TaxTMI Updates e-Newsletter
Sep 22,2026

Fraudulent GST registrations - registrations obtained through misuse of PAN and Aadhaar particulars - Biometric-based Aadhaar authentication

HELD THAT: - The material before the Court showed that biometric-based Aadhaar authentication was then confined to registrations identified by the system as risky, despite the continuing problem of fraudulent registrations using stolen or frozen identity particulars.

As the respondents could not identify any difficulty in making such authentication mandatory, the Court considered an immediate nationwide direction necessary, while permitting the authorities to place practical implementation objections before it. [Paras 8]

All authorities across the country were directed, for the time being, not to grant any GST registration without biometric-based Aadhaar authentication, subject to the authorities' liberty to raise objections regarding practical difficulties in implementation.

Final Conclusion: The Court issued an interim nationwide direction requiring biometric-based Aadhaar authentication before grant of GST registration and kept the matter for further consideration.

GST show cause notices - clubbing of multiple financial years - Validity of the GST assessment order covering July 2017 to March 2023 by clubbing more than one financial year - HELD THAT: - Following the earlier common order [2025 (7) TMI 1402 - MADRAS HIGH COURT], the Court held that GST proceedings must be initiated with reference to the applicable tax period and that a show cause notice or order cannot be clubbed for more than one financial year. An order so passed is without jurisdiction. [Paras 5]

The impugned assessment and consequential rectification rejection order were quashed, with liberty to initiate separate proceedings for each financial year.

Final Conclusion: The assessment order, having been passed by impermissibly clubbing multiple financial years, was quashed. Separate proceedings may be initiated for each financial year.

E-way bill validity extension - Penalty for expired e-way bill - Imposition of a 200% penalty for transport of goods where the e-way bill had expired shortly after the permissible period for its extension - HELD THAT: - Although detention and penalty may follow transport in contravention of the statutory requirements, the e-way bill rule permits extension in exceptional circumstances and allows a further eight-hour period after expiry for seeking such extension. The vehicle was intercepted approximately 50 minutes after that period. Division Bench decisions had set aside 200% penalties in comparable cases of failure to renew an e-way bill, while recognising that the lapse need not result in complete exoneration.

The orders imposing and affirming the 200% penalty were set aside; the petitioners were directed to pay a token fine, with refund of the balance amount deposited as penalty.

Final Conclusion: The writ petition was disposed of by setting aside the penalty orders, subject to payment of a token fine and refund of the balance penalty deposit.

Effective opportunity of hearing in input tax credit adjudication - Input tax credit eligibility despite GSTR-3B/GSTR-2A mismatch - Intra-State supply of immovable-property renting-incorrect IGST reporting

Effective opportunity of hearing in input tax credit adjudication - Remand in the interests of natural justice - Effective opportunity of hearing in adjudication of the disputed input tax credit demand. - HELD THAT: - Although the appellant had not appeared despite the opportunities before the first appellate authority, the circumstances placed on record showed that it had not had a proper opportunity to present its case before the lower authorities. In the interests of natural justice, it was necessary to permit the appellant to place its case before the adjudicating authority. [Paras 7]

The grounds for remand were accepted; the impugned orders were set aside and fresh adjudication after affording an effective hearing was directed.

Input tax credit eligibility despite GSTR-3B/GSTR-2A mismatch - Verification of supplier certificates and reconciliation - Reverse-charge input tax credit verification - Eligibility of input tax credit claimed in GSTR-3B but not fully reflected in GSTR-2A, including credit supported by subsequently issued supplier certificates. - HELD THAT: - The claimant continues to bear the statutory burden of establishing eligibility of input tax credit, which cannot be allowed merely on the existence of invoices or on attribution of the mismatch to suppliers. Equally, the entire GSTR-3B/GSTR-2A difference cannot be treated as ineligible without category-wise and invoice-wise examination of the reconciliation and supporting evidence. Supplier certificates relating to the disputed financial year were admissible for consideration under the applicable circular, notwithstanding their issuance after the first appellate order, but required verification. Reverse-charge credit, incorrect tax-head reporting and alleged B2B-to-B2C reporting errors also required examination independently from the GSTR-2A mismatch. [Paras 7, 8, 9, 10]

The adjudicating authority was directed to consider the certificates and undertake verification of the reconciliation and supporting records before determining the eligibility of the disputed credit.

Intra-State supply of immovable-property renting-incorrect IGST reporting - Availment of CGST and SGST input tax credit where the supplier had incorrectly reported IGST on renting of immovable property situated in the same State. - HELD THAT: - The place of supply of renting of immovable property is the location of the property. As the supplier and the property were situated in the same State, the supply was intra-State and attracted CGST and SGST. The supplier's incorrect reporting of tax under the IGST head did not render the appellant's CGST and SGST credit ineligible, particularly when tax had been paid and no revenue loss arose. [Paras 8, 9]

The appellant's availment of CGST and SGST credit in respect of the concerned intra-State supply was held lawful.

Final Conclusion: The appeal was allowed, the impugned orders were set aside, and the disputed input tax credit claim was remitted for verification after affording the appellant an opportunity of hearing, subject to the finding that the credit relating to the intra-State supply was lawful.

Vested right of appeal - Prospective application of pre-deposit requirement in penalty-only appeals - Applicability of the post-amendment pre-deposit requirement to a penalty-only appeal arising from a pre-amendment show-cause notice - HELD THAT: - The right of appeal was held to be a substantive right vesting when the lis is instituted. A subsequent amendment imposing a fresh pre-deposit burden cannot apply to pending proceedings absent a clear legislative intention to that effect.

Since the show-cause notice commenced the proceedings before the proviso became operative, the statutory pre-deposit introduced for penalty-only appeals could not be imposed on the appeal arising therefrom. [Paras 14, 15, 17]

No pre-deposit was required; the Registry's objection was set aside for admission of the appeal.

Final Conclusion: The Registry's objection was set aside and the penalty-only appeal was admitted without pre-deposit, with all jurisdictional and merits contentions left open for final hearing.

Statutory limit on condonation of delay in GST registration appeals - Maintainability of departmental appeal after implementation of impugned order

Statutory limit on condonation of delay by appellate authority - Jurisdiction of the First Appellate Authority to condone delay in appeals against cancellation of GST registration beyond the outer limit prescribed under Section 107(4) of the Act. - HELD THAT: - The extraordinary and equitable jurisdiction exercised by a High Court under Article 226 cannot enlarge the jurisdiction of a statutory appellate authority. Where the statute fixes both the period for appeal and the maximum period for condonation, the appellate authority must remain within that limit and cannot invoke hardship, equity, or directions issued by a constitutional court in fact-specific proceedings to assume an unvested power. [Paras 18, 19, 26]

The First Appellate Authority lacked jurisdiction to condone the delay beyond the statutory outer limit, and the condonation orders were held legally unsustainable.

Infructuous departmental appeal after restoration of GST registration - Maintainability of the Department's appeals after it implemented the impugned appellate orders by restoring the cancelled registrations. - HELD THAT: - Having acted upon the impugned orders and restored the registrations, thereby altering the respondents' legal and commercial position, the Department could not seek annulment of those orders without addressing the consequences of its own implementation. No effective or workable relief could be granted in the appeals, which had become academic and futile. [Paras 20, 21, 22, 26]

The Department's appeals were held infructuous and were disposed of as not maintainable.

Final Conclusion: Although the First Appellate Authority was held to have exceeded its statutory jurisdiction in condoning the delay, the Department's implementation of the impugned orders by restoring the registrations rendered its appeals infructuous. The appeals were accordingly disposed of as not maintainable.

Outsourced hospital food supply and composite healthcare services - Failure to establish fraud or suppression - Cum-tax valuation of untaxed food supplies

Composite supply of healthcare services - Outsourced hospital food supply - Taxability of food supplied by an outsourced caterer to a hospital for consumption by in-patients, claimed as part of composite healthcare services. - HELD THAT: - A composite supply requires two or more taxable supplies that are naturally bundled and supplied together, with one being the principal supply. The caterer made only one contractual supply, namely food, to the hospital. The Board clarification treats food supplied by a healthcare provider to its in-patients on medical advice as ancillary to healthcare services; it does not extend to an independent outsourced food supplier. Clarifications issued by the Principal Accountant General or the hospital management could not alter that position. [Paras 9, 10, 11]

The food supply was not a composite supply in the caterer's hands and was liable to tax; the order of the First Appellate Authority was set aside.

