TaxTMI Updates e-Newsletter
Sep 24,2026

Opportunity to contest ex parte GST assessment - Ex parte assessment of second-hand mobile phone dealer - need for opportunity to submit reply and supporting documents

Whether an ex parte GST assessment of a dealer claiming to trade in second-hand mobile phones should be remanded for fresh consideration? - HELD THAT:- An opportunity can be granted to the petitioner to contest the matter on merits. Normally, this Court imposes the condition to deposit 25% of the disputed tax amount. However, considering the contention made by the learned counsel for the petitioner under Rule 32(5), the same is not imposed in the instant case. [Paras 6]

The assessment order was set aside and the matter remanded for fresh disposal after the dealer files a reply and supporting documents within the stipulated period.

Final Conclusion: The writ petition was allowed, and the ex parte assessment was remanded for fresh consideration on the dealer's reply and supporting material.

Seeking grant of refund alongwith interest - amount deposited inadvertently in the Electronic Cash Ledger (ECL) under the GST regime - requirement of physical submission of refund application along with all the requisite documents

HELD THAT:- We do not find a good ground to interfere with the impugned order/judgment [2025 (6) TMI 94 - DELHI HIGH COURT] in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed.

Personal hearing in GST adjudication - Violation of natural justice - Validity of a GST adjudication order passed without affording the petitioner a personal hearing after the hearing date originally fixed -

HELD THAT: - No hearing took place on the date fixed in the show cause notice, and no subsequent hearing date was notified before the adjudication order was made after a substantial interval. The order was silent on the grant of any hearing. In the absence of any adjournment sought by the petitioner, denial of the personal hearing contemplated under the statute amounted to a complete breach of natural justice. [Paras 4, 5, 6, 7]

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

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

Restoration of GST registration upon filing of pending returns and payment of statutory dues - Restoration of GST registration cancelled for non-furnishing of returns, subject to payment of outstanding penalty with statutory interest and filing of defaulted returns - HELD THAT: - The revenue stated that it would not object to revival of the registration if the outstanding penalty and statutory interest were paid and the defaulted returns filed within the stipulated time. The petition was disposed of on that basis. [Paras 7, 8]

The concerned authority was required to communicate the outstanding penalty and statutory interest within two weeks; on payment thereof and filing of the defaulted returns within four weeks thereafter, the registration was to be restored without delay.

Final Conclusion: The writ petition was disposed of by permitting restoration of the GST registration upon timely discharge of the outstanding statutory dues and filing of the pending returns.

Dismissal of GST appeal for non-prosecution - Statutory requirement of reasoned appellate order - Validity of dismissal of a GST appeal against penalty demand solely for non-prosecution without deciding the appeal on merits

HELD THAT: - Section 107(12) requires the appellate authority to state the points for determination, its decision thereon and reasons for that decision. The appellate authority was bound to consider the grounds of appeal and material on record, formulate the points for determination and render a reasoned decision on merits. Section 107 does not authorise dismissal of an appeal merely for non-prosecution; such dismissal reflects abdication of the statutory duty and non-application of mind. [Paras 10, 11, 12, 13]

The impugned appellate orders were quashed and the matters remanded for fresh reasoned and speaking orders on merits after affording personal hearing to the concerned parties.

Final Conclusion: The writ petitions were allowed, and the appeals were restored to the appellate authority for decision on merits in accordance with law.

Prospective levy of Goods and Services Tax - Requirement of a speaking order

Prospective levy of Goods and Services Tax - Liability to Goods and Services Tax on rentals payable for land used as a Sumo Taxi Stand. - HELD THAT: - Goods and Services Tax came into operation with effect from 08.07.2017; consequently, its payment could not be compelled for any preceding period. [Paras 9]

The impugned demand was quashed to the extent it imposed Goods and Services Tax before 08.07.2017, and the respondents were directed to charge it only from that date while recovering the outstanding dues.

Requirement of a speaking order - Claim for allotment of land for a Sumo Taxi Stand. - HELD THAT: - The entitlement to allotment was not adjudicated on merits. The competent respondent was required to determine the claim in accordance with law by a reasoned order. [Paras 9]

A speaking order on the allotment claim shall be passed within three months.

Final Conclusion: The petition was partly allowed by restricting the Goods and Services Tax liability to the period commencing from 08.07.2017. The claim for land allotment was left for determination through a speaking order in accordance with law.

Alternative statutory remedy in GST demand proceedings - Natural justice - service of show cause notice and opportunity of hearing

Exercise of writ jurisdiction against the GST demand order despite the statutory appellate remedy on the allegation of non-service of the show cause notice and denial of hearing - HELD THAT: - The record established that the petitioner had been served with the show cause notice, had submitted its reply, and had been granted an opportunity of personal hearing. Consequently, no basis was made out to bypass the statutory appeal on the ground of breach of natural justice.

Having approached the Court nearly one year and six months after the impugned order, the petitioner could not seek condonation of delay in writ jurisdiction; any application for condonation could be considered by the Appellate Authority in accordance with law. [Paras 9, 10, 12, 13]

The writ petition was disposed of, leaving the petitioner at liberty to pursue the statutory appeal with an application for condonation of delay.

Final Conclusion: The Court declined to interfere in writ jurisdiction, as the alleged breach of natural justice was not borne out by the record and an effective statutory appeal was available.

Penalty for e-way bill contravention - Declared place of business of recipient - Delivery to undeclared place of business

Imposition of penalty for generating an e-way bill showing a delivery address that was not a declared principal or additional place of business of the recipient - HELD THAT: - Penalty under Section 129 is attracted not only by non-payment of tax but also by contravention of the applicable enactments or rules. Since the e-way bill is intended to enable tracking of goods and the stated place of delivery was not a declared place of business when the goods were supplied and intercepted, the supplier had committed a contravention notwithstanding payment of tax. Subsequent registration of that address as an additional place of business did not assist the petitioner. [Paras 4, 5]

No ground for interference with the penalty order was made out.

Final Conclusion: The writ petition was disposed of without interfering with the penalty order. The petitioner was left at liberty to pursue appropriate remedies against the recipient for recovery of the penalty paid.

Regular bail in CGST offence - Grant of regular bail for alleged fraudulent input tax credit offences under the Central Goods and Services Tax Act after filing of the charge sheet - HELD THAT: - The Court considered that the accused had remained in custody, the charge sheet had been filed, no flight risk or criminal antecedents were shown, no further custodial detention was required, and the maximum prescribed punishment was five years. It therefore found continued pre-trial detention unwarranted, without expressing any view on the merits. [Paras 8]

Bail was granted subject to stringent conditions, including cooperation in the pending investigation and trial concerning the co-accused.

Final Conclusion: The bail application was allowed, subject to conditions intended to secure the accused's attendance and prevent interference with the pending investigation and trial.

Contractual allocation of GST liability - Maintainability of writ petition in contractual payment dispute

Maintainability of writ petition in contractual payment dispute - Disputed questions of fact - Non-joinder of necessary parties - Maintainability of a writ petition seeking release of the GST component withheld from contractual dues - HELD THAT: - The controversy was confined to the treatment of the GST component and was capable of determination from the acceptance letter and other documents on record. The respondents could not resist writ jurisdiction by alleging disputed facts where performance of the contract, the bills and the basic transaction were undisputed. The reconsideration of dues in the subsequent correspondence also negatived the objection of delay and laches. The GST Department and other election authorities were not necessary parties, since the dispute concerned the contractual liability of the authorities that processed and released payment. [Paras 7, 8]

The writ petition was maintainable and was not barred by disputed facts, delay and laches, or non-joinder.

Contractual allocation of GST liability - Binding effect of acceptance letter - Entitlement to payment of the GST component where the acceptance letter stipulated that GST was payable in addition to the quoted rates - HELD THAT: - The accepted contractual term governing payment of GST could not be altered by subsequent calculations or correspondence. Having accepted the bid on terms providing for GST in addition to the quoted rates and accepted performance of the contract, the respondents were bound to honour that condition. Petitioner's independent payment of GST did not authorise deduction of the GST component from the contractual consideration. [Paras 8, 9, 10, 11]

The withholding of the GST component was unsustainable; the respondents were directed to release it with interest at 6% per annum.

Final Conclusion: The writ petition was allowed. The respondents were directed to release the wrongly deducted GST component with interest.

Relevant date for refund of Kerala Flood Cess mistakenly paid through GSTR-3B

Limitation for refund of Kerala Flood Cess - Relevant date for refund application - Limitation for refund of Kerala Flood Cess initially paid through Form GSTR-3B instead of the prescribed Form KFC-A - HELD THAT: - Issue involved in this writ petition is concerned, this Court has already decided the same, in Pushpagiri Medical Society v. State of Kerala and Others [2026 (1) TMI 1683 - KERALA HIGH COURT] where, this Court came to a definite conclusion that, in respect of the application to be submitted seeking refund of the amount mistakenly paid along with Form GSTR 3B towards Kerala Flood Cess, the relevant date could be the date on which the petitioner had paid the amounts towards the Kerala Flood Cess in the correct account. Thus, it was clearly held by this Court in the aforesaid judgment that, the period of two years as envisaged in Section 54 has to be reckoned from the date on which the petitioner had remitted the Kerala Flood Cess and not from the payment effected along with Form GSTR 3B.

