16(5) after verification of the return-filing date.

Interest on delayed GST refund - Exhaustion of statutory remedy - Claim for interest on an alleged delayed GST refund without first approaching the authority contemplated under the GST Act - HELD THAT: - Since the statutory provisions governing refund and interest on delayed refund provide a remedy before the designated authority, the claim for such interest must first be raised before that authority. Recourse to writ jurisdiction may be invoked only after statutory remedies are exhausted and the party remains aggrieved. [Paras 4, 6]

The petitioner was permitted to apply to the appropriate authority within two weeks; the authority was directed to decide the application within 60 days of its receipt, consistently with principles of natural justice, without any expression on merits.

Final Conclusion: The writ petition was disposed of by relegating the claim for interest on delayed refund to the statutory authority, with a direction for expeditious consideration if an application is made.

Detention and seizure of inter-State transit goods - Authority of Uttar Pradesh GST authorities to detain and seize goods merely transiting Uttar Pradesh from Delhi to West Bengal

HELD THAT: - The Court held that the GST authorities of a State are not authorised to detain or seize goods which are merely passing through that State and are destined for another State.

Maruti Enterprises [2026 (5) TMI 1510 - ALLAHABAD HIGH COURT] and Golden Traders [2026 (4) TMI 288 - ANDHRA PRADESH HIGH COURT] have taken the view that where the goods are merely passing through the respective State, the authorities of that States are not authorized to detain and seize the goods. [Paras 9, 10]

The impugned appellate order was quashed; the goods were directed to be released and any amount deposited was directed to be refunded.

Final Conclusion: The writ petition was allowed, the impugned order was quashed, and release of the goods with refund of any deposited amount was directed.

Condonation of delay in GST appeal - delay in filing the statutory appeal beyond the period prescribed for appeal - HELD THAT: - Having regard to the extent of delay, the factual aspects sought to be raised in appeal, and the Co-ordinate Bench decision in SEPL INFRA PRIVATE LIMITED [2026 (7) TMI 2004 - KARNATAKA HIGH COURT] the Court found it expedient to grant the relief sought. [Paras 6]

The appellate order was set aside, the delay in filing the appeal was condoned, and the appellate authority was directed to proceed in accordance with law; all merits contentions were kept open.

Final Conclusion: The writ petition was partly allowed by condoning the delay and restoring the GST appeal for consideration in accordance with law, without adjudicating the merits.

Condonation of delay in GST appeal - Mandatory pre-deposit and appellate remedy

Condonation of delay in filing a GST appeal where sufficient cause was shown and the mandatory pre-deposit had been paid - HELD THAT: - The Court found that the petitioner had established sufficient cause for the delay, as the person entrusted with business affairs had fallen seriously ill. Having also complied with the mandatory pre-deposit requirement, dismissal of the appeal solely on limitation without considering such cause and substantial compliance was held to be a hyper-technical approach that rendered the appellate remedy illusory. [Paras 13, 14, 15, 16]

The appellate order was quashed, the delay was condoned, and the appellate authority was directed to admit and decide the appeal on merits after affording an opportunity of hearing.

Final Conclusion: The writ petition was disposed of by condoning the delay and directing adjudication of the statutory appeal on merits within the stipulated period.

Rejection of appeal on limitation without consideration of condonation application - Requirement of reasoned order

Validity of rejection of the appeal as time-barred without considering the grounds urged for condonation of delay - HELD THAT: - The authority gave no reasons addressing the petitioner's explanation for the delay in filing the appeal. Its observation regarding the statutory limitation period did not constitute consideration of the condonation application or the submissions made therein. [Paras 5, 6]

The impugned order was set aside and the matter remanded for a fresh hearing on limitation and for passing a reasoned order in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the rejection of the appeal on limitation and remanding the matter for fresh consideration of the condonation application.

Violation of principles of natural justice - Service of GST notices through portal

Validity of the GST adjudication order where the show-cause notice and order were uploaded only under the 'Additional Notice and Orders' tab without separate intimation, preventing the petitioner from responding - HELD THAT: - The Court held that uploading the show-cause notice and adjudication order only under the specified portal tab, without separate intimation, rendered the petitioner unable to submit a reply. This constituted a violation of the principles of natural justice. [Paras 4]

The adjudication order was quashed and set aside, and the authority was directed to grant a personal hearing and pass a fresh reasoned and speaking order in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the adjudication order and remitting the matter for fresh adjudication after affording the petitioner an opportunity of personal hearing.

Dismissal of statutory appeal on limitation - Dismissal of the petitioner's statutory appeal solely on limitation without consideration on merits

HELD THAT: - The Court found that the petitioner had made out a prima facie case. As the appeal had been dismissed only on limitation and not on merits, interference was warranted in the peculiar facts to secure the ends of justice. [Paras 7, 8]

The appellate and adjudication orders were quashed, and the adjudicating authority was directed to reconsider the grounds in appeal on merits after affording a hearing and to pass a fresh reasoned order in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned orders and directing fresh adjudication on merits after granting the petitioner an opportunity of hearing.

Constitutional validity of input tax credit condition under section 16(2)(c) of the CGST Act - Alternative statutory remedy against GST adjudication order

Constitutional validity of input tax credit condition under section 16(2)(c) of the CGST Act - constitutional challenge to section 16(2)(c) of the CGST Act - HELD THAT: - The challenge stood covered by the Supreme Court decision in Bhandari Scrap Traders vs. Union Of India & Ors. [2026 (7) TMI 1839 - SC ORDER] which had upheld the constitutional validity of section 16(2)(c) of the CGST Act. [Paras 2]

The constitutional challenge was not entertained.

Alternative statutory remedy against GST adjudication order - Maintainability of the writ petitions against the final GST adjudication order - HELD THAT: - Since the notice had culminated in a final order appealable under the Rajasthan GST Act, the writ jurisdiction was not invoked. The petitioners were required to pursue the statutory appellate remedy. [Paras 3, 4]

The writ petitions were dismissed with liberty to file appeals before the appropriate authority within 30 days; the appellate authority was directed to consider them without raising limitation and decide them expeditiously in accordance with law.

Final Conclusion: The writ petitions were dismissed as the constitutional challenge was covered by the Supreme Court decision and the petitioners had an efficacious statutory appellate remedy.

Alternative statutory remedy in GST registration cancellation disputes - Exercise of writ jurisdiction involving disputed questions of fact

Maintainability of the writ petition against rejection of the application for cancellation of GST registration despite the statutory appellate remedy - HELD THAT: - Though the availability of an alternative remedy does not oust jurisdiction under Article 226, it is a relevant consideration in exercising that discretionary jurisdiction. The challenge involved allegations requiring examination of disputed facts and appraisal of the material on record, which could appropriately be undertaken by the statutory Appellate Authority. [Paras 11, 13, 14, 16]

The writ petition was not entertained, and the petitioner was relegated to the statutory appeal; the Appellate Authority was directed to decide the matter uninfluenced by the observations in the order.

Final Conclusion: The writ petition challenging rejection of the application for cancellation of GST registration was disposed of with liberty to pursue the statutory appellate remedy.

Cancellation of GST registration - non-speaking order - Failure to consider reply to show cause notice

Validity of cancellation of GST registration without consideration of the registered person's reply raising the dropping of earlier show cause notices on the same grounds - HELD THAT: - The cancellation order did not deal with the petitioner's specific contention that earlier show cause notices founded on the same reasons had been dropped and that the fresh notice lacked detailed particulars of further queries. The Court held that the impugned order was not a reasoned order, as the authority had failed to consider this material response. [Paras 3, 4, 5]

The cancellation order was set aside and the matter was remitted for submission of a detailed reply, personal hearing, and a fresh reasoned order.

Final Conclusion: The petition was disposed of after setting aside the cancellation of registration and directing fresh consideration of the show cause notice after hearing the petitioner.

