TaxTMI Updates e-Newsletter
Sep 28,2026

Recovery proceedings pending second appeal - Statutory protection against recovery - Consideration of an application for withdrawal of recovery proceedings upon filing of a second appeal under the OGST Act

HELD THAT: - Noting that the recovery notice preceded the filing of the second appeal, the Court permitted the petitioner to invoke the statutory remedy for protection against recovery and required the competent authority to examine the applications in accordance with the relevant provision. [Paras 7]

The authority was directed to decide the applications for statutory protection and withdrawal of the recovery proceedings within fifteen days, and no recovery was permitted until their disposal.

Final Conclusion: The writ petition was disposed of with directions for expeditious consideration of the applications seeking protection against recovery and withdrawal of the recovery proceedings.

Provisional attachment under the CGST Act - one-year statutory lapse and no renewal

Statutory lapse of provisional attachment of bank accounts - Absence of power to renew provisional attachment - Continuation of provisional attachment of the writ petitioners' bank accounts after expiry of one year under Section 83 of the CGST Act - HELD THAT: - An order of provisional attachment ceases to have effect upon expiry of one year. Section 83 contains no enabling provision for renewal, re-issuance or revival of an attachment that has lapsed. Since the attachments had statutorily lapsed and no interim protection had been granted against the writ order, their continuation was impermissible.

In the case on hand, admittedly, the provisional order of attachment was passed on 18.02.2022 and 22.02.2022. These two writ appeals were admitted on 19.05.2022. However, no interim order was granted. In the absence of any such interim order, we are of the considered opinion that these writ appeals have become infructuous and nothing survives for further adjudication, in the light of the categorical pronouncement of the judgment of KESARI NANDAN MOBILE [2025 (8) TMI 992 - SUPREME COURT]. [Paras 11]

The writ appeals were dismissed as infructuous, and the provisional attachments could not continue.

Final Conclusion: The provisional attachments had lapsed by operation of law after one year. The revenue's writ appeals were dismissed as infructuous.

De novo GST adjudication subject to conditional deposit - Ex parte GST assessment and remand for fresh adjudication - HELD THAT: - In view of the petitioner's undertaking to make the stipulated deposit, after adjustment of any cash recovery subject to verification, the assessment was treated as an addendum to the show-cause notice. Fresh adjudication was directed upon the petitioner filing a reply with supporting documents. [Paras 7, 8, 9, 10, 11]

The assessment order was quashed and the matter remitted for adjudication on merits, conditional upon deposit of 25% of the disputed tax and submission of a reply; on non-compliance, recovery could proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the assessment and directing de novo adjudication subject to the prescribed deposit and compliance with the stated conditions.

Conditional de novo adjudication of ex parte GST demand - Pre-deposit as condition for remand - HELD THAT: - The record disclosed service of an intimation in Form GST DRC-01A and a show-cause notice in Form GST DRC-01 under section 73; hence, no procedural irregularity warranting interference was established.

Nevertheless, following the consistent view in similar circumstances, the Court granted an opportunity for de novo adjudication subject to deposit of 25% of the disputed tax and submission of a reply with supporting documents. [Paras 9, 10, 11, 12, 13]

The impugned order was quashed and the matter remitted for fresh adjudication subject to the stipulated pre-deposit and reply; the bank attachment, if any, would stand lifted on compliance, subject to there being no arrears for any other tax period.

Final Conclusion: The writ petition was disposed of by permitting fresh adjudication on fulfilment of the stipulated conditions. On default, recovery proceedings could be pursued in accordance with law after due notice.

Blocking of electronic credit ledger under Rule 86A - Deemed stay on recovery upon appellate pre-deposit - Effect of appellate pre-deposit on recovery proceedings

HELD THAT: - A blocking order under Rule 86A is a provisional measure requiring recorded reasons and cannot operate beyond one year. The deemed stay arising on filing an appeal after making the prescribed pre-deposit stays recovery of the balance demand and precludes appropriation from either the electronic cash ledger or the blocked electronic credit ledger. Such deemed stay, however, does not by itself affect the subsisting blocking order under Rule 86A; the affected person may seek unblocking under that Rule. [Paras 3, 4]

The respondents were directed to consider the request for unblocking; if rejected, a speaking order of refusal shall be issued within one month.

Final Conclusion: The deemed stay of recovery consequent upon appellate pre-deposit did not automatically require unblocking of the electronic credit ledger. The writ petition was disposed of with a direction to consider the petitioner's request for unblocking.

Penalty for delayed GSTR-3B tax payment - Statutory conditions for waiver of penalty - Validity of penalty imposed for delayed remittance of tax under GSTR-3B during the COVID-19 pandemic period

HELD THAT: - The statute permits waiver of the penalty only where tax and interest are paid within thirty days of receipt of the show cause notice. As that statutory exception did not apply, the pandemic-related delay did not furnish a ground to waive the penalty. [Paras 4]

The penalty imposed at 10% of the tax demand was upheld and the writ petition was disposed of without interference.

Final Conclusion: The challenge to the penalty for delayed GSTR-3B tax payment was rejected, since the statutory conditions for waiver were not satisfied.

Deficiency memo for time-barred GST refund claim - Show-cause notice before rejection of GST refund claim

Validity of a deficiency memo issued to treat a GST refund application as time barred - HELD THAT: - Rule 92(3) prescribes issuance of notice and an opportunity of hearing where the proper officer proposes to reject a refund claim wholly or partly. In contrast, Rule 90(3) concerns remediable deficiencies requiring a fresh application after rectification, with consequential exclusion of that period for limitation. A claim being time barred is not a deficiency for which a deficiency memo may be issued. [Paras 5, 6]

No further action may be taken pursuant to the impugned deficiency memo; the respondent may issue a show-cause notice under Rule 92(3) if rejection of the refund claim is intended.

Final Conclusion: The writ petition was disposed of by precluding action on the deficiency memo while leaving the respondent at liberty to proceed under Rule 92(3) for any proposed rejection of the refund claim.

Provisional attachment of bank accounts under GST - Statutory lapse of provisional attachment after one year

Continued freezing of bank accounts provisionally attached in connection with proceedings against a company after expiry of the statutory one-year period - HELD THAT: - A provisional attachment under Section 83 is a pre-emptive measure to protect revenue and ceases by operation of law upon expiry of one year from the attachment order.

Revenue confirmed that no subsequent provisional attachment orders had been issued. Since the original attachment orders had lapsed and the petitioners were not recipients of the subsequent demand-cum-show cause notice, there was no basis to continue restricting operation of their bank accounts. [Paras 19]

The provisional attachments having ceased to have effect, the bank accounts were directed to be defreezed and made operable forthwith upon production of a certified copy of the order.

Final Conclusion: The writ petitions were allowed to the extent that the petitioners' bank accounts were directed to be defreezed and made operable forthwith.

Adjustment of tax paid under incorrect GST heads - Interest on tax liability discharged under incorrect GST heads

Appropriation of CGST and SGST paid through a clerical error towards the corresponding IGST liability on outward supplies - HELD THAT: - Although Section 77 does not expressly provide for a case of clerical payment under the CGST and SGST heads instead of the IGST head, its underlying principle applied because the entire tax liability had been discharged within the prescribed period. The taxable person could not be required to pay the tax again and thereafter seek refund; nor could interest be levied when the requisite tax had already been remitted. [Paras 5]

The amounts paid under the CGST and SGST heads were directed to be appropriated towards the IGST liability upon application, with a refund application to be furnished if procedurally necessary.

Final Conclusion: The writ petition was disposed of by directing appropriation of the tax already remitted under the incorrect GST heads towards the IGST liability, without requiring a duplicate payment or levy of interest.

Duplicate adjudication by Central and State GST authorities - Parallel proceedings by Central and State GST authorities - Sustainability of the State GST assessment and rectification orders duplicating an earlier Central GST adjudication on the same issues for the same assessment period

HELD THAT: - A comparison of the orders established that both proceedings concerned identical issues and the same assessment period. Since the Central GST authorities had issued the earlier order and the appeal against that order was pending before the appellate authority, the subsequent State GST orders could not be sustained. [Paras 4, 5]

The State GST assessment and rectification orders were quashed and the writ petition was allowed.

Final Conclusion: The impugned State GST orders were quashed because they duplicated the earlier Central GST adjudication concerning the same issues and assessment period.