Failure to establish fraud or suppression - Deeming of tax-demand notice - Validity of invoking fraud- or suppression-based tax-demand proceedings for untaxed food supplies to hospital in-patients. - HELD THAT: - The caterer's reliance on the Board circular, though legally erroneous, did not establish deliberate non-payment, fraud, wilful misstatement or suppression with intent to evade tax. No material substantiated the ingredients required for such proceedings, and the dropping of the proposed penalty for the related default reinforced the absence of deliberate evasion. The notice was therefore liable to be treated as one issued under the ordinary tax-demand provision. [Paras 12]

The invocation of the fraud- or suppression-based provision was held unsustainable, and the notice was deemed to have been issued under Section 73(1), with a direction to the proper officer to redetermine tax, interest and penalty accordingly.

Cum-tax valuation - Tax-inclusive invoice value - Availability of cum-tax valuation for food supplies invoiced without separately collecting GST. - HELD THAT: - As the invoices did not contain a separately identifiable tax component and there was no allegation that tax had been collected in addition to the invoiced value, the stated consideration had to be treated as inclusive of tax. The statutory benefit of tax-inclusive valuation could not be denied merely because it had not been specifically claimed, since the authorities must determine and collect only the tax legally payable. [Paras 13, 14, 15]

The proper officer was directed to recompute the differential tax by applying the cum-tax formula under Rule 35, after verifying the relevant invoices and confirming that no tax had been separately collected.

Final Conclusion: The departmental appeal was allowed subject to modification: the food supply was held taxable, but the demand was directed to be redetermined as an ordinary tax demand and on a cum-tax basis.

Inverted-duty refund on processed fabrics - credit-note adjustment to turnover - Inverted-duty refund on processed fabrics - scope of identical input-output supplies restriction - Consequential recomputation of refund - prohibition on appellate remand

Credit notes - exclusion from turnover for inverted-duty refund - Treatment of credit notes issued in respect of returned or rejected supplies while computing turnover for refund of accumulated input tax credit on processed fabrics - HELD THAT: - A credit note issued when supplies are returned or rejected represents a supply which cannot form part of the relevant turnover. Its value is therefore deductible from the outward taxable supply turnover for computation of the inverted-duty refund. [Paras 7]

The appellate finding permitting deduction of the credit-note value from turnover was upheld.

Identical input-output supplies restriction - scope of circular clarification - Eligibility for accumulated input tax credit refund where higher-taxed chemicals and dyes are used in processing fabrics supplied at a lower rate - HELD THAT: - The clarification concerning identical input and output supplies is confined to cases in which accumulation results from a reduction in tax rate on the same goods at different points of time. As there was no reduction in the rate applicable to the processed fabrics, the clarification did not govern the claim arising from higher-taxed processing inputs. [Paras 7]

The Revenue's objection founded on the circular was rejected and the refund eligibility was sustained.

Consequential recomputation - distinction from prohibited remand - Whether the direction to re-compute the refund after deciding the substantive refund claim amounted to an impermissible remand by the appellate authority? - HELD THAT: - After the appellate authority had decided the refund eligibility and the governing parameters, only a ministerial computation conforming to those findings remained. The direction neither left the claim for fresh adjudication nor authorised reopening of the merits, and consequently could not be equated with a prohibited remand. [Paras 7]

The direction for consequential re-quantification of the refund was upheld as not amounting to a remand.

Final Conclusion: The Revenue's appeal was dismissed. The appellate order allowing the refund, subject to consequential re-computation in accordance with its findings, was affirmed.

Inverted duty refund for processed fabrics using higher-taxed inputs - Consequential recomputation of refund by appellate authority

Inverted duty refund for processed fabrics using higher-taxed inputs - Inapplicability of Circular No. 135/05/2020-GST to supplies without GST-rate reduction - Eligibility for refund of accumulated input tax credit under inverted duty structure where fabrics are processed on job-work basis using higher-taxed chemicals, dyes and consumables, while the output supply continues at an unchanged GST rate - HELD THAT: - Paragraph 3 of the Circular concerns accumulation of credit caused by reduction of GST rate on the same goods, which therefore attract different tax rates at different points of time. It does not apply where processed fabrics continue to bear the same GST rate and credit accumulates on chemicals, dyes and consumables 0-Pused in processing. The Tribunal found support in the High Court authority quoted in the order M/s Vindhya Spinning Mills Private Limited [2026 (7) TMI 1337 - MADRAS HIGH COURT]which recognised refund eligibility where higher-taxed materials are used though the principal goods are taxed at the same rate. [Paras 8]

The Circular did not bar the respondent's claim for accumulated input tax credit refund under the inverted duty structure.

Consequential recomputation of refund by appellate authority - Prohibition on remand u/s 107(11) of the CGST Act - Character of the appellate direction requiring recomputation of the refund after the substantive refund eligibility had been determined - HELD THAT: - A direction to carry out consequential arithmetical recomputation after deciding the substantive refund issue is a ministerial implementation of the appellate findings. As the appellate authority neither left the refund claim for fresh adjudication nor permitted reconsideration of the merits by the original authority, the direction could not be treated as a prohibited remand. [Paras 8]

The direction for recalculation of the refund in conformity with the appellate findings was upheld as not amounting to remand.

Final Conclusion: The Revenue appeals were dismissed. The appellate orders allowing the refund claims, with consequential recomputation, were sustained.

Revocation of cancellation of GST registration - Payment of interest, late fee and penalty for return default

Revocation of GST registration cancelled for non-furnishing of returns where tax had been paid but interest, late fee and penalty remained unpaid - HELD THAT: - The proviso to Rule 23(1) requires, in a case of cancellation for failure to furnish returns, not merely furnishing of returns and payment of tax but also payment of the interest, penalty and late fee payable in respect of those returns. Verification confined to filing of returns and payment of tax did not address those substantive liabilities. Though the direction for verification was read as contemplating collection of the amounts indicated in Rule 23, the failure expressly to apply the proviso warranted modification of the appellate order. [Paras 10, 11, 12, 15, 16]

The impugned order was modified to ensure recovery of interest and late fee under the applicable provisions and to impose penalty under Rule 23.

Final Conclusion: The Department's appeal was disposed of by modifying the order revoking cancellation so that the unpaid ancillary statutory liabilities were addressed, with penalty imposed under Rule 23.

Detention penalty for diversion of goods without specified statutory contravention - Natural justice in GST detention proceedings - Appellate non-application of mind to natural justice objections

Detention penalty for diversion of goods without specified statutory contravention - Sustainability of penalty for alleged unloading of iron and steel goods at an undeclared destination, without a specific charge of contravention of the Act or Rules - HELD THAT: - Liability under the detention provision requires a pleaded and established contravention of the Act or Rules. The show-cause notice did not identify any specific statutory or rule violation, while the original and appellate orders neither specified the alleged defective documents nor the provision contravened.

Applying the principle in M/S Brindavan Beverages (P) Ltd. And Ors, [2007 (6) TMI 4 - SUPREME COURT] the Tribunal held that a vague notice disables the noticee from effectively meeting the case against it. [Paras 4, 6, 7]

The penalty proceedings under section 129 were unsustainable for want of a specific charge and proof of statutory contravention.

Natural justice in GST detention proceedings - Validity of detention proceedings founded on inculpatory statements not supplied to the appellant and concluded without affording the promised personal hearing and opportunity of cross-examination - HELD THAT: - There was no evidence that copies of the statements relied upon against the appellant had been supplied, and the contention of non-supply remained unrebutted. Further, although a personal hearing had been offered in the show-cause notice, the original order was made before that hearing and contained no recorded submissions. The proceedings consequently violated the principles of natural justice. [Paras 5, 6]

The original order was vitiated by denial of natural justice and was liable to be set aside.

Appellate non-application of mind to natural justice objections - Validity of the appellate order dismissing the challenge to the detention penalty without addressing the objections concerning denial of hearing and undisclosed statements - HELD THAT: - The appellate authority brushed aside material objections despite the finding that no hearing had preceded the original order. It also misstated the identity of the person whose statement was relied upon, and its observations on route and subsequent invoicing did not identify any contravention of the Act or Rules. The appellate order was therefore cryptic and disclosed non-application of mind. [Paras 7]

The appellate order suffered from serious non-application of mind and was set aside.

Final Conclusion: The appeal was allowed and the appellate order was set aside with consequential relief, as the detention penalty proceedings lacked a specific statutory charge and were vitiated by breaches of natural justice and appellate non-application of mind.