Alternative statutory remedy under GST appeals - Condonation of delay in filing GST appeal

Maintainability of the writ petition against the GST demand order where the statutory appeal could not be filed within time due to circumstances beyond the petitioner's control - HELD THAT: - Since an appeal under the CGST Act was available against the impugned order, the writ petition was not to be directly entertained without exhaustion of that remedy. However, the Court was satisfied that the delay in pursuing the appeal occurred for reasons beyond the petitioner's control and noted that earlier Division Bench decisions had permitted delayed appeals to be entertained on merits where sufficient cause was shown. [Paras 6, 7, 9, 10]

The Appellate Authority was directed to entertain and decide the appeal on merits, provided it was filed within 30 days of upload of the order on the Court's website.

Final Conclusion: The writ petition was disposed of without direct adjudication of the GST demand, while preserving the statutory appellate remedy and directing consideration of the delayed appeal on merits subject to timely filing.

Restoration of appeal dismissed for non-appearance -

Whether an appeal dismissed for the petitioner's non-appearance should be restored for adjudication on merits? - HELD THAT: - Having regard to the explanation in the petitioner's affidavit that its auditor/tax consultant could not attend the hearings due to personal difficulties, the Court found it expedient to grant relief. The merits of the underlying tax dispute were expressly kept open.

The appellate order was set aside and the appeal restored, subject to payment of costs; upon default, the appellate order would automatically stand restored.

Final Conclusion: The writ petition was partly allowed by restoring the appeal for fresh proceedings in accordance with law, subject to the stipulated condition.

Writ petition challenging the GST demand despite the unavailed statutory appellate remedy and the delay in approaching the Court - HELD THAT:- The writ petition was dismissed for failure to avail the statutory appellate remedy; liberty was granted to file an appeal, with exclusion of the time spent in prosecuting the writ petition for limitation purposes. Case of SINGH CONSTRUCTION AND CO. distinguished [2025 (4) TMI 1837 - MADHYA PRADESH HIGH COURT]

Set-off of brought forward LTCG loss against capital gain assessed as STCG under Section 50 - scope of provisions of section 74

HELD THAT:- AO had relied upon the order of the Ld. CIT(A) in the case of M/s Bharat Enterprises to deny the set-off of brought forward long-term capital losses. However, the Coordinate Bench of the ITAT, in the case of M/s Bharat Enterprises, has overturned the order of the Ld. CIT(A) and the operative portion of the order of the Coordinate Bench of the ITAT [2011 (6) TMI 506 - ITAT MUMBAI] concluding that carry forward long term capital losses can be set off against the gains arising from sale of depreciable asset computed u/s. 50 in view of the wording of Sec. 74(1)(b).

We find that the Ld. CIT(A) had rightly deleted the disallowance made by the AO, as the assessee was found entitled to set off the brought forward long-term capital losses against the deemed STCG arising from the transfer of the long-term capital asset. [Paras 7 and 8]

Final Conclusion: The appeal as allowed and held that the deemed short-term capital gains arising from the transfer of depreciable assets held for more than 36 months under Section 50(2) of the Act can be set off against the brought forward long-term capital losses under Section 74.

Rebate under section 87A on short-term capital gains taxable at special rates

Entitlement to rebate under section 87A on tax payable on short-term capital gains chargeable at the special rate under section 111A - HELD THAT: - Section 87A grants rebate on the tax liability computed on total income and draws no distinction between income taxable at normal rates and short-term capital gains taxable at special rates. In the absence of an express exclusion in section 87A, section 111A or section 115BAC, and consistently following the Tribunal decision PRANAY M KOTHARI [2026 (3) TMI 1753 - ITAT CHENNAI] the rebate could not be denied merely because the total income included short-term capital gains. [Paras 6, 7]

The assessee was held entitled to rebate under section 87A on tax payable on short-term capital gains, and the order allowing the claim was upheld.

Final Conclusion: The Revenue's appeal was dismissed and the order allowing rebate under section 87A on tax payable on short-term capital gains was sustained.

Reassessment - change of opinion after scrutiny assessment - Capital gains exemption on sale of shares - Reassessment of capital gains arising from sale of shares and the consequent exemption claim, after their scrutiny and acceptance in the original assessment, on the same facts

HELD THAT: - Issues categorically examined and decided in the original scrutiny assessment cannot be revisited through reassessment, whether under the old or new regime. The Assessing Officer had undertaken a detailed inquiry into the share sale, including its valuation, the purchaser's identity and creditworthiness, the genuineness of the transaction, and the consequential exemption claim; acceptance of the claim after such inquiry constituted formation of an opinion, notwithstanding that the assessment order did not elaborate upon every query.

Though we are mindful of the fact that the decision in Hindustan Lever Ltd [2004 (2) TMI 41 - BOMBAY HIGH COURT] was rendered in the context of the old regime of Sections 147 and 148, the principles laid down therein would continue to apply even to the Notice issued in the present case. Under the new regime, basically the procedure is changed whereby now a Show Cause Notice is issued to the Petitioner under Section 148A(b) of the IT Act. This Show Cause Notice is nothing but the reasons recorded for reopening the assessment. In this view of the matter, we find that the ratio laid down in Hindustan Lever Ltd (supra) would squarely apply to the facts of the present case.[Paras 12, 13, 15, 18]

The reassessment was founded on a change of opinion; the show-cause notice, the order under section 148A(d), and the consequential notice under section 148 were quashed. The limitation ground was expressly kept open.

Final Conclusion: The writ petition was allowed and the impugned reassessment proceedings were quashed as being founded on a change of opinion. The challenge on limitation was left open.

Reassessment on information suggesting escaped income - Independent assessment vis-a-vis GST adjudication

Validity of initiation of reassessment on the basis of information connected with an adjudication under GST enactments - HELD THAT: - Initiation of reassessment requires information suggesting that income chargeable to tax has escaped assessment. Although the statutory definition of information includes material received under the risk-management strategy formulated by the CBDT, the record did not disclose whether that strategy covers a GST adjudication order.

At the notice stage, the Income Tax authorities must undertake reassessment independently under the Income-tax Act and cannot ride piggyback on GST adjudication; the outcome of the GST appeal cannot by itself form the sole basis of reassessment. [Paras 4, 5]

Interference with the reassessment notice was declined, leaving the petitioner free to challenge any reassessment order in accordance with law.

Final Conclusion: The writ petition was disposed of without granting the challenge to the reassessment notice, subject to the Income Tax authorities conducting any reassessment independently in accordance with the Income-tax Act.

Extinguishment of statutory claims under approved resolution plan - Survival of reassessment proceedings for pre-CIRP period

Survival of reassessment proceedings and consequential demand for the pre-CIRP assessment year after approval of the resolution plan - HELD THAT: - Once a resolution plan is approved, claims not forming part of it, including statutory dues, stand extinguished and proceedings concerning such claims cannot continue. As the Revenue had admittedly not lodged its claim in the approved resolution plan, the reassessment claim did not survive.

By virtue of the judgment of the Hon'ble Supreme Court in GHANASHYAM MISHRA AND SONS PRIVATE LIMITED [2021 (4) TMI 613 - SUPREME COURT] and the final resolution plan approved by the NCLT, since admittedly there was no claim by the Revenue before the NCLT, Mumbai Bench, in the resolution plan approved, the reassessment proceedings stand extinguished. [Paras 9, 10]

The reassessment proceedings for assessment year 2020-21 and the consequential demand were held non-operational and unsustainable.

Final Conclusion: The appeal was allowed. The reassessment proceedings and consequential demand for assessment year 2020-21 did not survive because the Revenue's claim was not part of the approved resolution plan.

Bogus purchases based solely on third-party seized data - Denial of cross-examination

Bogus purchases based solely on third-party seized data - Uncorroborated parallel tally entries - Addition for alleged bogus purchases founded solely on parallel tally data seized from a third party, despite the assessee's denial and evidence of sales transactions with that party - HELD THAT: - The parallel tally data was the sole basis for the addition. No independent verification, evidence of transport of goods or payment towards the alleged purchases, or other material directly implicating the assessee was brought on record. The assessee, on the other hand, consistently denied the purchases and furnished material showing regular sales transactions with the concerned party. As the books were not disputed and the allegation remained founded on incomplete third-party information, the addition was uncalled for. [Paras 7]

The addition for alleged bogus or unaccounted purchases was deleted.