Mandatory e-way bill requirement for inter-State movement of goods - Detention and penalty for non-production of e-way bill

Requirement of an e-way bill for inter-State movement of goods on 24.11.2017 and sustainability of detention and penalty for its non-production - HELD THAT: - Though rule 138 provided the mechanism for e-way bills, its mandatory nationwide operation was brought into force only with effect from 01.04.2018. Consequently, an e-way bill was not compulsorily required for the inter-State movement on the date of interception. The goods corresponded with the accompanying invoice and transport documents, and no discrepancy or material indicating intention to evade tax was found. [Paras 10, 11, 12, 13]

The detention proceedings and consequential penalty for non-production of an e-way bill were unsustainable; the Revenue's appeal was dismissed.

Final Conclusion: The Revenue's appeal against deletion of the detention proceedings and penalty was dismissed.

E-way bill validity and correct vehicle particulars - Penalty for transport of goods under an expired e-way bill - Rebuttable presumption of intent to evade tax

Penalty for transporting electrical equipment under an expired e-way bill containing wholly different vehicle particulars in Part B - HELD THAT: - An e-way bill is not valid for movement of goods unless Part B contains the correct vehicle details. The concession for minor clerical errors in vehicle particulars cannot extend to substitution of an entirely different vehicle. The Tribunal applied the stated position that mens rea is not essential for a civil fiscal penalty unless made so by the enactment, and held that the expired e-way bill, the wholly different vehicle particulars and the surrounding circumstances raised a rebuttable presumption of intent to evade tax. The appellant failed to rebut that presumption.

Thus, it is clear that because of the questioned invoice and e-way bill were issued on 31.07.2022 and later was valid till 01.08.2022. Distance from Alwar to Agra is shown 167 kms in transporter’s consignment note and e-way bill. In such circumstances and accordingly principle laid down in BM computers [2025 (4) TMI 810 - ALLAHABAD HIGH COURT] and Dharmendra [2008 (9) TMI 52 - SUPREME COURT] the department/state has succeeded to establish a presumption that by mentioning entirely different no. even in expired e-way bill than the vehicle no. in which goods were actually being transported. Respondent taxpayer has violated the relevant provisions section 68 read with section 129 of CGST/UPGST Act read with rule 138 of CGST rules 2017 with intent to evade tax. Though this is a rebuttable presumption and in our considered opinion appellant has completely failed to rebutte the same even from the surrounding circumstances of the case.[Paras 10, 12, 13, 14, 15]

The concurrent findings sustaining the penalty disclosed no legal or factual error and were affirmed.

Final Conclusion: The Tribunal upheld the penalty, holding that the appellant had transported the goods with an invalid expired e-way bill bearing incorrect vehicle particulars and had not rebutted the resulting presumption of intent to evade tax. The second appeal was dismissed.

Inverted duty structure refund - determination of inverted-rated turnover and adjusted total turnover

Refund of accumulated input tax credit under the inverted duty structure-determination of whether outward supplies allegedly taxable at 18% were required to be included with supplies taxable at 5% for computing inverted-rated turnover and adjusted total turnover - HELD THAT: - The refund formula requires correct determination of the turnover of inverted-rated supplies and adjusted total turnover. As the first appellate authority had not addressed the alleged 18% outward supplies and the Revenue had not produced supporting invoices or documents, the correct admissible refund could not be ascertained. [Paras 8]

The matter was remanded to the first appellate authority for fresh determination of the relevant turnover and admissible refund after the Revenue produces the relevant documents, if any, and both parties are afforded reasonable opportunity; the merits of the refund computation were not adjudicated.

Final Conclusion: The Revenue's appeal was disposed of by remanding the refund computation to the first appellate authority for a reasoned fresh decision.

Transitional refund of service tax on unprovided services - Input tax credit of pre-GST service tax - Refund of tax on services not provided

Entitlement to input tax credit of service tax deposited before GST on advances received for flat bookings which were cancelled after the appointed day - HELD THAT: - Service tax paid under the erstwhile Finance Act, 1994 is not "input tax" under the CGST/SGST Acts and consequently cannot be taken as input tax credit. Where the booked services were not ultimately provided, section 142(5) requires the refund claim to be dealt with under the existing law and paid in cash; a taxpayer cannot unilaterally adjust such refund claim through an entry in the electronic credit ledger without statutory sanction. [Paras 5]

The claimed input tax credit was inadmissible; the first appellate order was upheld and the appeal was dismissed.

Final Conclusion: The appeal was dismissed, as service tax paid under the erstwhile law on subsequently cancelled flat bookings could be sought only through the statutory refund mechanism and not by way of input tax credit under GST.

Reasoned and speaking appellate orders - Validity of the common appellate orders confirming GST demands without addressing the appellants' material grounds of appeal - HELD THAT: - The appellate authority had merely recorded a general conclusion that the objections were unsupported and that the original orders were legal, without considering the substantive grounds or the judicial authorities relied upon. Identical conclusions in the three appeals, without independent examination of their respective contentions, constituted failure to exercise appellate jurisdiction.

Recording cogent reasons is an essential requirement of quasi-judicial decision-making and of natural justice. Since objections concerning the show cause notices, relied-upon documents and effective personal hearing at the original adjudication stage also remained to be considered, the merits of the demands were not adjudicated by the Tribunal. [Paras 31, 32, 33, 34, 35]

The appellate and original orders were set aside and the matters were remitted to the respective original adjudicating authorities for fresh adjudication after identifying and making available the relied-upon documents, affording reasonable opportunity of reply and effective personal hearing, and passing reasoned orders.

Final Conclusion: The impugned appellate and original orders were set aside, and the matters were remanded to the original adjudicating authorities for fresh adjudication in accordance with law.

Taxability of advance rental receipts - Appellate enhancement beyond the subject-matter of assessment - Onus to prove unexplained bank credits - Unexplained investments in prior-year shareholdings - Explained cash deposits - Transfers between individual and HUF accounts

Advance rental receipts - Double taxation of income - Taxability of advance rental receipts and the alleged unexplained component of rental credits for A.Y.2015-16 - HELD THAT: - The bank records established that the actual rental receipts were lower than the figure adopted by the lower authorities; hence, the residual addition as unexplained rental credits had no factual basis. The advance rental receipts had been offered to tax in subsequent assessment years, a position not rebutted by the Revenue. In the absence of accrual in the relevant year, taxing those receipts again would result in impermissible double taxation of the same income. [Paras 8, 14]

The additions relating to alleged unexplained rental receipts and advance rental receipts were deleted, and the Revenue's challenge to the relief relating to rental receipts was dismissed.

Appellate enhancement of a new source of income - Validity of enhancement of income from sale of agricultural land when the assessment had considered only the allowability of development expenditure - HELD THAT: - The law on this issue is settled by the Hon’ble Supreme Court in Shapoorji Pallonji Mistry [1962 (2) TMI 12 - SUPREME COURT] and Rai Bahadur Hardutory Motilal Chamaria [1967 (4) TMI 8 - SUPREME COURT] wherein it has been categorically held that the appellate authority cannot assess a new source of income not considered by the AO.

The power of appellate enhancement is confined to a source of income considered by the Assessing Officer from the perspective of its taxability. Since the assessment had accepted the sale transaction and examined only the development expenditure claimed against it, treating the entire sale consideration as taxable introduced a new source of income outside the subject-matter of assessment. [Paras 8]

The enhancement relating to the sale consideration of agricultural land was held to be without jurisdiction and was deleted.

Unexplained money u/s 69A - Running loan and advance accounts - Additions for alleged unexplained money arising from bank credits, loans and advances recorded in running accounts for A.Y.2015-16 to A.Y.2017-18 - HELD THAT: - The impugned credits were recorded in the books, represented brought-forward balances or continuing financial dealings, and were supported by ledger accounts, confirmations and banking records. The assessee had furnished material establishing the identity of creditors, genuineness of transactions and creditworthiness where relevant. As the Revenue neither discredited that evidence nor brought adverse material to show that the recorded credits represented unexplained money, the statutory conditions for treating them as unexplained were not met. [Paras 8, 10, 12]

The additions sustained as unexplained bank credits, loans and advances for the relevant assessment years were deleted.

Unexplained investments u/s 69 - Prior-year investments in shares and securities - Addition for alleged unexplained investment in shares and securities for A.Y.2017-18 - HELD THAT: - The year-wise records showed that the investments in shares and securities had been acquired in earlier years and were merely carried forward during the relevant year. The balance treated by the Assessing Officer as investment had also substantially been accepted as prior-year loans and advances. Since no fresh investment during the year was established and the Revenue produced no material to rebut the documentary explanation, the addition could not be sustained. [Paras 12, 16]

The residual addition for alleged unexplained investments in shares and securities was deleted, and the Revenue's challenge to the corresponding relief was dismissed.