Thus, where Kerala Flood Cess had mistakenly been paid along with Form GSTR-3B and was subsequently remitted through the correct account, the two-year period for seeking refund under Section 54 commenced from the latter payment, and not from the earlier payment through Form GSTR-3B. The refund application was consequently within time. [Paras 5, 6]

The rejection order was quashed and the competent authority was directed to reconsider the refund application as having been filed in time and pass orders within one month.

Final Conclusion: The refund rejection was set aside, and the application was directed to be reconsidered as timely filed.

Opportunity of hearing before adverse GST adjudication - Validity of an adverse GST order passed without affording the assessee an opportunity of personal hearing - HELD THAT: - Section 75(4) mandates an opportunity of hearing where an adverse decision is contemplated. As it was admitted that no such opportunity had been afforded, the impugned order could not be sustained. [Paras 3, 5]

The impugned order was set aside, with liberty to the revenue to pass fresh orders after affording due opportunity of hearing in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the adverse order for breach of the statutory requirement of hearing, while preserving the revenue's liberty to proceed afresh in accordance with law.

Alternative statutory appeal against GST adjudication - Sufficient cause for delayed statutory appeal

Alternative statutory appeal against GST adjudication - Exercise of writ jurisdiction against GST adjudication and rectification-rejection orders despite availability of a statutory appellate remedy - HELD THAT: - The Court declined to directly entertain the writ petition because the petitioner had an efficacious statutory remedy of appeal against the impugned orders which had not been exhausted. [Paras 6]

The petitioner was relegated to the statutory appellate remedy.

Sufficient cause for delayed statutory appeal - Consideration on merits of a delayed statutory appeal against the GST adjudication order where the delay occurred due to circumstances beyond the petitioner's control - HELD THAT: - The Court was satisfied that the delay in invoking the appellate remedy resulted from circumstances beyond the petitioner's control. Noting that earlier Division Bench decisions had directed consideration of time-barred appeals upon sufficient cause being shown, the Court issued a corresponding direction. [Paras 7, 9, 10]

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

Final Conclusion: The writ petition was disposed of without adjudication on the merits of the GST demand, with liberty to pursue the statutory appeal. The appellate authority was directed to consider the appeal on merits if filed within the stipulated period.

Conditional de novo adjudication - Pre-deposit as condition for remand - Consent-based remand for fresh adjudication of the GST demand after expiry of the statutory appellate limitation - HELD THAT: - Recording the petitioner's consent to deposit 25% of the disputed tax, the Court directed fresh adjudication on merits. The petitioner was required to make the deposit and submit a reply with supporting documents, with the impugned order to be treated as an addendum to the show cause notice. Bank attachment, if any, was directed to stand vacated upon compliance, subject to there being no arrears for another tax period. [Paras 7, 8, 9, 10, 11]

The matter was remitted for fresh adjudication subject to the stipulated pre-deposit and filing of reply; on non-compliance, recovery could proceed in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by directing conditional de novo adjudication on the petitioner's pre-deposit of 25% of the disputed tax and submission of its reply.

Amended refund formula for inverted duty structure - Supplementary refund claims for unutilised input tax credit

Amended Rule 89(5) formula for inverted duty refunds - Applicability of the amended Rule 89(5) formula to inverted-duty refund applications filed after 05.07.2022 for input tax credit accumulated before that date - HELD THAT: - The Tribunal held that the relevant date for applicability of the substituted formula was the date of filing of the refund application and not the period during which the input tax credit accumulated. Since the applications were filed after 05.07.2022, they were liable to be computed under the amended formula, which permitted consideration of input-service ITC; the Tribunal also considered judicial pronouncements in Ascent Meditech Ltd. & Others [2025 (5) TMI 149 - SC ORDER] treating the amendment as curative and clarificatory. [Paras 6]

The amended formula was held applicable, and accumulation of ITC before 05.07.2022 did not disentitle the respondent from refund computation under that formula.

Supplementary refund claim for unutilised input tax credit - Maintainability of supplementary inverted-duty refund claims for the same tax periods after filing NIL or earlier refund claims - HELD THAT: - Neither the show-cause notices nor the adjudication orders identified a statutory prohibition against a supplementary claim. Refund was treated as a substantive statutory benefit, while the manner of filing was procedural; therefore, absence of a separate supplementary-claim mechanism or technological limitation of the GST portal could not defeat a claim satisfying the substantive conditions. [Paras 6]

The supplementary claims could not be rejected merely because earlier claims had been filed or because the portal did not permit filing under a particular category; their admissibility was required to be examined on merits.

Final Conclusion: The Tribunal upheld the appellate order allowing the differential refund claims and rejected the Department's appeals.

Condonation of delay of 719 days in the filing of the appeal

HELD THAT:- Petitioner, has fairly brought to our notice the order [2026 (8) TMI 214 - SC ORDER]

We are not going to take a divergent view in the instant matter. The Special Leave Petition is, accordingly, dismissed. Pending interlocutory application(s), if any, is/are disposed of.

DTAA non-discrimination and differential corporate tax rates - Interest paid by permanent establishment to head office - tax deduction at source - Taxability of interest received by permanent establishment from head office - Depreciation on automated teller machines as computers

DTAA non-discrimination and differential corporate tax rates - Entitlement of the Indian permanent establishment of a Netherlands-incorporated bank to the tax rate applicable to domestic companies under the non-discrimination clause of the India-Netherlands DTAA - HELD THAT: - The appellant did not satisfy the statutory conditions for a domestic company and was consequently a foreign company. The retrospective Explanation to section 90 clarifies that levy of a higher rate upon a foreign company is not less favourable treatment. Further, a foreign company, taxable in India on Indian-source income, and a domestic company, taxable on global income, are not in the same circumstances under Article 24(2). The DTAA contains no specific tax-rate provision overriding the domestic law. [Paras 9, 10, 11]

The claim for taxation at the rate applicable to domestic companies was rejected.

Interest paid by permanent establishment to head office - tax deduction at source - Deductibility of interest remitted by the Indian permanent establishment of a foreign bank to its overseas head office and branches without deduction of tax at source - HELD THAT: - For determining profits under Article 7, the permanent establishment is treated as a separate and distinct enterprise. Having invoked that fiction to claim the interest as business expenditure, the appellant could not deny its application for tax deduction at source. Interest remitted to the head office was liable to tax in India and attracted the obligation to deduct tax; non-compliance therefore attracted disallowance under section 40(a)(i). [Paras 12, 13, 14, 15]

The disallowance of interest expenditure for failure to deduct tax at source was sustained.

Taxability of interest received by permanent establishment from head office - Inclusion in the Indian permanent establishment's taxable profits of interest received from its overseas head office and foreign branches - HELD THAT: - The disallowance of interest paid by the permanent establishment resulted from non-compliance with tax deduction at source requirements, not from treating the payment as one made to self. Article 7 treats the permanent establishment and head office as separate enterprises for computation of profits. Accordingly, interest received by the Indian permanent establishment from the head office or other foreign branches was taxable business income and could not be excluded as a payment to self or on mutuality. [Paras 17, 18, 19, 20]

Interest received by the permanent establishment from the head office and foreign branches was held includible in its taxable profits.

Depreciation on automated teller machines as computers - Classification of automated teller machines as computers for depreciation purposes - HELD THAT: - Classification for depreciation depends on the asset's functional utility in the assessee's business. Automated teller machines perform digital data processing and networked banking functions through specialised computing systems. Their functional parity with computers warranted their inclusion in the relevant computer category for depreciation. [Paras 23]

Automated teller machines were held to qualify as computers, and the appellant's claim for higher depreciation was allowed.

Final Conclusion: The appeal was allowed in part. The claims concerning the domestic-company tax rate and interest transactions with the head office and foreign branches were rejected, while higher depreciation on automated teller machines was allowed.

Appeal under Section 260A - substantial question of law - Bogus purchases in bullion trade - factual determination

HELD THAT: - The Tribunal had considered the purchase documentation, banking transactions, GST records, stock register, undisputed corresponding sales and the narrow margins inherent in bullion trading.

Its conclusion that the entire purchases could not be treated as bogus, coupled with estimation of gross profit on the disputed purchases, was a factual determination based on the material on record. A different view taken by the AO or the appellate authority did not warrant interference absent perversity, lack of evidence, or disregard of material evidence giving rise to a substantial question of law. [Paras 8, 9, 10, 11, 12]

No substantial question of law arose; the Revenue's appeal was dismissed.

Final Conclusion: The Tribunal's factual determination regarding the disputed bullion purchases and estimation of gross profit was upheld, no substantial question of law arising for consideration.