Right to cross-examination of third-party material - Violation of principles of natural justice - Reliance on third-party statements and seized records without affording the assessee an opportunity of cross-examination - HELD THAT: - Where third-party statements and records are made the basis of an adverse addition, denial of the requested opportunity to cross-examine constitutes a serious violation of the principles of natural justice. The assessee was not afforded cross-examination of the third party or an effective opportunity regarding the seized material relied upon for the addition.

Hon'ble High Court of Rajasthan in the case of CIT vs. Smt. Sunita Dhadda [2017 (7) TMI 1164 - RAJASTHAN HIGH COURT] held that as per the principles of natural justice, Ld. AO has to provide opportunity of cross-examination and this view of the Hon'ble Rajasthan High Court has subsequently been affirmed by the Hon'ble Apex Court [2018 (3) TMI 1610 - SC ORDER] [Paras 8]

The assessee succeeded independently on the ground of denial of cross-examination.

Final Conclusion: The appeal was allowed, the appellate order was set aside, and the addition for alleged bogus or unaccounted purchases was deleted.

Validity of reassessment - shorter time Notice under section 148A(b) - minimum opportunity to respond - Penalty u/s 271AAC(1) consequential upon deleted reassessment addition

Validity of reassessment proceedings - minimum opportunity to respond - Validity of reassessment founded on a notice under section 148A(b) allowing the assessee less than seven days to respond - HELD THAT: - The legal ground, being a pure question of law going to the root of the reassessment and requiring no new facts, was admitted. The statutory minimum of seven days for responding to the notice was mandatory. As the notice effectively afforded only five days, or six days even if the date of issue was included, it was invalid; consequently, the reassessment founded upon it was void ab initio. [Paras 5, 7, 8, 9]

The reassessment order was quashed, the addition was deleted, and the grounds on merits were dismissed as infructuous.

Penalty consequential upon deleted reassessment addition - Sustainability of penalty under section 271AAC(1) where the reassessment addition forming its basis was deleted - HELD THAT: - The penalty was wholly dependent upon the reassessment addition. Once that addition was deleted on the legal ground, the penalty could not survive. [Paras 11]

The penalty was deleted.

Final Conclusion: Both appeals were allowed. The reassessment and consequential penalty were set aside.

TP Adjustment - Arm's length price adjustment under TNMM -consistent treatment of depreciation in PLI computation - Arm's length price adjustment for international transactions with associated enterprises

Arm's length price adjustment under the Transactional Net Margin Method where depreciation was included in the assessee's operating cost but excluded from the operating cost of comparable companies - HELD THAT: - The computation of the profit level indicator must adopt a consistent treatment of depreciation for the assessee and the comparables. Inclusion of depreciation in the assessee's operating cost while excluding it from the operating cost of comparables resulted in an anomalous and fallacious comparison. On computing the assessee's margin without depreciation, consistently with the comparables, the international transactions were found to be at arm's length. [Paras 6]

The arm's length price adjustment was deleted and the assessee's appeal was allowed.

Final Conclusion: The order sustaining the arm's length price adjustment was set aside, and the addition was directed to be deleted.

Rebate u/s 87A on short-term capital gains taxable under section 111A

Whether rebate under section 87A is available against tax payable on short-term capital gains chargeable at special rates under section 111A where the assessee is governed by section 115BAC(1A) and total income does not exceed the prescribed threshold? - HELD THAT: - The Tribunal followed the consistent view of coordinate Benches JAYSHREEBEN JAYANTIBHAI PALSANA [2025 (8) TMI 842 - ITAT AHMEDABAD] and THE CHAMBER OF TAX CONSULTANTS [2025 (1) TMI 1501 - BOMBAY HIGH COURT] that rebate under section 87A is available on the tax liability computed on total income without distinguishing between income taxable at normal rates and short-term capital gains taxable at special rates. The Revenue neither distinguished the decisions relied upon nor cited any contrary decision of the jurisdictional High Court or the Supreme Court. [Paras 5, 6, 7]

The assessee was held entitled to the rebate under section 87A on tax paid on short-term capital gains.

Final Conclusion: The Revenue's appeal was dismissed, and the order allowing the rebate under section 87A was sustained.

Reassessment on departmental information - Long-term capital gains on sale of shares - addition for alleged accommodation entry

Reassessment on departmental information - Independent application of mind u/s 148A - Validity of reassessment initiated on information flagged on the Insight Portal after following the procedure under section 148A - HELD THAT: - The information available through an internal departmental system could constitute the starting point for enquiry. The Assessing Officer confronted the information to the assessee, considered the response and passed an order under section 148A(d) before issuing notice under section 148; the record therefore did not establish mechanical action or borrowed satisfaction. [Paras 7]

The challenge to the initiation of reassessment proceedings was rejected.

Long-term capital gains on sale of shares-addition for alleged accommodation entry - Suspicion cannot substitute legal evidence - Addition of sale proceeds of shares as unexplained money on the allegation of bogus long-term capital gains - HELD THAT: - The purchase and sale through a recognised broker, de-mat records, contract notes and banking channels were undisputed, and the transaction was not isolated in the assessee's share dealings. No independent enquiry, corroborative material, cash exchange or link between the assessee and any alleged accommodation-entry provider was established. Allegations founded on investigation findings and suspicion, without evidence disproving the documentary record, could not justify treating the sale proceeds as unexplained.

Hon’ble Gujarat High Court has held in the case of Sanjaykumar Damjibhai Gangani [2025 (9) TMI 1379 - GUJARAT HIGH COURT] that where assessee-company claimed LTCG under section 10(38) arising out of sale of shares of S and had furnished complete evidence including contract note of shares, de-mat details, detail of bonus shares, since no adverse evidence was brought against said evidences, Assessing Officer was not justified in making addition under section 68 merely on allegation that assessee was a beneficiary of penny stock scrip[Paras 10, 11, 12, 13]

The addition for alleged unexplained money in the form of an accommodation entry was deleted.

Final Conclusion: The reassessment was upheld, but the addition relating to the alleged bogus long-term capital gain on sale of shares was deleted. The assessee's appeal was partly allowed.

Unexplained investment and interest based on uncorroborated Excel sheets - Unexplained expenditure for alleged cash purchases - Unaccounted sales based on WeChat screenshots - Alleged sundry debtors from unverified electronic record - Proof of cash-rent expenditure - Unexplained investment in stock discrepancy

Unexplained investment and interest based on uncorroborated Excel sheets - Corroboration of seized electronic records - Additions for alleged loan transactions and consequential interest based on deleted Excel sheets - HELD THAT: - The Excel sheets did not establish that their entries represented actual loan transactions of the assessee and contained errors and inconsistencies showing that they were neither contemporaneous nor maintained in the regular course of business. The assessee furnished particulars of the parties and explained the presence of the files, but no independent enquiry or cross-verification was made and no supporting financial or documentary material was found. An uncorroborated electronic sheet may provide a basis for investigation but cannot, without proof connecting its entries to actual transactions of the assessee, be the sole basis of additions.

In the absence of any independent and cogent evidence establishing that the entries in the excel sheets represented actual transactions undertaken by the assesseee the additions made by the Assessing Officer by computing peak amount u/s. 69 of the Act and the alleged interest income thereon on such loans u/s. 69A was rightly deleted by the Ld. CIT(A). The Ld. CIT (A) also placed reliance on the decisions of VC Shukla & Others [1998 (3) TMI 675 - SUPREME COURT] and Common Cause Vs. UOI [2017 (1) TMI 1164 - SUPREME COURT] [Paras 24, 25, 26, 29, 30]

Deletion of the additions for unexplained investment and consequential interest for the three assessment years was upheld.