Cash deposits in bank account - Deletion of additions for cash deposits in bank accounts for A.Y.2015-16 and A.Y.2017-18 - HELD THAT: - The cash flow statements, disclosed income and financial statements evidenced the availability of cash from disclosed sources. The Revenue failed to identify any defect in that material or to demonstrate that the explanation was incorrect. Once the source of the deposits was supported by documentary evidence, the burden shifted to the Revenue, which remained undischarged. [Paras 14, 16]

The deletion of the additions for cash deposits was upheld and the Revenue's grounds were dismissed.

Transfers between individual and HUF accounts - Deletion of the addition for a transfer from an individual account to the HUF account for A.Y.2015-16 - HELD THAT: - The transfer was supported by the individual's return of income, financial statements and bank records, which established the explained source, identity and genuineness of the banking transaction. The Revenue did not produce any adverse material to dispute those facts. [Paras 14]

The deletion of the addition for the transfer from the individual account to the HUF account was upheld.

Final Conclusion: The assessee's appeals for A.Y.2015-16 to A.Y.2017-18 were allowed, while the Revenue's appeals for A.Y.2015-16 and A.Y.2017-18 were dismissed.

Reassessment - change of opinion - Reason to believe - tangible material

Validity of reassessment where claims for depreciation, deductions and treatment of pre-production income had been examined during the original scrutiny assessment - HELD THAT: - The original Assessing Officer had specifically sought and considered the assessee's explanations and material concerning depreciation on the dam, additional depreciation, disallowance of expenditure relating to exempt income, and pre-production interest and other income. The recorded reasons for reopening were founded solely on the original assessment record and reflected the successor Assessing Officer's different inference that the allowances had been wrongly granted.

No fresh tangible material, false statement, or failure by the assessee to make a full and true disclosure of material facts was recorded. Reassessment under Section 147 is not a power of review; a mere change of opinion on material already examined does not furnish jurisdictional reason to believe that income escaped assessment. [Paras 29, 30, 31, 32, 33]

The reassessment was without jurisdiction, and the Tribunal's order quashing it was upheld.

Final Conclusion: The revenue's appeal was dismissed, affirming the quashing of the reassessment for Assessment Year 2009-10.

Search-assessment limitation u/s 153B - Sequencing of statutory stay exclusion and TOLA extension

Computation of the limitation period for search assessments where exclusion of court-ordered stay periods and extension under TOLA are invoked - HELD THAT: - The Explanation to Section 153B, by its express terms, forms an integral part of the computation of the single period of limitation prescribed under that section. The applicable stay-period exclusion must therefore be given effect while determining the composite limitation date, before testing whether that date falls within the TOLA window.

Treating the stay exclusion as a cumulative addition after a TOLA extension would render the statutory scheme unworkable and impermissibly enlarge the Revenue's period for completing assessments.

For the years in which stay operated, the composite limitation date fell outside the TOLA window even on the computation most favourable to the Revenue; for the remaining years, TOLA extended the limitation only up to 30.09.2021. [Paras 21, 22, 23, 26, 27]

The impugned assessments, antecedent notices and consequential penalty orders for all nine assessment years were barred by limitation and were quashed.

Final Conclusion: The Revenue appeals were dismissed and the assessee appeals were allowed. The assessments and consequential proceedings for all nine assessment years were held time-barred; the merits of the additions were left open.

Reassessment - change of opinion - Reopening based on misreading of tax audit report - Validity of reopening the completed scrutiny assessment on the premise that tax deducted at source on salary payments had been claimed as a deduction under section 43B

HELD THAT: - The income-tax return disclosed that the assessee had not claimed the tax deducted at source as expenditure or as a deduction under section 43B; the alleged deduction resulted from a misreading of the audit report. The deduction position and tax deducted at source had already been examined during the original scrutiny assessment and accepted. Reopening without fresh or tangible material, on material already available and considered, amounted to a change of opinion and disclosed non-application of mind. [Paras 7, 8, 9]

The reassessment action was quashed as it was founded on non-application of mind and an impermissible change of opinion.

Final Conclusion: The writ petition was allowed, and the impugned reassessment notice and consequential order were quashed.

Validity of Reassessment proceedings under the substituted reassessment regime - effect of TOLA

HELD THAT:- As decided i. Venkatal Iyyappa Rajanna [2025 (8) TMI 1723 - KARNATAKA HIGH COURT] in view of the concession made by the Revenue in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] the reassessment proceedings in the present case would also require to be dropped.

Tax deduction at source on rebate for defective products - Verification of statutory due-date compliance for employees' welfare contributions

Tax deduction at source on rebate for defective products - Disallowance for non-deduction of tax at source - Disallowance for non-deduction of tax at source on fixed 'refurbish and rebate' credit notes issued to distributors for defective products - HELD THAT: - The character of the payment could not be determined merely from its description or from the fact that it arose on identification of a defective product. The uniform credit note at 30% of the original price, irrespective of actual repair cost or whether repair was undertaken, and the absence of any obligation upon the distributor to repair, showed that it was not consideration for carrying out work. A distributor's discretionary repair of the product could not by itself bring the payment within the tax-deduction provisions applicable to a contract for work. [Paras 21, 22, 23, 24, 25]

The disallowance under section 40(a)(ia) was deleted.

Statutory due-date compliance for employees' welfare contributions - Disallowance of employees' contributions to welfare funds where the payment dates recorded in the tax audit report were disputed - HELD THAT: - The question was factual, namely, whether the contributions were actually deposited within the due dates prescribed under the relevant welfare statutes. The statutory consequence could follow only upon verification of the correct payment dates from the challans and supporting material, particularly where errors in the tax audit report were asserted. [Paras 26, 27, 28]

The finding was set aside and the limited issue was remanded to the Assessing Officer for verification; contributions found deposited within the prescribed due dates were directed to be allowed in accordance with law.

Final Conclusion: The disallowance relating to the fixed rebate on defective products was deleted. The disallowance of employees' welfare contributions was remanded for verification of the actual statutory due-date compliance, and the appeal was partly allowed for statistical purposes.

Late fee for delayed TDS statements u/s 234E - Prospective operation of section 200A mechanism for section 234E fee

Levy of late fee for delayed filing of the quarterly TDS statement where the period of delay extended beyond 1 June 2015 - HELD THAT: - The enabling mechanism under section 200A for computation of late fee under section 234E became operative from 1 June 2015 and operates prospectively. Although a TDS statement furnished after that date attracts late fee, the fee can be computed only for the period commencing from 1 June 2015 until the actual filing of the statement, and not for the antecedent period of delay. See SHRI UTTAM CHAND GANGWAL M/S ADINATH STONES [2019 (1) TMI 1355 - ITAT JAIPUR], HUTATMA JAIWANTRAO PATIL GIRLS HIGH SCHOOL & JUNIOR COLLEGE HIMAYATNAGAR [2026 (2) TMI 928 - ITAT PUNE] and SHRIKRISHNA LAXMINARAYAN THAKUR [2025 (1) TMI 1183 - ITAT PUNE] [Paras 7]

The late fee levied for the period before 1 June 2015 was deleted, and the TDS Officer was directed to recompute the fee only from 1 June 2015 until filing of the relevant TDS statement and issue a fresh demand notice. The appeal was partly allowed.

Final Conclusion: The appeal was partly allowed, with the late fee confined to the period from 1 June 2015 until the filing of the TDS statement.

Section 54F exemption claimed under section 54 - Appellate jurisdiction over corrected exemption claims

Appellate jurisdiction to entertain additional exemption claims -exemption u/s 54F denied solely because the assessee claimed it under Section 54 in the return - claim for exemption under section 54F which was not correctly made in the original or revised return - HELD THAT: - The restriction on the Assessing Officer entertaining a new deduction claim otherwise than through a revised return does not curtail the jurisdiction of the appellate authorities to consider an additional or corrected claim where the relevant facts and material are already on record. The Commissioner (Appeals) therefore erred in treating the absence of a section 54F claim in the return as an absolute bar to adjudication of that claim. [Paras 29, 42]

The Commissioner (Appeals) was competent to entertain and decide the corrected claim under section 54F.

Section 54F exemption claimed under section 54 - Entitlement to exemption under section 54F on capital gain from transfer of land where the exemption had been claimed in the return under section 54 and the consideration was invested in a new residential house. - HELD THAT: - Though section 54 was inapplicable because the original asset was land and not a residential house, the incorrect statutory description could not defeat an otherwise admissible exemption. The exemption, the underlying transfer and the investment in the new residential house had been disclosed, and the error was clarified during assessment. The Tribunal found that the purchase was within the prescribed period and that neither authority had recorded any specific finding of breach of a condition under section 54F. Determination of taxable income must follow the substantive provision applicable to the disclosed transaction rather than the incorrect section number stated in the return.

