TaxTMI Updates e-Newsletter
Sep 25,2026

Pre-adjudication challenge to input tax credit show-cause notice - Exclusion of period of judicial restraint from tax limitation

Challenge to show-cause notice for input tax credit - Maintainability of a challenge to a show-cause notice proposing reversal of input tax credit on invoices not reflected in GSTR-2A. - HELD THAT: - At the show-cause stage, the Court would not determine entitlement to input tax credit solely from the electronic statement or the appellant's documentary assertions. The audit finding could validly initiate proceedings, and the proper officer had jurisdiction to adjudicate the alleged wrongful availment; the statutory conditions, including the appellant's factual and legal defences, were matters for that adjudication. Absence of a counter-affidavit, the interval between the audit report and notice, and non-initiation of proceedings against the supplier did not render the notice without jurisdiction. [Paras 19, 21, 22, 26, 27]

The refusal to quash the show-cause notice was affirmed, leaving all factual and legal defences open before the proper officer.

Exclusion of stayed period in limitation computation - Exclusion, for limitation, of the period during which proceedings pursuant to the show-cause notice remained restrained by an interim order in the writ proceedings. - HELD THAT: - As the statutory proceedings could not continue because of interim protection obtained by the appellant, the time consumed during such restraint could not be allowed to prejudice the statutory process. The direction to exclude that period while computing limitation was justified in the circumstances. [Paras 24, 25]

The direction excluding the period of judicial restraint while computing limitation was upheld.

Final Conclusion: The order under appeal was affirmed, allowing the statutory adjudication to proceed while preserving the appellant's factual and legal defences.

Expired e-way bill - absence of intent to evade tax - Detention and penalty of goods in transit

Detention and penalty in respect of goods transported with an expired e-way bill, where the accompanying invoice and builty were correct and the delay resulted from an unrebutted vehicle breakdown - HELD THAT: - Section 129(3) cannot be invoked merely because the e-way bill had expired. Where the goods and accompanying documents disclosed no discrepancy, and the explanation for non-extension of the e-way bill remained unrebutted without any independent enquiry, no adverse inference of an intention to evade tax could be drawn solely from the expired e-way bill.

This court in the cases of Agrim Wholesale [2025 (9) TMI 1875 - ALLAHABAD HIGH COURT] and CJ Darcl Logistics [2025 (9) TMI 594 - ALLAHABAD HIGH COURT] have held that absence of any material to establish the intent to evade payment of tax does not attract the rigours under section 129(3) of the Act.[Paras 8, 9, 10]

The detention and consequential tax and penalty orders were quashed, with refund of the amount deposited in accordance with law.

Final Conclusion: The writ petition was allowed, the impugned detention and appellate orders were quashed, and refund of the amount deposited was directed in accordance with law.

Penalty demand not specified in Form DRC-01 - Adjudication beyond show cause notice

Confirmation of penalty in adjudication where the show cause notice did not clearly specify the proposed penalty in Form DRC-01 - HELD THAT: - The statutory requirement that the amount of tax, penalty and other demand be clearly specified in the show cause notice on Form DRC-01 had not been complied with. The penalty could therefore not be sustained on the basis of the notice as issued. [Paras 3, 4]

The adjudication order was set aside and the matter remitted, permitting issuance of a supplementary notice quantifying penalty and interest, followed by fresh objections and a fresh adjudication after hearing the petitioner. The objection regarding absence of ingredients for invoking Section 74 was left for determination in the remanded proceedings.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication order for failure to specify the penalty demand in the prescribed show cause notice and remitting the matter for fresh adjudication.

Service of show cause notice after cancellation of GST registration - Principles of natural justice

Validity of an order under section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017 where the show cause notice was uploaded on the GST portal after cancellation of the taxpayer's registration - HELD THAT: - Upon cancellation of registration, the taxpayer was not obliged to check the GST portal. A show cause notice thereafter had to be served through an alternative mode; portal upload alone resulted in breach of the principles of natural justice. [Paras 4, 6]

The impugned order was quashed, with liberty to the Department to issue a proper notice and proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the order passed without proper service of notice after cancellation of registration, while preserving the Department's liberty to proceed upon due notice.

Ex parte adjudication order passed u/s 73 of the UPGST Act, 2017, read with CGST Act, 2017 - preliminary objection raised that the petitioner has statutory remedy of appeal

HELD THAT:- The writ petition was disposed of on the State's concession, permitting the petitioner to file a statutory appeal within two weeks without objection as to limitation; any deposit against the disputed demand may be adjusted towards the prescribed pre-deposit.

Assignment of proper officer functions to Central Tax Officers - Writ jurisdiction where statutory appellate remedy against GST demand order is available

Assignment of proper officer functions to Central Tax Officers - Validity of the circulars assigning functions of proper officer under the CGST Act to Central Tax Officers - HELD THAT: - The Central Tax Officers had been appointed under the statutory notification, and the circulars assigned proper-officer functions, including functions under the demand provision, by reference to monetary limits. The Customs Act decisions concerning assignment of functions to officers who were not officers of customs were distinguishable; assignment of functions to already appointed Central Tax Officers was not a delegation of powers requiring a notification. [Paras 12, 13]

The challenge to the three circulars, and to the competence of the officer on that ground, was rejected.

Writ jurisdiction where statutory appellate remedy against GST demand order is available - Maintainability of the writ challenge to the GST demand order when an effective statutory appeal was available - HELD THAT: - Though availability of an alternative remedy does not by itself bar writ jurisdiction, a writ petition ought not ordinarily be entertained where the statutory mechanism provides effective redressal, unless recognised exceptions are established. No such exception was made out: the authority had considered the defence and documents and afforded personal hearing, while reappreciation of the disputed material lay within the appellate authority's domain. [Paras 15, 16, 17, 18, 19]

The writ challenge to the demand order was declined, with liberty to pursue the statutory appeal within 30 days; the Court stated that the appellate authority would not oust the petitioner on limitation.

Final Conclusion: The challenge to the circulars assigning proper-officer functions was rejected. The writ challenge to the GST demand order was declined in favour of the statutory appellate remedy, with the stated protection regarding limitation.

Input tax credit - supplier's payment of tax - Alternative statutory remedy - writ jurisdiction

Input tax credit - supplier's payment of tax - Constitutional validity of the condition for input tax credit requiring proof of payment of tax by the supplier - HELD THAT: - The condition was held to be neither arbitrary nor disproportionate. It requires the recipient to establish, through cogent material, that the tax charged by the supplier was actually deposited; the constitutional challenge had already been settled by the Supreme Court in Bhandari Scrap Traders v. Union of India [2026 (7) TMI 1839 - SC ORDER] wherein the Court rejected the argument that the provision must be read down merely because the supplier may default. The condition is neither arbitrary nor disproportionate, inasmuch as it merely requires the recipient to establish, through cogent material, that the tax charged has been actually deposited by the supplier. [Paras 13]

The challenge to the validity of the condition for availment of input tax credit was not accepted.

Alternative statutory remedy - writ jurisdiction - Wrongful availment of input tax credit from cancelled suppliers - Exercise of writ jurisdiction against the demand for input tax credit availed from suppliers whose registrations had been cancelled, notwithstanding objections concerning hearing, overlapping proceedings and duplication of demand - HELD THAT: - The objections required factual scrutiny of the returns, e-way bills, transport and delivery records, payment trails, reply, hearing record, and the respective scope of the penalty and demand proceedings. The alleged inadequacy of hearing was curable and did not go to jurisdiction. Whether the proceedings concerned the same subject matter so as to attract the statutory bar, or resulted in duplication or double taxation, was a mixed factual and legal question more appropriately examinable in the statutory appeal. [Paras 17, 18, 19, 20, 21]

The writ petition was not entertained and the petitioner was relegated to the appellate remedy, with liberty to seek exclusion of the pendency period in accordance with law.

Final Conclusion: The petition was disposed of without examining the merits of the demand, leaving the petitioner to pursue the statutory appeal. The appellate authority was directed to consider any application for exclusion of the period of pendency in accordance with law.

Alternative statutory appeal against cancellation of GST registration - Exercise of writ jurisdiction where efficacious statutory remedy exists

Writ jurisdiction against cancellation of GST registration and rejection of the revocation application when a statutory appeal was available - HELD THAT: - The Court held that the CGST Act provides an efficacious appellate remedy under Section 107.

We find that the petitioner has adequate remedy of appeal under Section 107 of the CGST Act and we are also cautions of the judgment of Hon'ble Supreme Court in the case of Commissioner of Income Tax and others vs Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] wherein it is held that in tax matters complete statutory mechanism is provided for and ordinarily the proceedings be relegated to the statutory remedy provided under the statute. [Paras 7, 8]

The writ petition was dismissed on the ground of availability of the statutory appellate remedy.

Final Conclusion: The challenge to cancellation of GST registration and rejection of its revocation was dismissed, the Court declining writ interference in view of the available statutory appeal.

Opportunity of hearing before cognizance on complaint

Cognizance on CGST offence complaint - Opportunity of hearing under Section 223 BNSS - Validity of cognizance on a complaint alleging offences under the CGST Act where the applicant was not afforded an opportunity of hearing as contemplated by Section 223 of the BNSS. - HELD THAT: - On the statement of counsel for the complainant that the cognizance order had been passed without affording the applicant an opportunity of hearing in compliance with Section 223 of the BNSS, the Court found that the order could not be sustained. [Paras 6]

The cognizance order was set aside and the complaint was remanded to the Chief Judicial Magistrate for a fresh order after hearing both parties.

Final Conclusion: The application was allowed. The impugned cognizance order was set aside and the complaint was remanded for fresh consideration after affording hearing to both parties.

Refund of unutilised input tax credit by SEZ units - Entitlement of an SEZ unit to claim refund of unutilised input tax credit under the GST refund framework

HELD THAT: - The refund provisions do not confine an application to suppliers making supplies to an SEZ unit. The reference to such suppliers in the relevant rule identifies one category of applicants and cannot be construed to exclude an SEZ unit. A restrictive word not found in the statutory scheme cannot be inserted by interpretation.

Following the earlier decisions of the Court Urjita Electronics [2025 (1) TMI 1856 - MADRAS HIGH COURT] AND Platinum Holdings [2021 (10) TMI 630 - MADRAS HIGH COURT] the petitioner was held entitled to have its refund claim processed. [Paras 6]

The impugned orders were set aside and the refund application was directed to be processed within two months.

Final Conclusion: The writ petition was allowed, the orders denying the refund claim were set aside, and the respondents were directed to process the application within two months.

GST exemption for interest on deposits, loans or advances - Burden of proving State-specific exempt interest turnover

GST exemption for interest on loans and advances - Scope of the exemption for consideration represented by interest under Entry 27 of Notification No. 12/2017-Central Tax (Rate). - HELD THAT: - Entry 27 exempts services of extending deposits, loans or advances where the consideration is represented by interest or discount, excluding interest involved in credit-card services. The Tribunal held that recovery of interest falls within the exemption. [Paras 9]

The first question of law was answered in favour of the appellant.

Proof of exempt interest income attributable to another State - Adverse inference for withholding documentary evidence - Entitlement to exemption for interest income claimed to have been attributable to another State but erroneously reported as turnover of Chhattisgarh. - HELD THAT: - The appellant was required to establish, by cogent documentary evidence, that the disputed turnover represented exempt interest income relating to another State and had been wrongly disclosed in the Chhattisgarh returns for the relevant period. Filing of Form GSTR-09C did not dispense with that evidentiary burden. The Chartered Accountant's certificate neither disclosed the findings from the documents examined nor identified their documentary basis. As the appellant produced no supporting evidence before the assessing authority, the first appellate authority or the Tribunal, an adverse inference was drawn against it. [Paras 11, 12, 15, 18, 20]

The appellant failed to establish that the disputed turnover constituted exempt interest income attributable to another State, and the appeal was rejected.

