TaxTMI Updates e-Newsletter
Sep 19,2026

Personal hearing in GST adjudication - Violation of natural justice

Validity of the GST adjudication order passed without affording the petitioner a reasonable opportunity of personal hearing - HELD THAT: - The scheduled hearing did not take place, no further hearing date was intimated, and the adjudication order, passed more than nine months after the last date fixed, was silent regarding any opportunity of hearing. In the absence of any adjournment sought by the petitioner, denial of the personal hearing contemplated under Section 75(4) constituted a complete violation of natural justice. [Paras 4, 5]

The adjudication order was set aside and the matter remitted for issuance of a fresh show cause notice with at least 15 days' advance notice, followed by fresh adjudication.

Final Conclusion: The writ petition was disposed of by setting aside the impugned adjudication order for denial of personal hearing and remitting the matter for fresh proceedings.

Alternative statutory remedy and writ jurisdiction - Natural justice - disputed service of notice and opportunity of hearing - Appellate jurisdiction despite absence of remand power

Alternative statutory remedy and writ jurisdiction - Natural justice - disputed service of notice and opportunity of hearing - Maintainability of writ petitions challenging penalty imposed on Directors on the asserted non-service of the show-cause notice and denial of personal hearing despite an available statutory appeal - HELD THAT: - Availability of an alternative remedy does not ordinarily bar writ jurisdiction where there is want of jurisdiction or breach of natural justice; however, that exception is to be sparingly invoked. Whether the show-cause notice and hearing notices were served, and whether an effective hearing was denied, required examination of the notices, their mode of service and the underlying record. Such factual questions were appropriately examinable in appeal, and any infirmity concerning personal hearing was curable and did not go to jurisdiction. [Paras 16, 17, 18, 19]

Writ jurisdiction was declined and the petitioners were relegated to the statutory appellate remedy.

Appellate jurisdiction despite absence of remand power - Effect of the Appellate Authority's asserted lack of power to remand on the availability of an appeal against the penalty order - HELD THAT: - The authority's power to determine an appeal on merits upon a fresh and independent appraisal of the record is distinct from a power to remand. Absence of the latter does not deprive the Appellate Authority of jurisdiction to entertain the appeal or consider the grounds raised. [Paras 20]

The asserted absence of remand power did not render the statutory appeal ineffective.

Final Conclusion: The petitions were disposed of with liberty to pursue the statutory appeal and to seek exclusion of the period spent in the writ proceedings in accordance with law.

Judicial discipline - binding appellate orders - Consequential GST refund - statutory withholding - Writ jurisdiction despite alternative remedy

Judicial discipline - Binding appellate orders under GST law - Binding effect of an operative GST appellate order on the refund sanctioning authority considering a consequential refund claim - HELD THAT: - An appellate order remains final and binding unless modified, stayed or set aside through the statutory remedies. A mere departmental review, intention to challenge, or a subsequently filed appeal does not suspend its operation. The refund authority could not reopen the adjudicated entitlement to input tax credit, including by relying on capitalization or depreciation material, while processing the consequential refund; such reconsideration could be pursued only through the prescribed appellate or revisional mechanism. [Paras 18, 19, 22, 25]

The refund authority was bound to give effect to the operative appellate order and could not reject the refund by indirectly reopening the determination of input tax credit.

Consequential GST refund - Statutory withholding of refund - Entitlement to seek consequential refund after setting aside of the underlying GST demand and the conditions for withholding that refund - HELD THAT: - Setting aside the demand gave rise to a consequential refund claim, to be processed under the statutory refund procedure; the absence of an express refund direction in the appellate order did not permit re-adjudication of the annulled demand. Where refund is proposed to be withheld owing to pending or further proceedings, the specific statutory mechanism requires the prescribed conditions, including the requisite opinion founded on malfeasance or fraud and an opportunity of hearing. Those requirements were not met, and the refund could not be rejected merely because the appellate order was under review or proposed to be challenged. [Paras 28, 30, 32, 33, 34]

The rejection of the consequential refund was unsustainable; the refund application was remanded for fresh consideration in accordance with law, with any withholding to conform to the statutory safeguards.

Alternative remedy and writ jurisdiction - Maintainability of the writ petition despite the statutory appellate remedy against the refund-rejection order - HELD THAT: - The existence of an alternative remedy does not bar writ jurisdiction where the impugned action suffers from jurisdictional error, non-application of mind or manifest arbitrariness. Since the refund authority had disregarded a binding appellate order and the available appeal lay before an authority subordinate to the authority that had already expressed a view against refund, the alternative remedy was neither efficacious nor adequate in the circumstances. [Paras 35, 36, 37, 39, 40]

The petitioner was not required to pursue the statutory appeal before invoking writ jurisdiction.

Final Conclusion: The refund-rejection order was quashed and the refund application remanded for fresh, reasoned consideration in accordance with law. Any withholding of refund must satisfy the statutory conditions and follow the prescribed hearing requirement.

Validity period of the Authorization for Search - allegation made regarding exertion of pressure to discharge the liability by the petitioner on behalf of the allegedly defaulted supplier who had wrongfully availed ITC

HELD THAT:- Pending further listing, the petitioner was permitted to carry on normal business and the respondent authorities were restrained from taking coercive steps, including pressure to discharge the alleged supplier's liability.

Seeking regular bail should be granted in the alleged offence concerning wrongful availment and utilisation of input tax credit - HELD THAT:- Regular bail was granted considering the filing of the complaint, absence of criminal antecedents, period of custody and the likely time for conclusion of trial.

Parallel GST proceedings for the same tax period - Simultaneous GST proceedings by different State tax authorities for the same tax period despite pendency of earlier proceedings concerning alleged nil/exempt turnover

HELD THAT: - As the earlier proceedings concerning the alleged declaration of turnover as nil/exempt remained pending, the subsequently initiated proceedings for the same period were parallel proceedings. The Court did not adjudicate the exemption claim, which was required to be examined in the earlier proceedings upon production of documents and after affording personal hearing.

The later show cause notices, adjudication orders and consequential recovery action were quashed. The earlier proceedings were directed to be considered afresh without being impeded by limitation, since the parallel proceedings now quashed had been initiated.

Final Conclusion: Both writ petitions were allowed. The parallel proceedings were quashed and the earlier proceedings were retained for fresh consideration after opportunity to substantiate the exemption claim.

Rule 88C proceedings and Section 73 adjudication - Failure to consider material response

Validity of adjudication u/s 73 upon an unexamined claim that the Rule 88C mismatch proceedings had concluded in the petitioner's favour - HELD THAT: - The Court held that the grievance against the Section 73 proceedings depended on examining the petitioner's assertion that its explanation under Rule 88C(2) had been accepted and the Rule 88C proceedings had thereby concluded in its favour.

As that aspect had not been examined, the petitioner was required to be afforded an opportunity to furnish the relevant details and response for consideration. [Paras 4]

The impugned adjudication order was quashed and the proceedings were restored for reconsideration, including whether the Rule 88C proceedings had concluded in the petitioner's favour and, if so, whether the Section 73 proceedings could be sustained.

Final Conclusion: The petition was allowed in part, and the adjudication proceedings were restored for fresh consideration in light of the unexamined Rule 88C proceedings.

Composition levy - enhanced turnover threshold - Prospective operation of composition levy amendment

Availability of the enhanced turnover threshold for composition levy for the assessment period 2018-19 - HELD THAT: - Notification No. 02/2019-Central Tax merely brought the relevant amendment into force, whereas Notification No. 14/2019-Central Tax implemented the corresponding composition-levy amendment with effect from 01.04.2019. The enhanced threshold was therefore available only for the succeeding tax period and could not support the claimed composition levy for the period in dispute. [Paras 7]

The writ petition was dismissed; however, liberty was granted to pursue the statutory appeal on deposit of 25% of the disputed tax in cash, upon which the appeal was directed to be considered on merits after hearing the petitioner.

Final Conclusion: The challenge to the assessment order failed on the claimed applicability of the enhanced composition-levy threshold. The petitioner was nevertheless permitted to avail the appellate remedy subject to the stipulated pre-deposit.

Condonation of delay in GST refund claims - Double reversal of TRAN-I credit - Condonation of delay in filing a GST refund application founded on the asserted double reversal of TRAN-I credit - HELD THAT: - Though the two-year limitation for a refund application is mandatory, recourse under Article 226 is available for condonation of delay, while the merits of the refund claim ordinarily remain for consideration by the statutory authority.

The asserted erroneous double reversal of TRAN-I credit, which was stated to have remained unnoticed until the records were examined, constituted just cause for condoning the delay and restoring the claim for examination. [Paras 4]

The rejection of the refund application as time-barred was set aside and the proceedings were restored for fresh consideration on the supporting documents to be furnished by the petitioner.

Final Conclusion: The petition was allowed, and the refund application was restored to the authority for reconsideration after condoning the delay.

Liability of works-contract service recipient for differential GST

Reimbursement of differential GST on government works contracts - Reimbursement of differential GST paid by a government contractor on a works contract upon transition from the VAT regime to the GST regime - HELD THAT: - Applying the settled position held in SHRI M.G. ARUNKUMAR [2023 (8) TMI 1531 - KARNATAKA HIGH COURT] that the recipient of a works-contract service must bear the differential tax liability arising from introduction of GST during execution of the contract, the Court held that the State, being the beneficiary of the work, was obliged to reimburse the contractor who had discharged that liability. Reimbursement was confined to the differential liability attributable to introduction of GST and remained subject to verification of records and calculations. [Paras 5]

A writ of mandamus was issued requiring consideration and determination of the representation and reimbursement of the determined differential GST amount within the stipulated period, subject to verification in accordance with law.