Unexplained expenditure for alleged cash purchases - Selective reliance on seized electronic worksheet - Additions for alleged unaccounted cash purchases from Onyx Collection based on the PAYMENT worksheet - HELD THAT: - The invoice numbers, amounts and other material particulars in the worksheet did not reconcile with the regular ledger of Onyx Collection, and only some bank-payment entries had been selectively matched. No enquiry was made from the supplier and no confirmation, receipt, delivery record, sales record, transport document or other corroborative material was produced. Selective reliance on entries favourable to the Revenue while ignoring material inconsistencies could not establish that the unmatched cash entries represented unaccounted purchases. [Paras 43, 45, 48, 50, 54]

The additions for unexplained expenditure for the assessment years 2020-21 and 2021-22 were directed to be deleted.

Unaccounted sales based on WeChat screenshots - Unsupported multiplier applied to diary entries - Addition for unaccounted sales inferred from WeChat screenshots containing diary images - HELD THAT: - The employee's statement did not admit that the figures in the larger screenshot were coded figures or represented one-hundredth of their actual value. The two diary images were materially inconsistent in their dates, contents and totals, and no complete diary or corroborative material established a basis to multiply all the recorded figures by 100. However, as the diary workings related to the assessee's business, the figures actually recorded were treated as unaccounted sales. [Paras 70, 73, 75, 76, 77]

The multiplier was held unsustainable, and the addition was restricted to gross profit at 8% on the turnover represented by the figures actually recorded in the diary.

Alleged sundry debtors from unverified electronic record - Corroboration of electronic debtor balances - Addition based on alleged sundry-debtor balances in the GrpSum-952.xls file - HELD THAT: - The incomplete sheet described as "Samsung-2020" contained no complete identifying particulars of the alleged debtors. Matching a limited number of names with mobile contacts, coupled with the file name and the alleged connection of its number with the assessee's shop, did not establish ownership of the entire file or the correctness of all its entries. No debtor was examined, and no corresponding books, invoices, banking entries, stock records or other accounting material corroborated the alleged balances. An isolated and unverified electronic record cannot sustain an addition without cogent evidence establishing its nexus with the assessee and the transactions recorded therein. [Paras 94, 95, 96, 102, 103]

The addition for alleged unexplained money was deleted, and the estimation of gross profit on the alleged debtor balances was also held unsustainable.

Proof of cash-rent expenditure - Disallowance of alleged cash rent expenditure - HELD THAT: - The assessee did not furnish rent receipts, relevant ledger account, landlord confirmation, proof of payment, or other material substantiating the claimed cash-rent expenditure. The claimed expenditure was therefore not established by cogent and verifiable evidence. [Paras 106, 107]

The disallowance of cash-rent expenditure was sustained.

Unexplained investment in stock discrepancy - Addition for difference between physical stock and stock reflected in the trial balance - HELD THAT: - The trial balance was furnished after the search, and the assessee failed to provide a satisfactory reconciliation or supporting evidence to explain the stock difference. A bare assertion that the difference stood accounted for in the books could not warrant deletion of the addition. [Paras 109, 110]

The addition for unexplained investment represented by the stock difference was sustained.

Final Conclusion: The Revenue's appeals for all three assessment years were dismissed. The assessee's appeals were partly allowed, with deletion or restriction of the additions founded on uncorroborated electronic material, while the cash-rent and stock-difference additions were sustained.

Condonation of delay in income-tax appeals - Sufficient cause based on professional default - Exercise of discretion in rejecting applications for condonation of delay in connected quantum and penalty appeals - HELD THAT: - While limitation requires the assessee to establish sufficient cause, that expression must be applied to advance substantial justice in the absence of mala fides, deliberate delay or gross and unexplained indifference.

Valid electronic service determines commencement of limitation but does not answer whether sufficient cause prevented timely filing. An explanation founded on the default of an earlier professional cannot be accepted automatically or rejected summarily; it requires factual examination of the assessee's bona fides, conduct, discovery of the default, subsequent promptness and supporting evidence.

The first appellate authority had not afforded an effective opportunity to substantiate the explanation, and had not adequately considered the surrounding circumstances showing that the substantive grounds were not ex facie frivolous. Although the penalty appeal was connected with the quantum appeal, its condonation was required to be independently considered having regard to its distinct delay and the later penalty order. [Paras 18, 20, 21, 22, 23]

The impugned orders were set aside and both appeals were restored for fresh, evidence-based consideration of condonation after effective hearing; if delay is condoned, the substantive quantum and penalty grounds shall be decided in accordance with law, without any opinion having been expressed on their merits.

Final Conclusion: Both appeals were allowed for statistical purposes and restored to the first appellate authority for fresh consideration of the respective applications for condonation of delay and consequential adjudication, if warranted.

Penalty u/s 270A(9) for misreporting of income - Immunity from penalty for under-reporting of income

Penalty on cash deposits disclosed in a revised computation during assessment - classification as under-reporting or misreporting and entitlement to immunity - HELD THAT: - The revised computation disclosing the entire cash deposits was filed during assessment, the tax was paid, and the computation was not rejected. Though the deposits were assessed as income from other sources, the assessment order did not specify how any ingredient of misreporting under section 270A(9) stood satisfied.

The disclosure could, at the highest, constitute under-reporting and not under-reporting in consequence of misreporting; consequently, denial of immunity was unjustified.

We also find that Surat bench of Tribunal in Rajesh C Dalal [2023 (9) TMI 218 - ITAT SURAT] while considering the similar grounds of appeal held that when the assessee during assessment filed revised computation of income and included entire income from house property in its income and such revised computation was accepted by assessing officer, in such circumstances, at the best it would be a case of underreporting of income. And by no stretch of imagination it could be a case of under reporting in consequences of misreporting.[Paras 7]

The assessee was held entitled to immunity from penalty, and the penalty sustained for misreporting was not justified.

Final Conclusion: The appeal was allowed, the cash-deposit disclosure being treated at most as under-reporting and not as misreporting, with consequent entitlement to immunity from penalty.

Charitable exemption denied - belated filing of audit report in Form No. 10B

Entitlement of a charitable trust to exemption under section 11 where the audit report in Form No. 10B, though obtained before filing the return, was filed belatedly - HELD THAT: - The Tribunal found the facts and issue identical to those in the assessee's own cases for the immediately preceding and succeeding years. Following the coordinate-bench decision, which treated the requirement of filing Form No. 10B within the prescribed time as directory, Tribunal held that the delayed filing could not deny the claimed exemption. [Paras 5]

The AO was directed to allow the assessee's claim under section 11.

Final Conclusion: The appeal was allowed and the Assessing Officer was directed to grant the claimed exemption under section 11.

Employees' provident fund contribution - delayed remittance owing to bank holidays

Deduction of employees' provident fund contributions remitted after the prescribed date because of intervening bank holidays - HELD THAT: - The payments were cleared by the bank on the next working day after Saturday and Sunday. As there was no intentional delay on the assessee's part, the disallowance of deduction for the contributions was held to be illegal. [Paras 8]

The disallowance was set aside and the ground claiming deduction was allowed.

Final Conclusion: The appeal was allowed with acceptance of the claim for deduction of the employees' provident fund contributions. The consequential grounds were left open.

Benami transaction - bar on enforcement of rights - Protection of possession of benami property - Vendor's title and possession claim after benami sale

Benami transaction - bar on enforcement of rights - Enforcement of rights under sale transactions admittedly entered benami before commencement of the Benami Act through a suit instituted thereafter - HELD THAT: - Section 4 saves only proceedings pending when the Benami Act came into force; it bars a suit subsequently instituted by a person asserting himself to be the real owner of property held benami. The admitted benami character of the sales could not therefore be given effect to merely because the transactions pre-dated the Act.

In Manjula v. D.A. Srinivas [2026 (5) TMI 593 - SUPREME COURT] the plaintiff was barred from purchasing the land by the provisions of the Karnataka Land Reforms Act 1961; therefore, the plaintiff funded the purchase in the name of another, who converted the land for non-agricultural use, and the plaintiff sought the transfer in his name. The Hon’ble Supreme Court held that the transaction was a Benami arrangement prohibited under the Benami Act. [Paras 18, 21]

The plaintiff's claim founded on the benami sales was barred.