Disallowance of bogus purchases - non-response of the suppliers to the notice issued u/s 133(6) and alleged cancellation of GST registrations - addition for alleged bogus purchases deleted by ITAT where the books of account and corresponding sales were accepted and the assessee had furnished purchase and payment documents

HELD THAT: - Mere non-response of suppliers to verification notices and alleged cancellation of their GST registrations, being circumstances beyond the assessee's control, did not displace the books of account, purchase invoices and banking payment evidence.

Where the books were accepted and sales were not doubted, the corresponding purchases could not be disallowed in their entirety; a finding that purchases were bogus would necessarily require the corresponding sales also to be treated as bogus. The Tribunal's conclusion that the addition rested on presumption rather than tangible material was therefore a factual finding correctly reached on the evidence.

The Bombay High Court in the matter of Nitin Ramdeoji Lohia [2022 (11) TMI 480 - BOMBAY HIGH COURT] has specifically held if the purchases are bogus, it would be impossible for the assessee to complete the business transaction and that if the purchase is bogus, the corresponding sale also must be bogus or else the transaction would be impossible to complete and as a necessary corollary, unless the corresponding sale is held to be bogus, the purchase also cannot be held to be bogus, rather it would be a case of purchase from bogus entities/parties. The ratio of the said judgment squarely applies in the instant case. Here, the sales are not doubted after examining the books of account and accordingly the question of disbelieving the purchase does not and cannot arise. Therefore, the finding of the Tribunal on this issue is correct. [Paras 15, 18, 20, 22, 23]

No substantial question of law arose from the Tribunal's deletion of the addition.

Final Conclusion: The appeal was dismissed as the proposed questions sought interference with factual findings of the Tribunal and gave rise to no substantial question of law.

Condonation of delay in filing Form No. 10B - Genuine hardship u/s 119(2)(b)

Condonation of a 30-day delay in furnishing Form No. 10B for a charitable institution's claim of exemption, despite a pending condonation application before the CBDT - HELD THAT: - The delay occurred in the first year in which the due date for furnishing Form No. 10B was advanced by one month, during the COVID-19 period when compliance deadlines were being extended. The audit report was filed before the extended due date for the return owing to a bona fide misunderstanding of the amended requirement.

The Court held that refusal to condone the delay would cause genuine hardship by denying the claimed exemption; the power under section 119(2)(b) is to be exercised to advance substantial justice. In these circumstances, the petitioner was not required to await disposal of its pending application before the CBDT.

One of the relevant considerations for condoning delay under Section 119(2)(b) of the I.T. Act is to consider the genuine hardships which an Assessee will face if the delay is not condoned. We derive support from the decision of this Court in the case of Sitaldas K. Motwani [2009 (12) TMI 36 - BOMBAY HIGH COURT] wherein held that 'phrase “genuine hardship” used in Section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12th October,1993.When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice-oriented so as to advance cause of justice.' [Paras 11, 12, 13, 15, 16]

The delay was condoned; the impugned rejection order and the intimation under section 143(1) were set aside, and the return was directed to be processed treating Form No. 10B as having been filed within time.

Final Conclusion: The writ petition was allowed and the delay in filing Form No. 10B was condoned on account of the bona fide circumstances and genuine hardship involved.

Recoverability of a demand raised u/s 156 - Natural justice in unexplained expenditure additions based on import data - Stay of high-pitched tax demand pending appeal - Administrative instructions prescribing deposit for stay of tax demand - Office Memoranda stipulating payment of 20% of the demand

Natural justice in unexplained expenditure additions based on import data - Stay of high-pitched tax demand pending appeal - Recovery pending appeal of demand arising from an unexplained expenditure addition based on an alleged discrepancy in import data - HELD THAT: - The information supplied to the assessee did not contain meaningful invoice-wise or bill-of-entry-wise particulars, notwithstanding repeated requests for such details. Since the assessee had furnished particulars of its recorded imports, which exceeded the aggregate import data relied upon by the AO, and the departmental data also disclosed apparent repetition, a reconciliation of the alleged difference was impossible. The addition was therefore prima facie vitiated by breach of natural justice. In considering stay, a strong prima facie case and serious triable issues, apart from financial hardship, warranted protection against recovery. [Paras 18, 19, 20, 21, 22]

Recovery of the demand was stayed during the pendency of the first appeal, subject to the appellate authority deciding the appeal independently on merits.

Administrative instructions prescribing deposit for stay of tax demand - Applicability of administrative instructions requiring payment of a prescribed portion of the outstanding demand as a condition for stay - HELD THAT: - Administrative circulars cannot bind or curtail the Court's power to grant stay. The Revenue's own acceptance before the Supreme Court that the relevant office memoranda do not operate as a fetter and permit a lesser deposit pending appeal also negatived its insistence on payment of 20% of the demand. [Paras 23]

The Revenue's contention that payment of 20% of the outstanding demand was mandatory was rejected.

Final Conclusion: The demand was stayed pending disposal of the appeal, which was requested to be decided expeditiously. The observations on the assessment were expressly confined to the prima facie consideration of stay.

Effective opportunity of hearing in faceless assessment - Validity of the faceless assessment and consequential penalty notices where the assessee's request for additional time and subsequently uploaded response were not considered - HELD THAT: - The Revenue fairly accepted that the assessment should be reconsidered after affording the assessee a proper and effective opportunity of hearing. The assessment was consequently required to be restored from the show-cause-notice stage, with an opportunity to furnish a further reply and to attend a personal hearing; any material or decision proposed to be relied upon must also be put to the assessee. [Paras 9]

The assessment order and consequential penalty notices were set aside and the matter remanded for a fresh reasoned assessment after compliance with the stipulated opportunity requirements.

Final Conclusion: The writ petition was disposed of by setting aside the assessment order and penalty notices and remanding the assessment for fresh consideration after an effective hearing.

Writ jurisdiction where statutory appeal is pending - Exercise of writ jurisdiction against an assessment order where the assessee has already invoked the statutory appellate remedy - HELD THAT: - Where the assessee has already availed the statutory appellate remedy against the assessment order, the Court may decline to exercise its discretionary jurisdiction under Article 226. The Court did not adjudicate the jurisdictional challenge or the applicability of the earlier judgment in the assessee's own case, leaving those questions for independent consideration in the pending appeal. [Paras 5, 6, 7, 10]

The writ petition was disposed of without examining the merits; the CIT(A) was requested to decide the pending appeal expeditiously upon an appropriate application, while remaining free to take an independent view on jurisdiction and the other contentions.

Final Conclusion: The writ petition was disposed of on account of the pending statutory appeal, without any determination on the merits of the jurisdictional or other challenges.

Settlement applications - pending assessment case on date of application - Section 119(2)(b) relaxation - impermissible additional eligibility condition

Eligibility of searched assessees holding live notices under sections 153A or 143(2) when applying by 30.09.2021 for settlement, despite absence of eligibility as on 31.01.2021 - HELD THAT: - For the relevant purpose, the statutory scheme requires a case to be pending when the settlement application is made; it prescribes no anterior date on which an assessee must have acquired eligibility. While the Board could extend the filing deadline to alleviate genuine hardship, it could not superadd a prior-eligibility requirement unknown to the Act. Since pendency depended solely on issuance of notice by the Assessing Officer, the Revenue could not benefit from its delayed action; differential treatment of years arising from the same search solely by reference to notice dates was also without a rational basis. [Paras 18, 22, 23, 24, 25]

Paragraph 4(i) of the Board's Order and the corresponding Press Release were read down so that the prior-eligibility condition does not operate against assessees holding live and unadjudicated notices when filing applications by 30.09.2021. The rejection of the settlement applications was quashed, and the applications were directed to be decided on merits; the consequential assessment proceedings were directed to abide by that outcome.

Final Conclusion: The writ petitions were allowed, with the settlement applications restored for decision on merits and the consequential assessment proceedings made subject to that decision. The challenge to the constitutional validity of section 245C(5) was left open.

Credit for tax deducted at source from salary refused - deduction is not reflected in Form 26AS

HELD THAT: - Non-reflection of the claimed tax deduction in Form 26AS could not, by itself, warrant denial of credit. The Assessing Officer was required to re-examine the documents produced to substantiate deduction of tax from salary and determine whether the claim was satisfactorily established. See Manohar Jhunjhunwala [2026 (8) TMI 1189 - BOMBAY HIGH COURT][Paras 7, 8]

The directions refusing credit merely for non-reflection in Form 26AS and the consequential order were set aside, and the matter was remanded for fresh examination; credit must be granted if deduction from salary is established.

Final Conclusion: The writ petition was disposed of by setting aside the refusal of salary TDS credit founded solely on Form 26AS and directing fresh verification of the supporting material.