Final Conclusion: Although interest qualifying under Entry 27 was held exempt, the appellant did not substantiate that the disputed turnover represented such exempt interest income attributable to another State. The appeal was rejected.

GST exemption for recovery of written-off housing loans - Pure question of law at appellate stage - Admissibility of certified banker's books

GST exemption under Notification No. 12/2017 for recovery of an amount under a written-off housing loan account, raised for the first time before the Tribunal - HELD THAT: - The notification, having been issued under statutory authority, was held to have the force of law. Its applicability raised a pure question of law that could be urged at any stage. Entry 27 was treated as exempting services by way of extending loans, and recovery of the loan amount was held covered by that exemption. [Paras 10, 11, 13]

The notification plea was maintainable, and the first question of law was answered in favour of the appellant.

Cross-objection by a successful respondent - Departmental filing styled as a cross-objection where the appellate order granted the respondent complete relief - HELD THAT: - A cross-objection is necessary only where the respondent seeks relief that was not granted. As the appellate order was wholly in the respondent's favour, the filing was in substance a reply or counter-statement; in any event, it was held to have been filed within time after service of notice of appeal. [Paras 14]

The objection to the maintainability of the respondent's filing was rejected.

Documentary proof of recovery of written-off housing loans - Admissibility of certified banker's books - Claimed exemption for recovery from a written-off housing loan account - consideration of bank account record and further documentary proof - HELD THAT: - Entitlement to the exemption required cogent and reliable proof that the disputed amount represented recovery from a written-off housing loan account during the relevant financial year. The bank account record produced had not been considered by the Appellate Authority. A certified copy of a banker's book was held admissible as prima facie evidence, and further record of the loan write-off was required for a just decision. [Paras 20, 21, 23, 25, 26]

The appellate order was set aside and the matter remanded for production and consideration of the certified bank record and the record of the housing loan write-off, without adjudicating the factual applicability of the exemption.

Final Conclusion: The appellate order was set aside and the matter remanded for consideration of the certified bank record and loan write-off record; the factual applicability of the exemption remains to be determined in accordance with law.

Mandatory show cause notice for tax demand based on suppression of facts - Validity of demand for alleged suppression of outward supplies under section 74 without service of a statutory show cause notice

HELD THAT: - Service of a notice upon the person chargeable with tax and consideration of that person's representation are mandatory prerequisites to determination under section 74. The notice must disclose the demand, foundational facts and necessary particulars to enable an effective representation; GST DRC forms or other communications cannot substitute the statutory notice. As no notice was issued, the taxpayer was deprived of knowing the case against him and making an effective representation, thereby vitiating the proceedings. [Paras 15, 18, 20, 23]

The impugned first appellate order was set aside and the appeal was allowed.

Final Conclusion: The appeal was allowed and the impugned first appellate order was set aside, as the tax demand had been determined without the mandatory statutory show cause notice.

Detention of goods for route deviation under GST - Mala fide intent to evade tax - penalty u/s 129

Validity of detention and penalty u/s 129 for transportation of Tailor Made Cold Binder by a longer route despite valid documents and availability of a shorter route - HELD THAT: - The State did not identify any destination within Uttar Pradesh to which the goods were allegedly intended to be diverted. The explanation that the shorter route passed through difficult hilly terrain, making a longer route safer for a heavily loaded commercial vehicle, remained unrebutted.

As the GST Act and Rules neither require declaration of a particular route nor mandate adherence to one, selection of an alternative route for logistical reasons could not, without material establishing tax evasion, justify an inference of mala fide intent. Transportation under valid documents involved no statutory contravention.

In M/s Om Prakash Kuldeep Kumar [2023 (10) TMI 103 - ALLAHABAD HIGH COURT] as clarified the distinction between the historical VAT era and the modern GST era. The Hon’ble court observed that under previous state VAT Laws, dealers were legally bound to declare the specific transit route but under the Central/State GST Acts or Rules, there is no provision requiring an assessee to declare or rigidly stick to a designated route of transportation and in such circumstances taking an alternative or longer route for logistical reasons does not constitute a statutory basis for detention.[Paras 13, 14, 15, 16, 17]

The section 129 penalty was unsustainable; the impugned orders were quashed and refund of the penalty deposited under protest was directed in accordance with law.

Final Conclusion: The appeal was allowed, the detention-penalty orders were quashed, and refund of the penalty deposited under protest was directed in accordance with law.

Statutory pre-deposit for Tribunal appeal - Pre-deposit against reduced disputed tax

Requirement of a further statutory pre-deposit for an appeal before the Tribunal where the disputed tax was reduced in first appeal and the pre-deposit already made exceeded the prescribed percentage of the surviving disputed tax - HELD THAT: - The pre-deposit made at the first appellate stage represents a specified portion of the disputed tax and not payment towards a separate or independent liability. For a further appeal, the tax remaining after reduction by the Appellate Authority constitutes the tax in dispute. The requirement of an additional deposit cannot be applied mechanically where the amount already deposited equals or exceeds the aggregate prescribed percentage of that surviving dispute, as such construction would produce an anomalous and unworkable result. [Paras 10, 11, 12, 13]

No further pre-deposit under Section 112(8) was required, and no interference with the order admitting the appeal was warranted.

Final Conclusion: The application seeking recall or modification was disposed of without interference. The appeal could proceed without any further statutory pre-deposit.

Writ jurisdiction where statutory appellate remedy is available - Maintainability of a writ challenge to assessment additions requiring factual and evidentiary appraisal despite an available statutory appellate remedy - HELD THAT: - We find no good ground and reason to interfere with the impugned judgment/order passed by the High Court.

The special leave petition is, accordingly, dismissed.

Entitlement to deduction as a developer of infrastructure facilities u/s 80-IA(4) - Substantial question of law u/s 260-A - Concurrent factual findings on infrastructure-facility deduction

Maintainability of an appeal u/s 260-A challenging concurrent findings that the assessee's road and infrastructure works qualified it as a developer for deduction u/s 80-IA(4) - HELD THAT: - An appeal under Section 260-A lies only where a substantial question of law arises and does not permit reappreciation of evidence or substitution of the High Court's view for concurrent factual findings.

The finding that the assessee qualified as a developer was reached by the appellate authority and the Tribunal on the material on record, and the Department established neither perversity nor application of an erroneous legal test.

Tribunal's reliance on its confirmed earlier order did not itself give rise to a substantial question of law, and the dismissal of an appeal involving the same assessee and subject matter for another assessment year reinforced that conclusion.

The expression “substantial question of law”, though not defined in the Act, has received a settled meaning through a long line of decisions of the Hon’ble Supreme Court. In Vijay Kumar Talwar [2010 (12) TMI 2 - SUPREME COURT] the Hon’ble Supreme Court, while referring to the Constitution Bench judgment in Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. and Mfg. Co. Ltd. [1962 (3) TMI 77 - SUPREME COURT]has laid down the test to be applied in determining whether a question of law is substantial or not.[Paras 5, 6, 7, 8, 9]

No substantial question of law arose, and the Department's appeal was dismissed.

Final Conclusion: The Department's challenge to the concurrent allowance of the claimed infrastructure-facility deduction did not disclose a substantial question of law. The appeal was dismissed.

Application for immunity u/s 270AA(2) - Consideration of reply in penalty-immunity proceedings - Negative evidence of non-filing of appeal

Rejection of an application for immunity from penalty proceedings for alleged under-reporting of income without considering the assessee's reply and by requiring proof that no appeal had been filed - HELD THAT: - An assessee cannot be required to furnish negative evidence that no appeal has been filed against the assessment order.

The Assessing Officer may obtain a declaration to that effect, including an undertaking that any appeal filed would be withdrawn or deemed withdrawn. Since Form 68 already contained the relevant declaration and the reply filed by the assessee was not considered, the rejection suffered from non-application of mind. [Paras 14, 15, 16, 17]

The rejection order was set aside and the application for immunity was remitted for a fresh, objective decision in accordance with law and the material on record.

Final Conclusion: The writ petition was allowed and the application for immunity from penalty proceedings was directed to be reconsidered. Further penalty proceedings were stayed until such application is decided.

Writ jurisdiction - assessment validity pending in statutory appeal

Exercise of writ jurisdiction to examine the challenge to rectification and assessment proceedings when the validity of the assessment is pending before the appellate tribunal - HELD THAT: - As the legality and validity of the assessment order, including the grounds raised in the rectification application, were pending before the appellate tribunal, a writ adjudication at that stage could interfere with the tribunal's independent assessment and opinion. [Paras 14]

The challenge was not entertained; the Assessing Officer or the appellate tribunal, as the case may be, was directed to consider the interim application within six weeks, and no coercive action was to be taken in the meantime.

Final Conclusion: The writ application was disposed of without examining the merits of the pending appellate challenge, subject to protection against coercive recovery until consideration of the interim application.

Admissibility of Additional evidence before Income-tax Appellate Tribunal - Unexplained cash credits - findings of fact - Substantial question of law - absence of perversity

Additional evidence before Income-tax Appellate Tribunal - Permissibility of additional evidence before the Tribunal comprising records retrieved after their loss, damage or soiling for the relevant assessment year - HELD THAT: - Rule 18(4) of the Income Tax Appellate Tribunal Rules, 1963 permits additional evidence to be filed through a separate paper book with an application stating the reasons. The Tribunal was entitled to consider the records subsequently retrieved by the assessee, particularly when the AO had erroneously recorded that no material had been produced. [Paras 35, 36, 39]

There was no illegality in the Tribunal's admission and consideration of the additional evidence.

Unexplained cash credits - findings of fact - Substantial question of law - absence of perversity - Challenge to the Tribunal's findings on alleged unexplained cash credits and bogus trading liabilities - HELD THAT: - The Tribunal had examined the documentary material, including confirmations, transaction particulars, payment and tax-deduction certification, books of account and bank records, before recording findings on the genuineness of the transactions and the extent of explained liabilities. As the last fact-finding authority, its evidence-based and reasoned conclusions disclosed no perversity; the Revenue's challenge consequently raised only questions of fact. [Paras 33, 34, 40, 41, 42]

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

Final Conclusion: The appeal was dismissed, as the challenged findings rested on lawful consideration of additional evidence and disclosed neither perversity nor any substantial question of law.

Non-discrimination under the India-Netherlands DTAA - Separate-entity treatment of a banking permanent establishment - Tax deduction at source on interest remitted to foreign head office and branches - Taxability of interest received by a permanent establishment from head office and foreign branches

Non-discrimination under the India-Netherlands DTAA - Tax rate applicable to foreign companies - Entitlement of the Indian permanent establishment of a Netherlands-incorporated non-resident bank to the tax rate applicable to domestic companies under Article 24(2) of the India-Netherlands DTAA - HELD THAT: - The bank did not satisfy the statutory conditions for being a domestic company and was consequently a foreign company. The retrospective Explanation to section 90 clarifies that a higher tax rate for a foreign company is not less favourable treatment.

As held in Royal Bank of Scotland N.V. [2024 (5) TMI 1172 - CALCUTTA HIGH COURT] the explanation is clarificatory and must be given full effect as part of the statute. The judgment emphasised that even without the explanation, the statutory provisions of the Finance Act and the Income Tax Act remain clear that a non-domestic company is liable to the rate specified for such an entity.

Further, a foreign company, taxable only on Indian-source income, and a domestic company, taxable on global income, are not in the same circumstances under Article 24(2); nor does the DTAA prescribe a rate overriding the domestic Finance Act. [Paras 10, 11, 12]

The Indian permanent establishment was liable to tax at the rate applicable to a foreign company, and the question was answered against the assessee.