Protection of possession of benami property - Injunction to protect possession claimed by the real purchaser of benami property - HELD THAT: - The statutory prohibition against enforcing any right in respect of benami property is absolute and cannot be circumvented by characterising the relief as protection of settled possession against persons other than the true owner. Such protection would itself enforce a right arising from the benami transaction. [Paras 23]

The plaintiff was not entitled to protection of possession by injunction.

Vendor's title and possession claim after benami sale - Counterclaim by the heirs of the vendors for title and possession of land sold in the name of the benamidar - HELD THAT: - The vendors' predecessor had lost title by executing the sale deeds in favour of the benamidar. The consequences prescribed for benami property did not restore ownership to the vendors or their heirs; consequently, they could not assert title or seek possession. The Courts below had also considered the counterclaim and cross-objections. [Paras 24, 25, 26, 27]

The counterclaim for possession was rightly declined.

Final Conclusion: Both appeals were dismissed. The Central Government was directed to take steps for acquisition of the land in accordance with the Benami Transactions (Prohibition) Act.

Provisional attachment of bank accounts under the Customs Act - Prior approval for provisional attachment - Pre-decisional hearing for extension of provisional attachment

Statutory preconditions for provisional attachment of bank accounts - Commissioner's approval for provisional attachment - Validity of debit-freeze directions and provisional attachment orders over the petitioner's bank accounts issued without the Commissioner's approval - HELD THAT: - The power of provisional attachment under Section 110(5) is conditional upon strict compliance with its substantive and procedural requirements, including approval of the Commissioner. The admitted absence of such approval rendered two provisional attachment orders and their consequential extensions illegal. The debit-freeze directions issued in respect of other accounts were also not shown to have been supported by written orders containing reasons or by the requisite approval. [Paras 31, 38, 39]

The provisional attachment orders issued without the Commissioner's approval and the consequential extension orders were quashed; the debit-freeze directions not complying with Section 110(5) were held invalid.

Validity of written provisional attachment orders - Validity of the subsequent provisional attachment orders issued after obtaining the Commissioner's approval - HELD THAT: - The later orders were passed in writing during proceedings against the concerned exporters and disclosed the reasons on which the proper officer formed the opinion to attach the petitioner's accounts. They satisfied the requirements for exercise of power under Section 110(5). [Paras 41]

No interference was warranted with the provisional attachment orders issued in accordance with Section 110(5).

Pre-decisional hearing for extension of provisional attachment - Reasoned extension of provisional attachment - Validity of extension orders continuing provisional attachment of the petitioner's bank accounts without prior hearing or recorded reasons - HELD THAT: - An extension of provisional attachment requires a pre-decisional opportunity of hearing and recorded reasons. The extension orders had been made without notice or hearing to the petitioner and did not disclose reasons for their issuance. A subsequent hearing could not cure that defect. [Paras 43, 44, 45]

The extension orders were set aside, without prejudice to the department's pending adjudication or its statutory power to take fresh action in accordance with law.

Final Conclusion: The writ petition was allowed in part. The unauthorised provisional attachments and extension orders were set aside, while the conforming provisional attachment orders were maintained.

Provisional release of seized goods - Executive circular contrary to parent statute

Whether goods notified u/s 123 of the Customs Act, 1962 can be excluded from provisional release u/s 110A of that Act by CBIC Circular No. 35/2017-Cus. dated 16.08.2017? - HELD THAT: - Section 110A renders all goods eligible for provisional release, subject to the competent authority's discretionary determination of entitlement. An executive circular cannot introduce exclusions that are absent from, and thereby supplant, the parent provision; consequently, the Circular could not override or dilute Section 110A. Case followed M/S. ITS MY NAME PVT. LTD. [2020 (6) TMI 72 - DELHI HIGH COURT]. [Paras 11, 12]

The Tribunal's direction for provisional release was sustained and the substantial question was answered in favour of the respondent.

Final Conclusion: The appeal was dismissed, the exclusion in the CBIC Circular being incapable of overriding the statutory power of provisional release.

EPCG concessional-duty import - fulfilment of export obligation and actual-user condition - Export Obligation Discharge Certificate - effect on customs demand

Sustainability of duty demand, confiscation, redemption fine and penalties for alleged breach of EPCG authorisation conditions in the import of a Honda CR-V car - HELD THAT: - The conditions of the EPCG authorisation were identical to those considered by the Co-ordinate Bench in the same appellants' case [2023 (7) TMI 1665 - CESTAT CHENNAI] concerning the other imported cars, and no different view could be taken. The competent DGFT authority had issued the EODC after the appellants had submitted the requisite particulars; the non-production of that certificate during the earlier proceedings was beyond their control. Once the EODC had been granted, the alleged non-compliance with the EPCG conditions could not legally sustain. [Paras 7, 8, 9]

The duty demand, confiscation, redemption fine and penalties were held unsustainable.

Final Conclusion: The impugned order was set aside and the appeals were allowed, as the alleged breach of EPCG conditions could not be sustained.

Confiscation of re-melted gold as alleged smuggled goods - Statutory presumption for notified gold - Evidentiary value of retracted customs statements - Cross-examination of relied-upon witnesses

Confiscation of re-melted gold as alleged smuggled goods - Statutory presumption for notified gold - Confiscation of re-melted gold as smuggled goods under sections 111(d) and 111(o), and discharge of the burden u/s 123 - HELD THAT: - The presumption u/s 123 arises only where the seizure is founded on a reasonable belief, supported by objective material, that the particular gold is smuggled. Purity, absence of documents at interception, or private carriage do not establish foreign origin. The absence of foreign markings and evidence of illicit importation, coupled with material contradictions between the Panchanama and contemporaneous FASTag records, undermined the departmental case. The contemporaneous tax invoice, supplier confirmation and banking transactions established domestic acquisition; nor was any breached condition of exemption in respect of imported goods identified for invoking section 111(o).

In the case of Vinod Solanki Vs UOI [2008 (12) TMI 31 - SUPREME COURT] the Hon’ble Supreme Court emphasized that a retracted confession must be tested in the light of attending circumstances and corroborative evidences.

The principle in Naresh J. Sukhawani Vs UOI [1995 (11) TMI 106 - SUPREME COURT] does not dispense with scrutiny of the voluntariness and reliability of a statement, nor does it make every retracted statement conclusive irrespective of surrounding evidence. In the facts before us, the statements do not receive sufficient independent corroboration to sustain absolute confiscation and substantial penalty.[Paras 12, 14, 15, 16, 19]

The gold was not proved liable to confiscation; consequently, the penalties founded on its alleged liability to confiscation could not survive.

Evidentiary value of retracted customs statements - Cross-examination of relied-upon witnesses - Reliance on retracted statements recorded under section 108 and denial of cross-examination of witnesses whose statements and Panchanama were relied upon - HELD THAT: - Though statements under section 108 are admissible, their reliability must be assessed independently. The retracted statements lacked corroboration through evidence of the alleged illicit purchase or importation. As the statements and Panchanama were specifically challenged for voluntariness and accuracy, denial of the requested cross-examination of their makers and Panch witnesses bypassed the safeguard under section 138B and materially prejudiced the respondent.

The Hon’ble Supreme Court 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 13, 17, 18]

The retracted statements, without independent corroboration and without affording cross-examination, could not sustain confiscation or penalty.

Final Conclusion: The departmental appeal was dismissed and the order setting aside confiscation and consequential penalties was upheld.

Redemption fine and penalty for delayed clearance of warehoused goods - Bona fide delay in clearance of warehoused goods

Imposition of redemption fine and penalty for failure to clear warehoused goods within the warehousing period - HELD THAT: - The Tribunal found that the appellant had furnished explained and justified reasons for the delay.