Final Conclusion: The writ petition was allowed with directions to determine and reimburse the differential GST liability, limited to the tax attributable to transition from VAT to GST and subject to verification of records and calculations.

Restoration of cancelled GST registration - compliances with conditions governing filing of returns and payment of tax - HELD THAT: - Accepting the common submission that the controversy was covered by the governing precedent, the Court applied the conditions prescribed therein for revival of registration. issue is squarely covered by decision rendered by this Court in Tvl. Suguna Cutpiece Center [ 2022 (2) TMI 933 - MADRAS HIGH COURT][Paras 4]

The cancellation order was set aside and restoration of GST registration was directed, subject to compliance with the prescribed conditions.

Final Conclusion: The impugned cancellation order was set aside and the GST registration was directed to be restored, subject to compliance with the conditions in the governing precedent.

GST component actually paid by the petitioner - Bill of Quantities - tender rate quoted without taxes - Works contract - GST component in continuation of pre-GST work

Entitlement to the GST component on balance construction work where the accepted Bill of Quantities specified rates "without taxes", notwithstanding the standard PWD condition requiring tax-inclusive rates - HELD THAT: - The accepted Bill of Quantities formed the basis of the contract and expressly recorded that the quoted amount was without taxes; the standard condition in the PWD Manual could not therefore treat the rate as tax-inclusive. Further, the Bill of Quantities contemplated taxes under the sales tax regime, whereas the claim concerned GST. Since the work continued an earlier contract entered into before the GST regime, the original tender also did not contemplate inclusion of GST in the quoted rates. [Paras 7, 9, 10, 11]

The petitioner was held entitled to disbursement of the GST actually paid, subject to proof through the returns filed under the CGST Act and the SGST Act; the impugned communication was set aside.

Final Conclusion: The impugned communication rejecting the GST claim was set aside. The respondents were directed to disburse the GST component actually paid upon production of the relevant statutory returns and an appropriate claim.

Maintainability of advance ruling application - Supply undertaken by applicant - Maintainability of an advance ruling application concerning GST liability, registration and invoicing obligations arising from consultancy remuneration paid to a faculty member

HELD THAT: - An advance ruling can be sought only in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant. The questions raised concerned the alleged supply of services by the Consultancy In-charge to the applicant and the faculty member's consequential obligations relating to registration and tax invoice, rather than any supply made by the applicant. [Paras 3]

The application was not admitted.

Final Conclusion: The application for advance ruling was not admitted, as it did not relate to a supply undertaken or proposed to be undertaken by the applicant.

Supply on transfer of business without consideration - Classification of business transfer as supply of services - Exemption for transfer of a going concern - Taxability of stock transferred otherwise than as a going concern - Going Concern Exemption - Deemed Supply of Goods

Supply on transfer of business without consideration - Transfer without consideration of the entire proprietorship business, with its assets, liabilities, employees and business rights, to an LLP - HELD THAT: - The inclusive scope of supply extends beyond transfers made for consideration in the course or furtherance of business. A comprehensive transfer of the business, even without consideration and not in the usual course of business, is consequently regarded as a supply. [Paras 4]

The proposed transfer of the business was held to constitute a supply under GST.

Classification of business transfer as supply of services - Nature of the proposed comprehensive transfer of business as a supply of goods or services - HELD THAT: - Schedule II excludes transfer of a business as a going concern from the treatment of business assets as a supply of goods upon cessation of taxable-person status. Since activities covered by Schedule II must be treated as either a supply of goods or services, and the transfer as a going concern is not a supply of goods, it falls within the residual definition of services. [Paras 4]

The proposed transaction was held to be a supply of services.

Exemption for transfer of a going concern - Availability of exemption for transfer of the entire business as a going concern - HELD THAT: - Entry No. 2 of the exemption notification applies to services by way of transfer of a going concern as a whole or an independent part thereof. The applicant had not furnished documentary evidence establishing that the business was a going concern; therefore, its status as such could not be determined on the material placed before the Authority. [Paras 4]

The exemption is available only if the business qualifies as a going concern by all applicable standards.

Taxability of stock transferred otherwise than as a going concern - GST treatment of stock and business assets transferred where the business does not qualify as a going concern - HELD THAT: - Where the transfer does not qualify as transfer of a going concern, the transferred stock and business assets are treated as supplies of goods under Entry No. 4(c) of Schedule II and do not obtain the exemption available for transfer of a going concern. [Paras 4]

The transferred stock and assets would be taxable as supplies of goods at the rates applicable to the respective goods.

Final Conclusion: The proposed transfer of the entire business was held to be a supply of services. Exemption is available only upon proof that the business is a going concern; otherwise, the transferred stock and assets are taxable as supplies of goods at the applicable rates.

Classification of battery-operated E-Rickshaws, E-Carts, Ecovat Hydraulic vehicles and E-Scooters supplied without batteries - GST rate on electrically operated two- and three-wheeled vehicles - Advance-ruling jurisdiction over refund of accumulated input tax credit

Classification of electrically operated vehicles supplied without batteries - GST rate on electrically operated two- and three-wheeled vehicles - Classification and GST rate of battery-operated E-Rickshaws, E-Carts, Ecovat Hydraulic vehicles and E-Scooters supplied with or without batteries - HELD THAT: - Vehicles deriving traction energy solely from electrical energy, with no alternate source of propulsion, retain their character as electrically operated vehicles where the motor, inverter, control module and drivetrain are fitted on the chassis with the body and the vehicle is capable of transporting persons or goods. The absence of a fitted battery is immaterial. The three-wheeled vehicles fall under tariff item 87038040 under heading 8703, while E-Scooters fall under tariff item 87116020 under heading 8711; both are covered as electrically operated vehicles under the relevant Schedule I entry. [Paras 4]

The E-Rickshaws, E-Carts and Ecovat Hydraulic vehicles are classifiable under heading 8703, and E-Scooters under heading 8711, whether supplied with or without batteries, and all are taxable at 5 per cent GST.

Advance-ruling jurisdiction over refund of accumulated input tax credit - Maintainability of the advance-ruling question concerning refund of accumulated input tax credit arising from an inverted duty structure - HELD THAT: - The question relating to entitlement to refund of accumulated input tax credit did not fall within any of the statutorily specified questions on which an advance ruling could be sought. [Paras 1, 4]

The refund question was not admitted and was left undecided on merits.

Final Conclusion: The Authority ruled that the specified battery-operated two- and three-wheeled vehicles remain electrically operated vehicles when supplied without batteries and attract GST at 5 per cent. The question concerning refund of accumulated input tax credit was not admitted.

Reassessment barred by final Settlement Commission order - Reassessment of section 80IB(10) deduction after settlement - Assessing Officer's power to reassess the section 80IB(10) housing-project deduction covered by the final Settlement Commission order -

Whether the AO could reopen, under Sections 147 and 148, the deduction claim that formed part of a final settlement order under Section 245D(4)? - HELD THAT: - The settlement application placed the gross total income and statutory deductions, including the claimed section 80IB(10) deduction, before the Settlement Commission. Upon admission, the settlement proceedings concerned the return for the assessment year, including deductions, and the final settlement consequently covered the deduction. Chapter XIX-A permits displacement of that finality only where the Settlement Commission declares its order void for fraud or misrepresentation; it does not preserve a parallel power in the Assessing Officer to reopen matters covered by the settlement. The Revenue's recourse under that prescribed mechanism had been rejected and had become final. [Paras 23, 24, 25, 26, 27]

The reassessment notice and order were unsustainable; the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal was dismissed, sustaining the quashing of the reassessment notice and reassessment order.

Compulsory production of foundational search records - necessity in criminal trial - Recall of prosecution witness - essentiality for just decision

Production of foundational search records under Section 91 CrPC - Compulsory production of the Satisfaction Note, first Authorization Warrant and Panchnama for re-examining the legality of the search - HELD THAT: - Production under Section 91 CrPC depends upon whether the records are necessary or desirable for the proceeding at the relevant stage, and not merely upon their existence or availability. The earlier production direction was an interlocutory procedural order which could be reassessed when it was shown that the warrant and search, including procedural objections concerning the search, had already undergone judicial scrutiny on the foundational material. That earlier scrutiny did not determine criminal liability, but it removed any surviving necessity to compel the same records solely to reopen the legality of the search. [Paras 44, 47, 48, 49, 50]

The refusal to continue with compulsory production of the records disclosed no jurisdictional error and was upheld.

Recall of prosecution witness under Section 311 CrPC - Recall of a prosecution witness for further cross-examination concerning the unproduced Satisfaction Note - HELD THAT: - The power to recall a witness is wide but is not automatic; the further evidence must be essential to the just decision of the case. The stated purpose was to confront the witness with the Satisfaction Note, whose production had been declined and which was not on record. Further, the witness had already been substantially cross-examined on the preliminary inquiry, authorization of the search, the premises and the allegation of planting of documents. No independent purpose making a further examination essential was shown. [Paras 61, 62, 64, 65, 66]

Dismissal of the recall application was upheld, there being no patent illegality or jurisdictional error.

Final Conclusion: The petition was dismissed, as the orders declining further production of the search records and recall of the prosecution witness disclosed no jurisdictional error.