Statutory authority not constituting local authority under GST - Concessional GST rate for works contract services supplied to Kerala Water Authority - Interest on differential GST paid through electronic credit ledger

Statutory authority not constituting local authority under GST - Concessional GST rate for works contract services supplied to Kerala Water Authority - Eligibility of works contract services supplied to Kerala Water Authority for the concessional GST rate after 1-1-2022 - HELD THAT: - The statutory definition of local authority is confined to the bodies specifically enumerated therein. A statutory authority does not become a local authority for GST purposes merely because the State enactment constituting it deems it to be a local authority. Kerala Water Authority, being a statutory body not falling within any enumerated category, could not claim the concessional rate available for works contract services supplied to a local authority. [Paras 12, 13, 14, 15, 20]

Kerala Water Authority was held not to be a local authority under the CGST/KGST Act, and the works contract services supplied to it were held taxable at 18% with effect from 1-1-2022.

Interest on differential GST paid through electronic credit ledger - Liability to interest on differential GST discharged partly through the electronic credit ledger and partly through the electronic cash ledger - HELD THAT: - While liability to interest follows delayed payment of differential tax, the Tribunal held that interest was not payable on the portion discharged through the electronic credit ledger. Interest was confined to the portion of differential tax paid through the electronic cash ledger. [Paras 18, 19, 20]

The interest demand was sustained only in respect of tax paid through the electronic cash ledger and was dropped to the extent of tax paid through the electronic credit ledger.

Final Conclusion: The appeal was disposed of by affirming the higher GST rate on works contract services supplied to Kerala Water Authority after 1-1-2022, while restricting interest to the differential tax paid through the electronic cash ledger.

Refund of excess IGST paid on export of cashew kernels - Clerical error in GSTR-3B reporting - Retention of tax without authority of law

Entitlement to refund of IGST paid twice on export of cashew kernels after erroneous reporting of zero-rated supplies in GSTR-3B - HELD THAT: - The export details and IGST liability had been correctly reflected in GSTR-1, but the export turnover and tax were wrongly reported under the column applicable to supplies other than zero-rated supplies in GSTR-3B. As the mismatch prevented automated customs refund, the appellant again paid the IGST in the corrected return and received refund of that second payment.

The original payment consequently remained excess payment. The authorities failed to distinguish between the amount refunded through the automated system and the original amount claimed as refund. A clerical error apparent from the returns and explained through reconciliation was not a substantive infraction warranting denial of refund; retention of tax deposited twice would be without authority of law.

We find that our view is also supported by the Hon’ble Orissa High Court in the judgement of Rajendra Narayan Mohanty [2026 (2) TMI 1101 - ORISSA HIGH COURT] wherein held that refund claimed in respect of tax paid erroneously or under mistaken notion cannot be denied solely on the ground of limitation stipulated in Section 54 of the GST Act.

Also see M/S. MERCK LIFE SCIENCE PRIVATE LIMITED [2025 (11) TMI 1419 - KARNATAKA HIGH COURT] [Paras 6, 7, 8, 9, 12]

The appellant was held entitled to refund of the excess IGST, and the denial based on clerical mistakes or procedural infractions was set aside.

Final Conclusion: The impugned appellate order was quashed and the appeals were allowed with consequential relief, granting refund of the excess IGST paid on the export supplies.

Consignment value in e-way bill for return of job-worked goods - Show-cause notice - factual foundation and new grounds

Show-cause notice-factual foundation - New grounds beyond show-cause notice - Speaking order and natural justice - Validity of detention and penalty proceedings for return of job-worked goods where the allegations regarding transport documents were contradicted by the department's own records and subsequent orders relied on grounds outside the show-cause notice - HELD THAT: - The departmental records established that the goods were accompanied by a tax-paid job-work invoice, the original delivery challan and an e-way bill. The foundational allegations in the show-cause notice that the requisite documents and e-way bill were absent were thus factually incorrect. The detention order impermissibly altered the allegation from non-production of an e-way bill to invalidity of the e-way bill, without such charge in the show-cause notice or reasons for that conclusion. The appellate order, though recording the return e-way bill, relied on an unalleged requirement concerning a different movement and incorrectly held that no delivery challan accompanied the goods. Orders cannot be sustained on grounds extraneous to the show-cause notice; the absence of reasons for treating the e-way bill as invalid also violated natural justice. [Paras 5, 6, 7]

The show-cause notice, detention order and appellate order were held unsustainable and were set aside.

Consignment value in e-way bill for return of job-worked goods - Inclusion of the principal's goods value in the consignment value declared in an e-way bill when goods are returned by a job worker after completion of job work - HELD THAT: - On a conjoint reading of section 15 and Explanation 2 to Rule 138, the supply on return of goods by the job worker is the job-work service. Its transaction value comprises the job-work charges and applicable taxes; the value of the principal's original goods is not includable in the consignment value. As the value of the taxable job-work supply was below the prescribed threshold, generation of an e-way bill was not mandatory. Consequently, proceedings founded on an alleged defective or absent e-way bill could not be maintained. [Paras 8, 9]

The value of goods belonging to the principal and subjected to job work is not includable in the e-way bill consignment value on their return by the job worker.

Final Conclusion: The appeal was allowed and the appellate order was set aside with consequential relief, the penalty proceedings being unsustainable on both the factual record and the applicable rule governing consignment value.

Mandatory seven-day limit for detention penalty order

Mandatory seven-day limit for detention penalty order - Validity of the detention-penalty order for the intercepted sponge-iron consignment passed beyond the statutory period after notice. - HELD THAT: - The requirement under section 129(3) to pass the penalty order within seven days of service of notice is mandatory. As the order was passed 28 days after issuance of the notice, the statutory time limit was blatantly breached, vitiating the entire proceedings. [Paras 5, 6, 8, 10, 11]

The original penalty order was void ab initio and a nullity; consequently, the appellate order upholding it was set aside.

Final Conclusion: The appeal was allowed and the appellate order was set aside with consequential relief, since the detention-penalty order passed beyond the mandatory statutory period was void ab initio.

Export quota premium - deduction u/s 80HHC - CBDT circulars-binding effect on courts

Deduction u/s 80HHC in respect of premium realised on transfer of export quota, claimed by treating it as an export incentive under the CBDT Office Memorandum - HELD THAT: - Administrative circulars bind departmental authorities but neither bind courts nor prevail over statutory text or judicial interpretation. The Office Memorandum's equation of quota-sale premium with receipts specified in sections 28(iiia) to 28(iiic) would create an impermissible legal fiction, since the premium from transfer of quota did not possess the requisite characteristics of those export-incentive receipts, including receipt of foreign exchange. It could therefore not be treated as eligible income for the claimed deduction.

In Nagesh Knitwears P. Ltd. [2012 (6) TMI 65 - DELHI HIGH COURT] as he then was, speaking for the Bench, explained that the incidence of premium cannot be equated with the incomes covered by Sections 28(iiia) to (iiie) of the Act, 1961. The reason is legally tenable and hence does not warrant further examination.

Lastly, if a Court were compelled to treat an administrative CBDT Circular as binding on itself, it would undermine the entire constitutional and statutory framework governing income tax liability, including the standard of “income derived,” the strict construction of legitimate deductions, and the classification of permissible expenses.[Paras 15, 16, 17, 18, 19]

The claim for deduction under section 80HHC in respect of export quota premium was rejected and the appeals were dismissed.

Final Conclusion: The Court upheld the denial of the claimed deduction for export quota premium and dismissed both appeals.

Revisional jurisdiction over assessment of export quota sale premium - Exercise of revisional jurisdiction over an assessment allowing deduction on premium from sale of export quota by treating it as business profits under the CBDT Office Memorandum

HELD THAT: - Revisional power is exercisable only where the assessment order is both erroneous and prejudicial to the interests of the Revenue; a permissible view cannot be revised merely because the Commissioner disagrees with it, unless that view is unsustainable in law.

The High Court [2012 (6) TMI 65 - DELHI HIGH COURT] had considered the statutory treatment of export quota premium, the effect of the CBDT Office Memorandum and the Tribunal's view before upholding revision. Its conclusion that the Commissioner had rightly exercised revisional jurisdiction was held to be available and tenable. [Paras 12, 14, 15]

The Commissioner's revisional order was sustained and no remand or interference with the impugned judgment was warranted.

Final Conclusion: The Commissioner's revisional order was upheld and the civil appeals were dismissed.

Deduction claimed u/s 80P(2)(d) - petitioner is not a Co-operative Bank but a Co-operative Society whose license was cancelled in 2004 and claimed deduction u/s 80P(2)(d) - reopening of assessment -

High Court [2025 (12) TMI 299 - GUJARAT HIGH COURT] upheld the petitioner's entitlement to deduction u/s 80P(2)(d) as a cooperative society and quashed the reopening notices and related orders issued by the Department - HELD THAT:- We see no good ground to interfere with the impugned Order passed by the High Court.

The Special Leave Petition is, accordingly, dismissed.