Reassessment beyond three years - statutory threshold of escaped income - Contractual receipts - income embedded therein

Validity of a reassessment notice issued beyond three years where the income embedded in contractual receipts, as quantified in assessment, was below the statutory threshold - HELD THAT: - For issuing a reassessment notice beyond three years, the conditions under section 149(1)(b), including the prescribed threshold of income escaping assessment, are cumulative and mandatory. The Assessing Officer had treated only the income embedded in the contractual receipts as escaped income and, in the final assessment, quantified only the profit element therein. That income component fell below the statutory threshold; hence, the jurisdictional condition for reopening was not met. [Paras 11, 12, 13, 14, 15]

The notice under section 148 and all consequential proceedings were quashed. The separate question whether the gross contractual receipts constituted income represented in the form of an asset was left open.

Final Conclusion: For Assessment Year 2013-14, the reassessment notice issued beyond three years and the consequential proceedings were quashed because the escaped income, as quantified by the Revenue, fell short of the statutory threshold.

Faceless assessment - denial of requested personal hearing through video conferencing - HELD THAT: - A personal hearing specifically sought by the assessee had to be granted before completion of the assessment. The scheduled video-conference hearing did not commence, and the portal record showed no subsequent hearing notice; nor did the respondents produce any such notice. The assessment was therefore passed without an effective personal hearing, contrary to the requirements governing faceless assessment and the principles of natural justice. [Paras 6, 7]

The assessment order and consequential demand and penalty show-cause notices were quashed, and the matter was remanded for a fresh assessment after permitting a further reply and granting a personal hearing.

Final Conclusion: The writ petition was allowed to the extent of quashing the assessment and consequential notices for breach of natural justice, with a fresh assessment directed. The remaining contentions were kept open.

Faceless assessment - No adequate opportunity of hearing - Principles of natural justice denied -

HELD THAT: - The assessee was effectively afforded only one working day to reply, contrary to the NFAC SOP requiring a minimum of seven working days. The personal-hearing notice allowed less than 24 hours and fixed the hearing before expiry of the time for filing the reply; the reasonable request for a one-day adjournment was also refused. These circumstances constituted a gross denial of a reasonable opportunity of hearing and breached the requirements of natural justice. [Paras 8, 9, 10]

The assessment order and consequential demand and penalty show-cause notices were quashed, and the matter was remanded to recommence from the show-cause-notice stage with the prescribed opportunities to reply and be heard; the merits were not adjudicated.

Final Conclusion: The impugned assessment and consequential notices were quashed for denial of adequate opportunity of hearing. The assessment was remanded for fresh proceedings, while all other challenges were kept open.

Reasoned appellate order in income-tax appeals - Dismissal of appeal for non-appearance

Dismissal of an income-tax appeal solely for the appellant's non-appearance without determining the grounds raised in appeal - HELD THAT: - Even in the appellant's absence, the appellate authority is required to frame the points for determination and decide them by reasons. An appeal cannot be dismissed solely for non-appearance without considering and answering the grounds raised, as this fails to satisfy the statutory requirements governing appellate orders. [Paras 4]

The appellate order was quashed and the appeal was remitted for fresh consideration after affording the petitioner a reasonable opportunity of hearing.

Final Conclusion: The writ petition was disposed of by setting aside the dismissal of the appeal for non-appearance and directing fresh appellate adjudication in accordance with the statutory requirement of a reasoned order.

Additions based on entries in an impounded diary - Concurrent findings of fact - Substantial question of law in income-tax appeals - Challenge to the Tribunal's factual treatment of cash credits recorded in an impounded diary as unexplained investment of the partner - HELD THAT: - The appellate authorities had concurrently found that the cash credit recorded in the partner's name represented unaccounted funds infused by him in the partnership firm, after considering the stated unaccounted sources.

Revenue's plea that the entire amount reflected in the diary ought to be assessed in the partner's hands sought a reconsideration of those factual findings and disclosed no substantial question of law. [Paras 7, 8]

No substantial question of law arose from the Tribunal's order.

Final Conclusion: The appeals were dismissed, as the Tribunal's order rested on concurrent factual findings and raised no substantial question of law.

Authorities in the Customs Department had sought the opinion of the Central Bureau of Narcotics seeking a clarification as to whether, the prayer of the Petitioner can be accepted and the goods seized earlier can be released

HELD THAT:- As opinion of the NCB favours the case of the Petitioner. However, since the matter is pending before the Customs Authority, we, instead of expressing any final opinion on merit, deem it appropriate to allow the Customs Authority to take a decision in the matter, in light of the communication dated 30th July 2026 and pass an appropriate order on the prayer of the Petitioner for release of the seized goods. Respondent has also fairly agreed to such a recourse.

Considering the peculiar facts of the case, we are inclined to keep the Writ Petition pending. However, liberty is granted to the Customs Authority to pass appropriate order on the prayer of the Petitioner, despite the pendency of this Writ Petition.

Duty-free shops-application of domestic regulatory laws to imported goods - eligibility of absolute immunity from the domestic regulatory regime - classification in writ jurisdiction

Applicability of domestic regulatory laws to imported goods warehoused or sold through airport duty-free shops for re-export - Whether all transactions conducted within a DFS, beyond the customs barrier, would enjoy absolute immunity from the domestic regulatory regime or whether such immunity/exemption would be restricted solely to fiscal levies such as customs duty, indirect tax, etc.? - HELD THAT: - The fiscal treatment of transactions beyond the customs barrier does not confer blanket immunity from domestic regulatory or public-health laws. Goods brought into Indian territorial waters are imported goods even if not cleared for home consumption, and a restriction under any other law may render them prohibited goods under the customs regime. Warehousing, re-export or sale through a duty-free shop cannot, therefore, exclude the operation of domestic regulatory law.

The decision in Glamstone Cosmetics Pvt. Ltd. [2026 (3) TMI 452 - BOMBAY HIGH COURT] has established that goods brought into India from outside the country would mean and include goods brought within the “territorial waters of India”. The term ‘India’, as defined under Section 2(27) of the Act of 1962, would include territorial waters and not merely the port of arrival or the warehousing of the goods. “Import” under Section 2(23) takes place once the goods enter the “territorial waters of India”. [Paras 22, 25, 26, 27]

The first question was answered against the petitioners: duty-free status limits fiscal levies but does not exempt imported goods from domestic regulatory requirements.

Nicotine pouches-classification as drugs and import-licensing requirement - Requirement of an import licence or registration for nicotine pouches pending determination whether the particular product is a drug and whether a statutory exemption applies. - HELD THAT: - Whether a nicotine pouch is a drug depends upon its composition and intended use, and upon its satisfaction of a particular statutory category, subject to any applicable exemption. The impugned communication did not identify the category under which the product qualified as a drug or disclose the jurisdictional facts supporting that conclusion. However, as the petitioners had not supplied the product specifications, the Court could not determine the classification in writ jurisdiction or interfere with the communication on that ground. [Paras 48, 49, 50, 51, 52]

The classification and licensing question was kept open; the petitioners may submit supporting material to the appropriate authority, which shall decide the representation by a reasoned order in accordance with the observations made.

Final Conclusion: The writ petitions were disposed of. While duty-free sale did not exclude domestic regulatory law, the classification and licensing requirement for the particular nicotine pouches was left open for reasoned consideration by the appropriate authority on representations supported by product particulars.

Reverse burden u/s 123 for notified gold - Documentary provenance of domestically acquired gold jewellery - discharge of burden

Confiscation and penalty in respect of a gold kada/bangle claimed to have been manufactured from domestically purchased 999-purity gold - applicability of the reverse burden u/s 123 and sufficiency of the appellant's documentary explanation - HELD THAT: - Invocation of the reverse burden requires tangible material supporting a reasonable belief that the notified gold is smuggled; neither an inland seizure nor absence of foreign markings is conclusive. The determination must rest on cumulative circumstances, including the manner of carriage, nature of the article, statements, documentary provenance and accounting trail. Here, the gold was a kada/bangle transported through a domestic courier for stated job-work, and the appellant had identified registered suppliers and tax invoices for 999-purity gold.

In the absence of evidence that those invoices were false or unrelated to the business stock, or other incriminating material such as concealment, admissions or foreign markings, the documentary explanation could not be rejected on conjecture.

The claimant's burden u/s 123 is dischargeable on a preponderance of probability through reliable documentary and circumstantial material; it does not require proof of uninterrupted physical identity of fungible gold unless the circumstances reasonably warrant it. [Paras 11, 12, 13, 14, 15]

The confiscation of the gold kada/bangle and the penalty imposed upon the appellant were set aside.

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

Classification of Protector Tube - HSN Explanatory Notes in customs tariff classification - Tariff classification of PVC Protector Tube by constituent material - Classification of brake hose components as motor-vehicle parts - Extended limitation and penalty for intentional customs misdeclaration

Classification of PVC Protector Tube - Preferential customs benefit and correct tariff classification - classifiable under CTH 39172310 or under CTH 40091100 - HELD THAT: - HSN and its Explanatory Notes guide tariff classification in the absence of a contrary indication in the Tariff Schedule.

Hon’ble Supreme Court in CCEs Vs. Wood Craft Products Ltd. [1995 (3) TMI 93 - Supreme Court] has held that in case of ambiguity regarding classification, necessary assistance has to be taken from HSN.