TDS refund pursuant to appellate give-effect orders - Post-assessment Form 26B requirement - Withholding of refund without statutory adjustment order

Entitlement to TDS refund arising from appellate give-effect orders despite the alleged non-furnishing of financial-year-wise refund particulars or Form 26B - HELD THAT: - A refund arising upon assessment under Section 201 or upon giving effect to an appellate order is a vested and crystallised entitlement. The adjustment procedure under Section 200A, Rule 31A and Form 26B operates in a different field and cannot be invoked after such assessment to deny or defer the refund. The Department's technical objection regarding financial-year particulars could not defeat a claim founded on give-effect orders already forming part of its records. In the absence of a legally passed order of adjustment under Section 245, the refundable amount could not be withheld. [Paras 16, 18, 19, 20]

The respondents were directed to process the refund under the three give-effect orders expeditiously, preferably within six weeks, and to pay applicable interest until payment.

Final Conclusion: The writ petition was disposed of with directions to process the refundable amounts arising from the give-effect orders and to pay statutory interest thereon until payment.

Reassessment - scope of Explanation to section 147 - Search material in pending reassessment - Reassessment of subsequently noticed escaped income

Validity and scope of the Explanation to amended section 147 permitting reassessment of subsequently noticed escaped income without fresh compliance with section 148A - HELD THAT: - The decisions concerning the unamended provision, which turned on the expression "and also" in its substantive part, were held inapplicable after its deletion. Although an Explanation ordinarily clarifies the main provision, it may enlarge its scope where its language and context disclose a clear legislative intention.

The amended Explanation expressly enables assessment or reassessment of any issue of escaped income subsequently noticed during the proceedings, irrespective of compliance with section 148A. [Paras 15, 18, 19, 20, 21]

The Explanation was upheld and could not be struck down or read down; the pending reassessment could be enlarged in respect of subsequently noticed escaped income without separate compliance with section 148A.

Search material in pending reassessment - Use of material obtained during search proceedings to enlarge a pending reassessment for the same assessment year - HELD THAT: - The expression "any issue" in the Explanation is not confined to information available when reassessment commenced and includes material received from a source outside the original reassessment proceedings. Where reassessment is already pending, the authority may enlarge it on the basis of search material relating to escaped income, or independently initiate the procedure applicable to search material; adoption of the former course is not unlawful. [Paras 23, 24]

The reassessment could validly be enlarged on the basis of search material, notwithstanding the availability of a separate mechanism for assessment of income detected during search.

Final Conclusion: The writ petition was dismissed. The amended Explanation to section 147 was held to authorise enlargement of pending reassessment on the basis of subsequently noticed escaped income, including material obtained during search proceedings.

Taxability of non-resident receipts - situs of accrual - Reassessment - jurisdictional nexus with India - Advance rulings-scope of jurisdiction after admission of application - Reassessment limitation - qualifying asset of assessee - Protective assessment - prohibition on protective recovery

Taxability of non-resident receipts-situs of accrual - Reassessment-jurisdictional nexus with India - Taxability in India of payments received under an overseas pharmaceutical marketing and settlement arrangement, and validity of reassessment notices issued to the non-resident US entity for AY 2012-13 and AY 2013-14. - HELD THAT: - The residence of the payer in India, its accounting of the payment, or its claim of expenditure cannot, by itself, determine where income accrued or arose to a non-resident. The Revenue was required to establish a real and substantive nexus between India and the income-producing right or activity, or bring the receipt within a specific statutory deeming provision. The contractual and regulatory rights, settlement, market exploitation and economic activity were situated outside India. An opinion expressed in foreign anti-trust proceedings, without a judicial finding of illegality or admission of guilt, could not render the receipt tainted for Indian tax purposes; nor could the tax authorities substitute their view for the commercial judgment underlying the settlement. [Paras 170, 171, 172, 173, 174]

The reassessment notices and consequential proceedings for AY 2012-13 and AY 2013-14 were without jurisdiction and were quashed.

Advance rulings - scope of jurisdiction after admission of application - Prima facie tax avoidance-requirement of Indian tax incidence - Validity of the refusal to pronounce an advance ruling on the taxability of the payment received by the Israeli applicant - HELD THAT: - The advance-ruling jurisdiction is applicant-specific, transaction-specific and confined to the question posed in the application. Having admitted the application and declined to reopen its admissibility, the Authority could not invoke the admission-stage bar to avoid pronouncing on the referred question. It also lacked jurisdiction to determine, behind the back of the non-applicant US entity, that income belonged to that entity. A conclusion that a transaction was prima facie designed to avoid Indian tax required identification of the Indian tax incidence allegedly avoided; speculative inferences concerning commercial prudence, contractual rights governed by foreign law, or an alleged undisclosed anti-competitive understanding could not sustain such conclusion. In the absence of a business connection or other statutory nexus with India, remittance from India alone could not attract the charging provisions. [Paras 199, 200, 201, 202, 203]

The order declining the advance ruling was set aside; the application was allowed and the payment received by the Israeli entity was held not chargeable to tax in India.

Reassessment limitation - qualifying asset of assessee - Notice under reassessment procedure-meaningful opportunity to respond - Validity of reassessment proceedings for AY 2014-15 based on the extended limitation period and on a ground not disclosed in the show-cause notice - HELD THAT: - A qualifying asset for invoking the extended reassessment period must belong to the assessee proceeded against; a deposit in the bank account of a third party could not be treated as that assessee's asset merely by presuming that the underlying income belonged to it. The Assessing Officer could not assume the jurisdictional fact that was itself to be established in reassessment. Further, the alleged asset-based foundation for the extended limitation was introduced only in the order passed after the assessee's reply, without prior notice and meaningful opportunity to respond. As no surviving period remained under the ordinary limitation regime after the statutory exclusion period, the subsequent order and notice were time-barred. [Paras 211, 212, 213, 214, 215]

The reassessment order and notice for AY 2014-15 were held time-barred and without jurisdiction and were quashed.

Protective assessment - prohibition on protective recovery - Refund of tax deducted at source-security pending substantive assessment - Withholding of tax deducted at source from the Israeli recipient on the basis of a protective assessment while substantive proceedings had been pursued against the US entity - HELD THAT: - A protective assessment is permissible where there is uncertainty regarding the person in whose hands income is assessable, but the law recognises no protective recovery. The refund due to the recipient could not be withheld merely because proceedings were pursued against another entity. Continued withholding in such circumstances was arbitrary; however, safeguards could be imposed to secure any tax demand that may ultimately arise against the US entity. [Paras 217, 218, 219, 220, 221]

Refund of the tax deducted at source, with applicable interest, was directed subject to furnishing the stipulated corporate guarantee or solvent security by the concerned entities.

Final Conclusion: The reassessment proceedings against the US entity for all three assessment years were quashed. The advance-ruling order was set aside, the payment to the Israeli entity was held not taxable in India, and refund of tax deducted at source was directed with interest, subject to the stipulated security.

Agricultural and business expenditure in social forestry operations - Book profit adjustment for expenditure relating to exempt agricultural income - Concealment penalty where tax is assessed on book profit

Agricultural and business expenditure in social forestry operations - Classification of social forestry expenditure incurred on sapling cultivation, clonal propagation and supervision of trees grown by farmers - HELD THAT: - The Court accepted the Tribunal's factual segregation of the activities. Expenditure on growing saplings was agricultural in character, whereas expenditure on supervising trees grown by farmers, including related staff and conveyance expenses, was business expenditure; expenditure on coppice shoots grown without primary operations on land was also non-agricultural. [Paras 24, 25, 26]

The Tribunal's restriction of the disallowance to the loss attributable to agricultural sapling-growing operations was affirmed.

Book profit adjustment for expenditure relating to exempt agricultural income - HELD THAT: - Having upheld the finding that only expenditure incurred in growing saplings constituted agricultural expenditure, the Court held that only the agricultural loss disallowed on that basis could be considered in computing book profit, and not the entire amortised social forestry expenditure. [Paras 28]

The question was answered partly in favour of the Revenue, limited to adjustment of the restricted agricultural loss.

Penalty for concealment arising from additions under normal computation where tax was paid on book profit - HELD THAT: - Where additions under the normal provisions do not alter the tax liability because tax is assessed on book profit, there is no tax sought to be avoided and concealment does not result in tax evasion. Mere assessment under book-profit provisions does not by itself preclude penalty; penalty may be attracted where concealed income increases the book profit and the resulting minimum alternative tax.

Hon’ble Delhi High Court in case of Nalwa Sons Investments Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT] wherein in similar facts, penalty levied under section 271(1)(c) of the Act in respect of addition made by computation of book profit under section 115JB was deleted, as no penalty could be levied on account of concealment under section 115JB of the Act as the tax has been paid on income computed on the book profit and not on statutory provision which would not result in any tax evasion.[Paras 31, 32, 33]

Deletion of the concealment penalty was affirmed and the Revenue's appeal was dismissed.

Final Conclusion: The restricted agricultural-loss disallowance and deletion of the concealment penalty were sustained. The book-profit adjustment was permitted only to the extent of the disallowed agricultural loss.

Unexplained money u/s 69A - demonetisation period cash deposits - Substantial question of law - stated source was the return of business advances to paddy-procurement agents

HELD THAT: - The Tribunal's finding that the source of the deposits stood explained was supported by the assessee's accounts and the evidence concerning the established practice of advancing funds to agents for paddy procurement.

Assessing Officer neither rejected the books of account nor examined the available agents, other than one, and brought no material to disprove the explanation. The comparative cash-deposit data also supported the Tribunal's factual conclusion.

Tribunal, by relying on the decision in the case of TASMAC [2024 (10) TMI 1614 - ITAT CHENNAI] wherein it was held that in a case where the assessee explained the nature and source of income, an addition under Section 69A of the Act does not arise, allowed the appeal, deleting the additions. The Tribunal, on analysing the entire material, arrived at a factual finding that the assessee had explained the source of deposits made and thereby deleted the additions made under Section 69A of the Act. [Paras 15]

No infirmity or perversity was found in the Tribunal's factual finding; consequently, no substantial question of law arose and the deletion of the addition was sustained.