Sufficient cause for condonation of delay - Revenue attributes the 341-day delay to a “peculiar procedural trajectory” - Legal status of a TPO report in an “abated” proceeding

HELD THAT:- Having heard the learned counsel appearing for the petitioner and having gone through the materials on record, we see no good ground to interfere with the impugned order passed by the High Court.[2026 (4) TMI 1920 - CALCUTTA HIGH COURT]

The Special Leave Petition is, accordingly, dismissed.

Cash credits - book-entry conversion of compulsorily convertible debentures into compulsorily convertible preference shares - Penalty for unexplained share premium - Penalty for non-reporting of income-effect of deletion of underlying additions

Cash credits - book-entry conversion of compulsorily convertible debentures into compulsorily convertible preference shares - Applicability of the cash-credit provision to share premium arising solely on conversion of compulsorily convertible debentures into compulsorily convertible preference shares - HELD THAT: - The conversion was effected only through a book entry and did not represent receipt of any sum by the assessee during the previous year relevant to the assessment year. A sum credited in the books for purposes of the cash-credit provision refers to an amount received during the relevant previous year; consequently, the share premium generated on conversion could not be assessed as an unexplained cash credit for that year. [Paras 18]

The addition on account of share premium was unsustainable, and no substantial question of law arose.

Penalty for unexplained share premium - HELD THAT: - The penalty was premised solely on the addition for alleged unexplained share premium. As that addition had been set aside, the basis for the penalty no longer survived. [Paras 24]

The penalty order could not survive, and no substantial question of law arose.

Levy of penalty for non-reporting of income where the principal additions were set aside and the remaining additions were remanded - HELD THAT: - The principal additions relating to share premium and advertisement and business-promotion expenditure had been set aside; therefore, penalty attributable to those additions did not arise. In respect of additions remanded for fresh consideration, the question of penalty would arise only if those additions were reiterated. [Paras 25, 26, 27]

No substantial question of law arose in relation to the penalty.

Final Conclusion: The Revenue's appeals were dismissed, as no substantial question of law arose on the cash-credit addition or the consequential penalties.

Undisclosed income penalty u/s 271AAB - Surrender in search proceedings - non-automatic penalty - Seized diary notings of advances - outflow of funds

Levy of penalty u/s 271AAB on the amount surrendered with reference to advances noted in a seized diary - HELD THAT: - Penalty under section 271AAB is leviable only upon income satisfying the exhaustive statutory definition of undisclosed income; surrender in a statement recorded during search does not, by itself, establish that character. The penal provision requires strict construction, and the AO must apply mind and establish that the amount represents undisclosed income found in, or as a result of, the search.

The diary contained vague notings of advances, which represented an outflow or application of funds rather than an inflow of undisclosed income; no matching undisclosed asset or source was established. Deeming provisions concerning unexplained sums could not be automatically imported into the self-contained definition, and the Assessing Officer had not recorded the requisite finding. Case followed K. KRISHNAMURTHY VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX [2025 (2) TMI 583 - SUPREME COURT] [Paras 17, 18, 19, 20, 21]

The amount did not constitute undisclosed income under section 271AAB, and deletion of the penalty levied thereon was upheld.

Final Conclusion: The Revenue's appeal was dismissed, affirming deletion of the penalty on the surrendered amount attributed to diary notings of advances.

Reassessment notice issued after three years - approval by specified authority - sanctioned by the Principal Commissioner instead of the authority specified under section 151(ii) - HELD THAT: - The competent approving authority is determined by the date of issue of the reassessment notice and not by the date on which approval is obtained. Since the notices were issued after the three-year period, approval of the Principal Commissioner was not a valid sanction; fresh approval of the authority prescribed for notices issued after that period was required. [Paras 14, 15]

The reassessment notices were quashed as invalid, rendering the consequential reassessment orders unsustainable; the remaining grounds were infructuous.

Final Conclusion: All five appeals were allowed after the reassessment notices and consequential reassessment orders were held invalid for want of approval from the competent specified authority.

Charitable exemption u/s 11 - belated furnishing of Form 10B audit report - Form 10B was furnished after the prescribed time but was available before processing of the return under section 143(1) - HELD THAT: - Though the prescribed audit report was furnished belatedly, it was available with the CPC before processing of the return. Following the coordinate Bench decision Shree Gajanan Maharaj Shegaon Mandir Vishwasth Manda [2026 (9) TMI 1370 - ITAT PUNE] the Tribunal held that the delay in furnishing Form 10B did not justify denial of the claimed charitable exemption. [Paras 6, 7]

The assessee's claim for exemption under section 11 was allowed.

Final Conclusion: The appeal was allowed, with the assessee held entitled to exemption under section 11.

Post-search reassessment jurisdiction for preceding assessment years - Mandatory notice u/s 148 - Administrative scrutiny guidelines cannot confer statutory jurisdiction

Validity of assessment for a year preceding a post-01.04.2021 search, initiated u/s 143(2) without invoking sections 147 and 148 - HELD THAT: - For searches initiated after 31.03.2021, the erstwhile search-assessment regime under section 153A stood confined to earlier searches, while Explanation 2(i) to section 148 treated a post-01.04.2021 search as deemed information suggesting escapement of income. The assessment of a preceding assessment year therefore had to be initiated through the reassessment framework under sections 147 and 148. Dispensation of the preliminary procedure under section 148A in specified search cases did not dispense with the jurisdictional notice under section 148. A notice under section 143(2), issued after compulsory scrutiny selection under administrative guidelines, could not substitute the statutory mode for assuming jurisdiction.

Further, approval at the stage of passing the order could not cure the absence of jurisdiction at inception, and participation in scrutiny proceedings could not supply such jurisdiction. [Paras 21, 22, 23, 24, 25]

The assessment was quashed as unsustainable for want of notice under section 148; the surviving additions were rendered academic and left open.

Final Conclusion: The appeal was allowed and the assessment for Assessment Year 2022-23 was quashed for want of valid assumption of reassessment jurisdiction. The merits of the additions were left open.

Unexplained cash credit u/s 68 - unsecured loans repaid before assessment - expenditure relating to the impugned unsecured loans disallowed

HELD THAT: - The Tribunal found that the unsecured loans had been repaid, with interest wherever applicable, as borne out by the material furnished by the assessee.

We find the Hon’ble Gujarat High Court in the case of PCIT vs. Ambe Tradecorp (P.) Ltd. [2022 (7) TMI 902 - GUJARAT HIGH COURT] has held that where the assessee took loan from two parties and the assessee had furnished the requisite material showing identity of loan givers and that the assessee was not beneficiary as loan was repaid in subsequent year, no addition u/s 68 could be made on account of such loan.

Also in Dazzling Construction (P.) Ltd. [2025 (3) TMI 1380 - ITAT DELHI] held where the assessee received loan from a company, since trail for obtaining of loan and repayment thereof were proved and lender had duly filed its return of income encompassing transactions carried with the assessee, additions made by Assessing Officer towards unexplained credit under section 65 in case of the assessee were wholly unjustified.

Applying the authorities relied upon, including the earlier decision in the assessee's own case [2024 (12) TMI 1636 - ITAT NAGPUR], it held that established repayment before completion of assessment could not be disregarded in treating the loan credits as unexplained; the interest disallowance founded on those credits could consequently not survive. [Paras 7, 8, 9, 10, 11]

Deletion of the addition for unsecured loans and the consequential interest disallowance was upheld, and the Revenue's grounds were dismissed.

Final Conclusion: The Revenue's appeal was dismissed, affirming deletion of the addition under section 68 and the consequential interest disallowance.

Validity of reassessment notice founded on incorrect Form 26AS receipts - Validity of reassessment proceedings initiated on the basis of receipts incorrectly recorded from Form 26AS

HELD THAT: - The recorded reasons proceeded on a receipt figure not borne out by Form 26AS. Since the foundational fact for forming the belief of escapement was incorrect and non-existent, the assumption of jurisdiction lacked a live factual basis and was unsustainable in law. [Paras 7]

The reassessment proceedings, the notice issued under section 148, and the consequential reassessment order were held void ab initio.

Final Conclusion: The appeal was allowed on the legal ground that the reopening was founded on incorrect and non-existent facts. The remaining grounds on merits were not adjudicated.

Penalty notice u/s 271(1)(c) - non-specification of charge - non identifying the precise charge for which penalty was initiated

HELD THAT: - The notices invoked concealment of particulars of income or furnishing of inaccurate particulars without identifying the specific limb on which penalty was proposed. The failure to specify the charge in the notice under section 271(1)(c) read with section 274 vitiated the penalty proceedings.