Separate-entity treatment of a banking permanent establishment - Tax deduction at source on head office interest - Deductibility of interest remitted by the Indian banking permanent establishment to its foreign head office and overseas branches without deduction of tax at source - HELD THAT: - For determining the profits of a permanent establishment, Article 7 treats the branch as a separate and distinct enterprise. The assessee could not invoke that fiction to claim the interest as expenditure while rejecting it to avoid tax deduction at source. Since interest remitted to the head office was liable to tax in India, failure to deduct tax attracted disallowance under section 40(a)(i). [Paras 14, 15, 16]

The interest deduction was rightly disallowed for non-compliance with the tax-deduction-at-source requirement.

Taxability of interest received by a permanent establishment from head office and foreign branches - Separate-entity fiction for computation of permanent establishment profits - Inclusion in the Indian permanent establishment's taxable profits of interest received from its foreign head office and other overseas branches - HELD THAT: - The disallowance of interest paid by the permanent establishment resulted from failure to comply with tax-deduction-at-source requirements, not from treating the remittance as a payment to self. Under the separate-entity fiction in Article 7, interest received by the Indian permanent establishment from the head office or foreign branches is business income of that establishment and cannot be excluded on mutuality or payment-to-self principles. [Paras 18, 19, 20, 21]

Interest received from the foreign head office and branches was includible in the permanent establishment's taxable profits in India.

Final Conclusion: All three substantial questions were answered in favour of the revenue. The appeal was allowed, the impugned Tribunal order was set aside, and the Assessing Officer was directed to pass a consequential order for the relevant assessment years.

DTAA non-discrimination and tax rate applicable to foreign companies - Interest remitted by permanent establishment to head office - TDS compliance - Taxability of interest received by permanent establishment from head office - Depreciation on automated teller machines as computers - Vehicle lease rentals-revenue or capital expenditure

DTAA non-discrimination clause - Tax rate applicable to foreign companies - Entitlement of the Indian permanent establishment of a Netherlands-incorporated non-resident bank to the tax rate applicable to domestic companies under the non-discrimination clause in Article 24(2) of the India-Netherlands DTAA - HELD THAT: - The assessee did not satisfy the statutory conditions of a domestic company and was therefore a foreign company. The retrospective Explanation to section 90 clarifies that a higher tax rate for a foreign company is not less favourable treatment. Further, domestic and foreign companies are not in the same circumstances, since the former is taxable on global income whereas the latter is taxable on Indian-source income. Following Royal Bank of Scotland N.V. v. Commissioner of Income Tax [2024 (5) TMI 1172 - CALCUTTA HIGH COURT] the DTAA was held not to prescribe a rate overriding the domestic Finance Act. [Paras 11, 12, 13]

The claim for taxation at the rate applicable to domestic companies was rejected and the question was answered in favour of the revenue.

Interest paid by permanent establishment to head office - Tax deduction at source on overseas remittances - Deductibility of interest remitted by the Indian permanent establishment to its overseas head office and branches without deduction of tax at source - HELD THAT: - For attribution of profits under Article 7, the permanent establishment and head office are treated as separate enterprises. The assessee could not invoke that fiction to claim the interest deduction while denying its consequence of tax deduction at source. Interest remitted to the head office was liable to tax in India and attracted the obligation under section 195; failure to comply consequently attracted disallowance under section 40(a)(i). [Paras 15, 16, 17]

The disallowance of the interest expenditure for non-compliance with TDS requirements was upheld in favour of the revenue.

Interest received by permanent establishment from head office - Separate entity fiction under DTAA - Inclusion of interest received by the Indian permanent establishment from its overseas head office and foreign branches in its taxable Indian profits - HELD THAT: - The disallowance of interest paid by the permanent establishment resulted from TDS default, not from treating the payment as a payment to self. Article 7 treats the permanent establishment and head office as distinct enterprises for profit attribution; accordingly, interest received by the Indian permanent establishment is taxable business income and cannot be excluded on the basis of mutuality or payment to self. [Paras 19, 20, 21, 22]

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

Automated teller machines as computers - Depreciation based on functional utility - Classification of automated teller machines as computers, rather than general office equipment or machinery, for depreciation - HELD THAT: - Depreciation classification depends upon the asset's functional utility in the assessee's business. An ATM performs digital data processing and electronic transaction functions analogous to computing hardware; its functional parity with a computer warranted classification in the applicable computer category. [Paras 25]

ATMs were held to qualify as computers and were entitled to the higher depreciation rate.

Vehicle lease rentals - capital or revenue expenditure - Accounting standards and computation of taxable income - Characterisation of rentals under the unchanged motor-vehicle leasing agreement as revenue expenditure rather than capital expenditure by bifurcating the payments under Accounting Standard 19 - HELD THAT: - Accounting treatment under Accounting Standard 19 cannot govern the characterisation of expenditure or allowance of depreciation under the Income-tax Act. The agreement was for hiring vehicles for business use, without evidence of an intention to acquire legal ownership. The revenue had also allowed the rentals in preceding years under the same arrangement, and the bifurcation into principal and interest components solely on the accounting standard was unsustainable. [Paras 27, 28]

The entire vehicle lease rentals were held allowable as revenue expenditure.

Final Conclusion: The appeal was partly allowed for AY 2004-05: the domestic-rate claim and the challenges concerning interest paid to, and received from, the overseas head office and branches failed, while higher depreciation for ATMs and deduction of vehicle lease rentals as revenue expenditure were allowed.

Revisionary jurisdiction for lack of inquiry - Taxability of accrued interest settled by issue of equity shares

Revisionary jurisdiction u/s 263 - Erroneous and prejudicial reassessment order - Validity of revision of the reassessment order where the AO accepted the claimed non-taxability of accumulated interest without proper inquiry or application of the applicable provisions - HELD THAT: - An assessment order is amenable to revision where it is both erroneous and prejudicial to the interests of the Revenue. Acceptance of a claim without necessary inquiry or proper application of law renders the order erroneous. AO failed to examine the interest component settled on conversion of the zero-coupon debentures and accepted the return without applying the relevant provisions. [Paras 6, 11]

The revisionary jurisdiction was validly exercised, and the reassessment order was rightly set aside for fresh determination.

Constructive receipt of interest income - Conversion of zero-coupon debentures into equity shares - Capital gains exclusion and interest income - Taxability of accumulated interest embedded in equity shares issued upon premature conversion of zero-coupon debentures, notwithstanding cash-basis accounting and the exclusion of conversion from transfer for capital-gains purposes - HELD THAT: - The issue of equity shares of ascertainable monetary value in settlement of the accumulated interest constituted constructive receipt; receipt of income need not be in physical cash. A taxpayer claiming credit for tax deducted at source on such interest cannot disclaim the taxability of the underlying income. The exclusion of conversion from the meaning of transfer applies to computation of capital gains and does not exempt the embedded interest income. Once taxed on conversion, the interest component forms part of the cost basis of the shares, avoiding double taxation on their subsequent sale. [Paras 7, 8, 9, 10]

The accumulated interest settled through allotment of equity shares remained taxable as interest income; all matters arising on fresh assessment may be raised before the Assessing Officer.

Final Conclusion: No substantial question of law arose. The appeal was dismissed and the revision of the reassessment order for fresh determination was affirmed.

Admissibility of electronic evidence in income-tax assessment - Section 65B certification and digital-evidence safeguards - Unexplained cash credits founded on notional and opening-balance entries - Post-search assessment under the reassessment procedure - Revenue and capital expenditure - Disallowance for non-deduction of tax at source

Admissibility of electronic evidence - Section 65B certificate - Chain of custody of digital evidence - Reliance on the HP 32 GB pen-drive described as the JSK Server, and on electronic data extracted from it, for additions alleging unaccounted transactions - HELD THAT: - The record disclosed irreconcilable discrepancies concerning the premises, date and manner of recovery of the pen-drive. The certificate under section 65B was issued by a person not shown to control the device, did not certify the statutory conditions, and was unsupported by a seizure memo, chain-of-custody record or hash value. The prescribed safeguards in the CBDT Digital Evidence Investigation Manual were not followed. There was also no independent material connecting the data with the assessee or corroborating any alleged cash movement. The rebuttable presumption under section 292C could not operate in such circumstances; nor could an untested employee statement or an uncorroborated and retracted tentative offer cure these defects. [Paras 58, 59, 63, 66, 67]

The JSK Server lost its evidentiary value and could not be treated as material for drawing an adverse inference or sustaining additions against the assessee.

Unaccounted commission and interest income - Consideration of seized material in entirety - Addition for alleged unaccounted commission and interest income derived from entries in the JSK Server - HELD THAT: - Independently of the inadmissibility of the digital material, the computation adopted by the special auditor and the Assessing Officer selectively treated credit balances as income while disregarding debit balances in the very same accounts. The trial balance reflected adverse balances, and the unexplained presence of dummy accounts further undermined the reliability of the data. Material relied upon for assessment must be considered as a whole and cannot be selectively adopted only to support an addition. [Paras 71, 75, 76]

The addition for alleged unaccounted commission and interest income was deleted.

Unexplained cash credit - Notional book entries - Opening-balance credits - Section 68 additions for alleged unexplained credits in the Z and other ledger accounts forming part of the JSK Server - HELD THAT: - The disputed ledger entries were founded on digital material held unreliable. In any event, the entries bore the character of dummy, contra, adjustment or opening-balance entries, without evidence of an actual receipt of money in the relevant year. The narration indicated accumulated balances from the beginning of the year, while no identifiable creditor, corresponding cash movement or other corroborative material was established. Section 68 could not be invoked merely on the basis of such unsubstantiated entries. [Paras 81, 82, 86, 87, 91]

The additions under section 68 based on the impugned ledger entries were deleted.

WhatsApp chats as electronic evidence - Unexplained money - Addition u/s 69A for alleged cash receipts inferred from WhatsApp chats extracted from employees' devices - HELD THAT: - The chats were unsupported by a section 65B certificate for the device or the extracted material. Apart from the chats, no evidence established that cash was actually received by the assessee. Unauthenticated and uncorroborated chats alone could not support the addition. [Paras 94]

The addition under section 69A was deleted.

Disallowance of expenses recorded in inadmissible digital data - Revenue's challenge to the deletion of disallowances of bad debts and other expenses recorded in the JSK Server - HELD THAT: - The disallowances related to income additions founded on the JSK Server. Once those additions were deleted because the digital material could not be relied upon, a further disallowance of expenditure by reference to the same material could not survive. The reasoning of the appellate authority allowing the expenditure was not controverted. [Paras 101]

The deletion of the disallowances was upheld.

Revenue expenditure on leased premises - Repair and maintenance expenditure - Allowance of expenditure on repairs, maintenance and allied works undertaken in leased business premises - HELD THAT: - The expenditure was found to be routine in nature and did not bring into existence a new capital asset. Repairs and maintenance of premises taken on lease for business purposes remained allowable where the use of the premises for business was not disputed. [Paras 103, 111, 147]

The deletion of the disallowance treating the expenditure as capital was upheld.

Software licence and customisation expenditure - Revenue or capital expenditure - Treatment of annual SAP licence and customisation charges for an already installed accounting software - HELD THAT: - The payment was for annual licence and customisation of an existing accounting software and represented routine upgradation expenditure. It was therefore revenue expenditure and not capital outlay. [Paras 105]

The deletion of the capital-expenditure disallowance was upheld.

Prior-period expenditure - Allowance of an expenditure claimed for the first time in the year under appeal although the invoice related to an earlier period - HELD THAT: - There was no finding that the expenditure had been claimed as deduction in an earlier year, nor was its business character disputed. The invoice pertaining to an earlier period, by itself, did not justify disallowance when the expenditure was first claimed in the year under appeal. [Paras 107]

The deletion of the disallowance was upheld.