Final Conclusion: The tax case appeal was dismissed, as the Tribunal's finding that the cash deposits had an explained source did not warrant interference.

Recovery of assessed tax pending appellate proceedings - Attachment of bank accounts

Continuation of attachment of the assessee's bank accounts while the income-tax appeal, restored for fresh adjudication, remained pending before the Commissioner of Income Tax (Appeals) - HELD THAT: - As the appellate issue had been restored for fresh consideration and had not yet been finalised, the Court made the lifting of the attachment conditional upon deposit of 20% of the assessed tax liability. [Paras 7]

On deposit within three weeks, the attachment of the two bank accounts was directed to be lifted; the appellate authority was directed to decide the restored appeal on priority within six months.

Final Conclusion: The writ petition was disposed of by granting conditional release of the attached bank accounts and directing expeditious disposal of the pending restored appeal.

Revision u/s 263 - depreciation on acquired trademark - distinction between lack of enquiry and inadequate enquiry

Validity of revision of the assessment accepting depreciation on a trademark acquired from a related party, on the ground of inadequate verification of its valuation and commercial rationale - HELD THAT: - Revisionary jurisdiction is exercisable only where the assessment order is both erroneous and prejudicial to the interests of the revenue. The assessment record showed that the AO had specifically called for and examined details of additions to fixed assets, supporting bills, audited financial statements, depreciation particulars and the assessee's replies before accepting the depreciation claim.

There is no statutory requirement that acquisition of a fixed asset must invariably be supported by a valuation report. Where an enquiry has been made and a legally permissible, plausible view has been adopted, the revisionary authority cannot invoke section 263 merely because further or differently directed enquiry was considered desirable.

Hon'ble Supreme Court in its landmark case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] has held that an incorrect assumption of facts or an incorrect application of law may render an order erroneous, but where the AO adopts one of the courses permissible in law or where two views are possible and the AO has taken one such view, the order cannot be branded as erroneous merely because the Commissioner does not agree with it. The same principle has been reiterated in CIT v. Max India Ltd. [2007 (11) TMI 12 - SUPREME COURT]

Equally important is the distinction between lack of enquiry and inadequate enquiry. As in CIT v. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] held that where Ld. AO has conducted an enquiry, the mere fact that such enquiry was considered inadequate by the Commissioner would not, by itself, justify assumption of jurisdiction u/s 263. The Court specifically recognized that it is only in cases of lack of enquiry that such jurisdiction can ordinarily be exercised. [Paras 12, 13, 14, 15, 16]

The twin conditions for revision under section 263 were not satisfied; the revisionary order was quashed and the original assessment was restored.

Final Conclusion: The appeal was allowed. The revisionary order was quashed and the assessment accepting the depreciation claim was restored.

Exemption u/s 54B - Exemption on reinvestment of agricultural land - Appellate enhancement without notice - Consistent treatment of co-owners

Exemption on reinvestment of agricultural land - Consistent treatment of co-owners - Entitlement to exemption on investment in agricultural land sold by co-owners, where the Revenue had accepted the corresponding claim of the other co-owner - HELD THAT: - The assessee and his brother were co-owners of both the agricultural land sold and the land purchased, and had claimed exemption in respect of the same investment. As the Revenue had accepted the brother's claim on identical facts, the assessee's identical claim could not be rejected. [Paras 10, 16]

The claimed exemption was directed to be granted for both assessment years.

Appellate enhancement without notice - Agricultural income assessed as income from other sources - Validity of addition made by the appellate authority by treating claimed agricultural income as income from other sources without issuing notice of enhancement - HELD THAT: - The assessment had not examined the taxability of the claimed agricultural income, and the appellate authority made the addition on the basis of the remand report. Since no notice of enhancement was issued under section 251(2), the addition could not be sustained. [Paras 12, 16]

The additions treating the claimed agricultural income as income from other sources were deleted for both assessment years.

Final Conclusion: Both appeals were allowed. The exemption claims were directed to be granted and the additions made without notice of enhancement were deleted.

Interest on surplus deposits attributable to provision of credit facilities - Deduction under section 80P(2)(a)(i) for co-operative credit societies - Eligibility of interest earned on deposits with Co-operative Banks and Scheduled Banks for deduction under section 80P(2)(a)(i) by a co-operative credit society providing credit facilities to its members - HELD THAT: - The assessee was engaged solely in providing credit facilities to its members, and the deposits represented funds not immediately required for lending.

We find that while deciding a similar issue the Hon’ble Jurisdictional High Court in Tumkur Merchants Souharda Credit Co-operative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] after considering the decision of the Hon’ble Supreme Court in Totgar’s Co-operative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] held that the interest earned by the Co-operative Society, which is engaged in the business of providing credit facilities to its members, from deposit of excess amount for short term in bank is eligible for deduction under section 80P(2)(a)(i) of the Act.

Applying the binding jurisdictional precedent, the Tribunal held that interest earned by depositing such funds with Co-operative Banks and Scheduled Banks is attributable to the business of providing credit facilities to members. The decision cited by the Departmental Representative concerned deduction under section 80P(2)(d) and was therefore inapplicable. [Paras 11, 12]

The interest income was held eligible for deduction under section 80P(2)(a)(i), and the addition was directed to be deleted.

Final Conclusion: The appeal was allowed. The assessee was held entitled to deduction under section 80P(2)(a)(i) in respect of interest earned on the deposits in question.

Most-favoured-nation clause - notification for treaty-based exemption

Most-favoured-nation clause - notification requirement - Interest on income-tax refund - treaty rate - Claim to a nil source-tax rate on interest under section 244A under the India-Netherlands DTAA by invoking the MFN clause and the interest provisions of the India-USA or India-Italy DTAA - HELD THAT: - A notification under section 90(1) is indispensable for domestic enforcement of an MFN-based treaty benefit. Notification No. S.O. 693(E) amended Article 11(2) of the India-Netherlands DTAA only by reducing the tax rate on interest to 10 per cent for beneficial owners; it did not import the exemption for interest under Article 11(3)(c) of the India-USA DTAA or Article 12 of the India-Italy DTAA. In the absence of a specific notification extending such nil-rate exemption, the claimed treaty benefit could not be imported. [Paras 14, 15, 16]

The claim for nil-rate taxation was rejected and the interest on income-tax refund was held taxable at 10 per cent under Article 11(2) of the India-Netherlands DTAA read with Notification No. S.O. 693(E).

Credit of tax deducted at source on income-tax refund interest - Allowance of eligible tax deducted at source against the income-tax refund interest - HELD THAT: - The entitlement was confined to credit of the eligible tax deducted at source against the interest income. [Paras 17]

The Assessing Officer was directed to grant eligible tax deducted at source credit against the interest income.

Final Conclusion: The appeal was dismissed, subject to the direction to grant eligible tax deducted at source credit against the income-tax refund interest.

Assignment of contractual and decree rights to acquire immovable property - capital asset - Indexed cost of improvement - verification of supporting evidence - Exemption for investment in a new residential house - examination of supporting evidence - Penny stock share gains - preponderance of probabilities

Assignment of contractual and decree rights to acquire immovable property - capital asset - Capital gains and income from other sources - Tax character of consideration received on assignment of contractual rights and rights under a decree to acquire immovable property - HELD THAT: - A contractual right to obtain conveyance of immovable property is property and, therefore, a capital asset; its assignment constitutes a transfer. The absence of registered title or physical possession did not reduce the assignable rights under the contract and decree to a mere contingent right to litigate. [Paras 8]

The consideration was held chargeable under the head Capital Gains and not Income from Other Sources; the addition made under the residuary head was set aside with a direction to assess the receipt under Capital Gains in accordance with law.

Indexed cost of improvement - verification of supporting evidence - Indexed cost of improvement claimed in computing capital gains - HELD THAT: - The Tribunal found correct the assertion that documentary material supporting the expenditure on improvement had been furnished but had not been examined by the lower authorities. [Paras 9]

The issue was remanded to the AO to verify the documentary evidence and allow the indexed cost of improvement in accordance with law after granting a reasonable opportunity of hearing; all contentions were left open.

Exemption for investment in a new residential house - examination of supporting evidence - Claim to exemption for investment of the net consideration in land and construction of a new residential house - HELD THAT: - The exemption claim had been rejected for want of documentary proof, whereas the assessee asserted that material concerning deposits and withdrawals from the Capital Gains Account Scheme, utilisation of funds, and acquisition of land had been furnished. Fresh consideration of the claim on the entire material was therefore considered appropriate. [Paras 10]

The claim was remanded to the Assessing Officer for fresh adjudication after considering all documents and submissions, with liberty to raise all contentions including the applicability of the CBDT circular; the merits were not adjudicated.

Penny stock share gains - preponderance of probabilities - Unexplained cash credit - sham share transactions - Addition of sale proceeds from shares of an alleged penny stock company as unexplained cash credit and denial of long-term capital-gains exemption - HELD THAT: - In alleged bogus penny-stock transactions, genuineness must be tested on the touchstone of surrounding circumstances and preponderance of probabilities. The scrip's coverage in the investigation report, unusual off-market physical acquisition through another broker, abnormal price and volume movement followed by suspension of trading, lack of supporting fundamentals, and absence of a credible investment rationale cumulatively shifted the onus to the assessee. Contract notes, banking records and demat statements did not displace that circumstantial evidence. Cross-examination was not required since no particular third-party statement was the sole basis of the addition. [Paras 11]

The addition of the share-sale proceeds as unexplained cash credit and the consequential denial of the long-term capital-gains exemption were sustained.