As decided in M/S AKC RETAILERS PRIVATE LIMITED [2026 (5) TMI 1267 - ITAT DELHI] once the Assessing Officer had nowhere specified the corresponding limb in his section 271(1)(c) penalty show-cause notice forming part of the case records, his failure to this effect indeed vitiates the penalty proceedings itself. [Paras 6]

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

Final Conclusion: The penalty was annulled because the notices did not specify the charge under section 271(1)(c), and the appeal was allowed.

Unexplained Sundry creditors - proof of identity, creditworthiness and genuineness - Cash deposits alleged as unexplained - non-consideration of supporting evidence - Alleged accommodation entries - absence of supporting material

Unverifiable Sundry creditors - proof of identity, creditworthiness and genuineness - HELD THAT: - The documentary material furnished established that the transactions were genuine and were with identified parties having sufficient creditworthiness. The lower authorities had not reached their conclusion upon a true understanding and appreciation of those facts. [Paras 9]

The addition for unverified sundry creditors was deleted.

Cash deposits alleged as unexplained - non-consideration of supporting evidence - HELD THAT: - For AY 2016-17, the material showed that the requested information had been provided, whereas the addition rested on unclear observations and conjecture without proper consideration of the evidence. For AY 2017-18, the finding of non-compliance was contradicted by the assessment order's own acknowledgment that documents had been submitted; the lower authorities had consequently failed to correctly appreciate the material on record. [Paras 13, 24, 25]

The additions for alleged unexplained cash deposits for both assessment years were deleted.

Alleged accommodation entries - absence of supporting material - Sustainability of addition for transactions with two counterparties treated as accommodation entries in the absence of material connecting the assessee to the alleged entries - HELD THAT: - The assessment order did not identify the assessee's role in giving or taking accommodation entries and made no reference to any seized document, statement, or other material supporting the allegation. The addition was therefore made in a cryptic, summary and ad hoc manner. [Paras 17]

The addition for alleged accommodation-entry transactions was deleted.

Final Conclusion: The appeal for AY 2016-17 was partly allowed, and the appeal for AY 2017-18 was allowed.

Agricultural income - genuineness of cultivation receipts - Addition of gross agricultural receipts without allowance of cultivation expenditure - Addition of gross receipts declared from extensive cultivation on the ground that the agricultural income was unsubstantiated - HELD THAT: - The material produced established extensive agricultural operations through details of the land cultivated, crops and plantations, irrigation facilities, labour, horticultural borrowings and photographs. The net agricultural income, after cultivation expenditure, was not unreasonable having regard to the scale and nature of the agricultural activity; nor was there any cash deposit or unexplained investment suggesting another source of income. The lower authorities were also not justified in treating the entire gross agricultural receipts as income without allowing the disclosed cultivation expenditure. [Paras 14, 15, 16]

The addition of the gross agricultural receipts was deleted and the appeal was allowed.

Final Conclusion: The Tribunal allowed the appeal and directed deletion of the addition made by treating the agricultural receipts as unsubstantiated income.

Addition for unrecorded "on-money" receipts - Third-party digital data and documents as evidence

HELD THAT: - The Tribunal found that the impugned addition was founded on material recovered in an independent search of the property broker, who was an independent person.

Agreeing with the view taken in the earlier co-ordinate Bench decision M/s Homelife Buildcon Pvt. Ltd. [2025 (7) TMI 1231 - ITAT CHANDIGARH] on third-party evidence, it held that no reliance could be placed on such material to sustain the alleged unrecorded sale receipts. [Paras 10, 13]

The sustained addition for alleged on-money receipts was deleted.

Final Conclusion: The appeal was allowed and the addition for alleged on-money on sale of the flats was deleted.

Finality of benami adjudication - Tax prosecution after settlement proceedings

Finality of benami adjudication - Continuation of tax-evasion prosecution on the premise that the property transactions were benami after an unchallenged benami adjudication had found the recorded owners to be the actual owners - HELD THAT: - The Court found the allegation that the person whose identity was allegedly used was fictitious to be seriously doubtful on the material produced. More importantly, the competent authority's determination that the transactions were not benami had attained finality. The Department could not continue the prosecution on a directly contradictory factual premise without challenging that determination. [Paras 8, 9]

The benami foundation of the prosecution could not be sustained and constituted a ground for quashing the proceedings.

Tax prosecution after settlement proceedings - Conclusive settlement findings - Continuation of prosecution for alleged wilful tax evasion and false statements after the Interim Board for Settlement recorded full disclosure and cooperation, granted immunity from penalty, and declined immunity from prosecution solely because the complaint had preceded the settlement proceedings - HELD THAT: - The settlement order recorded that the petitioners had cooperated, made full disclosure of income and explained its derivation; the refusal of prosecution immunity was not founded on a finding of fraud or wilful concealment.

The Hon'ble Supreme Court in Vijay Krishnaswami @ Krishnaswami Vijayakumar [2025 (9) TMI 106 - SUPREME COURT] fully supports the case of the petitioners wherein it has been held that once the Settlement Commission/Board has conclusively examined the matter and recorded findings regarding disclosure and cooperation, continuation of criminal proceedings would amount to abuse of the process of law.

Applying the principle that conclusive settlement findings may render a prosecution an abuse of process where no finding of wilful tax evasion survives, the Court held that the respondent authorities' precedents concerning parallel tax and criminal proceedings did not govern a case in which the foundational allegations had already been examined by competent authorities. [Paras 10, 11, 12, 13]

Continuation of the prosecution was held to be a misuse of process; the complaint, summoning order and consequential proceedings were quashed qua the petitioners.

Final Conclusion: The petition was allowed and the complaint, summoning order and consequential proceedings were quashed qua the petitioners, as their continuation would amount to misuse of process.

Recovery of accrued trade remedial duty after expiry of levy notification - Advance Authorisation exemption from countervailing and anti-dumping duty - Classification of wind turbine parts as castings or non-casting components - Extended limitation for customs duty demand

Post-expiry recovery of trade remedial duties - Recovery of countervailing and anti-dumping duties allegedly short levied on imports made while the levy notifications were in force, where the show cause notice was issued after their expiry - HELD THAT: - The taxable event was importation, and the duty liability, if otherwise attracted, accrued when the relevant levy notifications were operative. Expiry by efflux of time is distinct from repeal, rescission or omission and does not retrospectively obliterate the notification or liabilities incurred during its currency. The recovery mechanism under the Customs Act remained available for duties not levied or short levied, and the applicable Customs Act provisions stood attracted to anti-dumping duty. [Paras 18, 21, 22]

Expiry of the levy notifications did not bar initiation or continuation of recovery proceedings for duties allegedly short levied on imports made during their currency.

Advance Authorisation exemption from countervailing and anti-dumping duty - Exemption from countervailing and anti-dumping duty on imports made under valid Advance Authorisations after fulfilment of export obligations - HELD THAT: - The exemption notification covered countervailing and anti-dumping duty, subject to fulfilment of the stipulated export obligation. Export Obligation Discharge Certificates, redemption certificates and discharge of statutory bonds constituted operative statutory acknowledgments of compliance. In the absence of their cancellation, withdrawal or invalidation by the competent authority, Customs could not disregard their legal effect or proceed on a contrary assumption. [Paras 29, 30, 32, 33, 34]

The imports covered by valid Advance Authorisations were entitled to exemption from countervailing and anti-dumping duty, even if otherwise falling within the scope of the levy notifications.

Classification of wind turbine parts as castings or non-casting components - Liability of wind turbine parts not covered by valid Advance Authorisations to countervailing and anti-dumping duty as castings for wind operated electricity generators, rather than forged, fabricated, machined or other non-casting components - HELD THAT: - The levy was product-specific and depended upon whether the imported article retained the essential character of a casting; its intended use in a wind operated electricity generator was not determinative. The Department bore the burden of establishing, component-wise and by cogent technical evidence, that the goods answered the statutory description. The technical material, including the metallurgical report and component-wise bifurcation, was not rebutted by comparable evidence, while the show cause notice contained only a bald assertion that the goods were casting parts. [Paras 37, 38, 41, 43, 44]

The Department failed to establish that the disputed imports were castings within the Product Under Consideration, and no duty liability survived on those goods.

Extended limitation for duty demand on wind turbine parts - Limitation for the customs duty demand on wind turbine parts, including invocation of the extended period despite an earlier show cause notice on substantially similar imports and demands beyond the statutory outer limit - HELD THAT: - The extended period required proof of collusion, wilful misstatement or suppression with intent to evade duty, and could not rest on a classification or notification dispute alone. The earlier show cause notice showed that the Department was already aware of the nature of the imports, defeating the allegation necessary for a further invocation of the extended period. The demand beyond the statutory outer limit was barred; in any event, the demand did not survive even for the normal period in view of the findings on merits. [Paras 48, 49, 50, 51]

The extended period was unavailable, the demand beyond the statutory outer limit was barred, and the consequential confiscation, redemption fine, interest and penalties were set aside.