Matching principle - Apportionment of multi-period expenditure - Apportionment of Microsoft 365 licence and support-service costs covering more than one accounting period - HELD THAT: - The expenditure related to a period extending beyond the year under appeal. Apportionment of the cost to the period to which the services related was held consistent with the accrual and matching principles. [Paras 109]

The proportionate disallowance was restored.

Business-purpose expenditure - Electricity and office expenses - Allowance of electricity, printing and stationery expenditure incurred for residential-designated premises and other business locations - HELD THAT: - There was no finding that the expenditure was fictitious or personal. The assessee maintained offices at different locations for its business operations, and the mere description of a premises as residential in an electricity bill, or its absence from the declared GST place of business, did not establish non-business use. [Paras 112, 115, 149]

The deletion of the disallowances was upheld.

Disallowance for non-deduction of tax at source - Lease-line charges - Disallowance for failure to deduct tax at source on lease-line and maintenance payments, including payments on which tax was deducted at a lower rate - HELD THAT: - No tax deduction was required on the lease-line payments. Further, where tax had been deducted, though at a lower rate, the payment could not be treated as one on which tax had not been deducted. However, the disallowance relating to other maintenance payments was sustainable where no plausible explanation for non-deduction was furnished. [Paras 117, 130]

The deletion was sustained for lease-line charges and payments on which tax had been deducted; the disallowance for unexplained non-deduction on the remaining payments was restored.

Deduction for employment of new workmen - Reduction of the statutory deduction claimed for employment of new workmen - HELD THAT: - No new contention or material was advanced to displace the quantification adopted by the lower authorities. [Paras 126]

The reduction of the claimed deduction was upheld.

Cash-payment disallowance - Disallowance for cash payments exceeding the statutory limit to a payee on a single day - HELD THAT: - Payments shown to have exceeded the prescribed limit to an individual payee on the same day attracted the disallowance. For the remaining payments, the assessee established that no payment to a single payee exceeded that limit. [Paras 128]

The disallowance was sustained only for the cash payments exceeding the statutory limit per payee per day and deleted for the balance.

Post-search assessment procedure - Jurisdictional defect in regular assessment - Validity of the regular assessment under section 143(3) after a search conducted on or after 1 April 2021 - HELD THAT: - Explanation 2 to section 148 deems the Assessing Officer to possess information suggesting escapement of income where a search is conducted. For the preceding assessment years covered by that provision, the special procedure under sections 147, 148 and 148B had to be followed. The statutory search-assessment mechanism prevailed over the general scrutiny-assessment provision, and failure to adopt it constituted a jurisdictional defect. [Paras 136, 137, 139]

The assessment for 2021-22 framed under section 143(3) was quashed.

Final Conclusion: The additions founded on the JSK Server and unauthenticated WhatsApp chats were deleted, while the revenue appeal for 2020-21 succeeded only to the limited extent of the proportionate multi-period expense and specified tax-deduction disallowance. The assessment for 2021-22 was quashed for failure to follow the mandatory post-search reassessment procedure.

Prospective application of specified violations for cancellation of trust registration - Specific notice and inquiry for cancellation of trust registration - Benefit to specified persons and cancellation of trust registration

Jurisdiction of Principal Commissioner (Central) over transferred trust cases - Jurisdiction of the Principal Commissioner (Central) to cancel trust registration after centralisation of the case - HELD THAT: - Upon transfer of jurisdiction under section 127, jurisdiction over the case extends to all proceedings under the Act and is exercisable by the superior authorities of the transferee Assessing Officer. The statutory power to cancel registration is conferred upon a Principal Commissioner or Commissioner generally and is not confined to the Commissioner (Exemptions). [Paras 7, 8, 9]

The jurisdictional objection was rejected.

Prospective operation of specified violations under section 12AB(4) - Retrospective cancellation of trust registration - Retrospective cancellation of registration and provisional registration on the basis of alleged specified violations occurring before 01.04.2022 - HELD THAT: - The specified-violation regime introduced with effect from 01.04.2022 is a complete code carrying penal consequences and operates prospectively. Alleged acts or omissions preceding its commencement cannot be treated as specified violations so as to invoke cancellation powers retrospectively under section 12AB(4). [Paras 22, 23]

The cancellation could not be sustained on allegations and material relating to the period before 01.04.2022.

Specific notice and inquiry for cancellation of trust registration - Identification of specified violation - Compliance with the statutory procedure for cancellation of registration on account of specified violations - HELD THAT: - The modes for initiating action under section 12AB(4) require identification of the applicable statutory trigger, an inquiry to reach satisfaction regarding the particular specified violation, and a meaningful opportunity to meet the proposed cancellation. The notice and order neither identified the precise statutory stage or trigger nor specified the clause of the Explanation allegedly attracted, but broadly invoked section 12AB(4) along with section 13, which operate in distinct spheres. [Paras 23, 25, 26, 29]

The notice and consequential cancellation order were invalid for failure to follow the prescribed procedure.

Specified violation for cancellation of trust registration - Benefit to specified persons under section 13(1)(c) - unaccounted educational receipts, diversion of funds and benefit to specified persons as specified violations justifying cancellation of registration - HELD THAT: - Retracted search statements and digital material were relied upon without independent corroboration, fresh examination or an opportunity of cross-examination. There was no finding that the educational institutions were not genuinely functioning, that accounted expenditure was inflated, or that any condition of registration had been breached. Further, alleged benefit to persons specified in section 13(3) falls within section 13(1)(c), which is not incorporated in the definition of specified violation; such matters may result in denial of exemption or taxation of diverted income in assessment, but do not by themselves warrant cancellation of registration. [Paras 41, 42, 43, 44, 45]

The allegations did not establish any specified violation under section 12AB(4) and could not sustain cancellation of either registration.

Final Conclusion: The appeal was allowed and the cancellation of the registration and provisional registration was quashed, as the alleged pre-01.04.2022 conduct could not constitute specified violations and the statutory procedure for cancellation had not been followed.

Section 80IA/80IB deduction for new hydraulic power steering gear undertaking - Depreciation on machinery kept ready for use - Continuity of section 80IA/80IB deduction after initial-year eligibility

Section 80IA/80IB deduction for new hydraulic power steering gear undertaking - Integrated and independent manufacturing unit - Commencement of commercial production - Eligibility of the new hydraulic power steering gear undertaking for deduction under sections 80IA/80IB upon its independent manufacturing capability and commencement of production before the statutory cut-off - HELD THAT: - The cumulative documentary and contemporaneous material established the construction of a separate building, installation of new machinery, deployment of fresh capital and workforce, additional power load, and separate production, accounts, sales and excise-linked records. The machinery available by the statutory cut-off was technically capable of independent manufacture; later additions were for capacity enhancement, additional facilities and in-house component manufacture, not for conferring independent character on the undertaking. Manufacture of the same product in the old unit, its continued production for commercial reasons, and a common invoice series did not establish reconstruction or displace the corroborated evidence. The technical certificates could not be discarded without contrary technical material. [Paras 54, 55, 57, 59, 60]

The new undertaking was held eligible for deduction under section 80IA for AY 1995-96.

Depreciation on machinery kept ready for use - Passive user of business assets - Depreciation on machinery received immediately before the close of the previous year and claimed as installed and ready for business use - HELD THAT: - The disallowance rested only on the presumption that machinery received at the end of the year could not have been installed and put to use. The assessee's documentary evidence regarding receipt and installation remained unrebutted, and the Revenue produced no material showing that the machinery remained uninstalled, incapable of use, or unavailable for business deployment. An asset installed and kept ready for use satisfies the requirement of use for business. [Paras 64, 65]

The depreciation claim was allowed.

Continuity of section 80IA/80IB deduction after initial-year eligibility - Entitlement to deduction u/s 80IA/80IB for the same hydraulic power steering gear undertaking in the subsequent assessment years after initial-year eligibility had been established. - HELD THAT: - There was no material change in the facts relating to the eligible undertaking; subsequent machinery additions only expanded production capacity and did not alter its character. Once the undertaking fulfilled the eligibility conditions in the initial year, the deduction remained available for the consecutive eligible years. [Paras 69]

The deduction under sections 80IA/80IB was allowed for AYs 1996-97 to 2004-05.

Final Conclusion: The appeals were allowed, with deduction under sections 80IA/80IB granted for all the relevant assessment years and the depreciation claim allowed.

Penalty u/s 271D for cash receipt of immovable-property sale consideration - AO had not recorded satisfaction for initiating penalty proceedings in the assessment order

HELD THAT: - The Tribunal held that the binding decisions applicable to it require the Assessing Officer, as the primary authority in the assessment proceedings, to record satisfaction regarding the alleged contravention before initiation of penalty proceedings. The contrary view followed by the Cochin Bench [2025 (3) TMI 1516 - ITAT COCHIN], based on a decision binding in that jurisdiction, could not displace the binding jurisdictional precedent; in any event, where High Court views diverge, the view favourable to the assessee must prevail.

We do not find any error or any illegality in the order of the CIT(A) in deleting the penalty u/s 271D of the Act. In any case, in view of the judgement of Vegetable Products Ltd.[1973 (1) TMI 1 - SUPREME COURT] when there are divergent views, the view in favour of the assessee has to be followed. [Paras 6, 7]

The deletion of the penalty was upheld and the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal was dismissed. The assessee's cross-objection, having become infructuous upon affirmance of the penalty deletion, was also dismissed.

Unexplained cash deposits in banking correspondent's settlement account - Penalty for unexplained money pending de novo assessment

Unexplained cash deposits in banking correspondent's settlement account - HELD THAT: - The Tribunal accepted that the assessee's inability to track the assessment proceedings was attributable to contact details on the portal not belonging to him. The receipt of commission subject to tax deduction supported the explanation that the account could have been used for customer transactions under the banking correspondent arrangement. The deposits consequently required examination upon production of the relevant evidence. [Paras 8]

The matter was restored to the Assessing Officer for de novo assessment, without adjudication on the merits of the addition.

Penalty u/s 271AAC(1) for unexplained money pending de novo assessment - HELD THAT: - As the question whether any part of the deposits constituted unexplained money was remitted for fresh determination, levy of penalty before that determination was premature. [Paras 9]

The penalty was deleted, with liberty to the Assessing Officer to initiate penalty proceedings afresh if the restored assessment results in a finding of unexplained deposits.

Final Conclusion: The assessment was restored for de novo examination of the cash deposits in the banking correspondent's settlement account. The related penalty was deleted, subject to fresh action if warranted by the restored assessment.

Unexplained money u/s 69A - demonetisation-period bank deposits - cash recorded in books of gold and silver ornaments - Double taxation - recorded cash-sale proceeds

HELD THAT: - The audited books, cash book, stock and purchase/sales records, sales bills and VAT returns supported the cash-sales explanation, and the Revenue neither identified a defect in those records nor rejected the books under section 145(3) or made an independent verification. Section 69A applies to money not recorded in the books and not satisfactorily explained; cash recorded as sales in unrejected books cannot selectively be treated as unexplained merely on statistical comparison or suspicion. The alleged non-genuineness of the sales was, at most, a question concerning the book results, and a separate addition of the recorded cash realisation would result in double taxation. [Paras 15, 16, 17, 18, 19]

The addition was deleted.

Final Conclusion: The addition for the demonetisation-period deposits was deleted, and the assessee's appeal was allowed.

Surviving limitation for reassessment notices - Revision of a non est reassessment order - Revision for alleged lack of inquiry into exempt long-term capital gains on shares

Surviving limitation for reassessment notices - Revision of a non est reassessment order - Validity of revision where the reassessment notice under the new regime was issued beyond the surviving period of limitation - HELD THAT: - Under the legal fiction governing transitional reassessment notices, the balance limitation available on the deemed notice remained available only after the prescribed exclusions; however, all consequential steps culminating in the new-regime reassessment notice had to be completed within that surviving time. As only five days remained, the subsequent notice was time-barred. A valid and subsisting assessment order is a condition precedent for revision, and an assessment founded on a jurisdictionally invalid notice is non est. [Paras 18, 19, 20, 21, 22]

The reassessment order was void ab initio and incapable of revision; the revisionary order was quashed.