Final Conclusion: The appeal was partly allowed: the receipt from assignment was directed to be assessed as capital gains, the indexed-cost and residential-house exemption claims were remanded for fresh consideration, and the addition concerning the penny-stock share transaction was sustained.

Unexplained money u/s 69A - cash deposits from disclosed cash sales

HELD THAT: - The books of account had not been rejected, and the cash sales as well as the corresponding bank deposits stood disclosed therein. Section 69A applies where money owned by the assessee is not recorded in the books of account; it could not therefore be invoked in respect of the recorded transactions. See Ankit Gold Ltd [2025 (6) TMI 1923 - ITAT AHMEDABAD] wherein held 'amount in question was already recorded as sales in the books and that such sales were supported by supporting documentation. Once the sales realization has been duly taxed, making an addition of the same amount under section 68 of the Act would result in double taxation, which is impermissible under law.' [Paras 6]

The deletion of the unexplained-money addition was upheld and the Revenue's grounds were dismissed.

Final Conclusion: The Revenue's appeal was dismissed, and the deletion of the addition in respect of recorded cash sales and corresponding bank deposits was sustained.

Penalty order for concealment of income as barred by limitation - Initiation of penalty proceedings in assessment order - statutory scheme governing limitation for levy of penalty provided u/sec. 275

HELD THAT: - Penalty proceedings were initiated in the assessment order in September 2024. Applying the statutory period of six months from the end of that month, the Tribunal held that the penalty order was required to be passed by 31.03.2025. The order passed thereafter was consequently barred by limitation.

We find support from the decision of Hardik Dayanand Patil [2026 (3) TMI 1762 - ITAT MUMBAI] and also the judgment of Rishikesh Buildcon [2022 (11) TMI 1038 - DELHI HIGH COURT]. Accordingly, finding the Ld.CIT(A) is reversed, penalty levied u/sec. 271(1)(c) of the Act at Rs. 4,62,000/- is deleted and the legal ground raised by the assessee is hereby allowed. [Paras 6]

The penalty order was held time-barred and the penalty was deleted; the remaining grounds on merits were treated as academic.

Final Conclusion: The appeal was allowed and the penalty for alleged concealment of income was deleted as barred by limitation.

Natural justice denied - no notice to interested banking company in benami adjudication - Secured creditor's mortgage - attachment and confiscation of benami property

Denial of notice and opportunity to the mortgagee bank in proceedings for confirmation of attachment of benami property - HELD THAT: - The Tribunal found that the bank was aware of the pending adjudication, had sufficient opportunity to approach the Adjudicating Authority and place its response, but did not do so. The statutory scheme permits a claimant in respect of the property to participate and permits addition of parties; consequently, no prejudice or illegality in the service of notice was established. [Paras 6]

The challenge to the confirmation order on the ground of want of notice was rejected.

Secured creditor's priority - Confiscation of benami property - Release of the attached flat on the basis of the mortgage and secured-creditor priority asserted by the bank - HELD THAT: - The Tribunal held that attachment under the Benami Act is directed towards eventual confiscation of the property and not recovery of government dues. Secured-creditor priority under SARFAESI could not be applied so as to defeat the statutory object by enabling release of property declared benami. The bank was required first to pursue recovery from the other mortgaged securities furnished for the borrower's loan and could thereafter make its statutory claim before the Adjudicating Authority if its dues remained unrecovered. [Paras 7]

The mortgage did not warrant release of the attached property, subject to the bank's liberty to make a statutory claim if recovery from the other securities proved insufficient.

Final Conclusion: The appeal was dismissed and the confirmation of attachment remained undisturbed, with liberty to the bank to pursue its statutory claim if recovery from the other mortgaged securities was inadequate.

Period of Limitation on statutory customs demand - Appropriation of voluntary customs duty deposit in settlement proceedings - Judicial review of settlement orders

Appropriation in settlement proceedings of voluntarily deposited differential customs duty relating to imports beyond the five-year statutory demand period - HELD THAT: - The statutory limitation restricts the Department's power to initiate or enforce a fresh demand, but does not govern the appropriation in settlement proceedings of an amount already voluntarily deposited. The Settlement Commission's finding that the proprietor had admitted the liability and directed adjustment of the deposit remained unassailed, there being no retraction of the statements or material controverting that factual position. Judicial review does not permit reappreciation of such factual findings in the absence of jurisdictional error, breach of natural justice, manifest legal error, or a conclusion unsupported by the record. [Paras 50, 51, 52, 53, 54]

The appropriation of the voluntary deposit was upheld, and no ground for interference with the settlement order was made out.

Final Conclusion: The writ petition was dismissed, the Court declining to interfere with the settlement order.

Exercise of writ jurisdiction against a customs penalty order where the statutory appeal was rejected for non-compliance with mandatory pre-deposit and a further appellate remedy was available

HELD THAT: - The statutory scheme provides a complete mechanism for adjudication and appellate redressal. Although the availability of an alternative remedy is not an absolute bar to writ jurisdiction, such jurisdiction is ordinarily not exercised to bypass the statutory framework, particularly where adjudication of the challenge requires examination of disputed facts and merits.

The prescribed pre-deposit is a condition for entertaining the appeal and cannot ordinarily be circumvented through writ jurisdiction on a plea of financial hardship. The alleged denial of cross-examination and other challenges to the evidentiary basis and legality of the penalty were matters inseparably connected with the merits, requiring consideration by the competent statutory forum. [Paras 22, 24, 25, 26, 27]

The writ petition was dismissed for availability of an efficacious statutory remedy, with liberty to pursue the available appellate remedy; all merits questions were left open.

Final Conclusion: The Court declined to bypass the statutory appellate mechanism and dismissed the petition without examining the merits of the customs adjudication or the dismissal of the first appeal.

Anti-Dumping Duty on Castings forming part of wind turbine Gear Boxes - Extent of Anti-Dumping Duty under Notification No.42/2017-Customs (ADD) on wind turbine Gear Boxes containing Castings

HELD THAT: - The Notification, issued pursuant to the recommendation for levy on Castings, covers Castings in raw, finished or sub-assembled form, including Castings forming part of a sub-assembly, equipment or component.

Tribunal had interpreted the levy as confined to the Castings even where they formed part of another component or equipment. That unchallenged interpretation, having attained finality, was binding on the Customs authorities; consequently, the Notification did not authorise levy on the Gear Boxes as a whole. [Paras 14, 15, 17]

The levy of Anti-Dumping Duty on the Gear Boxes was held to be without statutory authority; the final assessment was set aside to that extent and the self-assessment was directed to be accepted.

Final Conclusion: The writ petition was allowed, and the assessment imposing Anti-Dumping Duty on the Gear Boxes was set aside. The Customs authorities were directed to accept the self-assessment and release the securities furnished towards the differential duty on the Gear Boxes.

Customs Broker licence revocation - proof of breach of statutory obligations - Customs Broker due diligence - importer's misdeclaration and KYC verification

Sustainability of revocation of the Customs Broker licence, forfeiture of security and penalty for alleged failures in authorisation, due diligence, KYC verification and cooperation in clearing a misdeclared import consignment - HELD THAT: - Revocation could rest only on established statutory grounds and not on an apprehension of possible future misconduct. The importer had furnished an authorisation and there was no case that the Customs Broker had filed documents contrary to those supplied by the importer. The discrepancy in the goods and the variation in brand particulars became apparent only upon physical examination; the Customs Broker could not therefore be faulted for failing to detect it from the import documents.

The obligation of speed and efficiency did not concern verification of the BIS certificate. The KYC documents obtained satisfied the prescribed verification requirements, and the Customs Broker's participation in the investigation negated the alleged failure to cooperate.

Hon'ble High Court of Delhi in the case of Kunal Travels (Cargo) [2017 (3) TMI 1494 - DELHI HIGH COURT] the appellant CB is not an officer of Customs who would have an expertise to identify over valuation or under valuation of goods. Also see M/S PERFECT CARGO AND LOGISTICS [2020 (12) TMI 649 - CESTAT NEW DELHI] [Paras 7, 8, 10]

The alleged breaches were not established; consequently, the revocation of licence, forfeiture of security and penalty were set aside.

Final Conclusion: The appeal was allowed, and the revocation of the Customs Broker licence, forfeiture of security and penalty were set aside.

Transaction value of imported rechargeable batteries - grounds for rejection - Sequential customs valuation of imported rechargeable batteries - Confiscation and penalty for alleged undervaluation of imported rechargeable batteries

Transaction value of imported rechargeable batteries - grounds for rejection - Sequential customs valuation of imported rechargeable batteries - Enhancement of the declared transaction value of imported rechargeable batteries on the basis of market inquiry, without stated grounds for rejecting the declared value and without sequential application of the valuation rules - HELD THAT: - The declared transaction value could be rejected only upon reasonable doubt founded on stated grounds, following which valuation had to proceed sequentially under the prescribed methods. The authorities neither produced contemporaneous import data or other material to support doubt about the declared value nor addressed the comparable imports furnished by the importer, and instead adopted retail market-inquiry prices without establishing comparison with identical or similar goods. Payment of differential duty for provisional release did not amount to acceptance of the enhanced value or preclude its challenge. [Paras 9, 10]

The market-inquiry-based enhancement of value and the consequential confirmed duty demand were held unsustainable.

Confiscation and penalty for alleged undervaluation of imported rechargeable batteries - Confiscation, redemption fine and penalty imposed on the importer for alleged undervaluation of imported rechargeable batteries - HELD THAT: - The invoice amount was remitted to the overseas supplier, and no material established payment beyond the declared value or any discrepancy in the quantity or description of the imported goods. In the absence of evidence of misdeclaration, fraud, suppression or wilful misstatement intended to evade duty, the basis for confiscation and penal consequences was not made out.