Following the ratio of the decisions relied upon by the appellant [2020 (5) TMI 418 - SC ORDER], [2021 (3) TMI 497 - SC ORDER], [2021 (5) TMI 564 - SC ORDER], [2021 (11) TMI 387 - SC ORDER], [2022 (1) TMI 385 - SC ORDER] such delay could not be treated as wilful suppression of facts so as to attract penal provisions. [Paras 14, 15]

The duty demand with interest was upheld, while the redemption fine and penalty were set aside.

Final Conclusion: The appeal was partly allowed: the duty demand with interest was sustained, but the redemption fine and penalty were set aside.

Penalty for abetment of gold smuggling by Customs officers - Proof of facilitation of smuggling - Penalty on Customs officers for alleged facilitation of gold smuggling on the basis of their acquaintance with a person involved in smuggling and receipt of loans or gifts - HELD THAT: - The material did not establish that either officer had directed, enabled or otherwise facilitated the clearance of passengers carrying smuggled gold, or committed any act or omission amounting to abetment.

Mere acquaintance with the person involved, introduction to another officer, or receipt of a loan or gifts could invite action under the applicable service and conduct rules, but did not by itself establish liability for penalty under the Customs Act.

Revenue produced no grounds to dislodge these findings, which were also consistent with the earlier disposal of penalties imposed on persons alleged to be involved in the same smuggling by hc [2026 (1) TMI 442 - KERALA HIGH COURT] [Paras 7, 8]

The non-imposition of penalties on the two Customs officers was upheld and the Revenue appeals were dismissed.

Final Conclusion: The Revenue failed to establish any act of commission or omission by the Customs officers amounting to facilitation or abetment of gold smuggling. The appeals were dismissed.

Annulment of securities trades and refund of purchase consideration - Necessary party in annulled securities transactions - Scope of exchange bye-law indemnity

Annulment of securities trades - Refund of purchase consideration - Liability to refund the consideration paid for shares where the underlying trade was annulled and physical delivery was subsequently offered - HELD THAT: - Annulment brought the trade to an end and rendered physical delivery of the shares purposeless. Since the shares forming part of the annulled transaction had been returned to the selling member, the Exchange's subsequent insistence that the purchaser accept delivery was incoherent. The claim was for refund of the amount deposited for the annulled trade, and not for trading loss or damages; in those circumstances, liability for the refund lay upon the Exchange. [Paras 43]

The purchaser was entitled to refund of the purchase amount with interest from the Exchange.

Necessary party - Privity of contract in securities settlement - Whether the selling member was a necessary party and whether the purchaser was required to pursue arbitration or any other remedy against that member after annulment of the trade? - HELD THAT: - The settlement mechanism did not contemplate a direct one-to-one contract between the prospective buyer and seller. Even assuming a deemed contract under the Bye-Laws, the annulment of the trade and the non-delivery by the selling member left no subsisting relief against that member. As an effective decree for refund could be passed in the member's absence, the tests for treating that member as a necessary party were not satisfied. [Paras 43]

The suit was not bad for non-joinder or misjoinder, and arbitration or closing-out proceedings against the selling member were inapplicable.

Scope of exchange bye-law indemnity - Clearing House liability exclusion - Whether the Exchange was protected from the refund claim by the indemnity provision and the Bye-Law concerning non-liability of the Clearing House? - HELD THAT: - The indemnity provision occurred in the chapter governing references and appeals to dispute resolution and applied to matters done pursuant to a reference under those Bye-Laws. As no such reference existed, it did not confer a general immunity upon the Exchange. The provision concerning the Clearing House addressed title, ownership, genuineness, regularity and validity of securities or documents, and could not absolve the Exchange of refund liability arising from annulment of the trade. [Paras 43]

The Bye-Laws did not bar the refund claim against the Exchange.

Final Conclusion: The appeal was allowed, the Trial Court decree was set aside, and the Exchange was directed to refund the purchase amount with interest.

Corporate capacity under memorandum of association - Ultra vires investment in virtual digital assets

Entitlement to consideration of the listing application where preferential-issue proceeds were invested in virtual digital assets under an amendment to the ancillary objects clause, before inclusion of that activity in the main objects clause - HELD THAT: - Schedule I draws a distinction between the objects to be pursued by a company and matters necessary for furtherance of those objects. The first amendment was expressly made to the latter category, whereas the subsequent amendment inserted virtual digital asset business in the main objects clause.

Since there was no corresponding amendment to the main objects clause when the listing application was made, the raising of funds from preferential investors and the consequent investment in virtual digital assets were beyond the Company's corporate capacity and were ultra vires.

In the light of above discussion and the law laid down in Terrascope Ventures Limited (SEBI v. Terrascope Ventures Limited [2026 (3) TMI 1086 - SUPREME COURT]), no exception can be taken to the impugned communication. Accordingly, the point for consideration is answered in the negative.[Paras 27, 28, 31]

The listing application was not entitled to be considered on the basis of the first amendment, and the communication returning it was upheld.

Final Conclusion: The appeal was dismissed, as the investment of preferential-issue proceeds in virtual digital assets before their inclusion in the main objects clause was ultra vires the memorandum of association.

Attachment of pre-existing property as equivalent value of proceeds of crime - Attachment of jointly owned property restricted to proceeds attributable to the accused

Attachment of property of equivalent value where proceeds of crime are unavailable - Property acquired before commission of scheduled offence - Provisional attachment of property acquired before the alleged criminal activity as property of equivalent value when the proceeds of crime were unavailable - HELD THAT: - The expression "value of any such property" permits attachment of property of equivalent value where the property directly or indirectly derived from criminal activity is unavailable, siphoned off or vanished. Such attachment is not confined to property acquired after the commission of the scheduled offence.

Disclosure of the source of acquisition does not defeat attachment when the property is proceeded against as equivalent value rather than as directly or indirectly derived proceeds of crime. [Paras 18, 19]

The challenge to attachment of the property on the ground that it had been acquired before the alleged crime, or from disclosed sources, was rejected.

Attachment of jointly owned property - Attachment limited to value of proceeds of crime - Attachment of a jointly owned property beyond the share or interest of the person accused of money laundering - HELD THAT: - The attachment was confined to the value of proceeds of crime attributed to the appellant and was substantially below the property's present value. It therefore did not extend to the spouse's half share in the jointly held property. [Paras 20]

The objection that the entire jointly owned property, including the spouse's share, stood attached was rejected.

Final Conclusion: The appeal was dismissed. The provisional attachment was sustained as an attachment limited to property of equivalent value of the unavailable proceeds of crime.

Compliance with remand directions for re-quantification of construction services - Valuation of construction services under Rule 2A

Validity of the de-novo confirmation of service tax demand without re-quantifying construction services in terms of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, as specifically directed in remand - HELD THAT: - The Adjudicating Authority was required to re-quantify the demand relating to construction services under Rule 2A. Instead, it reiterated the earlier order without undertaking the directed exercise, solely because no additional material was furnished. The appellant had already submitted year-wise reconciliation of Form 26AS with its books of account and had deposited the balance tax; consequently, no further tax was payable. [Paras 9, 10, 11]

The impugned de-novo order was set aside and the appeal was allowed with consequential relief, if any, in accordance with law.

Final Conclusion: The appeal was allowed, and the de-novo order confirming the demand, interest and penalties was set aside with consequential relief in accordance with law.

Freight-forwarding incentives, rebates and brokerage - taxability under Business Auxiliary Service

Whether freight rebates, brokerage, incentives, airway bill fees and margins earned from booking and selling cargo space were liable to service tax under Business Auxiliary Service? - HELD THAT: - The statements of demand were founded on allegations similar to those considered in the appellant's earlier case [2025 (2) TMI 615 - CESTAT CHENNAI]. Since Revenue did not show that the final order rendered in that case had been set aside or had not attained finality, the Tribunal found no reason to take a different view. [Paras 9]

The impugned order was held unsustainable and set aside.

Final Conclusion: The impugned appellate order and the confirmed service-tax demand were set aside, and the appeals were allowed with consequential relief in accordance with law.