Twin conditions for revision - Lack of inquiry into exempt long-term capital gains on shares - Revision of the assessment accepting exemption of long-term capital gains from sale of Universal Credit and Securities Ltd. shares on the alleged ground of lack of inquiry - HELD THAT: - The Assessing Officer had called for and considered documentary material concerning the share transactions, including acquisition and sale details, contract notes, demat records, banking trail, securities transaction tax and the claimed exemption. An assessment cannot be revised merely because the inquiry was not elaborately reflected in the order or because the revisional authority considered further inquiry desirable. The distinction between lack of inquiry and inadequate inquiry precluded treating an inquiry-based assessment as erroneous; both error and prejudice to the Revenue were required for revision. [Paras 23, 25, 26]

Independently, the conditions for revision were not satisfied, and the revisionary order was quashed.

Final Conclusion: The reassessment notice was barred by limitation, rendering the reassessment non est and incapable of revision. In any event, the assessment had followed inquiry into the claimed long-term capital gains exemption, and the statutory conditions for revision were not fulfilled; the appeal was allowed.

Classification of goods - optical fibre cables - mis-classification - suppression - test report and sample testing - Burden of proof - Extended period of limitation - Adjudicating Authority - Refund claim - Larger Bench decision - stay by the Supreme Court - Circular No. 12/2006-Cus

HELD THAT:- We find that this Court had dismissed an identical Civil Appeal in Kalpataru Power Transmission Ltd. [2025 (7) TMI 1353 - SC ORDER]. Following the same, we dismiss the present Civil Appeal as well.

Provisional release of seized Ketamine Hydrochloride for export - Fresh export authorisation for the same consignment - Consistency of governmental stand on export authorisation

Provisional release for export of Ketamine Hydrochloride seized after filing of a shipping bill under an expired export authorisation, where a fresh authorisation was subsequently issued for the same goods - HELD THAT: - Though seizure under the NDPS Act would ordinarily require recourse to the statutory forum, the peculiar facts justified exercise of writ jurisdiction. The goods had not been exported during the intervening period; the earlier authorisation had expired following replacement of the shipment batch, and the CBN subsequently issued a valid export authorisation for the same goods.

The delay in obtaining the authorisation was therefore regarded as technical. Customs could not deny the benefit of that authorisation merely because the CBN had not specifically stated that the seized goods could be released, particularly when the licensing authority had treated the fresh authorisation as valid. Different departments of the Union cannot adopt contradictory stands concerning the same export transaction. [Paras 25, 28, 29]

The rejection of provisional release was quashed and the goods were directed to be provisionally released upon deposit with Customs, without prejudice to continuation of adjudication or criminal proceedings in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the rejection of provisional release and directing release of the seized goods subject to a deposit condition, while preserving the respondents' right to continue statutory proceedings.

Capital goods intended for use in a Section 65 warehouse - Interest on warehoused goods under amended Section 61

Classification of solar modules warehoused for a solar power project as capital goods intended for use in a Section 65 warehouse, and the consequential liability to interest on their clearance for home consumption - HELD THAT: - Under the amended Section 61, capital goods intended for use in a warehouse permitted to undertake manufacture or other operations under Section 65 may remain warehoused until clearance, while interest under Section 61(2) is confined to the residuary goods in clause (c). The expression "intended for use" does not require actual use and must be assessed at the time of import and warehousing, not retrospectively from subsequent events. The concurrent findings established that the uninstalled modules were intended for the project and became surplus only owing to supervening changes in its design and layout. Paragraph 12 of the CBIC circular concerns goods cleared as such for non-Section 65 purposes and cannot revive an interest levy absent from the statute. Decisions rendered under the unamended provision were distinguishable like PRATIBHA PROCESSORS [1996 (10) TMI 88 - SUPREME COURT], KESORAM RAYON [1996 (8) TMI 109 - SUPREME COURT] and SBEC SUGAR LTD. VERSUS UNION OF INDIA [2011 (2) TMI 227 - SUPREME COURT] [Paras 13, 14, 15, 17, 18]

The modules fell within Section 61(1)(a); consequently, no interest under Section 61(2) was payable and the revenue appeal was dismissed.

Final Conclusion: No substantial question of law arose. The appeal was dismissed, the solar modules being capital goods within Section 61(1)(a) and not liable to interest under Section 61(2).

Classification of STA micro-cuvettes as parts/accessories of coagulation analysers - Disposable functional components of analytical instruments - Specific tariff classification over residuary plastics heading - Sole or principal use under Chapter 90 Note 2(b) - classifiable under CTI 9027 9090 rather than CTI 3926 9099

HELD THAT: - The micro-cuvettes were specially designed cartridge assemblies, containing a steel ball whose magnetically controlled movement formed an essential part of determining coagulation time. They had no established practical use with instruments other than the specified analyser. Under Chapter 90 Note 2(b), permanent fitting into the analyser was not required where the article was solely or principally suitable for, functionally integrated with, and necessary to the analytical operation of that instrument.

The ratio of Chemilab [1994 (3) TMI 211 - CEGAT, NEW DELHI] is relevant to the present dispute. The fact that the TLC sheets in that case were described as consumables did not, by itself, prevent their treatment as parts under Note 2(b). What was determinative was their special character and the essential function performed by them in the analytical process. The same reasoning applies with greater force in the present case, where the imported cartridge itself incorporates a steel ball whose movement is controlled magnetically by the analyser.

A single-use or disposable character does not by itself negate an article's character as a part or accessory. Since Heading 3926 is residuary for other plastic articles, it could not displace the specific classification resulting from the application of Chapter 90 Note 2(b). [Paras 13, 14, 15, 16, 17]

The micro-cuvettes were held classifiable under CTI 9027 9090; the consequential differential-duty demand and interest were set aside, and the question of penalty, confiscation and redemption fine did not arise.

Final Conclusion: The appeal was allowed, the classification under CTI 9027 9090 was sustained, and the impugned order was set aside with consequential relief in accordance with law.

Royalty and licence fees in customs valuation - Condition of sale of imported goods - Inclusion of royalty paid for technology transfer, intellectual property and post-import manufacturing rights in the assessable value of imported components

HELD THAT: - Royalty may be added to transaction value only upon establishing both a direct and proximate relationship with the imported goods and that payment is a condition of their sale; the burden lies on Revenue. The explanation governing post-import processing does not independently enlarge the scope of these statutory requirements.

The agreements neither made import of components conditional upon royalty nor linked royalty computation to the value or quantity of imports; royalty arose on manufacture and sale of finished products. The procurement pattern also negated the asserted intrinsic nexus between the royalty and imports. The authorities below proceeded on broad commercial assumptions without establishing the mandatory statutory conditions. [Paras 24, 25, 26, 27, 28]

The royalty was not includible in the assessable value of the imported goods, and the impugned orders sustaining its addition were set aside.

Final Conclusion: The royalty was held not includible in the assessable value because Revenue did not establish its nexus with the imported goods and its character as a condition of sale. The impugned orders were set aside and the appeal allowed with consequential relief in accordance with law.

Appeal against self-assessed bill of entry - Waiver of notice and hearing - statutory right of appeal - Tariff reclassification - burden of proof on Revenue - Classification of Rivet Mobile Contact - electrical contact or article of silver - Confiscation and penalty for classification dispute without misdeclaration

Appeal against self-assessed bill of entry - Maintainability of appeals against self-assessed bills of entry where the Department had not reassessed the goods - HELD THAT: - A self-assessed bill of entry is an order of assessment and, therefore, a decision or order appealable under Section 128 at the instance of an aggrieved person. The absence of departmental reassessment, a lis, or a speaking order does not detract from its appealability. [Paras 13, 14]

The appeals against the self-assessments were maintainable, and their rejection at the threshold was unsustainable.

Waiver of notice and hearing - statutory right of appeal - Effect of waiver of show cause notice and personal hearing on the right to challenge classification in appeal - HELD THAT: - Waiver of the procedural safeguards of notice and hearing for expedited adjudication operates at the adjudication stage and cannot, without an informed and express surrender, extinguish the independent statutory right of appeal. The standard request recorded did not establish any intended waiver of the right to contest classification, particularly in a dispute involving technical composition and competing Chapter and HSN Notes. [Paras 15, 16]

The appellant had not forfeited its statutory right to appeal against the classification adopted in the adjudication order.

Tariff reclassification - burden of proof on Revenue - Classification of Rivet Mobile Contact - electrical contact or article of silver - Classification of Rivet Mobile Contact as an electrical contact under CTH 8538 or as an article of silver under CTI 71141120 - HELD THAT: - The Revenue bore the burden of establishing the proposed departure from the claimed classification. The jewellery expert's opinion established only silver content and could not determine tariff classification or answer the exclusion of identifiable electrical contacts from Chapter 71.

The uncontroverted evidence of dedicated design and use as a component of electrical contacts established its essential character as an electrical contact; the silver served a conductive and facilitating role. The goods were consequently excluded from Chapter 71 and fell under CTH 8538. [Paras 17, 18, 19, 20]

Rivet Mobile Contact was held classifiable under CTH 8538, without remand.

Confiscation and penalty for classification dispute without misdeclaration - Sustainability of confiscation, redemption fine and penalty where the goods were reclassified despite absence of misdeclaration - HELD THAT: - The confiscation, redemption fine and penalty rested upon the erroneous classification under CTI 71141120. Independently, there was no allegation of misdeclaration of the goods' description, quantity or value; an honestly declared classification dispute does not by itself attract confiscation. [Paras 21]

The confiscation, redemption fine and penalty were set aside.

Final Conclusion: The impugned appellate orders were set aside and all appeals were allowed with consequential relief. The self-assessment appeals were maintainable, the classification was held to fall under CTH 8538, and the consequential confiscation, redemption fine and penalty could not survive.

Actual-user condition in end-use customs exemption for windmill components

Compliance with the condition requiring the importer to use imported Wind Operated Electricity Generator parts for the specified purpose, where title was transferred under supply contracts before erection and commissioning under turnkey windmill projects - HELD THAT: - The exemption required ultimate use of the imported goods for the specified purpose and contained no express prohibition against their movement to the project site or transfer under a turnkey contractual arrangement. The imported components were used exclusively for erection and commissioning of windmills, and the respondent retained responsibility for their installation and commissioning.

Applying the binding jurisdictional High Court ruling in NORDEX INDIA PRIVATE LIMITED [2022 (8) TMI 1214 - MADRAS HIGH COURT] and the consistent coordinate-Bench decision M/S. GE INDIA INDUSTRIAL PVT. LTD. [2023 (7) TMI 667 - CESTAT CHENNAI], the Tribunal held that the condition does not require the importer to retain continuous ownership until final commissioning; use by the importer in executing the specified turnkey project satisfies the condition. [Paras 14, 15, 16, 18, 19]

Transfer of the imported goods under supply contracts before final assembly did not breach the exemption conditions, and the order dropping the proceedings was upheld.

Final Conclusion: The Revenue appeal was dismissed. The Tribunal held that the respondent had fulfilled the specified end-use condition for the concessional customs exemption.

Classification of medical-device parts and accessories - IGST on medical-device parts and accessories

Classification of AMICUS Platelet Kit and similar Cell Separator accessories under CTH 9018 or residual CTH 9033, with consequential determination of the applicable IGST rate - HELD THAT: - Parts and accessories suitable for use solely or principally with a medical device are classifiable with that device under Chapter Note 2(b) to Chapter 90; the residual CTH 9033 applies only where the parts or accessories are not specified or included elsewhere in that Chapter.