Having regard to the admitted nature of the original asset, the acquisition of the residential property within the prescribed period, the disclosure of the claim in the return, the documentary material furnished during the assessment proceedings and the absence of any specific finding that a condition of section 54F was violated, we are of the considered view that no useful purpose would be served by restoring the substantive claim for another round of proceedings. The jurisdictional High Court in Pruthvi Brokers & Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] has expressly recognised that the appellate authority may itself consider and allow an additional claim instead of remanding it to the Assessing Officer.[Paras 37, 40, 41, 43, 44]

The exemption under section 54F was allowed and the corresponding capital-gain addition was directed to be deleted.

Final Conclusion: The appeal was allowed. The Tribunal held that exemption under section 54F could not be denied merely because section 54 had been stated in the return, and directed recomputation after allowing the claim.

Capital-gains exemption for charitable trusts - fixed deposits as another capital asset - Application of charitable income - write-off of unrecoverable TDS

Fixed deposits as another capital asset - Capital-gains exemption for charitable trusts - Entitlement to capital-gains exemption under section 11(1A) where the net consideration from transfer of trust property was invested in bank fixed deposits for more than six months - HELD THAT: - The expression "another capital asset" in section 11(1A) stood enlarged by CBDT Instruction No. 883 to include investment of the net consideration in bank fixed deposits for a period of six months or more. As the investment satisfied that condition, it constituted investment in a new capital asset held for charitable purposes. Form No. 10 was not required, since the consideration had already been so invested and was not being accumulated for subsequent application. [Paras 12, 14]

The claim of exemption under section 11(1A) was allowed.

Application of income through write-off of unrecoverable TDS - Whether unrecoverable TDS written off by the charitable trust could be treated as application of income? - HELD THAT: - The Tribunal found that no refund of the TDS had been claimed and that the written-off amount had a direct nexus with the trust's income receipts. It therefore supported the claim as application of income. [Paras 14]

The write-off of unrecoverable TDS was allowed as application of income.

Final Conclusion: The appeal was allowed. The capital-gains exemption claimed on eligible fixed-deposit investment and the write-off of unrecoverable TDS as application of income were allowed.

Interest for delayed remittance of tax deducted at source - Fee for delayed furnishing of Form No. 26QB

Interest for delayed payment of TDS - Statutory and compensatory liability - Levy of interest for delayed remittance of tax deducted at source on consideration paid for immovable property. - HELD THAT: - Interest under section 201(1A) is a statutory consequence of failure to remit deducted tax within the prescribed period and compensates the Revenue for the period of non-payment. Bona fide conduct, lack of awareness, the accountant's unavailability, deposit of tax within the same financial year, and ultimate credit to the deductee do not displace that liability where delay is admitted and no error in computation is shown. [Paras 10, 11]

The interest levy was upheld.

Fee for delayed furnishing of Form No. 26QB - Processing of TDS statement - Levy of fee for delayed furnishing of Form No. 26QB relating to tax deducted at source on consideration paid for immovable property - HELD THAT: - The fee under section 234E is attracted by continuing delay in furnishing the prescribed TDS statement, irrespective of eventual revenue loss. For the period concerned, section 200A expressly authorised computation of that fee while processing the statement; reasonable cause or hardship did not confer discretion to waive it, and filing within the same financial year did not cure the delay. [Paras 12, 13, 14, 15]

The fee levy was upheld.

Final Conclusion: The appeal was dismissed, the interest for delayed TDS remittance and the fee for delayed filing of Form No. 26QB being sustained.

Income deemed to accrue or arise in India - Telecommunication-service receipts - royalty/FTS or business profits - India-UK DTAA.

HELD THAT: - The controversy was found to be recurring, with coordinate Bench decisions in the assessee's own cases consistently [2019 (11) TMI 1110 - ITAT MUMBAI] AND [2023 (4) TMI 1478 - ITAT MUMBAI] resolving it in favour of the assessee. As the Revenue could not distinguish those decisions on facts or law, the Tribunal followed them. Those decisions proceeded on the basis that unilateral amendments to domestic law cannot alter treaty characterisation without bilateral renegotiation of the treaty. [Paras 5]

The receipts were characterised as business profits and not as royalty or fees for technical services; grounds 3 and 4 were allowed.

Final Conclusion: The appeal was allowed on the merits of the taxability of telecommunication-service receipts. The challenges to reopening and limitation were left open, while the remaining ground was dismissed as not pressed.

Enhanced penalty for misreporting of income u/s 270A(8) - Requirement of a specific statutory charge for misreporting - Substitution of penalty charge in appellate proceedings

Misreporting of income - Specific statutory charge - Enhanced penalty - Sustainability of enhanced penalty for misreporting in respect of omitted salary, interest and rental receipts without identifying and establishing an applicable circumstance under section 270A(9) - HELD THAT: - Under-reporting and under-reporting in consequence of misreporting are distinct statutory defaults attracting different rates of penalty. Enhanced penalty requires the Assessing Officer to identify the particular conduct falling within one or more exhaustively enumerated categories of misreporting and to record findings establishing its ingredients. A generic allegation of misreporting, founded only on omission of income from the return and its detection on reassessment, does not establish misrepresentation, suppression, failure to record receipts in maintained books, or any other prescribed category. Neither the notice, assessment order nor penalty order specified the applicable statutory limb or supplied the requisite factual foundation.

Following the principles enunciated in GE Capital US Holding Inc. [2024 (6) TMI 155 - DELHI HIGH COURT] Jaina Marketing and Associates [2024 (9) TMI 1973 - DELHI HIGH COURT] and Prem Brothers Infrastructure LLP [2022 (6) TMI 130 - DELHI HIGH COURT] we hold that the penalty levied under sections 270A(8) and 270A(9) is unsustainable.[Paras 14, 15, 16, 17, 20]

The enhanced penalty for misreporting was unsustainable and was directed to be deleted.

Substitution of penalty charge - Ordinary under-reporting and misreporting - Power to sustain the levy as a penalty for ordinary under-reporting after failure of the charge of misreporting - HELD THAT: - The Assessing Officer had consciously initiated and imposed penalty exclusively for under-reporting in consequence of misreporting. Ordinary under-reporting and misreporting are separate statutory charges with different consequences. On failure to establish the aggravated charge, the appellate authority cannot substitute an ordinary under-reporting penalty and thereby alter the foundation of concluded penalty proceedings. [Paras 18]

The levy could not be recast as a penalty for ordinary under-reporting.

Final Conclusion: The appeal was allowed and the penalty for misreporting was deleted, as no statutory category of misreporting had been specified or established.

Ad hoc disallowance of business expenditure - Specified Bank Notes deposits from recorded cash sales - Unsecured loan credits - creditworthiness and genuineness

Ad hoc disallowance of business expenditure - Ad hoc disallowance of employee benefit and other business expenses by applying an average expense-to-turnover ratio without identified defects in the accounts - HELD THAT: - Neither the AO nor the appellate authority identified any particular expenditure as bogus, non-genuine, excessive or unrelated to business, or rejected the books of account. Having found the original percentage disallowance to lack scientific basis, the appellate authority could not sustain another estimated disallowance by applying an average ratio which included the ratio for the year itself. Absence of supporting vouchers may warrant verification of particular items, but does not justify a blanket percentage disallowance of the entire expenditure. [Paras 41, 42, 43, 44, 45]

The ad hoc disallowance was deleted.

Specified Bank Notes deposits from recorded cash sales - Double taxation of recorded business receipts - Addition as unexplained cash credit for Specified Bank Notes deposits stated to arise from recorded cash sales of a multi-outlet business - HELD THAT: - The presumption that cash deposits of unspecified denomination constituted Specified Bank Notes, without supporting bank information or other material, could not sustain an addition. The assessee's recorded sales, purchases, stock particulars, sales-tax returns and books were not shown to contain any defect, nor were the books rejected or the sales established as fictitious. The staggered timing of deposits, in the context of collections from multiple outlets, was insufficient to displace the explained source; nor was there a statutory requirement for an ordinary cash book to record the denomination of every note received in retail sales. Once the deposits were explained as business receipts already included in the recorded sales, their treatment again as unexplained cash credits would result in double taxation. [Paras 52, 53, 54, 55, 56]

The addition for the Specified Bank Notes deposits was deleted.

Unsecured loan credits - creditworthiness and genuineness - Subsequent repayment of unsecured loans - Addition for unsecured loans where the availability and consideration of lender evidence, including the immediate source of advances and subsequent repayments, required verification - HELD THAT: - Though confirmations and PAN particulars were furnished and the loan entries included banking-channel transactions, there was a factual dispute whether the lenders' income-tax returns and bank statements had been filed and considered. The later-year ledgers evidenced repayment or adjustment activity, but did not establish full repayment or conclusively prove the lenders' creditworthiness with reference to the immediate source of the advances. Subsequent debit entries must be considered in evaluating genuineness, but interest-free or unsecured character alone cannot justify the addition. [Paras 60, 61, 62, 63, 64]

The finding on the loan addition was set aside and the issue remanded without adjudication on merits for limited verification of the lenders' supporting records, immediate source and repayment or adjustment entries, followed by a fresh decision after opportunity of hearing.