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

Classification of low-ethoxylated alcohol ethoxylate under Chapters 34 and 38 - Organic surface-active agents-cumulative requirements of Chapter Note 3 - CTI 3402 1300 or CTI 3824 9090/3824 9990 -

HELD THAT: - Under GIR 1, classification had to be determined by the tariff headings and the relevant Chapter Notes. Chapter Note 3 requires cumulative fulfilment of the conditions relating to formation of a transparent or translucent liquid or stable emulsion without separation of insoluble matter, and reduction of surface tension. The chemical test reports recorded formation of a translucent liquid with separation of insoluble matter; hence, the goods did not fulfil Chapter Note 3(a), despite satisfying the surface-tension parameter. Water-insoluble surface-active products are excluded from Heading 3402 and fall under Heading 3824. The conclusion in the co-ordinate Bench decision concerning identical goods was also found applicable. See NHAVA SHEVA CUSTOMS COMMISSIONERATE-I, RAIGAD VERSUS GODREJ INDUSTRIES LIMITED [2026 (8) TMI 1621 - CESTAT MUMBAI] [Paras 8, 9, 10, 11]

The goods were held classifiable under CTI 3824 9090/3824 9990 and not CTI 3402 1300; consequently, the duty demand, interest and penalties were unsustainable.

Final Conclusion: The appeal was allowed and the impugned order was set aside, as the imported goods were correctly classifiable under CTI 3824 9090/3824 9990.

Abatement of appeal on winding up of company - Abatement of the appeal upon commencement of liquidation proceedings against the appellant-company - HELD THAT: - Rule 22 provides that an appeal by or against a company being wound up shall abate unless a timely application for continuance is made by or against its authorised successor or representative. As liquidation proceedings had been commenced and an Insolvency Resolution Professional appointed, the appeal stood abated. [Paras 4]

The appeal was held to have abated under Rule 22 of the CESTAT Procedure Rules, 1982.

Final Conclusion: The appeal was held abated consequent upon the appellant-company being subjected to liquidation proceedings.

Right to copy of prosecution sanction order - Prematurity of limitation objection at trial inception - Defective sanction distinguished from absence of sanction - Effect of repeal on pending company investigation

Supply of prosecution sanction order - Entitlement of the accused to a copy of the prosecution sanction order not supplied with the complaint and summons - HELD THAT: - The sanction order was material for preparation of the defence. Its non-supply was liable to prejudice the right of defence and result in a miscarriage of justice. [Paras 31, 32]

The petitioner was held entitled to a copy of the sanction order, and the respondents were directed to supply it.

Limitation objection at preliminary stage - Applicability of limitation to the prosecution for alleged misconduct connected with the financial affairs of group companies at the preliminary stage of trial - HELD THAT: - Whether the act attributed to the petitioner formed part of an integral and continuing series of acts, or was an isolated act attracting limitation, required evidence regarding its proximity and connection with the alleged offences. Even if cognizance were assumed to be beyond limitation, the complainant could seek recourse to the power to condone delay in the interests of justice upon proper explanation. [Paras 33, 35, 36]

The limitation objection was rejected as premature, without deciding whether limitation would ultimately apply.

Defective sanction distinguished from absence of sanction - Challenge to validity of sanction during trial - Quashing of the complaint and summoning order on the ground of alleged non-application of mind in an existing prosecution sanction order - HELD THAT: - An absence of sanction may be raised at the threshold, but alleged invalidity of a sanction, including non-application of mind, is to be examined during trial on the material and evidence bearing upon its grant. As a sanction had been granted by the competent authority before the complaint was instituted, its validity could not be determined at the pre-trial stage. [Paras 39, 40, 41, 42, 43]

Quashing was refused, with liberty to raise the validity of the sanction order before the trial court at the appropriate stage.

Savings of pending company investigation after repeal - Application of the General Clauses Act to repeal - Validity of prosecution under the repealed Companies Act, 1956 where the underlying investigation had been ordered before the repeal clause under the Companies Act, 2013 came into force - HELD THAT: - Section 465(3) preserved the general application of Section 6 of the General Clauses Act; consequently, repeal did not affect a pending investigation or consequential legal proceedings. Independently, the pending investigation was protected by the savings provision in Section 465(2)(j). Since the investigation order preceded the operation of the repeal clause, the investigation was pending at repeal and remained unaffected. [Paras 58, 59, 60, 61, 62]

Neither the sanction order nor the summoning order was defective on the ground that prosecution invoked provisions of the repealed Companies Act, 1956.

Final Conclusion: The writ petition was partly allowed only to the extent of directing supply of the sanction order. The challenge to the summoning order and the sanction order was dismissed, subject to the petitioner's liberty to contest the validity of the sanction during trial.

Fraudulent trading - removal and replacement of hypothecated machinery with lower-value machinery - Fraudulent intent -cumulative circumstantial evidence - Contribution to corporate debtor's assets for fraudulent trading

Fraudulent trading based on removal of financed and hypothecated C.I. flexographic press machinery and its replacement with lower-value rotogravure printing machinery - HELD THAT: - The contemporaneous financing documents, invoices and hypothecation established the existence of the secured machinery. There was no documentary consent of the financial creditors for its substitution, nor contemporaneous purchase material supporting the alleged alternative machinery. The independent valuation reports identifying the machinery at site as rotogravure printing machinery, the physical indications of earlier removal, and the absence of reliable explanation for the substituted machinery were sufficient to support the inference drawn.

A dispute concerning the technical identity of the machinery did not oust the Adjudicating Authority's jurisdiction. Fraudulent intent need not be established by direct evidence or by a series of independent transactions; it may be inferred from the cumulative documentary and circumstantial material. The suspended Board's conduct in delaying possession further strengthened that inference. [Paras 43, 44, 45, 46, 47]

The finding of fraudulent removal and replacement of the hypothecated machinery, attracting Section 66 of the Code, was upheld.

Contribution to corporate debtor's assets for fraudulent trading - Quantum of contribution directed for fraudulent removal of the financed and hypothecated machinery - HELD THAT: - Once the finding of fraudulent removal was sustained, the contribution direction operated to restore the corporate debtor's assets to the extent determined by the Adjudicating Authority. The appellants did not establish that the quantification was arbitrary or unsupported by the record, and the pleas based on depreciation and realisable value did not displace the finding that the asset position had been depleted. [Paras 48]

The direction requiring contribution to the assets of the corporate debtor was affirmed.

Final Conclusion: The appeal was dismissed, the direction for contribution to the corporate debtor's assets was affirmed, and costs were imposed on the appellants.

Refund of service tax paid on CIF ocean freight - statutory limitation - Constitutional refund claims outside statutory jurisdiction

Refund of service tax paid on CIF ocean freight under reverse charge, claimed beyond one year from payment-applicability of the statutory limitation - HELD THAT: - The statutory refund provision fixes the date of payment as the relevant date. The amount was paid as service tax following the audit objection, while the refund claim was filed after expiry of one year and was therefore governed by the statutory bar. A claim founded on a levy being unconstitutional or wholly without authority of law may be pursued through constitutional remedies, but the adjudicating and appellate authorities, being creatures of statute, cannot exercise jurisdiction beyond that conferred by the statute.

Supreme Court in its judgment in Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT] held that Commissioner (Appeals) and Tribunal, being creature of statute are vested with the jurisdiction to condone delay only to the extent the statute permits. In the instant case, it is on record that the claim was filed beyond payment of tax. Hence, the said claim is hit by limitation as prescribed under the Act. [Paras 6, 7]

The refund claim was held time-barred; the rejection of refund was upheld and the appeal was dismissed.

Final Conclusion: The appeal was dismissed, as the statutory refund claim for service tax paid on ocean freight had been filed beyond the prescribed period of limitation.

Service-tax demand on goods transport agency services based on Form 26AS - Reverse-charge liability of service recipient -

Sustainability of service-tax demand on a goods transport agency based on Form 26AS data without verifying whether the identified service recipients had received the services and discharged tax under reverse charge - HELD THAT: - The appellant had furnished particulars of the service recipients. Since service tax on the goods transport agency services was payable by the recipients under the reverse-charge mechanism, the Department was required to verify with the persons reflected in Form 26AS whether they had received such services and paid the tax. In the absence of that investigation, the allegations founded on Form 26AS were vague. [Paras 5, 6]

The demand, interest and penalty were set aside as unsustainable, and the appeal was allowed with consequential relief.