Following the settled position on such medical-device accessories, the goods, being accessories of a Cell Separator, fell under CTH 9018 and attracted IGST at 12% under Serial No. 218 of Schedule II. See Baxter India Private Limited [2026 (6) TMI 1245 - CESTAT MUMBAI] and Aloka Trivitron Medical Technologies Private Limited [2020 (11) TMI 685 - CESTAT CHENNAI] which was also upheld by the Hon’ble Supreme Court [2024 (3) TMI 1000 - SC ORDER]. [Paras 8]

The reclassification and consequential differential IGST demand were unsustainable; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The Tribunal set aside the impugned order confirming the differential IGST demand and allowed the appeal.

Private bonded warehouse licence - disqualification for customs offence - Customs offence and civil contravention

Refusal of a private bonded warehouse licence for cut and polished diamonds on the ground that the applicant had been subjected to customs adjudication orders imposing duty, redemption fine and penalties - HELD THAT: - The disqualification under Regulation 3(2)(c) applies where an applicant has been penalised for an offence under the Customs Act. Applying the settled construction of that expression, a civil penalty for contravention of the Act does not, by itself, constitute a penalty for an offence; offences attracting criminal prosecution are distinct from contraventions attracting monetary penalties. The prior adjudication orders could not, therefore, sustain refusal of the licence.

In view of the settled legal position as held in the above referred cases of Mumbai Travel Retail Private Limited [2025 (5) TMI 778 - CESTAT CHENNAI] and Kundan Care Products Limited [2025 (5) TMI 778 - CESTAT CHENNAI]we find that the issue arising out of the present dispute is no more res integra. Accordingly, we do not find any merits in the impugned order passed by the learned Commissioner, in not granting the private bonded warehouse license by rejecting the application filed by the appellant and consequently set aside the same.[Paras 10]

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

Final Conclusion: The refusal of the private bonded warehouse licence was set aside, and the appeal was allowed.

Group company eligibility under export promotion schemes - Binding DGFT interpretation of the Foreign Trade Policy - Helicopter parts as capital goods for service sector business

Group company status under the Foreign Trade Policy - Utilisation of group company export earnings and duty credit scrips - Eligibility for EPCG and SFIS/SHIS benefits where the importer used its group company's duty credit scrips and port-handling service earnings towards export obligation - HELD THAT: - Questions concerning interpretation of the Foreign Trade Policy are for determination by the DGFT, whose decision is final and binding. Both entities were incorporated enterprises and the collective voting control of their common directors satisfied the prescribed threshold for group-company status. As the DGFT had expressly clarified that they were group companies, Customs could not reopen that determination. The utilisation of the group company's duty credit scrips and adjustment of its port-handling service earnings for discharge of the importer's EPCG export obligation were therefore upheld. [Paras 10, 11]

The dropping of demands, confiscation and penalties in respect of the capital-goods imports under the EPCG and SFIS/SHIS schemes was sustained, and the Revenue's challenges failed.

Helicopter parts as capital goods - SFIS/SHIS exemption for service sector business - Eligibility of helicopter parts for SFIS/SHIS exemption as capital goods related to the importer's infrastructure-project service business - HELD THAT: - The statutory definition of capital goods encompasses equipment and accessories required, directly or indirectly, for rendering services. The helicopter parts were accessories essential to helicopter operations for transporting personnel and persons associated with monitoring infrastructure projects in remote locations. The expression 'private use' in the aviation permission denoted the regulatory category of aircraft operation and did not establish personal use. The imports consequently constituted capital goods related to the service-sector business and qualified for the claimed exemption. [Paras 11, 12, 13]

The duty demand, confiscation, redemption fine and penalties imposed in respect of the helicopter parts were set aside.

Extended period of limitation for customs demand - Suppression of facts - Invocation of the extended period for demanding duty on helicopter parts despite the department's prior knowledge of the group-company arrangement and the relevant DGFT clarification - HELD THAT: - Suppression for invocation of the extended period requires a deliberate non-disclosure intended to evade duty. The importer had referred the issue raised by the department to the DGFT, obtained the requisite clarification and furnished it to Customs; it had also secured the requisite import, use and operation permissions. The department's prior knowledge excluded any allegation of wilful misstatement or suppression. [Paras 12]

The extended period could not be invoked, rendering the demand unsustainable on this independent ground.

Final Conclusion: The importer's appeal was allowed and the Revenue's appeals were dismissed. The demand, confiscation, fine and penalties on helicopter parts were set aside, while the orders dropping the remaining proceedings were sustained.

Conclusive settlement of customs-duty proceedings on pre-notice payment

Applicability of conclusive settlement under section 28(6) of the Customs Act where differential customs duty had been paid before issuance of the show-cause notice - HELD THAT: - The Tribunal found that the requirement of section 28(5) stood satisfied and that the entire differential duty had been deposited before issuance of the show-cause notice. Consequently, section 28(6) rendered the proceedings conclusive as to the matters stated in the notice; the order confirming differential duty and imposing penalties ought not to have been passed. [Paras 6, 8, 9]

The impugned order was set aside and both appeals were allowed.

Final Conclusion: The Tribunal held that the proceedings stood concluded by virtue of section 28(6) of the Customs Act and set aside the impugned order. Both appeals were allowed.

COVID-19 extension of limitation and condonable delay - Limitation for appeals under the Insolvency and Bankruptcy Code

HELD THAT:- There being an inordinate delay, the Civil Appeal stands dismissed on the ground of delay. Consequently appeal stands dismissed.

Extinguishment of statutory tax claims under an approved resolution plan - Set-off of income-tax refunds against pre-resolution-plan demands - Overriding effect of the Insolvency and Bankruptcy Code over income-tax recovery

Validity of adjustment of income-tax refunds and initiation of proceedings for pre-transfer tax demands not forming part of the approved resolution plan - HELD THAT: - Upon approval of the resolution plan, claims not comprised in the plan stood frozen and extinguished, and could not be pursued by the Income Tax Authorities. The overriding provision of the Insolvency and Bankruptcy Code prevailed over any inconsistent recovery mechanism under the Income-tax Act; income-tax dues, though crown debts, had no priority over secured creditors. Consequently, refunds could not be adjusted against such pre-transfer demands, nor could fresh proceedings be initiated for them.

In light of the ratio laid down in Ghanashyam Misra [2021 (4) TMI 613 - SUPREME COURT], Essar Steel [2019 (11) TMI 731 - SUPREME COURT] and Vaibhab Goyal [2025 (3) TMI 1052 - SUPREME COURT] this Court is of the considered view that the Income Tax Authorities have no right to adjust refund for period which stood frozen. As such, on date on which Resolution Plan was approved by NCLAT dated 14.11.2018, all claims stood frozen and no claims, which does not form part of the Resolution Plan can survive.[Paras 11, 12, 13, 14, 15]

The impugned notices, refund adjustments and consequential proceedings for the pre-transfer period up to Assessment Year 2019-20 were quashed. Refunds adjusted or withheld were directed to be released with interest in accordance with law; the petitioner was also permitted to carry forward unabsorbed depreciation and accumulated losses and set them off against future tax obligations in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the pre-transfer tax recovery measures and directing release of the adjusted or withheld refunds with applicable interest. No reassessment or other proceedings could be initiated for claims extinguished under the approved resolution plan.

Financial creditors in a class - requisition for CoC agenda - Suspension of insolvency professional registration - effect on other assignments - Interim stay of disciplinary suspension

Financial creditors in a class - requisition for CoC agenda under Regulation 18(3) - appellant's claim that only an Authorised Representative, acting after an intra-class majority, could seek placement of an agenda for replacement of the Resolution Professionalb - HELD THAT: - At the interim stage, the Tribunal held that the composite voting mechanism governing an Authorised Representative's vote on a resolution placed before the CoC operates at a later stage than Regulation 18(3). Regulation 18(3), being concerned with placement of an agenda before a meeting, did not prima facie require prior intra-class majority approval before individual creditors' requests representing the prescribed voting threshold could be reckoned. [Paras 50]

The interpretive challenge did not disclose a strong prima facie case supporting interim protection.

Suspension of insolvency professional registration - other assignments - effect of suspension of an insolvency professional's registration upon ongoing insolvency assignments other than the CIRP in which the alleged misconduct occurred - HELD THAT: - Registration is not assignment-specific but is the statutory basis for acting as an insolvency professional in any insolvency process. Suspension therefore renders the professional ineligible to continue in all assignments. Mandatory intimation of the suspension to the CoCs of other assignments and to the Adjudicating Authority operationalises that consequence; it is distinct from the CoC's commercial decision to replace an otherwise eligible Resolution Professional under Section 27. The regulatory disciplinary power and the CoC's replacement power operate in separate fields. [Paras 59, 60, 61, 62, 63]

The Tribunal upheld intimation to the CoCs in other assignments as a lawful and necessary consequence of suspension, and not as an independent exercise of the power of replacement.

Interim stay of disciplinary suspension - Grant of interim stay of the disciplinary order suspending the appellant's registration pending disposal of the appeal - HELD THAT: - Interim stay of a regulatory disciplinary order requires satisfaction of the ordinary tests of prima facie case, balance of convenience and irreparable injury, with added caution where public interest is involved. The appellant's challenges were triable but not manifestly established at the interim stage. Replacement in other assignments was an ordinary consequence of suspension and did not establish irreparable injury, particularly as the appellant had no vested right to continue in an assignment and the CoCs remained free to consider future appointment or continuation if the appeal succeeded. [Paras 51, 64, 65, 66, 67]

No case for ad-interim stay was made out; the application was declined without prejudice to determination of the main appeal on merits.

Final Conclusion: The Tribunal declined interim stay of the suspension order, holding that no strong prima facie case, irreparable injury or balance of convenience favouring intervention was established. The main appeal was left open for adjudication on merits.

Medical bail for sick or infirm accused under PMLA - Continuity of custodial medical treatment

Entitlement to regular bail under the sick or infirm exception in the proviso to Section 45(1) of the PMLA, having regard to the petitioner's cumulative medical conditions and the treatment required - HELD THAT: - The expressions "sick" and "infirm" are disjunctive and cannot be restricted by importing requirements of terminal illness, irreversible deterioration, imminent threat to life, surgery or hospitalisation. Infirmity may arise from substantial impairment of physical functioning even without an immediate threat to life.

The medical material had to be assessed cumulatively, including the spinal pathology, osteoporosis, cardiac condition and need for supervised rehabilitation. The decisive question was not merely whether hospital referrals and diagnostic tests had been provided, but whether the advised structured, continuous and supervised treatment could be effectively delivered in custody.

Conservative management did not signify absence of a need for medical intervention, and the pre-existing nature of an ailment did not exclude consideration of the petitioner's present condition and treatment needs. [Paras 57, 58, 59, 60, 61]

The petitioner was held to fall within the expression "sick or infirm" and was granted regular bail subject to strict conditions addressing the risk of influencing witnesses or tampering with evidence.

Final Conclusion: The bail application was allowed under the medical exception to the PMLA bail conditions, subject to safeguards for the integrity of the investigation and trial.

Service tax valuation of reimbursed common expenditure - invoking of extended limitation period

Service tax valuation - reimbursed common expenditure - Prospective inclusion of reimbursable expenditure - Inclusion of proportionate reimbursements of shared utility and maintenance expenditure in the taxable value of alleged renting service where the accommodation was provided without rent - HELD THAT: - The Memorandum and the expense-sharing arrangement established that no rent was charged and that the amounts recovered represented only proportionate common expenditure.

Applying Union of India & Anr. v. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT] the Tribunal held that pre-amendment section 67 did not permit inclusion of reimbursable expenditure, while Rule 5(1) enlarged the statutory valuation provision and was ultra vires to that extent. The statutory inclusion of reimbursable expenditure from 14.05.2015 was a substantive and prospective amendment and could not govern the disputed period. [Paras 7, 10, 12, 13, 14]

The reimbursements could not be added to the taxable value, and the demand was set aside on merits.