Final Conclusion: The appeal was partly allowed. The expense disallowance and the addition for Specified Bank Notes deposits were deleted, while the unsecured-loan addition was restored for limited verification and fresh adjudication.

Corporate guarantee as international transaction - Arm's length pricing of corporate guarantee - Deduction for Special Economic Zone development profits

Corporate guarantee as international transaction - Transfer-pricing adjustment on corporate guarantee issued for the borrowing of an associated enterprise - HELD THAT: - The Explanation to section 92B includes guarantee within capital financing. The corporate guarantee increased the associated enterprise's creditworthiness and involved risk to the assessee, thereby constituting an international transaction for which arm's length price was required to be determined. [Paras 6, 7]

The corporate guarantee was held to be an international transaction and the transfer-pricing adjustment was sustained.

Arm's length corporate guarantee fee - Arm's length pricing of the corporate guarantee fee at the annual rate of 0.5% - HELD THAT: - The assessee had neither applied a method for determining the guarantee fee nor included its computation in the transfer-pricing study report. Applying the uncontrolled-price standard under Rule 10AB, the Tribunal found no infirmity in the rate adopted by the Transfer Pricing Officer and affirmed by the Dispute Resolution Panel. [Paras 9]

The computation of corporate guarantee fee at the annual rate of 0.5% was upheld.

Deduction for Special Economic Zone development profits - Eligibility of corporate guarantee fee for deduction available to an undertaking engaged in development of a Special Economic Zone - HELD THAT: - The deduction is confined to profits and gains derived from development of a Special Economic Zone. Corporate guarantee fee did not arise from that development activity and could not be treated as eligible profit. [Paras 8]

Deduction on the corporate guarantee fee was denied.

Credit for tax deducted at source - Credit for tax deducted at source reflected in Form 26AS - HELD THAT: - The claim required verification of the tax deducted at source reflected in Form 26AS. [Paras 10]

The issue was restored to the jurisdictional Assessing Officer for verification and grant of eligible credit.

Final Conclusion: The transfer-pricing adjustment on corporate guarantee fee and the denial of deduction thereon were sustained, while the claim for tax deducted at source credit was restored for verification. The appeal was partly allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) - Interest on deposits with co-operative banks -

HELD THAT: - Interest earned by such a society on funds deposited with a co-operative bank or bank retains its character as income attributable to its business of providing credit facilities to members and is eligible for deduction. As the facts were identical to those in the precedents considered, the disallowance was unsustainable. See KARNATAKA STATE CO-OPERATIVE APEX BANK [2001 (8) TMI 9 - SUPREME COURT] and THE VAVVERU CO-OPERATIVE RURAL BANK LTD. [2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT][Paras 9, 11]

The deduction was allowed and the Assessing Officer was directed to delete the addition.

Final Conclusion: The appeal was allowed, with a direction to delete the disallowance of deduction on interest earned from the co-operative bank.

Provisional release of detained imported goods - Security for differential customs duty

Provisional release of detained goods declared as SS Mop Stick and Sponge, pending adjudication on alleged misdeclaration and misclassification - HELD THAT: - The Court held that the interests of the Revenue would be adequately protected if the importer paid the duty on the declared value and furnished security towards the differential duty. Continued detention until completion of adjudication was therefore unjustified. [Paras 9, 10]

The goods were directed to be released provisionally on payment of applicable duty on the declared value, furnishing a bank guarantee for 30% of the differential duty and a personal bond for the balance 70%, without prejudice to further investigation and adjudication.

Final Conclusion: The writ petition was allowed and provisional release was directed on conditions sufficient to secure the differential duty, while preserving the Department's right to complete the investigation and adjudication.

Limitation for revocation of Customs Broker licence - Offence report under CBLR, 2018

Validity of revocation of the Customs Broker licence where the notice under Regulation 17(1) of the CBLR, 2018 was issued beyond ninety days from receipt of material constituting the offence report - HELD THAT: - Where no separate investigation report was furnished, the show-cause notices issued under the Customs Act, containing the investigation summary, allegations and relied-upon documents, constituted the offence report for Regulation 17(1). The respondent could not defer commencement of the mandatory ninety-day period by subsequently seeking the same documents from the Import Section, particularly when the show-cause notices and orders-in-original had already been received.

The Division Bench of this Court in Santon Shipping Services [2017 (10) TMI 621 - MADRAS HIGH COURT] held that since the offence report therein was dated 22.9.2010 and the show cause notice, admittedly, was issued only on 18.11.2011, there can be no doubt that the said show cause notice was issued well beyond the period of limitation of 90 days and therefore, the Revenue has not issued the show cause notice dated 18.11.2011 within the period of limitation prescribed under Regulation 22(1) CHALR, 2004, which is in paramateria of Regulation 17(1) of CBLR, 2018.

This Court is of the considered view that the show cause notice issued under Regulation 17(1) of CBLR 2018 was issued beyond the prescribed time limit of 90 days and the show cause notice having not been issued within the mandatory period, the respondent lacks statutory authority to revoke the customs broker license issued in favour of the petitioner.[Paras 13, 14, 15, 16, 17]

The notice was issued beyond the mandatory period of ninety days; consequently, the respondent lacked statutory authority to revoke the licence. The revocation order was set aside and restoration of the Customs Broker licence was directed.

Final Conclusion: The writ petition was allowed, the revocation of the Customs Broker licence was set aside, and the respondent was directed to restore the licence and permit its operation.

Public-place search of body-concealed narcotics - Section 50 notice - right to search before an independent Gazetted Officer or Magistrate - Recovery of body-concealed narcotics under the Customs Act - Sampling of homogeneous body-packed contraband - Prolonged pre-trial incarceration in NDPS prosecutions

Public-place search of body-concealed narcotics - Prior information and Section 42 compliance - Applicability of Sections 42 and 43 of the NDPS Act to airport interception and hospital recovery of narcotics allegedly concealed inside the body - HELD THAT: - Where airport officers acted on profiling based on prior experience, the reference to "intelligence" was treated as their personal knowledge and not necessarily as secret information from a third person. In the other cases, the prior intelligence was recorded, communicated to the superior officer and acted upon under authorisation. Further, the airport is a public place, and the medically necessary continuation of the search at a Government hospital did not interrupt the search and seizure action initiated at the airport. The action was therefore governed by Section 43. [Paras 9, 10]

Non-compliance with Section 42 was not made out; the airport-to-hospital search action was prima facie covered by Section 43.

Section 50 notice - right to an independent search - Independent Gazetted Officer - Validity of Section 50 notices issued before searches of air passengers suspected of concealing narcotics inside the body - HELD THAT: - A notice merely asking whether the person required a search before a Gazetted Officer or Magistrate does not communicate the statutory right under Section 50. Equally, suggesting a Gazetted Officer connected with the searching team as the available option curtails the person's free choice and is misleading. The officer conducting the search cannot himself be treated as the independent third person contemplated by the provision. However, signatures of panchas on a Section 50 notice are not a statutory requirement, and a fresh Section 50 notice is not required on every subsequent occasion of purging. [Paras 11, 12, 13, 14, 16]

The deficient or misleading notices did not satisfy Section 50 for the initial personal searches, but the absence of panch signatures and non-issuance of repeated notices did not, by themselves, invalidate the proceedings.

Recovery of body - concealed narcotics under the Customs Act - Fresh Section 50 notice - Need for a fresh Section 50 notice before medical recovery of narcotic capsules after admission of body concealment - HELD THAT: - Section 103 of the Customs Act is an independent special provision concerning goods secreted inside the body. Read with Section 79 of the NDPS Act, an admission that goods are secreted inside the body and voluntary submission for their removal attract Section 103(8), and do not require a fresh Section 50 notice after the Gazetted Officer has left. Where the persons were in medical distress, their direct removal to hospital, followed by orders of the Magistrate under Section 103, was prima facie covered by the statutory scheme. The capsules ejected during the medically supervised process constituted independent material bearing on possession, notwithstanding defects in the initial personal-search procedure. [Paras 12, 13, 17, 18]

The absence of a fresh Section 50 notice did not vitiate the medically supervised recovery of the capsules; the prosecution case remained prima facie sustainable, subject to trial.