Service tax demand based on balance-sheet and ST-3 return discrepancy - Cenvat credit on input services used for taxable output services - Cenvat credit on invoices issued to other entities - Cenvat credit on DG-set maintenance services - Extended limitation for differential service tax demand

Service tax demand based on balance-sheet and ST-3 return discrepancy - demand was confirmed based on the differential value between Balance Sheet / Trial Balance and ST-3 Returns - HELD THAT: - Service tax could not be demanded merely on the basis of a difference between financial statements and ST-3 returns. The Revenue was required to establish the taxable service and the consideration received. The Chartered Accountant's certificate explained that the figures included receipts relating to a period when renting was not taxable, exempt payments, unrealised consideration, and water and electricity charges; yet it was rejected without specifying the taxable service under which the differential amount was liable. [Paras 17]

The demand based on the differential value between the Balance Sheet or Trial Balance and ST-3 returns was held unsustainable.

Cenvat credit on input services used for taxable output services - Eligibility to Cenvat credit on services claimed to have been used for providing output services - HELD THAT: - The services claimed, including maintenance-related and business-support services, substantially fell within the scope of input services used for providing output services. Pooja expenses and credit-card payments did not qualify as input services. [Paras 18]

Cenvat credit was allowed except in respect of pooja expenses and credit-card payments.

Cenvat credit on invoices issued to other entities - Eligibility to Cenvat credit where input-service documents were issued in the names of other entities - HELD THAT: - The appellant was a separate entity from the entities in whose names the documents had been issued. In the absence of documents establishing receipt of the input services by the appellant, invoices issued to those other entities could not support Cenvat credit for the appellant's unit. [Paras 19]

The denial of Cenvat credit based on documents issued to other entities was upheld.

Cenvat credit on DG-set maintenance services - Eligibility to Cenvat credit on maintenance and repair services relating to DG sets - HELD THAT: - Although supply of electricity had earlier been held not liable to service tax, the appellant had discharged service tax for the relevant period. Credit on the services used for maintenance and repair of DG sets was therefore available where tax had been discharged on the related activity. [Paras 20]

Cenvat credit on the DG-set maintenance and repair services was allowed, subject to discharge of service tax on the same.

Extended limitation for differential service tax demand - Penalty for alleged suppression of taxable value - Invocation of the extended period and imposition of penalty for differential taxable value disclosed through regularly filed ST-3 returns - HELD THAT: - Regular filing of ST-3 returns and a demand arising from differential taxable value did not establish suppression of facts. The ingredients for invoking the extended period were therefore absent. [Paras 21]

The demand was restricted to the normal period, and the extended-period demand and penalties were set aside.

Final Conclusion: The appeals were partly allowed. The differential-value demand and the extended-period demand with penalties were set aside, while Cenvat credit was allowed or denied in accordance with the respective findings.

Extended period of limitation for service tax demand - Sustainability of the service tax demand where the show cause notice was issued after expiry of the extended limitation period

HELD THAT: - The last transaction for the relevant financial year was on 30.09.2013, whereas the show cause notice was issued on 12.10.2018. The notice was thus issued beyond the extended period of limitation, rendering the proceedings unsustainable. [Paras 4]

The impugned order and the service tax demand were set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The service tax proceedings were held barred by the extended period of limitation. The impugned order was set aside and the appeal was allowed with consequential relief.

Extended limitation for service-tax demand - Wilful suppression with intent to evade tax

Invocation of the extended limitation period for the service-tax demand where the show cause notice and adjudication order did not record the statutory ingredients for its invocation - HELD THAT: - The extended period is an exception and can be invoked only upon fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade tax; mere non-payment of tax is insufficient. Neither the show cause notice nor the Order-in-Original recorded reasons or findings establishing those ingredients. The demand founded upon the extended period was therefore unsustainable. [Paras 4]

The service-tax demand, and the consequential interest and penalties, were set aside as barred by limitation; amounts already deposited and noted in the impugned order were left unaffected.

Final Conclusion: The appeal was allowed and the impugned order was set aside to the extent that it sustained a time-barred demand and consequential interest and penalties.

Construction of residential complex service - Construction work for Gujarat State Police Housing Corporation Limited

Taxability of construction work undertaken for Gujarat State Police Housing Corporation Limited as construction of residential complex service - HELD THAT: - The Tribunal found that the appellant's contention on merits was supported by its earlier judicial pronouncements RD CONTRACTOR & COMPANY [2023 (2) TMI 946 - CESTAT AHMEDABAD], DH PATEL [2023 (4) TMI 920 - CESTAT AHMEDABAD], NATVAR CONSTRUCTION CO [2023 (4) TMI 438 - CESTAT AHMEDABAD], RN DOBARIYA [2023 (2) TMI 779 - CESTAT AHMEDABAD] and AMPLE CONSTRUCTION COMPANY [2023 (7) TMI 1021 - CESTAT AHMEDABAD] which were stated to be against the Department's position. [Paras 4]

The appeal was allowed with consequential benefit.

Final Conclusion: The appeal was allowed on merits, the Tribunal finding that the appellant's case was covered by judicial pronouncements against the Department.

Taxability of renting of immovable property before specific levy - Classification of food court kitchen licensing as business support service

Levy of service tax on the licensing of kitchens and provision of premises in a food court as business support service before renting of immovable property became specifically taxable - HELD THAT: - Following the ratio of the judgment of M/s Indian National Ship Owner’s Association [2009 (3) TMI 29 - BOMBAY HIGH COURT] when a new entry is introduced, then such service cannot be taxed prior to the date of such introduction.

The activity was admittedly subjected to service tax under renting of immovable property service from 2007. A service specifically brought within the tax net through a new taxable entry cannot, before that entry's introduction, be taxed under another entry merely by characterising the same activity as business support service. The latter entry was not a residuary entry capable of covering an activity that was subsequently made taxable under the specific entry. [Paras 6]

The demand for the period before the introduction of service tax on renting of immovable property was held unsustainable.

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

Service-tax abatement for rail transport services - Penalty on a railway wing

Service-tax abatement for rail transport services - Cenvat credit attributable to a prior period - Entitlement to service-tax abatement on transport of goods by rail where Cenvat credit availed related to a period preceding the relevant abatements notifications - HELD THAT: - The condition for the abatement was that no Cenvat credit be availed. The credit taken by the appellant pertained to a period preceding insertion of the notifications granting the abatement and could not be attributed to the period in question. Such availment was therefore not fatal to the claim for abatement. [Paras 6, 7, 8]

The appellant was held entitled to the claimed abatement.

Admitted service-tax liability - Penalty on a railway wing - Service-tax liability on renting of immovable property, maintenance or repair, and manpower recruitment or supply services, and liability to penalty - HELD THAT: - The appellant admitted the service-tax liability on the stated services and was consequently liable to interest. The amount already paid was directed to be adjusted against the admitted demand and interest. Having regard to the appellant being a wing of the railways, the Tribunal held that no penalty was imposable. [Paras 9, 10, 11]

The admitted service-tax demand with interest was confirmed subject to adjustment of the amount already paid, and no penalty was imposed.

Final Conclusion: The appeal was disposed of by sustaining the claimed abatement for rail transport services, while confirming the admitted service-tax liability with interest subject to adjustment of the amount already paid. No penalty was imposed.

Binding appellate determination in refund recovery proceedings

Validity of the demand for recovery of refund of CENVAT credit on exported goods, adjudicated without giving effect to the Tribunal's subsequent order upholding the refund and rejecting the limitation objection - HELD THAT: - The Tribunal's order setting aside the appellate order against the refund sanction, affirming entitlement to refund under Rule 5 of the CENVAT Credit Rules, 2004, and holding the claim not barred by limitation, had neither been stayed nor set aside. The adjudicating authority, despite being apprised of that order, proceeded on the displaced appellate order and reached conclusions contrary to the Tribunal's findings. An adjudicating authority exercising statutory power must take account of an operative appellate determination directly bearing on the matter before it and cannot disregard it. [Paras 52, 57, 58, 59, 60]

The demand confirmation and the demand-cum-show-cause notice were set aside.