Invocation of the extended period for service tax on reimbursements of shared common expenditure - HELD THAT: - The expenditure-sharing arrangement was clearly demarcated, and the Revenue produced no evidence that any amount over and above the stated common expenses had been realised. As the accommodation was provided free of charge, the appellant could bona fide believe that the reimbursements were not includible in taxable value; it was also a registered assessee filing statutory returns. Suppression with intent to evade service tax was therefore not established. [Paras 15]

The demand for the extended period was also set aside as time-barred.

Final Conclusion: The appeal was allowed, as shared common expenditure reimbursements for the relevant pre-amendment period were excluded from taxable value and the extended-period demand was independently held time-barred.

Service tax on incentives and discounts received by authorised vehicle dealers - Declared service-contractual obligation and consideration nexus

Service taxability of incentives, discounts and reimbursement amounts received by an authorised vehicle dealer from manufacturers under principal-to-principal dealership arrangements as consideration for a declared service - HELD THAT: - A declared service of agreeing to do, refrain from doing, or tolerate an act requires an independent contractual arrangement specifically covering that activity and a necessary nexus between the agreed activity and consideration.

The receipts in question were connected with the sale and servicing of vehicles by the appellant as an authorised dealer and service centre, and did not establish any contractual obligation or separate consideration for agreeing to do an act. Tribunal also treated the taxability of such dealer incentives and trade discounts under principal-to-principal arrangements as settled in favour of the dealer. [Paras 7, 8, 9]

The incentives, discounts and reimbursements were not consideration for a declared service; the service-tax demand, interest and penalties were set aside.

Final Conclusion: The appeal was allowed and the impugned order was set aside, with the service-tax demand, consequential interest and penalties failing.

Double taxation of rake/wagon loading service - Classification of transportation with incidental loading as Goods Transport Agency service

Double taxation of rake/wagon loading service - Service tax demand on rake/wagon loading service already taxed under the centralised registration - HELD THAT: - The Tribunal found that service tax on the rake/wagon loading service had already been discharged under the centralised registration. A further demand on the self-same taxable transaction under another registration amounted to double taxation. [Paras 6]

The duplicate demand on rake/wagon loading service was set aside.

Classification of transportation with incidental loading - Goods Transport Agency service - Whether Transportation contracts with incidental rake/wagon loading were classifiable as Goods Transport Agency service and not as cargo handling service? - HELD THAT: - The transportation and loading activities were covered by separate contracts and bills, and there was no evidence of specialised cargo-handling activity. Transportation was the predominant service, with loading at a single point being incidental or ancillary. Applying the principle of essentiality and the Board clarifications against splitting ancillary transportation activities into separate services, the composite activity was held to be transportation service appropriately classifiable as Goods Transport Agency service. [Paras 7]

The demand raised by classifying the transportation activity as cargo handling service was set aside.

Extended limitation in service-classification disputes - Invocation of the extended period for the service-tax demand arising from the classification dispute - HELD THAT: - The proceedings were initiated on the basis of information available in the income-tax return and Form 26AS, showing that the relevant facts were known to the Department. Since the dispute concerned classification of services, the extended period could not be invoked after expiry of the normal limitation period.

We rely on the decision in the case of International Merchandising Company, LLC, [2022 (12) TMI 556 - SUPREME COURT] wherein it has been held by the Hon’ble Apex Court that the extended period of limitation cannot be invoked and penalty would not be attracted when the dispute relates to one of interpretation of statute. [Paras 7]

The demands were independently held barred by limitation.

Final Conclusion: The impugned service-tax demands, consequential interest and penalties were set aside. The demand on transportation activity was also independently held time-barred.

Municipal-function exemption for railway cleaning and sanitation services - Extended limitation for service tax demand - absence of suppression - Penalty for non-filing and delayed filing of ST-3 returns - Refund of deposit made during investigation

Municipal-function exemption for railway cleaning and sanitation services - Eligibility of railway platform and coach cleaning, housekeeping and waste-disposal services for the municipal-function exemption when provided to Indian Railways - HELD THAT: - The services were held to be in the nature of public health, sanitation conservancy and solid waste management, being functions ordinarily entrusted to a municipality. As they were rendered to Indian Railways, a Government body, they fell within the exemption for such services provided to Government.

Tribunal in the case of M/s. Bindhya Bashini Traders [2025 (3) TMI 432 - CESTAT KOLKATA] wherein it has been held that similar/identical services provided to Indian Railways after 01.07.2012 is exempted from service tax as per Entry No. 25 of N.F. No. 25/2012ST dated 20.06.2012 and the demand for the said period has been set aside. Also see M/s. Khagaul Loco Labour Co-Operative Society Ltd [2026 (7) TMI 1001 - CESTAT KOLKATA][Paras 6]

The service tax demand, consequential interest and penalty under Section 78 were set aside.

Extended limitation for service tax demand - absence of suppression - Validity of invocation of the extended period for a service tax demand based on disclosed financial statements, tax data and ST-3 returns - HELD THAT: - The information forming the basis of the demand was available in the balance sheet, profit and loss account, 26AS and ST-3 returns for departmental scrutiny. In the absence of established suppression of facts with intent to evade tax, the extended period could not be invoked. [Paras 6]

The demand raised by invoking the extended period was held unsustainable, the major part of the period being time-barred.

Penalty for non-filing and delayed filing of ST-3 returns - Sustainability of penalty and late fee for non-filing and delayed filing of service tax returns - HELD THAT: - The non-filing of returns for certain periods and delay in filing returns were undisputed. Those defaults were treated as independently warranting the penalty and late fee imposed. [Paras 7]

The penalty and late fee for return-related defaults were upheld.

Refund of deposit made during investigation - Refundability of the amount deposited during investigation after the service tax demand did not survive - HELD THAT: - Since the substantive tax demand was unsustainable, the amount deposited during investigation could not be regarded as payment of service tax. The statutory refund provision applicable to service tax payments was therefore held inapplicable to that deposit. [Paras 8]

Refund of the investigation deposit with applicable interest was allowed.

Final Conclusion: The service tax demand, consequential interest and penalty under Section 78 were set aside, while the penalty and late fee for return-related defaults were sustained. The investigation deposit was directed to be refunded with applicable interest.

Service tax valuation of reimbursed freight and insurance charges - Value of taxable service

Inclusion of freight and insurance charges, separately recovered as reimbursement, in the value of erection and commissioning service - HELD THAT: - Service tax is chargeable only on consideration for the taxable service. The invoices showed that freight and insurance were separately billed as reimbursement, while service tax on erection and commissioning charges had been discharged.

The freight paid to goods transporters had also suffered service tax under reverse charge. In the absence of documentary evidence that any amount exceeding the actual freight and insurance expenditure was recovered, those reimbursed charges could not be added to the value of the taxable service.

As pointed out by the Supreme Court in Hukam Chand v. Union of India [1972 (8) TMI 130 - SUPREME COURT] 'The fact that the rules framed under the Act have to be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act.' In the present case, the Revenue has not come out with any positive documentary evidence to the effect that the Appellant has been collecting any higher amount than what was being paid to the transporter and the insurance companies.[Paras 8, 9, 11, 12]

The demand based on inclusion of the reimbursed freight and insurance charges was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The impugned demand was set aside because the separately invoiced freight and insurance charges were established as reimbursements and were not shown to contain any excess recovery.

Intermediary services - tripartite facilitation requirement - Place of provision of imported visa-processing services - Valuation of imported services - exclusion of sovereign visa fees - Extended limitation for undisclosed imported services

Intermediary services - tripartite facilitation requirement - Place of provision of imported visa-processing services - Characterisation and place of provision of visa-processing services rendered by a Dubai-based service provider to an Indian recipient - HELD THAT: - An intermediary facilitates the provision of a service between two other parties and necessarily involves three parties. The agreement was solely between the appellant and the Dubai-based service provider; the UAE Government was not a party, and the agreement did not permit assignment to a third party. The provider rendered assistance to the appellant for consideration paid by the appellant and was not an intermediary. [Paras 12]

The services were not intermediary services; their place of provision was India, attracting service tax under reverse charge.

Valuation of imported services - exclusion of sovereign visa fees - Valuation of imported visa-processing services where payments made through the service provider included visa fees payable to the UAE Government - HELD THAT: - Visa fees paid to the UAE Government through the service provider could not constitute consideration for the provider's services. Service tax was chargeable only on the service charges paid to the service provider. [Paras 13, 15]

The demand was restricted to service charges paid to the service provider, and the matter was remanded for recomputation of tax, interest and mandatory penalty.

Extended limitation for undisclosed imported services - Invocation of the extended limitation period for service tax on imported services received from the Dubai-based service provider - HELD THAT: - The appellant had not disclosed the services received from the overseas provider, and their receipt came to the Department's knowledge only during audit. In the absence of disclosure, the services would not otherwise have come to the Department's notice. [Paras 14]

The extended period of limitation was held invocable; consequential interest and mandatory penalty were to be recomputed with the revised demand.

Final Conclusion: The appeal was partly allowed. Service tax was confined to the service charges paid to the Dubai-based provider, with remand limited to recomputation of tax, interest and penalty, while reverse-charge liability and invocation of the extended period were sustained.

Finality of Education Cess refund orders following subsequent overruling of precedent - Refund of Education Cess and Higher Education Cess paid under protest

Entitlement to refund of Education Cess and Higher Education Cess redeposited under protest after refund orders founded on a precedent subsequently overruled - HELD THAT: - Refund orders settled under the precedent prevailing when they were made could not be reopened merely because that precedent was subsequently overruled; reopening such concluded matters would unsettle decisions that had attained finality.

CESTAT orders granting refund had virtually attained finality, and the cess was redeposited only under protest following the later change in law. The pending belated appeals warranted safeguards for the Revenue without defeating the petitioner's entitlement to refund.

Applying the ratio of the judgment rendered in Sarswati Agro Chemicals Ltd. [2023 (7) TMI 542 - SC ORDER] to the facts of the present case, we find that the CESTAT orders holding the petitioner entitled to refund of cess on the strength of SRD Nutrients Pvt. Ltd. have virtually attained finality except that some belated appeals against some of the orders passed by CESTAT in the case of the petitioner are still sub judice. [Paras 11, 12, 13, 14, 15]

The petitioner was held entitled to refund of the cess redeposited under protest, subject to the outcome of pending Supreme Court appeals and further proceedings, upon furnishing an equivalent bank guarantee.

Final Conclusion: The writ petition was disposed of with a conditional direction to refund the cess redeposited under protest, safeguarded by a bank guarantee and made subject to pending appellate and other Supreme Court proceedings.

Abatement of pending excise appeal on approval of resolution plan - Excise duty liability upon clearance by non-manufacturer - Assessable value of processed fabrics - Penalty for inadmissible valuation deductions - Rule 209A penalty for goods liable to confiscation

Abatement of pending excise appeal on approval of resolution plan - Abatement of the excise appeal of the corporate debtor after approval of a resolution plan. - HELD THAT: - The approved resolution plan took account of the confirmed government dues and provided for their settlement. Applying the decisions governing the effect of an approved resolution plan, the pending appeal was held liable to abate under Rule 22 of the CESTAT Procedure Rules, 1982. [Paras 4]

The corporate debtor's appeal was abated.

Excise duty liability upon clearance by non-manufacturer - Excise duty liability of persons clearing processed fabrics and stock taken over with the premises, notwithstanding that they were not manufacturers. - HELD THAT: - Although manufacture is the taxable event, collection of duty may be deferred until removal. The statutory scheme places the obligation to pay duty upon the person clearing the goods. The process-house entity had cleared the fabrics under statutory invoices, and the purchaser who took over the stock with the premises similarly cleared the goods; a finding that either was not the manufacturer did not extinguish duty liability on clearance. [Paras 4]

Duty and interest on the relevant clearances were upheld; the specific penalty imposed on the purchaser or transferee in respect of the stock demand was not sustained.