We find that our above views are also fortified by the observation of the Hon’ble Supreme Court in the case of Anil Kumar Anand [2019 (4) TMI 1444 - SUPREME COURT] wherein it was held that the Rules provided for customs valuation has to be followed sequentially in order to arrive at correct value of goods

The decision of Khushiram Beharilal [1997 (6) TMI 116 - CEGAT, NEW DELHI] state that acceptance of enhanced value does not mean that the appellants had given up their right to challenge in appeal against such decision; and there should be proper evidence and statutory authority for enhancing the assessable value of imported goods. [Paras 9, 10]

The confiscation, redemption fine and penalty were held unsustainable.

Final Conclusion: The appeal was allowed and the impugned order, including the valuation enhancement, consequential duty demand, confiscation, redemption fine and penalty, was set aside with consequential relief in accordance with law.

Appellate jurisdiction under the Customs Act - Directions against a non-appellant terminal operator - Authority of the Commissioner (Appeals) to direct a terminal operator, which had not preferred the appeal, to implement a detention and demurrage waiver and refund demurrage charges

HELD THAT: - The appellate jurisdiction is confined to an appeal by a person aggrieved by a decision or order of an officer subordinate to the Commissioner of Customs. As the terminal operator had not filed an appeal before the Commissioner (Appeals) concerning the merits, that authority lacked jurisdiction to require it to perform statutory functions in a prescribed manner. The customs communications concerning waiver also did not warrant such a direction. [Paras 3]

The directions requiring implementation of the waiver certificate and refund of demurrage were set aside.

Final Conclusion: The impugned order, insofar as it issued directions to the appellant terminal operator, was set aside and the appeal was allowed.

Territorial jurisdiction under Article 226 - part cause of action in investigation into company affairs

Territorial jurisdiction to entertain the challenge to an SFIO investigation into the affairs of a company having its registered office within the State - HELD THAT: - Territorial jurisdiction under Article 226 depends upon material and integral facts constituting the cause of action, and not upon the bare situs of a company's head office. However, an investigation into the affairs of the company would involve its registered/head office, which constituted the repository and fulcrum of the investigation; consequently, a part of the cause of action arose within the Court's territorial jurisdiction. [Paras 18, 19, 20]

The preliminary objection to maintainability on the ground of territorial jurisdiction was rejected and the writ application was directed to be heard on merits.

Final Conclusion: The writ application was held maintainable within the Court's territorial jurisdiction and was directed to proceed on merits. The interim order was continued.

Period of Limitation for insolvency appeals - e-filing system failure - Actus curiae neminem gravabit

Exclusion from the limitation period for an appeal under the Insolvency and Bankruptcy Code where e-filing was prevented by failure of the tribunal's OTP delivery system - HELD THAT: - Although the statutory timeline is to be strictly observed and the tribunal lacks power to condone delay beyond the outer condonable period, limitation runs only when the forum is open and capable of receiving the papers. Where a bona fide attempt to e-file within time is defeated solely by a malfunction in the tribunal's own system, the principle of actus curiae neminem gravabit permits exclusion of the period during which the system was non-functional and treatment of the first bona fide attempt as the date of presentation.

There is a plethora of decisions of this Court on “actus curiae neminem gravabit”, which we need not refer here for brevity, except the Constitution Bench decision in A.R. Antulay v. R. S. Nayak [1988 (4) TMI 432 - SUPREME COURT]. There, this Court applied the said principle to recall and set aside directions given by another Bench on the ground of curing defects and removing irregularity therein.[Paras 19, 20, 22, 24]

The dismissal as time-barred was set aside and the appeal and delay-condonation application were restored to the tribunal for reconsideration; if sufficient cause is found, the appeal shall be registered and decided in accordance with law.

Final Conclusion: The appeal was allowed and the tribunal's dismissal was set aside. The restored proceedings shall be reconsidered consistently with the principle that a litigant cannot suffer for failure of the tribunal's e-filing system.

Successful resolution applicant-provident fund and gratuity dues - Statutory provident-fund interest

Liability of a successful resolution applicant to discharge provident-fund and gratuity dues, with statutory interest, under an approved resolution plan- HELD THAT: - The Court proceeded on the settled position that provident-fund and gratuity dues are excluded from the liquidation estate and cannot be subjected to distribution under the waterfall mechanism. A successful resolution applicant is bound to satisfy the dues under the provident-fund law, including statutory interest on arrears. [Paras 5, 16, 19]

The successful resolution applicants were directed to discharge the due amounts under the provident-fund law, including statutory interest, in quarterly instalments, subject to recovery on default.

Waiver or reduction of provident-fund damages - Availability of reduction or waiver of provident-fund damages to a successful resolution applicant implementing a resolution plan - HELD THAT: - Although the statutory provision refers to a rehabilitation scheme sanctioned under the repealed sick-industries legislation, the Court opined that the Central Board could consider an application for reduction or waiver of damages, since implementation of a resolution plan is akin to a rehabilitation plan. [Paras 6, 18]

The successful resolution applicants' right to approach the Central Board for reduction or waiver of damages was expressly preserved.

Damages for delayed provident-fund contributions - discretion to impose penalty - Discretion of the authorised officer to impose damages for delayed provident-fund contributions after the amendment of Section 14B - HELD THAT: - The Court held that statutory interest constitutes the compensatory component of delayed provident-fund payments, while post-amendment damages operate as penalty. Since the provision continues to employ the expression "may recover", the Court considered that the authorised officer retains discretion whether to impose penalty in extenuating circumstances, though the prescribed Scheme regulates the quantum once penalty is imposed. While agreeing that mens rea or actus reus is not required, the Court expressed doubt regarding the proposition that levy of damages is automatic and mandatory. [Paras 7, 12, 14, 15, 16]

The question whether the authorised officer has discretion to levy or not levy damages was referred to a larger Bench without a final determination by the present Bench.

Final Conclusion: The successful resolution applicants were directed to discharge the provident-fund dues with statutory interest in quarterly instalments, subject to recovery upon default. The question of discretion to impose damages under Section 14B was referred to a larger Bench, while recourse to the Central Board for reduction or waiver was preserved.

Fair opportunity to an affected non-party in insolvency proceedings - Natural justice in insolvency proceedings -Consideration of pending Section 60(5) application before final determination of insolvency petition

Requirement to determine the appellant's pending application under Section 60(5), seeking intervention and alleging collusive initiation of insolvency proceedings, before final adjudication of the Section 7 company petition - HELD THAT: - In the peculiar circumstances, the appellant's application raised claims concerning the possible effect of the insolvency proceedings upon its rights and property, although it was not a party to the Section 7 petition. Judicial fairness required the application to be considered before a final decision on the company petition; no compelling urgency justified proceeding with the final adjudication while that application remained pending. [Paras 25, 26, 27]

The Tribunal was directed to decide the appellant's pending Section 60(5) application within three months, if not already decided, and only thereafter proceed to determine the Section 7 company petition on merits.

Final Conclusion: The appeal was disposed of with a direction that the pending application under Section 60(5) be decided before any final order is passed on the Section 7 company petition.

Pre-existing dispute over outcome-based professional fee for GST proceedings - Section 9 application - Operational debt - crystallisation of success fee - afterthoughts and moonshine disputes

Admission of a Section 9 application for unpaid outcome-based professional fee arising from GST proceedings in the presence of a pre-existing dispute - HELD THAT: - Contemporaneous correspondence and rejection of the invoices before the statutory demand disclosed a substantive contest over the meaning and occurrence of contractual success, entitlement to the fee, and the effect of the GST proceedings not having attained finality. The GST order for FY 2020-21, material to the computation, had been set aside; the capacity in which statutory representation was rendered and the enforceability of relief-linked remuneration under the applicable professional framework also required investigation. A plausible and bona fide dispute requiring further investigation, rather than a patently feeble defence, precluded adjudication of the underlying contractual claim in the limited Section 9 jurisdiction. [Paras 7]

The Section 9 application was dismissed without adjudicating the contractual claim on merits, leaving the Applicant at liberty to pursue other remedies available in law.

Final Conclusion: The petition for initiation of CIRP was dismissed because the alleged outcome-based fee was subject to a genuine and bona fide pre-existing dispute requiring adjudication beyond the scope of Section 9.

Effect of statutory omission on prior foreign exchange contraventions - Foreign investment reporting and share-allotment defaults - Mens rea in civil foreign exchange penalty proceedings - Confiscation of property involved in foreign exchange contravention - Liability of directors for foreign exchange contraventions

Effect of statutory omission on prior foreign exchange contraventions - Applicability of Section 6(3) of FEMA to foreign-investment contraventions committed before its omission - HELD THAT: - Though Section 6(3) was subsequently omitted, it was in force when the foreign remittance-related contraventions occurred. Its subsequent omission did not affect its applicability to those contraventions. [Paras 12]

Section 6(3) of FEMA was held applicable to the impugned contraventions.

Delayed reporting of foreign investment and share allotment - Mens rea for civil foreign exchange penalties - Penalty liability for delayed reporting of foreign remittances and delayed issue of shares under the Foreign Direct Investment Scheme - HELD THAT: - The delay in reporting receipt of foreign investment to the Reserve Bank and in issuing shares was undisputed and established the regulatory contraventions. Such defaults constitute breaches of civil obligations, for which penalty follows upon proof of contravention without proof of mens rea where the statute does not require it; later compliance and asserted bona fides did not render the defaults merely technical. [Paras 13, 14, 15]

The company's liability to penalty was sustained, subject to reduction of the penalty.