Sampling of homogeneous body-packed contraband - Procedural irregularity and prejudice - Effect at the bail stage of alleged deviations in sampling, inventory and certification of narcotics expelled as homogeneous capsules - HELD THAT: - The capsules were alleged to have been swallowed as a single batch for one journey and were recorded as identical and homogeneous. On the material then available, the classification, testing, mixing, seizure and subsequent sampling procedures were prima facie substantially compliant with the applicable standing instructions, standing order or rules. A lapse or delay in the procedure under Section 52-A does not, by itself, vitiate the prosecution or warrant bail unless serious prejudice or tampering is shown. No material of such prejudice or tampering was demonstrated. [Paras 22, 27, 28]

The alleged procedural breaches and delay in inventory certification were matters for trial and did not independently entitle the applicants to bail.

Prolonged pre-trial incarceration in NDPS cases - Rigours of Section 37 of the NDPS Act - Entitlement to bail in prosecutions alleging smuggling of commercial quantity narcotics concealed inside the body, in the context of prolonged pre-trial detention - HELD THAT: - The material disclosed a prima facie case in the applications in which bail was rejected, attracting the rigours of Section 37. The Court also found a prima facie case in the remaining cases. However, the four applicants who had remained in custody for more than four years faced trials that had not sufficiently advanced. Their continued detention had become punitive and offended the presumption of innocence and the right to speedy trial under Article 21. [Paras 29, 30, 31, 32, 33]

Bail was rejected for two applicants, while four applicants were released on stringent conditions owing to prolonged incarceration and inadequate progress of trial.

Final Conclusion: The applications of two applicants were rejected. The remaining four applicants, though facing a prima facie case, were granted bail on stringent conditions because of prolonged incarceration and inadequate progress of trial.

Provisional release of unseized imported food consignments - Sampling of imported food consignments

Entitlement to provisional release of imported roasted areca nut splits retained without seizure or recorded reasons, following testing of food samples - HELD THAT: - Continued retention could not be justified merely on suspicion where no seizure memo or reasons indicating liability to confiscation had been recorded. For imported food consignments, the Customs power to draw samples must be read with the food-safety statute and regulations; sampling must consequently be undertaken by an authorised food-safety officer in the presence of the Customs Officer and importer. The report based on a sample drawn by a Customs Officer was therefore excluded and stood superseded by the later report of the accredited agency, which confirmed conformity with applicable standards.

Prima facie, the goods fall within the parameters dealt with by the AAR in the Rulings in the cases noted by the Division Bench in order being Universal Impex [2023 (6) TMI 653 - AUTHORITY FOR ADVANCE RULINGS CUSTOMS, MUMBAI] These Rulings have attained finality, the AAR indicating that the categorization of consignment as raw Areca nut, would depend upon the moisture content contained. It was only in cases where the moisture content was found to be in the range of 10 to 15% that the consignment would fall within the category of raw areca nut.

In the present case, the moisture content in both reports dated 24.03.2026 and 20.05.2026, is less than 6%, and going by the ruling of the AAR, the consignment would thus not be classifiable as raw Areca nut. On the prima facie case made out before us, we are not inclined to intervene in the direction for provisional release leaving it open to the authority to seek personal bond in respect of differential duty, or penalty, at his discretion. Thus, the direction for provisional release is perfectly in order and the decision of the first Bench would apply to the present case as well. [Paras 16, 17, 18, 19, 20]

The direction for provisional release was sustained; the Customs authority may, at its discretion, require a personal bond for differential duty or penalty, while classification and assessment were left for adjudication in accordance with law.

Final Conclusion: The appeal was dismissed and the direction for provisional release was maintained, subject to the Customs authority's discretion to obtain a personal bond. Classification and assessment of the consignment were left open for adjudication.

Provisional release of imported Polyester Woven Fabric with PVC Coating - Reasonable and proportionate security for differential duty

Provisional release of imported Polyester Woven Fabric with PVC Coating pending adjudication of classification and duty liability-validity of the condition requiring a bank guarantee - HELD THAT: - The differential duty could not be treated as finally determined while adjudication remained pending. Provisional release must prevent unnecessary detention of goods while adequately securing Revenue; the conditions imposed must consequently be reasonable and proportionate. Payment of applicable duty on the declared value and execution of a personal bond for differential duty ultimately determined were held sufficient to protect Revenue, rendering an additional bank guarantee unjustified.

In similar circumstances, this Court in Vimpro Tech [2026 (8) TMI 740 - MADRAS HIGH COURT], considered the question of the conditions that may be imposed while granting provisional release of imported goods. In that case, reliance was placed upon Navashakti Industries Pvt. Ltd. [2010 (5) TMI 592 - DELHI HIGH COURT] wherein provisional release was directed subject to furnishing security towards the differential duty.

The said order was subsequently modified by the Hon’ble Supreme Court in Navashakti Industries [2011 (5) TMI 149 - SUPREME COURT] as directed to release of the goods subject to furnishing a bank guarantee for 30% of the differential duty, to the satisfaction of the Commissioner of Customs.[Paras 8, 9, 10]

The bank-guarantee condition was set aside and provisional release was directed on payment of applicable declared-value duty and execution of a personal bond for the differential duty ultimately determined, without prejudice to adjudication on classification and actual duty liability.

Final Conclusion: The writ petition was allowed to the extent of deleting the bank-guarantee requirement for provisional release. The classification and ultimate duty liability were left for determination in adjudication.

Writ jurisdiction to restore a time-barred customs appeal - Statutory limitation for customs appeals - Undisputed medical cause for delay

Restoration of a customs appeal filed beyond the maximum condonable period where the delay was attributable to undisputed medical circumstances - HELD THAT: - Though the Commissioner (Appeals) had no power to condone delay beyond the further statutory period, the Court found it appropriate, in the peculiar circumstances of the undisputed medical cause for delay and the substantive classification dispute concerning the imported goods, to exercise jurisdiction under Article 226 of the Constitution. [Paras 11, 12]

The order dismissing the appeal as time-barred was set aside and the appeal was restored for consideration on merits after affording an opportunity of hearing.

Final Conclusion: The writ petition was allowed and the customs appeal was restored to the appellate authority for disposal on merits in accordance with law.

Extended limitation for customs duty demand - Wilful misstatement or suppression of facts - Writ jurisdiction despite alternative statutory remedy

Extended limitation for differential IGST on imported rice bran - Wilful misstatement or suppression of facts - Invocation of the extended limitation under Section 28(4) for differential IGST on imported rice bran on the allegation of wilful misclassification and wrongful availment of a Nil-rate notification - HELD THAT: - A subsequent departmental view on classification or the applicability of an exemption notification cannot, by itself, attract the extended period. The statutory jurisdiction requires material establishing collusion, wilful misstatement or suppression resulting in short-payment. The importer had disclosed the description, classification and notification claim in the Bill of Entry, which was accepted by the proper officer; no material established concealment, a false declaration or deliberate suppression with intent to evade duty. [Paras 11, 13, 14, 15]

The conditions for invoking Section 28(4) were not fulfilled; the impugned demand order was set aside, without deciding the correct classification or the IGST otherwise payable, and subject to any action otherwise permissible within limitation.

Writ jurisdiction despite alternative statutory remedy - Jurisdictional challenge to customs demand - Availability of a statutory appeal against a customs demand founded on invocation of the extended limitation without fulfilment of its jurisdictional conditions - HELD THAT: - The alternative-remedy rule does not absolutely bar writ jurisdiction where the statutory conditions for assuming jurisdiction have not been met. Since the extended-period invocation suffered from that defect, relegating the importer to the appellate remedy was unwarranted. [Paras 17, 18]

The objection based on the availability of an appeal was rejected and the writ petition was entertained.

Final Conclusion: The writ petition was allowed and the customs demand order was set aside for want of material supporting invocation of the extended limitation, while leaving open any action otherwise permissible in law.

Abetment of attempted export of prohibited goods by Customs Broker - Writ jurisdiction despite alternative statutory remedy

Penalty on Customs Broker for abetment of attempted export of prohibited goods - Knowledge, conscious involvement and collusion - Penalty on a Customs Broker for abetment of attempted export of prohibited bull/ox meat, in the absence of proof of knowledge, conscious involvement or collusion. - HELD THAT: - Filing shipping bills, arranging containers and processing documents furnished by the exporter do not, by themselves, establish abetment. A Customs Broker's duty of due diligence does not dispense with the requirement of material establishing that it knowingly aided or abetted the attempted export of prohibited goods; failure to ascertain the source of the meat was insufficient for that purpose. [Paras 10, 11, 12]

The finding of abetment was unsupported by material, and the penalty imposed on the Customs Broker was set aside.