Final Conclusion: The writ petition was allowed, and the demand-cum-show-cause notice and the order confirming demand were set aside. Refund of the statutory pre-deposit with applicable interest was directed in accordance with law.

Exemption for Vanaspati in unit containers - affixation of brand name on goods - Penalty for wrongful availment of exemption - prerequisites for invocation

Exemption for Vanaspati in unit containers - affixation of brand name on goods - Entitlement to exemption for Vanaspati packed in unit containers where the alleged brand name appeared only on sale invoices and not on the goods or containers - HELD THAT: - The exclusion under Notification No. 6/2003-CE applies cumulatively only where the specified goods bear a brand name and are put up in unit containers for retail sale. The burden lay on the revenue to establish that the goods removed bore the brand name. The agents' and distributors' statements relied on by the revenue confirmed that the brand name appeared on invoices alone and not on the containers; such material could not be selectively accepted. Earlier manufacture of branded goods could at best create suspicion and did not prove branding of the goods cleared after the levy.

The case of Commissioner of Central Excise, Jamshedpur [2004 (11) TMI 106 - SUPREME COURT] squarely covers the case of the appellant. Once it is found that the goods removed by the appellant did not have the word ‘shiva’ affixed upon them, and that the brand name found mention only in the sale invoices, the exclusion contained in the notification is not attracted. The mention of a brand name in an invoice is not the use of a brand name upon the goods, and the appellant cannot, on that footing, be deprived of the benefit of the exemption under Notification No. 6/2003-CE dated 1st March, 2003.[Paras 13, 14, 15, 16, 17]

The invoice reference to the brand name was not use of a brand name upon the goods; the exclusion from exemption was inapplicable and the duty demand was unsustainable.

Penalty for wrongful availment of exemption - prerequisites for invocation - Sustainability of penalty for alleged wrongful availment of exemption on branded Vanaspati - HELD THAT: - The penalty was dependent upon the duty demand, which had failed. Independently, the dispute concerned the construction of the exemption notification, and no material established fraud, collusion, wilful misstatement or suppression of facts with intent to evade duty, being the conditions precedent for invocation of the penalty provision. [Paras 19]

The penalty was unsustainable.

Final Conclusion: The appeal was allowed. The impugned orders were set aside and the duty demand, penalty and consequential interest were quashed.

Cenvat credit on common inputs for by-product fertiliser - Concessional excise duty conditional on non-availment of Cenvat credit

Concessional excise duty on fertiliser produced from gelatin sludge - Cenvat credit on common inputs - Eligibility for concessional duty on Nutri Gold fertiliser manufactured by processing sludge generated during manufacture of Gelatin, where Cenvat credit had been availed for the manufacture of Gelatin - HELD THAT: - The condition for concessional duty required that no Cenvat credit be taken on inputs or input services used for the fertiliser. The show-cause notice did not identify inputs exclusively used for manufacture of Nutri Gold, and the original authority likewise did not specify such inputs; the reference to HDPE bottles also appeared for the first time in the impugned orders.

Where inputs used for the final product are also used in processing a waste product into a dutiable product, credit cannot be denied merely on that account. In the absence of evidence that credit had been availed on inputs purchased and used exclusively for Nutri Gold, denial of the concessional rate was unsustainable. [Paras 7, 9]

The impugned orders denying the concessional duty benefit and confirming the consequential demand and penalties were set aside, and the appeals were allowed.

Final Conclusion: The denial of concessional duty on Nutri Gold was held unsustainable for want of evidence that Cenvat credit had been availed on inputs exclusively used for its manufacture. The appeals were allowed.

CENVAT credit on supplementary invoices - Short-payment of excise duty without fraud, collusion or suppression

Eligibility of CENVAT credit on supplementary invoices issued for differential excise duty on coal supplies, where the supplier's initial exclusion of royalty, entry tax and forest transit fees from assessable value was not attributable to fraud, collusion, wilful misstatement or suppression of facts - HELD THAT: - Rule 9(1)(b) permits CENVAT credit on supplementary invoices, except where the additional duty became recoverable owing to the supplier's fraud, collusion, wilful misstatement, suppression of facts or contravention with intent to evade duty. The Tribunal's prior final order concerning the supplier had specifically held that the short-payment or non-payment was not on account of any such element. Consequently, the supplementary invoices were valid documents for availing credit. [Paras 7, 8]

The CENVAT credit was correctly availed; the impugned order denying credit, recovering it with interest and imposing penalty was set aside with consequential relief.

Final Conclusion: The appeal was allowed and the denial of CENVAT credit on the supplementary invoices, with consequential recovery, interest and penalty, was set aside.

Manufacturer in job-work arrangements - levy of central excise duty - Liability to excise duty on 10 kg tin containers fabricated by an independently registered job worker - Dummy-unit allegation-admissible evidence

- HELD THAT: - The Revenue had granted registration to the job worker for manufacture of containers and accepted excise duty paid by it. In the absence of admissible evidence of financial flow-back, profit sharing or common funding, the job worker could not be treated as a dummy unit and its manufacturing activity could not be attributed to the appellant. Where transactions between the job worker and the appellant were on a principal-to-principal basis, the job worker alone was liable for duty and its manufacturing cost could not be added to the value of the appellant's goods.

We find that as per the finding of the Tribunal in the matter of CC Vs. Siddesh Engineering [2009 (1) TMI 702 - CESTAT, MUMBAI] once transaction between job worker and the respondent are on principal-to-principal basis, the addition of the manufacturing cost of M/s. Quilon, the job worker cannot be added to the to the value of goods manufactured by appellant as only job worker is liable for payment of excise duty in such cases.[Paras 12]

The demands founded on treating the appellant as the manufacturer of the containers were unsustainable; the impugned orders were set aside and the appeals were allowed with consequential relief.

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

Revenue neutrality of duty on stock transfers to sister units - Availability of CENVAT credit to recipient unit

Sustainability of central excise duty demands on goods cleared to sister units where the duty paid was available as CENVAT credit to the recipient units - HELD THAT: - Where the entire duty paid on stock transfers to sister units is available to the recipient units as CENVAT credit, the exercise is revenue-neutral. Following the decisions in the appellants' own cases [2024 (6) TMI 904 - CESTAT KOLKATA] and [2023 (6) TMI 1102 - CESTAT KOLKATA] the Tribunal held that the duty demands were consequently unsustainable. [Paras 9, 10]

The demands were set aside on the ground of revenue neutrality, and the appeals were allowed with consequential relief.

Final Conclusion: The impugned orders were set aside and the appeals were allowed, as the duty demands arising from stock transfers to sister units were revenue-neutral.

Interest for delayed tax payment - statutory return periodicity - Writ jurisdiction - statutory appeal bar against interest demand

Interest for delayed tax payment - statutory return periodicity - Levy of interest for delayed payment where tax was paid in accordance with the six-monthly return periodicity prescribed under the MVAT Rules - HELD THAT: - Interest under Section 30(2) arises only upon failure to pay tax within the time specified by or under the Act. As the previous year's undisputed tax liability entitled the petitioner to file six-monthly returns, the prescribed return periodicity also governed the due date for payment. The appellate authority could not alter that statutory periodicity on the basis of turnover, perceived legislative intent, unjust enrichment, or an unsupported inference of colourable tax planning. Tax planning within the statutory framework did not constitute a dubious device, and the fiscal levy lacked authority of law. [Paras 35, 36, 38, 39, 40]

The impugned interest levy was held to be dehors the statutory provisions and constitutionally impermissible.

Writ jurisdiction - statutory appeal bar against interest demand - Maintainability of the writ petition against the interest demand after the challenge to the credit-note mismatch demand was not pressed. - HELD THAT: - Once the writ challenge stood confined to interest under Section 30(2), the statutory bar against an appeal from an order demanding such interest meant that no efficacious alternate remedy was available. [Paras 41]

The writ petition was maintainable.

Final Conclusion: The writ petition was allowed, the interest levy having been held to lack statutory authority. The challenge concerning the credit-note mismatch demand was not pressed.