The uncontroverted supplier catalogue and photographs established that the Protector Tube was made of 100% PVC; it was consequently classifiable under CTH 39172310 and not under CTH 40091100. Since the certificate of origin described the goods under the latter heading, the claimed preferential customs benefit was unavailable. [Paras 11, 12, 13]

The classification under CTH 39172310 and denial of the preferential benefit were upheld.

Classification of brake hose bracket as a motor-vehicle part - Classification of automobile brake-system connector as a motor-vehicle part - HELD THAT: - The bracket was used in brake hose assemblies, had been declared as an automobile part, and was neither a product of general use nor excluded from Section XVII. Goods suitable for use solely or principally with motor vehicles are classifiable as motor-vehicle parts rather than under generic or residuary entries. The connector, designed for integration into automobile brake systems, was likewise excluded from Chapter 39 as a vehicle part and could not be treated as a generic plastic pipe fitting. [Paras 12, 13, 14]

The classification of the bracket and connector under CTH 87089900, with the consequential differential duty, was upheld.

Extended limitation for intentional customs misdeclaration - Penalty for customs duty evasion - Invocation of the extended period and imposition of penalties for incorrect tariff declarations resulting in short payment of customs duty - HELD THAT: - Under the self-assessment regime, the importer must make a true and correct classification. The appellant's earlier declarations under the headings asserted by the Department, subsequent change in classification resulting in duty benefit, and admissions and voluntary payments in respect of other discrepancies supported the finding that the incorrect declarations were intentional and had caused short payment of duty. [Paras 15]

The extended period of limitation and the penalties imposed were sustained.

Final Conclusion: The order affirming differential customs duty on the three products, denial of the preferential benefit for Protector Tube, extended limitation and penalties was sustained, and the appeal was dismissed.

Classification of Excalibur Hybrid X archery crossbow - classifiable under Customs Tariff Item 9506 99 90 as sports or outdoor-game equipment, or under Heading 9304 as other arms

HELD THAT: - Applying the General Rules for Interpretation, the Authority held that the goods, being a bow-based archery article using limbs and string to propel arrows or bolts through stored mechanical energy, are excluded from Chapter 93. The HSN Explanatory Notes to Heading 9506 specifically include archery equipment such as bows, arrows and targets. The goods were therefore classifiable under Heading 9506 and, at the sub-heading level, under the residual tariff item 9506 99 90. [Paras 6]

The Excalibur Hybrid X archery crossbow was ruled classifiable under Customs Tariff Heading 9506 99 90 as "Other".

Final Conclusion: The proposed import of the Excalibur Hybrid X archery crossbow was held classifiable as sports equipment under Customs Tariff Heading 9506 99 90, and not as other arms under Heading 9304 00 00.

Benefit of concessional rate of duty - import of lithium-iron cells for use in manufacturing of battery packs of cellular mobile phone which get subsequently scrapped during the manufacturing process - End-use based customs duty concession - Manufacturing-process scrap as unutilised or defective goods - Recovery of differential customs duty on scrapped inputs

Concessional duty on lithium-ion cells for battery manufacture - Unutilised or defective goods under the IGCR Rules - Eligibility for concessional customs duty on imported lithium-ion cells damaged or scrapped during the manufacture of battery or battery packs - HELD THAT: - The concession is conditional upon the specified end-use. Manufacture under the IGCR Rules requires emergence of a new product having a distinct nature, character, use or name. Cells damaged or rejected during assembly or testing and sold as scrap do not result in the specified manufacture. Since neither the notification nor the Rules provide a separate allowance for process loss or wastage, such cells are to be treated as unutilised or defective goods under Rule 10. [Paras 4]

The concessional duty benefit is unavailable for lithium-ion cells damaged or scrapped during manufacture and sold as scrap; they must be dealt with as unutilised or defective goods under Rule 10 read with Rule 11.

Recovery of differential duty on scrapped imported inputs - Method of reversal of the duty concession on lithium-ion cells converted into scrap during manufacture - HELD THAT: - Rule 10(3) read with Rule 11 requires recovery of the difference between the duty otherwise payable at import and the concessional duty paid, together with applicable interest from the date of import until payment. The computation is based on the quantity and value assessed at import and is unaffected by the subsequent sale value of the scrap. [Paras 4]

The concession is to be reversed in full, with differential duty and interest, and not in proportion to the sale value realised from the scrap.

Final Conclusion: The concessional duty concession was denied for lithium-ion cells that were damaged or scrapped during manufacture. Such cells were held to be unutilised or defective goods, requiring payment of differential duty with interest without reference to the scrap sale value.

Classification of woven man-made fibre label tapes - IGST on imported textile labels

Classification of woven man-made fibre label tapes - Woven labels excluded from narrow woven fabrics - Classification of coated or processed woven rolls of man-made textile material, intended exclusively for use as garment labels, under the heading for labels and similar textile articles OR narrow woven fabrics, and under the specific entry for man-made fibre rather than the residual entry - HELD THAT: - Heading 5806 excludes narrow woven fabrics more specifically covered as woven labels, badges and similar articles. Though imported in rolls and requiring subsequent printing or cutting, the goods were specially processed for durable printing, non-embroidered, and designed solely to display garment-related information; they consequently possessed the essential character of labels or similar articles under Heading 5807. Having been declared and confirmed as woven articles of man-made fibre, they fell under the specific tariff item for man-made fibre and not the residual entry. [Paras 8]

The rolls were ruled classifiable under CTI 5807 10 20 as woven labels or similar articles of man-made fibre, subject to verification at import that they conform to the declared description, construction and material composition.

IGST rate for textile labels under Heading 5807 - Applicability of the concessional IGST entry to the imported woven man-made fibre label tapes classified under Heading 5807 - HELD THAT: - Entry 370 of Schedule I covers labels, badges and similar articles of textile materials falling under Heading 5807. Since the products were classified under CTI 5807 10 20, they fell within that entry. [Paras 8]

The products were held covered by Entry 370 of Schedule I to the notification and liable to IGST at 5 per cent, subject to its terms and conditions.

Final Conclusion: The imported rolls were ruled classifiable as woven labels or similar articles of man-made fibre under CTI 5807 10 20, subject to verification of their declared characteristics. They were consequently held eligible for IGST at 5 per cent under the applicable entry for Heading 5807.

IGST rate on imported bulk drugs/active pharmaceutical ingredients - Specific description-based drug entry prevailing over general chemical entries

Bulk drugs/active pharmaceutical ingredients as "drugs and medicines" - Coverage of bulk drugs/Active Pharmaceutical Ingredients under the expression "All Drugs and medicines" in the IGST rate entry - HELD THAT: - As neither the rate notification nor the Customs Act defines "drugs", the Authority applied the statutory definitions governing pharmaceutical goods. Active Pharmaceutical Ingredients are substances used as components of drugs and, read with the definition of bulk drugs, fall within the meaning of drugs. The expression "Chapter 30 or any Chapter" and the separate reference to formulations manufactured from bulk drugs show that the entry is not confined to finished formulations under Chapter 30. Import for examination, testing, clinical research, bioavailability or bioequivalence studies does not by itself alter the pharmaceutical character of an API as a drug. [Paras 7]

Bulk drugs/APIs qualify as "All Drugs and medicines" and attract IGST at 5 per cent under Sl. No. 226, provided that the particular goods are not covered by the specified nil-rate exclusion.

Specific drug entry prevailing over general chemical entries - Applicable IGST entry for bulk drugs/APIs classifiable under Chapters 28 or 29 - HELD THAT: - Though APIs may be classifiable under Chapters 28 or 29 by reason of their chemical composition, the rate is governed by the specific description applicable to the goods. Sl. No. 226 is a description-based entry for drugs and medicines falling under any Chapter, whereas Sl. Nos. 35 and 36 are general Chapter-based entries for inorganic and organic chemicals. The specific entry prevails over the general entries. The notification is a rate notification and not an exemption notification; consequently, any ambiguity in its taxing provision is to be resolved in favour of the taxpayer. [Paras 7]

Sl. No. 226 prevails over the general chemical entries under Sl. Nos. 35 and 36 for determining the IGST rate on qualifying bulk drugs/APIs.

Final Conclusion: Bulk drugs/APIs answering the description of drugs and medicines, and not falling within the stated nil-rate exclusion, are chargeable to IGST at 5 per cent under the specified entry. The alternative-rate question did not arise.