Final Conclusion: The service-tax demand raised against the goods transport agency, along with interest and penalty, was set aside for want of verification of the recipients' reverse-charge liability.

Extended period of limitation - Incorrect service-tax registration number in ST-3 return - Invocation of the extended period for service-tax demand where tax payment was reported under the incorrect unit registration number

HELD THAT: - The Tribunal found that the appellant had regularly filed service-tax returns and that the payment was reflected in the ST-3 return, though against the registration number of its other unit.

As Revenue did not dispute payment of the service tax, the incorrect registration number did not warrant invocation of the extended period. [Paras 7, 8]

The extended period was held inapplicable; the impugned proceedings and order were quashed and set aside.

Final Conclusion: The appeal was allowed with consequential relief.

Service-tax exemption for construction of dams - Revised Form 26AS and differential taxable value - Extended limitation and suppression of facts

Service-tax exemption for construction of dams - Entitlement to service-tax exemption for services rendered in construction of dams at Aland and Jambaga - HELD THAT: - The work orders subsequently produced established that the services were for construction of dams. Since the benefit under Notification No. 25/2012-ST had been allowed for comparable dam and bridge construction services, it was required to be extended to these services as well. [Paras 5]

The demand attributable to the services rendered at Aland and Jambaga was set aside.

Revised Form 26AS and differential taxable value - Service-tax demand on the alleged differential between Form 26AS receipts and the details furnished for irrigation-works services - HELD THAT: - The revised Form 26AS corrected the receipt figure and brought it in conformity with the amount for which details had been furnished. As no differential taxable value remained, there was no basis for the demand. [Paras 6]

The demand founded on the alleged differential taxable value was set aside.

Extended limitation and suppression of facts - Invocation of the extended period for service-tax demands based on service receipts disclosed in income-tax returns - HELD THAT: - Suppression requires material demonstrating misstatement or a conscious intent to suppress facts. The service receipts had been disclosed in income-tax returns, which were public documents, and the notice identified no basis for suppression other than failure to obtain service-tax registration or inform the department. That circumstance did not justify invocation of the extended period. [Paras 7]

The demand for 2015-16, having been set aside on merits, did not survive; the demand for 2016-17 was set aside as beyond the normal period of limitation.

Final Conclusion: The appeal was allowed. The demands concerning dam-construction services and the alleged Form 26AS differential were set aside, and the surviving demand for 2016-17 was held time-barred.

Service tax on installation of computer systems as electronic devices - Reverse-charge liability on imported maintenance or repair services - CENVAT credit - adjudication beyond show-cause notice - CENVAT credit - nexus of input services - Extended limitation - absence of suppression

Service tax on installation of computer systems as electronic devices - Prospective taxability of erection, commissioning and installation services - Service-tax liability on installation of computer systems during April 2003 to March 2005 under Erection, Commissioning and Installation Services - HELD THAT: - In the case of Neo Eaon Associates vs. Commissioner of Central Excise, Indore[2018 (2) TMI 229 - CESTAT NEW DELHI] the Tribunal held that installation of wiring and wireline, broadband and cables will not fall under the category of machinery and equipment but are specifically included in the amended category of ‘Installation of Electrical and Electronic devices.

Before the amendment, the taxable category covered installation of plant, machinery or equipment. Computer systems were held to be electrical and electronic devices specifically brought within the scope of the amended definition only with effect from 16.06.2005; their installation could not therefore be taxed for the disputed pre-amendment period. [Paras 5]

The service-tax demand on installation of computer systems for the period prior to 16.06.2005 was set aside.

Reverse-charge liability on imported maintenance or repair services received from abroad before 18.04.2006 - HELD THAT: - Services received from abroad became liable to service tax only from 18.04.2006 and could not be subjected to tax for the earlier period by invoking Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. [Paras 6]

The demand under reverse charge for the pre-18.04.2006 period was set aside.

CENVAT credit - adjudication beyond show-cause notice - CENVAT credit - nexus of input services - Denial of CENVAT credit on input services on grounds beyond the show-cause notice and for alleged absence of nexus with output services - HELD THAT: - The Commissioner denied credit entirely on a ground different from that alleged in the show-cause notice, thereby travelling beyond its scope. Further, CENVAT credit could not be denied merely on the ground that nexus between the input services and output services was not established.

As rightly pointed out by the appellant, the denial of cenvat credit on entirely on a different ground is beyond the scope of the show-cause notice which cannot be sustained as is held in the case of Toyo Engineering India Ltd.[2006 (8) TMI 184 - SUPREME COURT]. And with regard to nexus between the input services and output services, it is already a settled issue that cenvat credit cannot be denied on the ground of nexus as is held in the case of Coca Cola India Pvt. Ltd. [2009 (8) TMI 50 - BOMBAY HIGH COURT] [Paras 7, 8]

The denial of CENVAT credit was held unsustainable.

Extended limitation - absence of suppression - Invocation of the extended limitation period for service-tax demands founded on the appellant's financial records - HELD THAT: - As the Revenue relied on the appellant's financial records and no positive act of suppression or misstatement was established, invocation of the extended period was not justified. [Paras 8]

The demand was held unsustainable on limitation as well.

Final Conclusion: The appeal was allowed, as the service-tax demands and the denial of CENVAT credit were found unsustainable.

Extended limitation for service tax on seconded manpower - Validity of invoking the extended limitation period for service tax on manpower supplied by an overseas holding company under a master service agreement

HELD THAT: - Applying the Supreme Court principle in M/S NORTHERN OPERATING SYSTEMS PVT LTD. [2022 (5) TMI 967 - SUPREME COURT] that an assessee's view regarding liability, when neither untenable nor mala fide, does not establish wilful suppression or deliberate misstatement, the extended period of limitation was held inapplicable. [Paras 5, 6]

The demand was confined to the normal period of limitation with interest; the demand for the extended period and the penalties were set aside.

Final Conclusion: The impugned orders were modified by sustaining service tax with interest only for the normal limitation period and setting aside the extended-period demands and penalties.

Service-tax exemption equivalent to R&D cess on imported technology - Availability of exemption under Notification No. 17/2004-ST where R&D cess on imported technology was paid after service tax had been discharged

HELD THAT: - R&D cess was required to be paid before making payment for the import of technology, and the exemption was confined to service tax equivalent to cess paid. Although the appellants claimed the exemption before remitting the cess, the subsequent payment of cess did not disentitle them from the exemption. The delay could only attract interest on the delayed payment of service tax. [Paras 7]

The demand denying the exemption was not sustainable; the appellants were directed to pay interest on the delayed payment of service tax.

Final Conclusion: The appeals were partly allowed by retaining the claimed exemption and directing payment of interest on the delayed service-tax payment.

Delayed payment of compounded levy duty - Packing machines available for production - Applicability of the seventh proviso to Rule 9 - Sealed packing machines

Applicability of the seventh proviso to Rule 9 to delayed payment of pan masala duty where only the declared machines were operated and the other machines were sealed or inoperative - HELD THAT: - The second and seventh provisos operate in distinct fields. The second proviso governs delayed payment of determined duty by requiring payment of the outstanding duty with interest; the seventh proviso is not automatically attracted by every such delay, but is predicated on continued operation of packing machines during the subsistence of non-payment. The declarations of the operating machines had been disclosed to and acted upon by the Department, and there was no reliable evidence that the sealed or uninstalled machines were operated. Mere physical presence of such machines did not establish that they were available for production. The clarification that Department-sealed machines are not machines available for production supported this construction.

Identical issue had come up for consideration before this Tribunal in the case of Sanket Food Products (P) Ltd. [2014 (9) TMI 665 - CESTAT MUMBAI (LB)] wherein the scope and applicability of the Seventh Proviso to Rule 9 of the Pan Masala Rules came to be considered.[Paras 19, 20, 21, 22, 23]

The seventh proviso could not be invoked to recompute duty by including the sealed or inoperative machines; the delayed payment was governed by the second proviso with applicable interest, and the proposed demand was rightly dropped.

Final Conclusion: The Revenue appeal was dismissed and the dropping of the proposed demand was upheld.

CENVAT credit on duties paid upon debonding of a 100% EOU

Eligibility of CENVAT credit on duties paid on raw materials/inputs and capital goods upon debonding of a 100% EOU and its conversion into a DTA unit - HELD THAT: - Rule 3 confers the substantive entitlement to credit, while Rule 9 governs the documentary basis for its availment.