Confiscation of property involved in foreign exchange contravention - Foreign investment in restricted real estate sector - Confiscation of commercial property acquired from foreign remittances involved in FEMA contraventions - HELD THAT: - Confiscation under Section 13(2) is discretionary and additional to the pecuniary penalty, requiring judicial exercise on the facts. The property was acquired from remittances received from a third party while shares were allotted to another foreign entity, and the funds were used in the restricted real estate sector; the related reporting and delayed share-issue defaults were also established. [Paras 16]

The confiscation of the property was sustained.

Liability of director not in charge of company business - Personal penalty on a director not shown to be in charge of or responsible for the conduct of the company's business - HELD THAT: - No evidence established that the director was in charge of or responsible for the company's business or the impugned transactions. Personal liability could therefore not be sustained against that director. [Paras 17, 18]

The penalty imposed on that director was set aside.

Liability of director managing company affairs - Personal penalty on the director who managed the company's affairs in relation to the foreign remittance contraventions - HELD THAT: - The director had admitted a role in managing the company's affairs, failed to establish that the contraventions occurred without knowledge or despite due diligence, and had disclosed initial incorrect declarations to banks concerning the remittances. Personal liability was therefore established. [Paras 17, 18]

The personal penalty was sustained but reduced.

Final Conclusion: The company's appeal and the appeal of the director managing its affairs were partly allowed with reduced penalties, while the appeal of the director not shown to be in charge was allowed. Confiscation of the property was maintained.

Parole on compassionate grounds - seeking Grant of parole to enable the appellant to attend to his wife's treatment for an undisputed stage IV cancer condition

HELD THAT: - The availability of other family members to care for the appellant's wife could not constitute a basis to refuse parole in view of the seriousness of her undisputed ailment. [Paras 5, 6]

Parole was granted for five days under escort at the appellant's cost, subject to his reporting back to the concerned prison.

Final Conclusion: The appeals were disposed of by granting the appellant parole for five days on compassionate grounds, subject to the stipulated escort and reporting conditions.

Scheduled offence and money-laundering jurisdiction - Corresponding law under the Prevention of Money Laundering Act - Criminal misconduct by public servant -

Whether offence under Section 5(1)(d) of the J&K Prevention of Corruption Act continued to correspond to a scheduled offence after omission of Section 13(1)(d) of the Central Prevention of Corruption Act? - HELD THAT: - A scheduled offence is indispensable for proceeds of crime and an investigation for money laundering. Under Section 2(2) of the Prevention of Money Laundering Act, the reference to a Central enactment in the Schedule extends to the corresponding law applicable in Jammu and Kashmir. The omission of Section 13(1)(d) of the Central Prevention of Corruption Act did not remove the corresponding offence: the recast Section 7 comprehensively covers obtaining an undue advantage through abuse of official position or corrupt or illegal means, conduct also covered by Section 5(1)(d) of the J&K Act. As amended Section 7 is a scheduled offence, the J&K offence correspondingly remained a scheduled offence. [Paras 28, 30, 31, 32, 33]

The Enforcement Directorate was held to possess jurisdiction to register the ECIR and issue summons in respect of the alleged offence.

Final Conclusion: The petition challenging the summons and the ECIR was dismissed, as the alleged offence was held to be a scheduled offence for the purposes of the Prevention of Money Laundering Act.

Taxability of composite works contracts prior to separate works contract service

Composite works contracts - pre-01.06.2007 service tax levy - Levy of service tax under construction of residential complex service on a composite works contract executed before 01.06.2007 - HELD THAT: - The contracts involved use of materials and were composite works contracts.

The question as to whether the “Works Contract Services” provided before 01.06.2007 could be charged under other heads or otherwise has been decided in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] as been held that Works Contract Services are a separate species of contract and they could be charged to service tax only under the head of Works Contract Service, such service could not be taxed under another head and other heads cover only services simpliciter. Revenue’s submission that abatement was allowed under various notifications was also rejected by the Supreme Court.

Applying the principle that a works contract is distinct from a contract for services simpliciter and could be subjected to service tax only after works contract service was separately made taxable, the Tribunal held that such contracts could not be charged under construction of residential complex service for the period in dispute. Allowance of abatement did not validate a levy where no charge existed. [Paras 2, 3]

The demand under construction of residential complex service, with consequential interest and penalties, was set aside.

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

Revenue neutrality - CENVAT credit of reverse charge service tax - Sustainability of service tax demand under reverse charge for alleged supply of manpower where any tax payable was available as CENVAT credit to the appellant - HELD THAT: - The Tribunal found it admitted that any service tax payable under reverse charge would have been available to the appellant as CENVAT credit. The matter was therefore revenue-neutral, rendering the demand unsustainable; penalty could consequently not be imposed. [Paras 11]

The demand and penalty were not sustained, and the impugned order was set aside.

Final Conclusion: The appeal was allowed with consequential relief on the ground of revenue neutrality.

CENVAT credit of concessional countervailing duty on imported coal - equivalence of concessional CVD with excise duty -

Admissibility of CENVAT credit of additional customs duty paid at the concessional rate on imported coal under Notification No. 12/2012-Customs - HELD THAT: - Following the coordinate-bench decision on the identical issue in [2026 (9) TMI 1108 - GUJARAT HIGH COURT] the Court held that CVD paid at the concessional rate under the Customs notification is to be treated as equivalent to the excise duty payable for the purpose of Rule 3(1)(vii) of the CENVAT Credit Rules, 2004. The credit was therefore admissible. [Paras 6]

The impugned order was quashed and the petitioner was permitted to avail and utilize the CENVAT credit for the relevant period.

Final Conclusion: The writ petition was allowed. The denial of CENVAT credit of concessional CVD on imported coal, together with consequential interest and penalty, was set aside.

Admissibility of investigation statements u/s 9D of the Central Excise Act - Admissibility of CPU and pen drive data under Section 36B - Proof of clandestine clearance of Sponge Iron and Charcoal

Section 9D procedure for investigation statements - Cross-examination of statement makers - Admissibility of investigation statements relied upon to establish clandestine clearance of Sponge Iron and Charcoal - HELD THAT: - The statements relied upon by the Revenue had neither been tested through examination-in-chief nor subjected to cross-examination. Compliance with the statutory procedure governing relevancy of such statements was mandatory; consequently, the statements could not be treated as reliable or admissible evidence. [Paras 16]

The investigation statements were held inadmissible and could not support the duty demand.

Section 36B compliance for electronic records - Electronic evidence from CPUs and pen drives - Admissibility of printouts and documents retrieved from CPUs, computers and pen drives for proving clandestine clearance - HELD THAT: - The retrieved electronic data and printouts had not been tested in accordance with the statutory conditions applicable to computer-generated records, and no certificate required for their evidentiary use was produced. Such electronic material could not, therefore, be admitted to substantiate the allegation of clandestine removal. [Paras 17]

The retrieved electronic data and printouts were excluded from consideration as evidence of clandestine clearance.

Proof of clandestine manufacture and removal - Corroborative evidence of unaccounted clearances - Sustainability of the charge of clandestine manufacture and clearance of Sponge Iron and Charcoal in the absence of admissible and corroborative evidence - HELD THAT: - A charge of clandestine manufacture and removal requires tangible evidence, including investigation into manufacturing capacity, procurement of raw materials, buyers, transportation, labour and electricity consumption. As the principal statements and electronic records were inadmissible and no independent corroborative evidence on these aspects was available, the charge remained unproved. [Paras 18, 19]

The clandestine-clearance charge, the duty demand and the consequential penalties were set aside.

Final Conclusion: The appeals were allowed. The duty demand for the alleged clandestine clearance and the consequential penalties were set aside.

Bagasse - agricultural waste or residue or result of any process of manufacture - Rule 6(3) Cenvat credit obligation on electricity generated from bagasse - Recovery under Rule 6(3) of the Cenvat Credit Rules, 2004 on electricity generated from bagasse and sold outside the factory, and on press-mud supplied free of cost without maintenance of separate input accounts

HELD THAT: - Bagasse, being agricultural waste or residue and not the result of any process of manufacture, could not fall within the definition of manufacture. In the absence of manufacture, Rule 6 of the Cenvat Credit Rules, 2004 had no application to bagasse or to electricity generated therefrom. The Tribunal further accepted that the option for discharging obligations under Rule 6 is available to the assessee and cannot be selected by the Department, and that reversal of proportionate Cenvat credit is equivalent to non-availment of such credit.

The facts of this case are identical to the facts of the DSCL Sugars Ltd [2015 (10) TMI 566 - SUPREME COURT] in which Hon’ble Supreme Court has disposed of a bunch of Civil Appeals and SLPs and has held that bagasse is only an agricultural waste or residue and it is not the result of any manufacturing process. Therefore, it cannot be treated as falling within the definition of section 2(f) of the Act.

We also find force in the submission of the learned Counsel that demand for an amount under Rule 6(3) of the CCR cannot be raised by the department as held in Tiara Advertising [2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT]. We also find force in the submission that when the proportionate amount of Cenvat credit is reversed, it is as good as not availing any Cenvat credit at all, as held by Hon’ble Supreme Court in the case of Chandrapur Magnets Pvt Ltd. [1995 (12) TMI 72 - SUPREME COURT] [Paras 12, 13, 14]

The recovery under Rule 6(3), consequential interest and penalty were set aside, and the appeal was allowed with consequential relief.

Final Conclusion: The appeal was allowed and the impugned order confirming recovery under Rule 6(3), interest and penalty was set aside with consequential relief.