Bulk drugs/active pharmaceutical ingredients as drugs and medicines for IGST rate - Specific description-based IGST entry prevailing over general Chapter-based entries - Generalia specialibus non derogant

Bulk drugs/active pharmaceutical ingredients as drugs and medicines - IGST rate on imported bulk drugs - Eligibility of imported bulk drugs/active pharmaceutical ingredients, including those used in pharmaceutical formulations, testing, clinical research, bioavailability or bioequivalence studies, for the IGST rate applicable to "All Drugs and medicines" - HELD THAT: - The rate notification did not define "drugs". On a conjoint reading of the statutory definition of drug, which includes substances intended for use as components of a drug, and the definition of active pharmaceutical ingredients or bulk drugs, the Authority held that APIs fall within the meaning of drugs. Their import for testing, research, clinical trials, bioavailability or bioequivalence studies did not, by itself, alter that character. The semi-colon in the entry created distinct categories, and the expression "Chapter 30 or any Chapter" showed that coverage was not confined to finished formulations under Chapter 30. The applicability of the nil-rate exclusion was to be examined for the particular goods at import. [Paras 7]

Bulk drugs/APIs described in the application qualify as "All Drugs and medicines" and attract IGST at 5%, provided that the particular goods are not covered by the specified nil-rate exclusion.

Specific description-based IGST entry prevailing over general Chapter-based entries - Applicability of the specific entry for "All Drugs and medicines" to bulk drugs/APIs classifiable under Chapters 28 or 29, instead of the general entries for inorganic or organic chemicals - HELD THAT: - The applicable IGST rate was governed by the specific description of the goods and not merely by their chemical tariff classification. The entries for goods under Chapters 28 and 29 were general Chapter-based entries, whereas the entry for drugs and medicines was a specific description-based entry extending to goods under any Chapter.

It is a well-settled principle of classification that when a product is covered by both a general entry and a specific entry, the specific entry shall prevail over the general entry (generalia specialibus non derogant). Accordingly, Active Pharmaceutical Ingredients (APIs), though classifiable under Chapters 28 or 29 for tariff purposes, when they satisfy the description of "drugs", are appropriately covered under SI. No. 226 for the purpose of determination of applicable IGST rate. The SI. No. 226 entry is a specific entry which will prevail over the general entry of "all organic chemicals other than gibberellic acid".

Applying the ratio laid down in Court in Dilip Kumar & Company, [2018 (7) TMI 1826 - SUPREME COURT (LB)] the subject goods of the applicant are appropriately classifiable under SI. No. 226 of Schedule I to Notification No. 09/2025- Integrated Tax (Rate) dated 17.09.2025, which is a IGST taxing entry and not an exemption entry. [Paras 7]

The specific entry for drugs and medicines applies in preference to the general entries for inorganic or organic chemicals, subject to the prescribed exclusions.

Final Conclusion: The applications were answered in the affirmative. The subject Bulk Drugs/Active Pharmaceutical Ingredients (APIs), as described in the application and supported by the documents submitted by the Applicant, qualify as "All Drugs and medicines" under SI. No. 226 of Schedule I to Notification No. 9/2025-Integrated Tax (Rate) dated 17.09.2025 and are eligible for the concessional IGST rate of 5%, provided that the particular Bulk Drug/API is not covered under the exclusion specified in the said entry, including the goods specified at SI. No. 113 of Notification No. 10/2025-Integrated Tax (Rate) dated 17.09.2025.

Limited liability under personal guarantee - Finality of debt recovery adjudication - Repayment plan of personal guarantors -creditors' statutory approval

Limited liability under personal guarantee - Finality of debt recovery adjudication - appellants' claim that their personal guarantees were confined to the market value of mortgaged properties despite the final debt recovery adjudication - HELD THAT: - The clauses imposing payment liability upon default and permitting enforcement of the guarantee notwithstanding unrealisable securities were read with the clause concerning mortgaged properties. The debt recovery adjudication had upheld the guarantee and fixed the guarantors' joint and several liability for the entire dues; it had attained finality without challenge. The appellants had participated in those proceedings and filed written statements. They could not consequently re-agitate the extent of their liability in collateral proceedings under Section 114 of the Code. [Paras 16, 17, 19]

The plea of limited liability was untenable and barred from reconsideration in the Section 114 proceedings.

Repayment plan of personal guarantors - Creditors' statutory approval - Commercial wisdom of creditors - validity of rejection of the personal guarantors' repayment plans for want of the requisite creditor approval - HELD THAT: - The final repayment plans did not secure the requisite affirmative voting share. Section 114 requires consideration of the plan on the creditors' meeting report and does not empower the Adjudicating Authority to substitute its commercial view where the prescribed majority has not approved the plan. No prejudice or vitiation of the statutory process was established. [Paras 21, 22, 24]

The creditors' rejection of the repayment plans was binding and was sustained.

Final Conclusion: The appeals were dismissed and the impugned order was upheld. The final adjudication of the guarantors' liability could not be reopened, and the repayment plans lacked the statutory creditor approval.

Locus standi of non-participant to challenge concluded liquidation sale - Proportionality of costs for speculative liquidation challenge

Challenge to concluded liquidation sale by non-participating prospective bidder - Speculative claim of prejudice in e-auction process - Maintainability of a non-participating prospective bidder's challenge to the concluded e-auction, letter of intent and sale certificate for liquidation assets - HELD THAT: - The appellant admittedly neither participated in nor evinced interest in the e-auction. Its assertion that it might have participated if the subsequently incorporated conditions had been available at the auction stage was held to be speculative. Being neither an affected party nor anything more than a potential bidder in the event of a fresh auction, the appellant disclosed no substantive ground for annulment of the concluded sale. [Paras 12, 13]

The challenge to the e-auction, letter of intent and sale certificate was rejected and the appeal was dismissed on merits.

Proportionality of costs for speculative liquidation challenge - Propriety of costs imposed on a non-participating applicant for challenging the liquidation sale - HELD THAT: - While proceedings under the IBC were not in the nature of public interest litigation and costs were warranted to deter litigation by a total stranger, the costs imposed were disproportionate because the application had not been shown to have delayed the liquidation process. [Paras 14]

The costs were reduced to a proportionate sum, payable to the Prime Minister's Relief Fund.

Final Conclusion: The appeal was dismissed, as the appellant, a non-participant in the e-auction, established no substantive basis to disturb the concluded liquidation sale. The costs were, however, reduced as disproportionate.

Monetary-threshold exemption from PMLA twin bail conditions - Cancellation of bail in money-laundering prosecution - Individual attribution of money-laundering amount

Entitlement to the monetary-threshold exemption from the twin bail conditions under the first proviso to Section 45 of the PMLA where the aggregate proceeds of crime exceeded the threshold - HELD THAT: - The proviso concerns the sum of money-laundering for which the particular person is accused, and not the aggregate proceeds of crime in the case. Its benefit is discretionary and must be determined with reference to the extent of the accused's involvement and the material collected. Though the material prima facie indicated the respondent's involvement in conversion of funds, it linked him only to a confined transaction below the statutory threshold and did not show his direct or indirect participation in the larger laundering activity. [Paras 12, 17]

The respondent was entitled to seek exemption from the twin conditions, and the Special Court's extension of the proviso's benefit was upheld.

Cancellation of bail in money-laundering prosecution - Cancellation of bail granted to an accused eligible for the monetary-threshold exemption under the PMLA - HELD THAT: - Cancellation required a showing that the Special Court's exercise of discretion was perverse or fallacious, conferred an undue benefit on the accused, and prejudiced the prosecution. The material did not indicate that further custody was necessary, that release would hamper investigation, or that the respondent's involvement would extend to a larger laundering activity. The stringent bail conditions sufficiently addressed the apprehension of flight risk. [Paras 18, 19]

No perversity, arbitrariness, or prejudice to the investigation was established; the bail order was therefore maintained.

Final Conclusion: The application for cancellation of bail was rejected, the respondent's eligibility under the first proviso to Section 45 of the PMLA and the bail order being sustained.

Regular bail in money-laundering prosecution - Statutory conditions for bail under the Prevention of Money Laundering Act - Parity with co-accused

Grant of regular bail to an accused alleged to have played a central role in a cloud-storage investment scheme involving laundering of proceeds of crime - HELD THAT: - The material prima facie disclosed a specific and direct role in the formulation and operation of the investment model, mobilisation of investments, and movement and utilisation of the alleged proceeds of crime. The financial, documentary and witness material could not be discarded at the bail stage, and, with material witnesses yet to be examined, there were no tangible grounds to believe that the petitioner was not guilty.

The period of custody did not warrant release at the existing stage of trial in view of the grave allegations and the need for examination of key witnesses. Parity with a co-accused was unavailable because her bail was granted as a woman to whom the statutory conditions did not apply, apart from distinguishing circumstances concerning role and material. [Paras 7]

Regular bail was refused; the observations were directed not to influence the trial on merits.

Final Conclusion: The petition for regular bail was dismissed, the Court finding that the statutory threshold for release was not satisfied on the prima facie material.

Service tax valuation of pass-through insurance premium - Penalty for wilful suppression of service tax

Service tax valuation of pass-through insurance premium - Consideration for taxable service - Inclusion of insurance premium collected from borrowers and remitted in full to the insurer in the value of taxable banking and financial service - HELD THAT: - The value of a taxable service is confined to the gross amount charged for that service and requires a nexus between the amount received and the service rendered by the provider. Insurance premium that merely passes through the appellant to the insurer, without augmenting the appellant's remuneration, was not consideration for the appellant's taxable service. This principle governed the dispute, which related to the period preceding the amendment to the Explanation to Section 67.