Assessable value of processed fabrics - Deductibility of pre-clearance expenses - Assessable value of processed fabrics-deductibility of grading expenses, cartage, brokerage and interest on stock after allowance of value loss. - HELD THAT: - The arrangement between the process-house entity and the principal was held to be a colourable device, and the goods entered the course of wholesale trade only upon their clearance to independent buyers. The disputed expenses, even if incurred after manufacture, were incurred before such final clearance and consequently formed part of the assessable value. [Paras 4]

The denial of the disputed deductions was upheld, and the consequential duty demands with interest under the four notices were sustained.

Penalty for inadmissible valuation deductions - Intent to evade duty - Penalty on the process-house entity for claiming inadmissible deductions from assessable value. - HELD THAT: - The demands were within the normal period, and the impugned order contained no finding of the specified acts attracting Section 11AC with intent to evade duty. A claim for deductions which the Revenue considered inadmissible was insufficient by itself to justify that penalty. [Paras 4]

The penalty under Section 11AC was set aside.

Rule 209A penalty for goods liable to confiscation - General penalty for participation in duty evasion - Rule 209A penalties on the process-house entity and co-noticees for their role in the duty-evasion arrangement. - HELD THAT: - A penalty under Rule 209A requires a finding of the specified acts or omissions in relation to excisable goods held liable to confiscation. That statutory basis was not made out. However, the undisputed participation of the concerned noticees in the acts resulting in duty evasion warranted imposition of general penalty under Rule 210. [Paras 4]

The Rule 209A penalties were not sustained and were substituted by general penalties under Rule 210.

Final Conclusion: The corporate debtor's appeal was abated. The remaining duty demands and interest were sustained as indicated, while the Section 11AC and Rule 209A penalties were not sustained and general penalties were imposed under Rule 210.

Excise valuation of mould modification charges - Extended limitation for willful suppression - Penalty for excise duty short-payment

Excise valuation of mould modification charges - Additional consideration under Rule 6 - Inclusion of service charges for modifying buyer-owned moulds in the assessable value of bumpers - HELD THAT: - Additional consideration under Rule 6 must bear a nexus with the negotiated price of the goods cleared. The charges received for modifying the moulds were consideration for a distinct taxable service, and no nexus with the price of the bumpers was established. Explanation 1 covers the value of buyer-supplied tools, dies and moulds used in production, but not service charges for modification or repair of moulds whose cost had already been amortised. The modifications were also not shown to increase the moulds' useful life or production capacity. [Paras 20, 21, 22, 23, 24]

The mould modification charges were held not includible in the assessable value of the bumpers, and the duty demand was unsustainable on merits.

Extended limitation - wilful suppression - Invocation of the extended limitation period for duty on mould modification charges - HELD THAT: - The extended period requires proof of fraud, collusion, wilful misstatement or suppression with intent to evade duty; mere non-payment is insufficient. The material facts were available to the department through audit, returns and invoices, and no positive act of concealment or intent to evade was established. The valuation dispute was also one of statutory interpretation, and the assessee's failure to seek departmental clarification could not constitute suppression. [Paras 28, 29, 30, 31, 32]

The extended period was not invokable; since the entire demand fell outside the normal period, it could not survive.

Penalty for non-inclusion of mould modification charges - Imposition of penalty for alleged non-inclusion of mould modification charges in the assessable value of bumpers - HELD THAT: - The statutory ingredients for penalty were identical to those governing invocation of the extended period. As fraud, wilful misstatement, suppression and intent to evade duty were not established, the basis for penalty failed. [Paras 33]

Penalty was held not imposable.

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

Central Excise exemption for integrated non-conventional energy devices - Extended limitation for duty demand - absence of suppression with intent to evade - Mandatory penalty for wrongful availment of exemption

Exemption for integrated non-conventional energy systems - Eligibility of the Dual Fuel Burner System supplied for a biomass gasification project for exemption as a non-conventional energy device/system under List 8 of Notification No. 12/2012-CE - HELD THAT: - The goods were supplied as a complete, integrated burner system specifically designed to convert bio-gas generated in the biomass gasification project into usable thermal energy. Their commercial and functional identity could not be disregarded by separately treating the constituent components as valves, blowers, burners or regulators. The subsequent extension of exemption to specified parts was irrelevant, since the claim was for a complete system and not for individual parts. [Paras 10, 11, 12, 13, 14]

The Dual Fuel Burner System was held eligible for the claimed exemption, and the denial of exemption was unsustainable.

Extended period for duty demand - absence of suppression with intent to evade - Validity of invoking the extended period to recover duty on the claimed exemption for the Dual Fuel Burner System - HELD THAT: - The appellant had voluntarily disclosed the exempted clearances and its exemption claim to the Department shortly after the clearances and before any investigation. As the dispute concerned interpretation of the exemption notification and no material established fraud, collusion, wilful misstatement or suppression with intent to evade duty, the extended period was not invocable. [Paras 15, 16]

The duty demand was held barred by limitation.

Mandatory penalty for wrongful availment of exemption - Imposition of mandatory penalty for the alleged wrongful availment of exemption on the Dual Fuel Burner System - HELD THAT: - The claim arose from an arguable interpretation of the exemption notification, and the transactions had been disclosed through commercial records. The requisite elements for mandatory penalty, including an intent to evade duty, were therefore absent. [Paras 18]

The penalty imposed was held unsustainable.

Final Conclusion: The appeal was allowed, and the order denying exemption and confirming duty, interest and penalty was set aside.

Classification of railway printed forms as products of printing industry rather than paper stationery - Marketability of railway-exclusive printed stationery

Liability to central excise duty on railway-specific printed forms and stationery used solely for captive departmental purposes - HELD THAT: - We find that the Co-ordinate Bench of the Tribunal upon examination of a number of judgements delivered by the higher judicial forum in the case of Dy. Chief Manager, (Printing & Stationery), Central Railway [2015 (6) TMI 374 - CESTAT MUMBAI] has held that the impugned goods having not been proved by the department as capable of being bought and sold for consideration in the market, the demand of Central Excise duty is not sustainable.

We further find that Tribunal in the case of self-same appellant 2023 (11) TMI 302 - CESTAT MUMBAI vide Final Order dated 02.11.2023 by relying on the decision of the Tribunal in the case of Dy. Chief Manager, (Printing & Stationery), Central Railway (supra) [2015 (6) TMI 374 - CESTAT MUMBAI] has held that central excise duty on impugned goods is not sustainable.

The Tribunal found the dispute covered by earlier co-ordinate bench decisions on identical goods. Those decisions treated railway-specific printed forms as products of the printing industry classifiable under Chapter 49 rather than as paper stationery under Chapter 48. As the articles bearing departmental particulars could only be used internally, and the Revenue had not established that they were capable of being bought and sold for consideration, the essential requirement of marketability was not satisfied. [Paras 8, 9]

The central excise duty demand, with consequential interest and penalty, was set aside and the appeal was allowed.

Final Conclusion: The impugned order confirming central excise duty on the railway-specific printed stationery was set aside and the appeal was allowed.

Rule 6(3) of the CENVAT Credit Rules - electricity generated from bagasse - Bagasse-agricultural waste-not manufacture -

Applicability of Rule 6(3) of the CENVAT Credit Rules to surplus electricity generated from bagasse and sold to a State electricity distribution company - HELD THAT: - Following the consistent co-ordinate Bench view in the case of Indreshwar Sugar Mills Ltd [2026 (7) TMI 1614 - CESTAT MUMBAI] relying on Olam Agro India Private Limited [2026 (4) TMI 860 - CESTAT MUMBAI] treated as settled in light of the Supreme Court ruling in DSCL Sugar Limited [2015 (10) TMI 566 - SUPREME COURT] that bagasse is agricultural waste and not the result of manufacture, the Tribunal held that Rule 6(3) has no application to surplus electricity generated from bagasse and wheeled out for sale. Consequently, payment of an amount equal to six per cent of the value of such electricity was not exigible. [Paras 7, 8, 9]

The Rule 6(3) demand, with consequential interest and penalties, could not survive; the impugned order was set aside and the appeal was allowed.

Final Conclusion: The impugned order was set aside and the appeal allowed, as no amount under Rule 6(3) was payable on the sale of surplus electricity generated from bagasse.

CENVAT credit on inputs used in research and development - Research and development ancillary to manufacture

Eligibility to CENVAT credit on inputs exclusively used in research and development supporting manufacture of excisable final products - HELD THAT: - The issue was identical to that decided in the assessee's own case for an earlier period [2018 (4) TMI 466 - CESTAT MUMBAI]. The settled position accepted by the Tribunal was that research and development supporting the manufacturing facility is ancillary to manufacture, and credit cannot be denied in the absence of any allegation that such activity is unrelated to the excisable products manufactured by the assessee. [Paras 8, 9]

The disallowance of CENVAT credit and the consequential demand were held unsustainable; the impugned order was set aside.

Final Conclusion: The appeal was allowed and the order sustaining denial of CENVAT credit on research and development inputs was set aside.

Rule 6 CENVAT credit reversal on organic manure from press mud and spent wash - Press mud and spent wash arise as waste or by-products in the manufacture of sugar and molasses, and organic manure results from their physical mixing

HELD THAT: - Rule 6 applies where common CENVAT inputs or input services are used in the manufacture of dutiable final products and exempt final products. Press mud and spent wash arise as waste or by-products, and organic manure results from their physical mixing rather than manufacture of a distinct final product.

The amendment in Rule 6 might have the effect of treating the by-product to be exempted goods, but it cannot result in treating them as being manufactured goods, as the nature of bagasse or press mud or boiler ash, organic waste remains that of a waste/residue and is not in effect 'a final product'. More specifically, in case of Gujarat Mineral Development Corporation Ltd.[2021 (10) TMI 307 - CESTAT AHMEDABAD] it has been held that once it is established that the product in question is a by-product then it is settled that in respect of by-product demand under Rule 6 ibid will not sustain

Tribunal has held in the case of Bhaurao Chavan SSK Ltd. [2023 (7) TMI 430 - CESTAT MUMBAI] that press mud, bagasse, boiler ash and sludge which emerges as waste or by-product in the manufacture of sugar, fall outside the purview of Rule 6 of the Rules of 2004. Also see M/s DSCL Sugar Ltd.[2015 (10) TMI 566 - SUPREME COURT] [Paras 7, 9]

The confirmation of the Rule 6 demand and the impugned appellate orders were set aside, and the appeals were allowed.

Final Conclusion: Holding that organic manure formed from waste or by-products did not attract Rule 6 liability, the Tribunal set aside the impugned orders and allowed the appeals.

Deemed sale - transfer of right to use hired cranes - License to use goods - retention of effective control- Effective control retained by owner -

Whether Hire of cranes under contracts retaining the supplier's ownership and effective control transaction constituted a deemed sale by transfer of the right to use goods under the MVAT Act? - HELD THAT: - A transfer of the right to use goods requires that the transferee have the legal right to use them to the exclusion of the transferor; a mere license to use does not satisfy that test. The contractual terms established that ownership and effective control of the cranes remained with the appellant throughout the hire period. Temporary possession by the hiring companies, including their provision of fuel, did not convert the arrangement into a transfer of the right to use the cranes. [Paras 27, 29, 30, 32, 34]

The crane-hire activity was held to be a service and not a deemed sale; MVAT, interest and penalty were not leviable, and the impugned order was quashed.

Final Conclusion: The appeal was allowed and the Tribunal's order imposing MVAT, interest and penalty on the crane-hire transactions was quashed.