Writ jurisdiction despite alternative statutory remedy - Exercise of writ jurisdiction notwithstanding the statutory appellate remedy where the penalty finding lacks evidentiary support - HELD THAT: - The existence of an appellate remedy does not bar exercise of jurisdiction under Article 226 in an appropriate case. Since the abetment finding rested only on the alleged failure to ascertain the source of procurement and not on material proving knowledge, conscious involvement or collusion, the petitioner was not required to pursue the alternative remedy. [Paras 13]

The writ petition was entertained without relegating the petitioner to the statutory appellate remedy.

Final Conclusion: The writ petition was allowed, and the orders imposing and confirming the penalty on the Customs Broker were set aside.

Provisional attachment of bank account - Statutory duration of attachment - Continuation of provisional attachment of a bank account u/s 110(5) of the Customs Act after expiry of the maximum statutory period despite pending adjudication proceedings

HELD THAT: - Section 110(5) permits provisional attachment for a period not exceeding six months, extendable for a further period not exceeding six months in accordance with its proviso. The issuance of a show cause notice and pendency of adjudication do not confer an independent power to continue or revive an attachment beyond that maximum period. The statutory limitation must be given full effect and cannot be bypassed on the ground that investigation or adjudication remains pending. [Paras 9, 10, 12, 13, 14]

The attachment had ceased to operate by efflux of time; the writ petition was allowed and the Bank was directed to defreeze the petitioner's account.

Final Conclusion: The writ petition was allowed as the provisional attachment could not survive beyond the maximum period authorised by section 110(5) of the Customs Act. The respondents were left free to take any other action permissible in law.

Provisional attachment of bank account - statutory maximum period - Pendency of adjudication proceedings

Continuation of provisional attachment of a bank account under the Customs Act after expiry of the statutory maximum period, notwithstanding pendency of adjudication proceedings - HELD THAT: - Section 110(5) permits provisional attachment for a period not exceeding six months, extendable by a further period not exceeding six months upon recorded reasons and communication before expiry of the original period. The statutory authority cannot continue such attachment beyond the maximum period of twelve months. Issuance or pendency of a show cause notice under Section 124 does not itself extend the period prescribed for provisional attachment. [Paras 6, 8, 9, 11, 12]

The continued freezing of the bank account had no authority of law and was held to have ceased by efflux of the statutory period; the bank was directed to defreeze the account.

Final Conclusion: The writ petition was allowed, as the provisional attachment could not subsist beyond the maximum period permitted by Section 110(5) of the Customs Act.

Duty drawback recovery - further opportunity to prove realisation of export proceeds

HELD THAT: - Although the petitioner failed to substantiate its assertion that the show cause notice had not been received and did not avail the opportunity provided, it produced receipts issued by the Directorate General of Foreign Trade showing realisation of export sale proceeds. Sustaining the order without considering those receipts would cause prejudice to the petitioner, whereas granting a further opportunity would not prejudice the respondents. [Paras 6, 7]

The impugned order was set aside and the matter remitted for fresh consideration after hearing the petitioner and considering the documents produced, without adjudication on the merits of the recovery.

Final Conclusion: The writ petition was allowed, and the duty drawback recovery matter was remitted for fresh consideration after affording the petitioner an opportunity to establish realisation of the export sale proceeds.

Redemption of confiscated prohibited goods - redemption of confiscated gold jewellery - Judicial exercise of discretion to impose redemption fine under section 125 of the Customs Act

HELD THAT: - Though the option of redemption in respect of prohibited goods is discretionary, the discretion cannot be denied mechanically merely because the goods fall in that category. It must be exercised judicially on the facts of the case. In the absence of material showing any serious or previous violation by the petitioner, and having regard to payment of the penalty, the refusal of redemption could not be sustained. The redemption fine must remain within the statutory ceiling and be determined having regard to the principles in the decisions referred to. [Paras 6, 7, 8, 9, 10]

The refusal to release the confiscated jewellery on payment of redemption fine was set aside; the adjudicating authority was directed to determine the fine in accordance with section 125 and release the jewellery upon its payment.

Final Conclusion: The writ petition was allowed, and the rejection of redemption was set aside. The redemption fine is to be determined judicially within the limits prescribed by section 125, followed by release of the confiscated jewellery upon payment.

Recovery of erroneously paid drawback - Reasonable period of limitation - Limitation for recovery of drawback for non-production of proof of realisation of export proceeds, where Rule 16 prescribed no period and fraud was not alleged

HELD THAT: - Although Rule 16 confers power to recover erroneously or excessively paid drawback without prescribing a limitation period, that power must be exercised within a reasonable period. The fraud-based exception was inapplicable because the allegation was confined to non-production of proof of realisation of export proceeds, without any allegation of fraudulent availment or suppression. The recovery proceedings, initiated after unexplained delay from the last drawback payment, were consequently barred; an alternative statutory appeal could not preclude writ relief against an order passed without statutory authority. [Paras 8, 12, 13, 14]

The recovery order and consequential action were set aside, with directions to de-freeze the bank account and refund the recovered amount.

Final Conclusion: The recovery proceedings were held barred by limitation and the impugned recovery order and consequential action were set aside.

Classification of orthopaedic surgical tools - Basic customs duty exemption for spinal surgical instruments - IGST Schedule I treatment of spinal surgical instruments

Classification of orthopaedic surgical tools - Classification of imported orthopaedic surgical tools as CTH 9021 orthopaedic appliances or CTH 9018 surgical instruments - HELD THAT: - Heading 9021, read with Chapter Note 6, covers appliances used by patients to prevent or correct deformities or to support or hold body parts, whereas Heading 9018 covers instruments ordinarily used in professional medical practice. The goods were surgical tools used by surgeons, not articles implanted in or strapped to the patient; the earlier classification of the same items and verification of their use reinforced classification under CTH 9018. The precedents cited by the assessee were held factually distinguishable. [Paras 12, 13, 14]

The reclassification under CTH 9018 was upheld and the assessee's appeal was dismissed.

Basic customs duty exemption for spinal surgical instruments - Eligibility of imported spinal surgical instruments for basic customs duty exemption under List 30 for the period 16.07.2018 to 12.12.2019 - HELD THAT: - Having found the imported goods to be surgical tools specifically designed for spinal surgeries, the Tribunal characterised them as spinal instruments within the relevant entry in List 30 for the stated period. [Paras 17]

The extension of the basic customs duty benefit was upheld and Revenue's challenge failed.

IGST Schedule I treatment of spinal surgical instruments - Eligibility of imported spinal surgical instruments for Schedule I IGST treatment where the corresponding customs entry was subsequently restricted - HELD THAT: - The relevant IGST entry was identical to the customs-notification entry for the earlier period. The Tribunal further noted that, while the customs entry's scope was restricted with effect from 02.02.2020, no corresponding amendment was made to the IGST entry, and the imported spinal instruments therefore continued to receive Schedule I treatment. [Paras 18, 19]

The IGST benefit allowed by the original authority was sustained and Revenue's appeal was rejected.

Final Conclusion: The assessee's appeal challenging classification was dismissed. Revenue's appeal seeking denial of the customs and IGST benefits was rejected.

Classification of specialised diagnostic microcuvettes - Parts and accessories suitable for sole or principal use with analytical instruments

Classification of 'Integra Microcuvetten, Micro Cuvette Segment'-whether specialised optical cuvettes for sole or principal use with the Cobas c111 Analyser are classifiable as parts under CTI 9027 9090 OR articles of plastic under CTI 3926 9099 - HELD THAT: - Under Chapter 90 Note 2(b), an article suitable solely or principally for a particular instrument is to be classified with that instrument; permanent physical attachment is not required. Classification must turn on the goods' objective characteristics and analytical function, and their disposable nature alone does not negate their character as parts or accessories.

The cuvettes were specially engineered in their dimensions, configuration, material and optical characteristics to enable calibration and spectrophotometric analysis in the analyser, and were not shown to have practical use with other instruments or as general-purpose plastic articles.

The Revenue has also not established any practical use of the goods with instruments other than the ‘Cobas c111 Analyser’ or for general use as a plastic article. That the cuvette’s are disposable in nature would not preclude it from being classified as a part or accessory. Hence applying Chapter 90 Note 2(b), the goods are classifiable under CTI 9027 9090. The impugned order hence merits to be set aside.[Paras 6, 7]

The goods were held classifiable under CTI 9027 9090. The reclassification under CTI 3926 9099 was set aside; consequently, interest, confiscation and penalty did not survive, and consequential relief was granted.

Final Conclusion: The appeal was allowed and the specialised diagnostic microcuvettes were upheld as classifiable under CTI 9027 9090, with consequential relief.