Following Stanadyne Amalgamations (P) Ltd. [2019 (8) TMI 572 - MADRAS HIGH COURT] and AVO Carbon (India) Pvt. Ltd [2024 (8) TMI 1205 - CESTAT CHENNAI] the Tribunal held that, after payment of assessed duties at debonding, the goods became duty-paid goods available to the DTA manufacturer. The proviso to Rule 3(1) could not be treated as an exclusive source of entitlement or as restricting credit on capital goods, and the earlier duty-free holding of the goods under the EOU scheme did not bar credit of the duties actually paid at debonding. [Paras 10, 11, 12, 13, 14]

The assessee was entitled to CENVAT credit of eligible duties actually paid at debonding on inputs and capital goods; the denial of credit was set aside.

Final Conclusion: The assessee's appeal was allowed with consequential relief, the Revenue's appeal was rejected, and the cross-objection was disposed of.

Refund of accumulated Cenvat credit on exported goods - One-to-one correlation between inputs and exports - Repayment of drawback and Cenvat credit refund - Finality of unchallenged findings in remand proceedings - Consequential effect of final appellate orders

Refund of accumulated Cenvat credit on exported goods - One-to-one correlation between inputs and exports - Verification report - Refund of accumulated Cenvat credit on exported readymade garments denied for want of item-wise correlation between inputs and exports and alleged deficiencies in verification - HELD THAT: - The export-refund scheme does not require a direct one-to-one correlation between particular duty-paid inputs and the goods exported, provided the inputs were used in the manufacture of goods actually exported and the resulting credit could not be utilised. The verification report and the material considered in the refund sanction established the requisite verification, apart from short-shipment instances already excluded. The contrary appellate finding proceeded on a correlation requirement not imposed by law and misread the verification report as being silent on matters it addressed. [Paras 19, 20, 21]

The refund sanction was upheld and the contrary appellate order was held unsustainable.

Repayment of drawback and Cenvat credit refund - Finality of unchallenged findings in remand proceedings - Res judicata at successive stages of the same proceeding - Finality of an unchallenged finding in an earlier remand order that full repayment of drawback removes the bar to refund of accumulated Cenvat credit - HELD THAT: - Res judicata applies at successive stages of the same proceeding. The earlier appellate order remanded only documentary verification of the claim, while finally deciding the separate legal question that repayment of drawback removed the refund bar. As that finding was not challenged by the department, it bound the parties and could not be reopened merely because the order also contained a limited remand. [Paras 22, 23]

The drawback objection was barred from reconsideration and the denial of refund on that ground was set aside.

Consequential effect of final appellate orders - Implementation of the final order allowing the previously disallowed part of the refund claim - HELD THAT: - The earlier final order holding the disallowance unsustainable had attained finality. The merits of that part of the claim were therefore not open for fresh adjudication; what remained was implementation, subject only to verification of quantum and any residual statutory requirement consistently with that final order. [Paras 24]

The original authority was directed to give consequential effect to the final order to the extent not already implemented, in accordance with law.

Pendency of appeal without stay - Recovery of allegedly erroneous refund - Recovery of the sanctioned refund during pendency of an appeal without a stay order - HELD THAT: - Mere pendency of an appeal, without stay, does not suspend the order under challenge; the recovery proceedings were therefore not without jurisdiction merely because the appeal was pending. However, the recovery demand rested wholly on the premise that the refund was erroneous, which premise stood rejected. The interest demand necessarily followed the principal demand. [Paras 25]

Although refusal to keep the recovery proceeding in abeyance was not erroneous, the recovery demand and consequential interest were set aside for want of a surviving foundation.

Final Conclusion: The appeals were allowed: the refund sanction was upheld, the recovery demand with interest was annulled, and the unimplemented final order concerning the remaining part of the refund claim was directed to be given consequential effect in accordance with law.

CENVAT credit on commission-based sales promotion and trade-association membership - CENVAT credit on detention charges for imported raw materials - CENVAT credit on insurance of factory assets and goods - CENVAT credit on canteen and employee transport services - Penalty for irregular CENVAT credit without fraud, collusion or misstatement

CENVAT credit on commission-based sales promotion and trade-association membership - CENVAT credit on brokerage and commission and membership fees paid for sales-promotion activities. - HELD THAT: - The inclusive part of the definition of input service expressly covers advertisement and sales promotion. Brokerage and commission, and membership of associations or federations, were obtained for promoting sales of the manufactured goods. Further, for the disputed period, the explanation specifically included sale of dutiable goods on commission basis within sales promotion. [Paras 7]

The services qualified as input services and the denial of credit on these services was set aside.

CENVAT credit on detention charges for imported raw materials - CENVAT credit on detention charges incurred for delayed clearance of imported raw materials from warehouses. - HELD THAT: - The detention charges were connected with imported goods intended for use in manufacture, and their cost was included in the value of the goods or raw materials for accounting purposes. They consequently bore the requisite nexus with manufacture under the main part of the definition of input service. [Paras 7]

The detention charges qualified as input service and the denial of credit was set aside.

CENVAT credit on insurance of factory assets and goods - CENVAT credit on insurance premium paid for plant and machinery, stock and goods in transit. - HELD THAT: - The insurance policies covered manufacturing assets and goods against specified perils and were not obtained for employees' personal benefit. The insurance service therefore did not fall within the excluded category of employee-oriented personal-use services. [Paras 7]

The insurance service qualified as input service and the denial of credit was set aside.

CENVAT credit on canteen and employee transport services - CENVAT credit on canteen and bus-facility services incurred as staff welfare expenses under statutory obligations. - HELD THAT: - The statutory character of the welfare facilities under the Factories Act did not render canteen and employee transportation services eligible input services. The settled legal position treated such credit as contrary to the governing provisions. [Paras 7]

The denial of credit on staff welfare services was sustained, with consequential interest.

Penalty for irregular CENVAT credit without fraud, collusion or misstatement - Quantum of penalty for irregular CENVAT credit on rent-a-cab and staff welfare services without the specified aggravating ingredients. - HELD THAT: - For wrong availment or utilisation of credit without fraud, collusion, wilful misstatement or like ingredients, the statutory scheme confines penalty to 10% of the irregular credit. Following the findings on eligibility, irregular credit was confined to rent-a-cab service and staff welfare activities; the rent-a-cab credit had been conceded and reversed, and its treatment was left to the original authority. [Paras 8]

Penalty at 10% was sustained only in respect of the irregular credit relatable to rent-a-cab and staff welfare services.

Final Conclusion: The appeal was partly allowed by permitting credit on sales-promotion-related services, detention charges and asset insurance, while sustaining denial of credit on staff welfare services and the limited statutory penalty.

CENVAT credit - denial despite production of supporting invoices

CENVAT credit on the basis of invoices - Penalty for alleged wrongful availment of CENVAT credit - Entitlement to CENVAT credit where the relevant supporting invoices were supplied in response to the audit objection but were not considered by the authorities. - HELD THAT: - The relevant invoices on the basis of which CENVAT credit was availed had been furnished to the authorities and were available on record. Denial of credit without considering those invoices was therefore unsustainable; consequently, the credit had been correctly taken and no penalty was imposable. [Paras 4, 5, 6]

The denial of CENVAT credit and the consequential penalty were set aside.

Final Conclusion: The appeal was allowed with consequential relief, the CENVAT credit having been supported by invoices available on record.

Compensatory tax - direct and immediate effect - principle of equivalence - burden on the State to prove quantifiable and measurable benefit - validation and retrospective legislation - Entry 52 of List II - tax on entry of goods into local area - non-discrimination, reasonableness and public interest under Article 304

HELD THAT:- We do not find any good ground to entertain this appeal against HC order [2014 (10) TMI 379 - ALLAHABAD HIGH COURT]. The Civil Appeal is, accordingly, dismissed.

Pending application(s), if any, shall stand disposed of.

Post-conviction compounding - bar on review of final criminal judgment - Inherent jurisdiction - review of final criminal judgment - Compounding of cheque dishonour offence after finality of conviction

Maintainability of a petition seeking compounding of an offence under Section 138 of the Negotiable Instruments Act on a subsequent settlement after criminal revision had finally affirmed the conviction and sentence - HELD THAT: - Upon dismissal of the criminal revision on merits affirming the conviction and sentence, the matter stood finally concluded. Inherent jurisdiction cannot be invoked to review or nullify a final adjudication, and a subsequent compromise cannot indirectly reopen the concluded conviction. The authorities cited in support of compounding were distinguishable on the facts. [Paras 6, 7, 9, 10]

The petition was held not maintainable; compounding was declined and the petition dismissed with costs.

Final Conclusion: The petition seeking post-finality compounding of the cheque dishonour offence was dismissed as not maintainable, with costs.