The words “for such service” import a requirement of nexus and only an amount charged as consideration for the service actually rendered answers the description, and an amount that merely passes through the provider’s hands for onward payment to a third party, without adding to the provider’s own remuneration, would therefore fall outside it’s purview. This is in conformity with the principle affirmed by the Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd.,[2018 (3) TMI 357 - SUPREME COURT] where Court held that Section 67 permits taxation only of the gross amount charged for such service, and that reimbursable or pass-through expenditure bearing no nexus with the service rendered cannot be brought within that measure by a subordinate rule. That ratio governs the present dispute, which concerns a period well before the amendment to the Explanation to Section 67 with effect from 14.05.2015, and hence applies only prospectively. [Paras 20, 21, 25]

The demand on the insurance-premium component, together with consequential interest, was set aside; the tax and interest already discharged on administrative charges remained undisturbed.

Extended limitation for wilful suppression - Invocation of the extended period for demand of service tax on insurance premium in an interpretational valuation dispute - HELD THAT: - The Supreme Court has repeatedly held, beginning with CCE v Chemphar Drugs & Linments [1989 (2) TMI 116 - SUPREME COURT], and reiterated in Uniworth Textiles Ltd. [2013 (1) TMI 616 - SUPREME COURT] that mere non-payment of tax is not equivalent to wilful suppression, and that the qualifying word “wilful” must be given full effect. Thus a bona fide, even if ultimately incorrect, understanding of one’s tax liability does not attract the extended period. This position was affirmed again in Northern Operating Systems Pvt. Ltd.[2022 (5) TMI 967 - SUPREME COURT] where a demand raised on an interpretational question was held not to sustain invocation of the extended period in the absence of any positive act of suppression.

The extended period requires fraud, collusion, wilful misstatement or suppression with intent to evade tax; mere non-payment or an erroneous bona fide understanding of liability does not suffice. The dispute concerned the interpretation of the valuation provisions in relation to the insurance-premium arrangement, and neither the orders below nor the notice established deliberate concealment or wilful suppression. [Paras 22, 23]

Invocation of the extended period was held unjustified.

Penalty for wilful suppression of service tax - Penalty for alleged non-payment of service tax on insurance premium and admitted administrative charges - HELD THAT: - Penalty under Section 78 requires the same culpable ingredients as invocation of the extended period. No fraud or wilful suppression was established in respect of the premium component; nor was any separate basis shown for penalty on the administrative charges, for which tax and interest had been voluntarily paid before the show cause notice. [Paras 24]

The penalty under Section 78 was set aside.

Final Conclusion: The appeal was partly allowed: service tax, interest and penalty on the insurance premium were set aside, while the admitted tax and interest on administrative charges remained undisturbed.

Service-tax valuation of recipient-borne withholding tax - Applicable rate under service-tax reverse charge - Penalty in interpretative service-tax disputes

Appellate remand in service-tax proceedings - Commissioner (Appeals)'s remand for factual examination of whether withholding tax borne by the service recipient formed part of taxable value - HELD THAT: - The limitation on remand contained in the Central Excise appellate provision was not incorporated into the service-tax appellate scheme; consequently, the Commissioner (Appeals) was empowered to pass an appropriate order, including remand. That power, however, could be exercised only where a material fact required ascertainment. The original authority had already recorded the material factual premise, leaving no matter requiring further verification. [Paras 9, 10]

The Commissioner (Appeals) had power to remand, but the remand on includability of withholding tax was unwarranted and was set aside.

Service-tax valuation of recipient-borne withholding tax - Inclusion in taxable value of withholding tax paid by a service recipient from its own funds in respect of services received from a foreign service provider - HELD THAT: - Tax deducted at source and deposited by the service recipient from its own funds, without recovery from or deduction out of the consideration payable to the foreign service provider, is not consideration flowing to that provider. It therefore does not form part of the value of taxable service. [Paras 11]

No service tax was payable on the recipient-borne withholding-tax component, and the demand relating to it was held unsustainable.

Applicable rate under service-tax reverse charge - Applicable service-tax rate on services received from a foreign service provider before reduction of the rate but paid for after the reduction - HELD THAT: - For services taxable under reverse charge, the applicable rate is the rate in force when the service is received, not the rate prevailing when payment is made or invoicing occurs. The contrary realisation-based view was not followed, as it had not considered the prior authorities. Since receipt of the services while the higher rate prevailed was undisputed, subsequent payment after the reduction did not attract the reduced rate. [Paras 12, 13]

The rate-differential service-tax demand was sustained.

Penalty in interpretative service-tax disputes - Interest on sustained service-tax demand - Interest and penalty consequences of the withholding-tax demand and the rate-differential demand - HELD THAT: - Penalty referable to the withholding-tax demand could not survive once that demand failed. Interest followed the sustained rate-differential demand. However, the dispute over the applicable rate was interpretative, warranting deletion of penalty on that count. [Paras 14]

Interest on the sustained rate-differential demand was upheld, but the penalties did not survive.

Final Conclusion: The appeal was partly allowed: service tax on withholding tax borne from the recipient's own funds and the related remand were set aside, while the rate-differential demand with interest was sustained and the penalties did not survive.

Works contract service - non-commercial construction for educational institutions - Service-tax exemption for construction of educational buildings for charitable societies - SEZ construction - statutory exemption overriding notification procedure - Commercial or industrial construction - public community hall under MPLAD Scheme

Works contract service - non-commercial construction for educational institutions - Service-taxability of construction of school, college and vocational-training buildings for charitable trusts before 01.07.2012. - HELD THAT: - The buildings were not used, or intended to be used, primarily for commerce or industry. Construction for institutions established solely for non-profit educational purposes was non-commercial in nature and therefore did not fall within taxable works contract service. [Paras 15]

The demand under works contract service for the period from 2010-2011 up to 30.06.2012 was held unsustainable.

Service-tax exemption for construction of educational buildings for charitable societies - Eligibility of construction of educational buildings for charitable societies for exemption from 01.07.2012. - HELD THAT: - The applicable exemption for construction of educational buildings extended only to services provided to the Government, a local authority or a governmental authority. The exemption concerning buildings owned by entities registered under the Income-tax Act applied only where the building was predominantly meant for religious use by the general public. Construction for charitable societies for educational purposes did not satisfy either condition. [Paras 15]

The demand for construction undertaken from 01.07.2012 for charitable educational societies was sustained.

SEZ construction - statutory exemption overriding notification procedure - Eligibility for service-tax exemption on construction of a building for an SEZ unit despite non-compliance with the procedure prescribed by the exemption notification. - HELD THAT: - Construction of the SEZ building was exempt under the SEZ Act, the SEZ Rules and the notification. The statutory exemption under Section 26(1) of the SEZ Act overrides the procedural requirements of the notification; consequently, failure to follow that procedure could not defeat the exemption for services provided to the SEZ unit. [Paras 16]

The appellant was held eligible for service-tax exemption on construction of the SEZ building.

Commercial or industrial construction - public community hall under MPLAD Scheme - Service-taxability of construction of a public community hall for the District Collector under the MPLAD Scheme. - HELD THAT: - The evidence established that the construction was of a community hall for public use under the MPLAD Scheme and not a construction in furtherance of business or commercial purposes. The construction was therefore eligible for exemption. [Paras 17]

The demand relating to construction of the Nirmithi Kendra was held unsustainable.

Final Conclusion: The appeal was partly allowed: demands relating to non-commercial educational construction, SEZ construction and the public community hall were held unsustainable, while the demand for construction of educational buildings for charitable societies was sustained.

Mutual exclusivity of sales tax/VAT and service tax on delivery charges forming part of sale price - Delivery of manufactured gases - cargo handling service or goods transport agency service

Service tax on delivery charges forming part of sale price - Mutual exclusivity of sales tax/VAT and service tax - Levy of service tax on collection and delivery charges forming part of the sale price of manufactured gases and subjected to central sales tax/VAT - HELD THAT: - Where collection and delivery charges formed part of the sale price of gases and had been subjected to central sales tax/VAT, they could not also be treated as consideration for a taxable service. The earlier decision involving the same appellant on materially identical facts was followed, there being no evidence of any factual distinction. [Paras 6]

The service-tax demand on the collection and delivery charges was unsustainable.

Delivery of manufactured gases - cargo handling service or goods transport agency service - Classification of transportation and delivery of manufactured gases to customers as cargo handling service rather than goods transport agency service - HELD THAT: - A manufacturer delivering its own gases to customers in fulfilment of contracts of sale is not a cargo handling agency. As transportation was procured from goods transport agency providers and service tax under reverse charge had been accepted under that category, the activity could not be recharacterised as cargo handling service. [Paras 6, 7]

The delivery charges were not liable to service tax under the category of cargo handling service.