Revenue neutrality in inter-unit clearances - Extended period of limitation - disclosure in ER-1 returns

Revenue neutrality in inter-unit clearances - Differential excise duty on iron ore pellets transferred to the assessee's own manufacturing units, where the duty was available as CENVAT credit to those units - HELD THAT: - The receiving units used the pellets as inputs, availed CENVAT credit of the duty paid and cleared their finished goods on payment of duty. Since the clearances were to the assessee's own units, the differential duty arising from the assessable value adopted under CAS-4 resulted in a revenue-neutral situation. [Paras 6, 8]

The demand founded on the inter-unit valuation difference was set aside on merits.

Extended period of limitation - disclosure in ER-1 returns - Invocation of the extended period for differential duty on inter-unit clearances of iron ore pellets disclosed in ER-1 returns - HELD THAT: - The transactions and values adopted for the clearances were recorded in the ER-1 returns. Further, as the duty paid was available as CENVAT credit to the receiving units, no additional benefit accrued to the assessee; hence, suppression could not be alleged. [Paras 7, 8]

The demand for the extended period was also held time-barred.

Final Conclusion: The appeal was allowed and the impugned order was set aside, as the demand failed both on merits and limitation.

Assessable value of final goods using reusable tools and dies - Captive-consumption exemption for separately sold tools and dies - Extended limitation for omission of amortised tool value

Valuation of final goods using reusable tools and dies - Amortisation of tool and die cost - Inclusion in the assessable value of final products of tools and dies manufactured or procured by the appellant and separately sold to customers - HELD THAT: - As the tools and dies were repeatedly used for manufacture, their cost had to be spread over the final goods produced by applying amortisation. The appellant's separate invoicing of such tools and dies did not justify omission of their amortised value from the assessable value of the final products. [Paras 10, 11, 14]

Only the amortised value of the tools and dies, and not their entire sale value, is to be included under Rule 6 of the Valuation Rules; the matter was remanded for recomputation of duty, interest and penalty accordingly.

Captive-consumption exemption for separately sold tools and dies - Availability of captive-consumption exemption for tools and dies separately sold to customers and thereafter used in the factory - HELD THAT: - The exemption applies where goods are not sold but are used in manufacture, so that their value is automatically embedded in the final products. Tools and dies sold under separate invoices to customers before their use in manufacture stood on the same footing as customer-supplied tools and did not qualify for the exemption. [Paras 12]

The captive-consumption exemption under Notification No. 67/95-CE was held unavailable.

Extended limitation for omission of amortised tool value - Invocation of the extended period for non-inclusion of the amortised value of separately sold tools and dies in the assessable value of final products - HELD THAT: - The appellant had included amortised value where tools and dies were supplied by customers and was therefore aware that such value was includible in the final products. Its claimed bona fide belief in omitting the value of separately sold tools and dies was not accepted. [Paras 13]

The extended period was held invokable and the demand was not time-barred.

Final Conclusion: The appeal was allowed by remand for recomputation of duty, interest and penalty on the amortised value of the tools and dies.

CENVAT credit denial - proof of receipt and use of inputs - procedural defects in invoices

Denial of CENVAT credit on inputs despite departmental verification and records establishing their receipt and use in manufacture - HELD THAT: - The departmental verification report recorded that the party-wise ledgers disclosed receipt of the goods and payment of duty on the invoices. The authorities neither called for that report nor sought an explanation from the Range Officer, and no contrary evidence was produced. The purchase and clearance records further corroborated receipt of the inputs; consequently, the finding that vital documents had not been furnished was erroneous.

We rely upon the decision of this Tribunal in the case of Majestic Auto Ltd. [2008 (3) TMI 418 - CESTAT, NEW DELHI] wherein it was held that the credit is not deniable for minor procedural lapses when inputs/capital goods have suffered duty and are being used/are to be used in the process of manufacture. Though in that case the receipt of the goods by the manufacturer was not disputed but in the present case, the appellant already had a verification report in his favour which has casually and wrongly been ignored by the adjudicating authority. [Paras 5]

The denial of CENVAT credit on the ground that receipt of the inputs was unproved was held unsustainable.

CENVAT credit - incomplete address particulars in invoices - Denial of CENVAT credit merely because the invoices contained incomplete address particulars - HELD THAT: - The incomplete address in the invoices was only a procedural lapse. As the duty-paid nature and receipt of the inputs were established through the verification report and the appellant's records, and the invoices themselves were not disputed, the substantive benefit of CENVAT credit could not be denied for that defect. The decision cited by the department was distinguished because, unlike the present case, no documents establishing entitlement had been produced there. [Paras 5]

The appellant was held eligible for CENVAT credit notwithstanding the incomplete address particulars in the invoices.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Release of determined VAT refund - Interest on delayed VAT refund - Release of the VAT refund already determined by the assessing authority, with statutory interest for prolonged departmental delay

HELD THAT: - As the assessing authority had found the petitioner entitled to the refund and the Department had not released it for a prolonged period, the Court found no good reason to grant further time for payment. [Paras 5, 6]

The respondents were directed to calculate and pay the determined refund with interest under section 38(6) of the Telangana Value Added Tax Act, 2005, within four weeks.

Final Conclusion: The writ petition was disposed of with a direction to release the determined VAT refund together with statutory interest within four weeks.

Self-help repossession of hypothecated vehicles - compliance with RBI safeguards - Delay in challenge to unlawful repossession - Compensation for arbitrary deprivation of livelihood

Self-help repossession of hypothecated vehicle - RBI fair-practice safeguards - Validity of the loan agreement's repossession clause and the financier's right to self-help repossession of the hypothecated commercial vehicle - HELD THAT: - A financier may contractually repossess a financed vehicle upon default, but that right is subject to lawful and fair procedure. RBI directions require notice, an opportunity to cure, a fair mode of taking possession and a transparent sale process. Article 11, by determining the borrower's rights without notice, permitting entry wherever the asset may be found, prescribing no procedure for possession or sale, and allowing unilateral waiver of notice, was inconsistent with those safeguards and did not meet the standard of a valid repossession clause. [Paras 16, 21, 24, 25, 31]

Article 11 could not validly support repossession outside the requisite notice and due-process safeguards, and RBI was directed to secure genuine compliance with its recovery guidelines.

Unauthorised repossession of hypothecated vehicle - Forcible recovery practices - Lawfulness of the repossession and consequential sale of the hypothecated commercial vehicle - HELD THAT: - No seven-day notice, which was a condition precedent even under the agreement, was issued before repossession. The unrebutted manner of taking possession by breaking the steering lock during the night, without the borrower's signed possession memorandum, was neither peaceful nor lawful and amounted to the abusive recovery practice prohibited by the RBI framework. [Paras 26, 28]

The repossession was held unauthorised and arbitrary; however, the sale was not set aside as the vehicle had already been sold.

Delay in filing writ petition - Dismissal of the writ petition challenging repossession solely on the ground of delay - HELD THAT: - The finding of delay disregarded the borrower's prompt recourse to criminal remedies in the bona fide belief that the vehicle had been stolen and the continuing traffic challans relating to the vehicle after its asserted sale. In the absence of demonstrated prejudice to the Company, the writ petition could not be rejected for delay alone without examination on merits. [Paras 27]

The High Court's dismissal of the writ petition on the ground of delay was unsustainable.

Compensation for loss of livelihood - Arbitrary deprivation of property - Entitlement to compensation for arbitrary repossession of the vehicle used as the borrower's means of livelihood. - HELD THAT: - The borrower, being dependent upon the commercial vehicle for livelihood, was deprived of that livelihood by an arbitrary and unfair repossession. The Company's action was held to violate Articles 14 and 21 of the Constitution, warranting compensatory and restorative relief. [Paras 29, 30, 32]

The Company was directed to close the loan accounts, refund the sale consideration with interest and pay compensation to the borrower.

Final Conclusion: The appeal was allowed with costs and the High Court order was quashed. While the sale was left undisturbed, restorative and compensatory directions were issued against the Company, and RBI was directed to secure compliance with recovery safeguards.

Arbitrability of contractual GST reimbursement claims - Scope of enquiry at arbitrator-appointment stage

Scope of enquiry at arbitrator-appointment stage - Prima facie existence of arbitration agreement - Scope of enquiry in the appointment of an arbitrator where the arbitration agreement is admitted - HELD THAT: - The enquiry at the stage of appointing an arbitrator is confined to the prima facie existence of an arbitration agreement and does not extend to adjudicating other objections. Since the arbitration agreement was admitted, objections concerning jurisdiction and arbitrability were required to be left for determination by the duly constituted arbitral tribunal. [Paras 19, 20, 22, 31]

Reference could not be declined at the appointment stage, and the respondent's objections were left open for consideration by the arbitral tribunal.

Arbitrability of contractual GST reimbursement claims - Tax dispute and contractual dispute - Arbitrability of a contractual monetary claim for recovery of GST paid to a supplier after reversal of input tax credit - HELD THAT: - Questions concerning levy, assessment, collection or recovery of tax are within the statutory domain of tax authorities. However, a claim between contracting parties as to the ultimate burden of an indirect tax, or recovery of an amount paid to one party as GST under the contract, is a dispute in personam. Its adjudication neither determines liability to the revenue nor binds the revenue or encroaches upon sovereign taxing functions. The claim, founded on the respondent having charged and received GST under its invoices, was therefore prima facie distinguishable from a statutory tax dispute. [Paras 26, 27, 28, 29, 30]

The claim was not manifestly non-arbitrable, and an independent sole arbitrator was appointed while preserving the respondent's jurisdictional and arbitrability objections.

Final Conclusion: A sole arbitrator was appointed to adjudicate the inter se contractual claims, with all merits and objections concerning jurisdiction and arbitrability reserved for determination in arbitral proceedings. The connected interim petition was directed to be considered by the constituted tribunal.