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

Service tax on commission for procuring investors and depositors - Extended limitation for suppression of taxable service - Small service provider exemption based on taxable commission turnover - Cum-tax valuation where service tax was not separately charged

Service tax on commission for procuring investors and depositors - Service tax liability on commission received for procuring investors and depositors for a credit cooperative society - HELD THAT: - Following the Tribunal's earlier decisions M/s Ashish Kumar Joshi [2024 (5) TMI 860 - CESTAT NEW DELHI] Tribunal held that commission received for procuring prospective investors or depositors constituted taxable service under Notification No. 7/2003-ST. [Paras 4]

The appellants were held liable to service tax on the commission received.

Extended limitation for suppression of taxable service - Invocation of the extended limitation period for non-payment of service tax on commission income - HELD THAT: - The taxable nature of the commission had existed since 2003, and the service could not have come to the Department's notice without investigation. The appellants neither obtained service tax registration nor filed returns or paid tax, constituting suppression of the taxable service. [Paras 6]

Invocation of the extended period of limitation was upheld.

Small service provider exemption based on taxable commission turnover - Eligibility for the small service provider exemption where the demand was based on income figures reflected in Form 26AS - HELD THAT: - Figures in Form 26AS reflected tax deducted on income and did not by themselves establish the taxable turnover. The actual commission received for taxable services had to be ascertained to determine whether it remained within the prescribed exemption threshold. [Paras 7]

The issue was remanded without final determination for verification of taxable commission turnover and consequential grant of exemption, if eligible.

Cum-tax valuation where service tax was not separately charged - Cum-tax benefit on commission where service tax was not separately recovered from clients - HELD THAT: - As service tax had not been charged separately on the commission received, the amount was required to be treated as cum-tax value. [Paras 8]

The appellants were held entitled to cum-tax benefit, which the Adjudicating Authority was directed to allow.

Final Conclusion: The impugned orders were set aside and the matters remanded to determine exemption eligibility and extend cum-tax benefit; taxability and invocation of extended limitation were upheld.

Excise valuation - free-supplied cabin designs and drawings - Show cause notice-remand to cure valuation lacuna - Extended limitation and penalty-absence of wilful suppression

Assessable value of motor vehicle cabins - Free-supplied designs and drawings - additional consideration - Transaction value-burden of proof - Inclusion of free-supplied cabin designs and drawings in the assessable value of motor vehicle cabins as additional consideration - HELD THAT: - Transaction value could be displaced only where Revenue established that the drawings constituted consideration flowing from the buyer, were supplied for use in connection with production and sale, were used in or necessary for production, and their value had not already been absorbed in the negotiated price.

That this burden is real, and is not discharged by assertion, is settled by Commissioner of Central Excise, Belgaum vs. Mysore Kirloskar Ltd.[2008 (5) TMI 286 - SUPREME COURT] dealing with a demand raised by loading the value of machinery with charges for designs, drawings, patterns and jigs, held that although such charges are in principle includible where the contract is composite, the nexus of the consideration to the negotiated price has to be established, and a demand raised without establishing that nexus is not sustainable. On limitation the Court held that adequate reasons for invoking the proviso to Section 11A(1) must be indicated and that the extended period cannot rest on a vague allegation in the notice.

Mere free supply did not by itself displace the condition that price was the sole consideration. Neither the notice nor the original order examined the nature and relevance of the drawings, whether they were actual production drawings rather than customer specifications, or whether the statutory conditions for inclusion were satisfied. The Tribunal expressly declined to determine the true character of the drawings in the absence of material on record. [Paras 10, 12, 13, 17, 18]

The notional value of the free-supplied designs and drawings was held not includible, as Revenue failed to establish the ingredients for applying Rule 6.

Quantification of the demand, based upon a percentage suggested by one customer - Assessable value - arbitrary percentage-based quantification - HELD THAT: - The customer's suggested percentage was not evidence of the value of cabin drawings; it related to a different subject matter, was applied across all customers, and was added to an unrelated base. Valuation had to be determined by the statutory authority under an applicable valuation rule using reasonable means, not by adopting a figure volunteered by a customer. As the show cause notice contained no evidence of the alleged additional consideration beyond a response stating that its value was not ascertainable, remand would impermissibly enable Revenue to repair the foundational lacuna and make a fresh case. [Paras 21, 22, 24, 26, 27]

The percentage-based addition was not a determination of value recognised by the valuation provisions, and the remand direction was set aside.

Invocation of the extended limitation period and imposition of penalty for alleged non-inclusion of the value of free-supplied drawings - HELD THAT: - The registered manufacturer had filed periodical returns and undergone audits, and the alleged omission emerged from its own records. No positive concealment, withheld document, or misdeclaration was identified. The dispute was interpretational, and even the customer could not ascertain the value alleged to have been suppressed. Revenue neutrality was considered only as a corroborative circumstance indicating absence of intent to evade. Since the ingredients of wilful suppression and intent to evade were not established, the extended period and the penalty provision founded on the same ingredients were unavailable.

What does support the appellant here is Nirlon Ltd. vs. Commissioner of Central Excise, Mumbai [2015 (5) TMI 101 - SUPREME COURT] where the Court found no mala fide or intent to evade, found the exercise in addition revenue neutral, and held the extended period not invocable on that combination of circumstances. [Paras 30, 31, 32, 33, 34]

The extended period was held inapplicable, and the demands of interest and penalty were consequently unsustainable.

Final Conclusion: The appellate order, including its remand direction, and the original order were set aside. The appeal was allowed with consequential reliefs.

Captive-consumption valuation of stock-transferred excisable goods - CAS-4 cost of production under Rule 8 of the Central Excise Valuation Rules - Penalty for alleged valuation-related short-payment of duty

Valuation of iron and steel goods stock-transferred to sister units for captive use-applicability of Rule 8 or Rule 4 of the Central Excise Valuation Rules - HELD THAT: - The goods were transferred to sister units for captive consumption in the manufacture of excisable final products. We find that the issue has already been settled, in fact in the appellant's own case [2024 (6) TMI 125 - CESTAT KOLKATA] following the decision in the case of M/s. National Aluminium Company Ltd. [2024 (4) TMI 1088 - CESTAT KOLKATA] the Tribunal held that valuation on CAS-4 cost of production under Rule 8 was correct for such captive consumption and that Rule 4 was inapplicable. [Paras 10]

Duty had been correctly paid under Rule 8, and no differential duty was payable under Rule 4.

Penalty for the alleged short-payment arising from valuation of captively consumed stock-transferred goods - HELD THAT: - As no differential duty was payable, the basis for imposition of penalty for the alleged valuation-related short-payment did not survive. [Paras 11]

No penalty was imposable.

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

Rejection of plaint on limitation in loan-recovery suit - TDS deposit as payment on account of debt - Rejection of the loan-recovery plaint as time-barred where signed balance confirmations and continued TDS deductions were relied upon as acknowledgments or payments

HELD THAT: - On an application under Order VII Rule 11(d), rejection is warranted only where a meaningful reading of the plaint and the material relied upon shows an ex facie statutory bar.

Deposit of TDS against the loan transaction is capable, u/s 19 of the Limitation Act, of constituting payment on account of the debt and giving rise to a fresh limitation period; the binding Division Bench view of this Court was followed. The signed balance confirmations and continued TDS deductions consequently raised a triable question under Sections 18 and 19, the precise legal and evidentiary effect of which required determination on evidence. [Paras 29, 30, 31, 32, 34]

The Trial Court's refusal to reject the plaint was sustained, with limitation left for adjudication after evidence.

Final Conclusion: The petitions were dismissed, leaving limitation in the loan-recovery suits for determination upon evidence.

Employer-employee disputes as commercial disputes - Return of plaint filed before wrong forum

Employer-employee disputes as commercial disputes - Characterisation of employment-agreement claims for salary, increments and sales commission as a commercial dispute under the Commercial Courts Act, 2015 - HELD THAT: - A dispute arising from an employment agreement between an employer and an employee, concerning alleged unpaid salary, increments and related employment dues, is a contract of personal service and does not fall within the statutory definition of a commercial dispute. The definition cannot be extended to include ordinary employer-employee disputes contrary to the legislative mandate. [Paras 23, 24]

The finding that the suit was not a commercial dispute was affirmed.

Return of plaint filed before wrong forum - Course to be adopted where an employer-employee recovery claim is filed as a commercial suit before an inappropriate forum - HELD THAT: - Upon finding that the suit was not a commercial dispute, the Commercial Court ought not to have dismissed it. A litigant approaching a wrong forum should be permitted to present the plaint before the appropriate Court, rather than being subjected to the fresh expense of instituting a new proceeding. [Paras 25, 26, 28]

The dismissal was modified and the plaint was directed to be returned for presentation before the appropriate Court.

Final Conclusion: The appeal was disposed of by affirming that the employment-related recovery claim was not a commercial dispute, while modifying the dismissal to require return of the plaint for presentation before the appropriate Court.