Twin conditions for bail under the Prevention of Money Laundering Act - Prolonged undertrial detention and right to speedy trial

Twin conditions for bail under the Prevention of Money Laundering Act - Entitlement to bail under the PMLA despite allegations that proceeds of crime were routed through accounts standing in the applicant's name - HELD THAT: - The enquiry under Section 45 proceeds on broad probabilities and does not require a meticulous appraisal of evidence or a final finding of innocence. The mere passage of allegedly tainted money through an accused's account does not by itself establish involvement in a process connected with proceeds of crime. Though the material relied upon by the enforcement agency raised circumstances requiring trial, the applicant's explanation that the accounts were substantially controlled by the co-accused could not be rejected conclusively at the bail stage. Further, in the absence of other criminal involvement, and as the financial records were already secured, the risk of re-offending, absconding or interference with the trial could be addressed by conditions. [Paras 12, 13, 14, 15, 16]

The conditions for release under Section 45 were held satisfied for the limited purpose of bail.

Prolonged undertrial detention - Right to speedy trial - Grant of bail in a PMLA prosecution where the applicant had undergone more than one-half of the maximum sentence and the trial showed no prospect of early completion - HELD THAT: - Section 436A Cr.P.C. does not confer an absolute right to release, but is a beneficial protection grounded in the right to speedy trial. The applicant had crossed the statutory halfway mark of the maximum sentence, the delay was not attributable to him, and only a small number of the prosecution witnesses had been examined. The pendency and seriousness of the predicate proceedings, as well as multiple proceedings, remained relevant considerations but could not extinguish protection against excessive undertrial detention. Where statutory restrictions result in detention becoming punitive and the trial is unlikely to conclude within a reasonable time, conditional liberty must prevail under Article 21. [Paras 23, 24, 25, 28, 29]

Further detention was held to assume a punitive character, and regular bail was granted subject to conditions protecting the investigation and trial.

Final Conclusion: The regular-bail application was allowed subject to conditions, since the statutory bail requirements stood satisfied and continued custody would amount to punitive pre-trial detention.

Challenge to grant of bail and cancellation of bail - Connected PMLA and CBI bail proceedings - Application of mind in grant of bail for alleged unauthorised telephone interception

Challenge to grant of bail and cancellation of bail - Scope of review of an order granting regular bail as distinct from cancellation of bail for subsequent conduct - HELD THAT: - A challenge to the original grant of bail is confined to whether the discretion was vitiated by perversity, illegality, non-application of mind, consideration of irrelevant material or failure to consider relevant circumstances. It is distinct from cancellation founded on post-release misconduct, breach of conditions or supervening circumstances. The reviewing court cannot undertake a threadbare evaluation of evidence or substitute its view merely because another view is possible. [Paras 50, 51, 52]

The petitions were examined as challenges to the original exercise of discretion, and not as applications for cancellation of bail based on subsequent events.

Relevance of connected PMLA bail order in CBI proceedings - Use of a connected PMLA bail order while deciding regular bail in a CBI case arising from the same FIR - HELD THAT: - Proceedings by different investigating agencies remain distinct; an order in one neither binds the other agency nor grants an accused immunity from lawful action. However, where both proceedings arise from the same FIR and common alleged offences, a prima facie assessment in the connected PMLA proceeding is a relevant circumstance in considering bail. Its relevance does not make it conclusive, and the court deciding bail must independently assess the application and the individual role of the accused. [Paras 56, 57, 58, 59, 60]

The Special Judge's reference to the connected PMLA bail order did not by itself amount to abdication of jurisdiction.

Application of mind in grant of bail for alleged unauthorised telephone interception - Whether the regular-bail orders in the case concerning alleged unauthorised recording and examination of NSE employees' telephone calls were perverse for want of independent consideration of the respondents' roles and the material before the Special Judge? - HELD THAT: - The Special Judge had recorded CBI's objections, identified the common factual and legal foundation of the proceedings, and considered the allegations and role attributed to each respondent. The orders treated the connected PMLA observations as prima facie, imposed conditions, and were not based on mechanical parity. The charge-sheet filed after the bail orders, including any alteration of penal provisions, could not retrospectively render the earlier exercise of discretion perverse. No material placed before the Special Judge was shown to have been omitted or any irrelevant consideration shown to have governed the orders. [Paras 69, 70, 71, 72, 73]

No perversity, illegality or material defect in the grant of regular bail was established.

Final Conclusion: The petitions challenging the grant of regular bail were dismissed, the bail orders remaining undisturbed. The Trial Court was directed to proceed uninfluenced by the prima facie observations in the bail orders and in the present judgment.

Quantification of service tax dues under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Section 87(b) bank lien notice as written communication of duty liability

Eligibility under the Scheme where the outstanding service tax liability was communicated in a pre-cut-off notice issued to the petitioner's bank for creation of lien - HELD THAT: - Section 121(r) requires a written communication of the amount of duty payable. The notice issued under Section 87(b), before the cut-off date, quantified the outstanding service tax liability and created a lien on the petitioner's bank account. Non-quantification of interest did not detract from the quantification of duty, and the fact that the communication was addressed to the bank did not affect its consequence for the petitioner.

Petitioner is justified in placing reliance on the decision of Landmark Associates vs. Union of India & Ors. [2021 (1) TMI 385 - BOMBAY HIGH COURT] which held that the notice issued under Section 87(b) of the Finance Act, 1994, prior to 30th June 2019, amounts to quantification under the Scheme.[Paras 10, 11, 12, 13]

The tax dues stood quantified for purposes of the Scheme; the petitioner was eligible to avail its benefit and the writ petition was allowed.

Final Conclusion: The rejection of the declaration on the ground that the liability had not been quantified was held unsustainable. The writ petition was allowed.

Refund of pre-deposit - adjustment towards penalties - Interest on delayed refund of pre-deposit

Refund of pre-deposit - adjustment towards penalties - Consequential refund following appellate relief - Recovery of penalties from the refund of pre-deposit after the earlier appellate order had set aside the penalties, and consequential refund of the deposit attributable to the Event Management Services demand subsequently set aside - HELD THAT: - A refund arising from an appellate order had to be examined in accordance with that order. The Revenue could not, in proceedings for refund of the pre-deposit, initiate fresh penalty proceedings and appropriate penalties against the refund after the Tribunal had set aside the penalties; any separate proceedings, if otherwise permissible, could not validate such appropriation. The setting aside of the Event Management Services demand also rendered refundable the corresponding part of the pre-deposit. [Paras 4]

The appropriation towards penalties was held unsustainable, and the original authority was directed to recompute the consequential refund and the date on which it became due.

Interest on delayed refund of pre-deposit - Applicability of the unamended statutory regime governing interest on refund of pre-deposit in an appeal pending before the statutory amendment - HELD THAT: - As the appeal had been filed and was pending before the amendment, the transitional exclusion required the refund of pre-deposit to be governed by the unamended provisions of Section 35FF. Under that regime, interest was payable only where the refund due was not made within three months from receipt of the appellate order by the jurisdictional authority. The principle governing statutory interest on delayed refund was held applicable to refund of pre-deposit. [Paras 4]

The original authority was directed to recompute the refund due, the date from which it became due, and the consequential interest under the unamended provisions.

Final Conclusion: The appeal was allowed. The matter was remitted for fresh computation of the consequential refund and interest, with penalty appropriation from the pre-deposit refund held impermissible.

SEZ service-tax exemption for authorised services - Situs of service for SEZ exemption - Rent-a-cab service for authorised SEZ operations

Entitlement to service-tax exemption for rent-a-cab service authorised by the SEZ Specified Officer and supplied for authorised SEZ operations, notwithstanding that pick-up and drop of staff was performed outside the SEZ area - HELD THAT: - The statutory exemption for taxable services supplied for authorised SEZ operations does not depend upon the situs of their rendition. Form A-1 issued by the SEZ Specified Officer expressly recognised the appellant's rent-a-cab service as an authorised service, and the Department produced no documentary material to displace it. Treating transportation of SEZ staff by pick-up and drop as not consumed within the SEZ merely because it was rendered outside the SEZ area was held to be fallacious. [Paras 9, 10, 11, 12]

The denial of exemption was held unsustainable; the impugned order, including the consequential demand, interest and penalties, was set aside and the appeal was allowed with consequential benefits.

Final Conclusion: The appellant was held entitled to exemption for the authorised rent-a-cab service supplied for SEZ operations. The appeal was allowed with consequential benefits.

Business Auxiliary Service - Trading of cargo space - Sale of cargo slots at specific rates

Taxability under Business Auxiliary Service of the margin earned on purchase and sale of cargo slots at specifically agreed rates - HELD THAT: - Commission was payable only where the appellant acted as a General Sales Agent. Cargo slots obtained at specifically agreed rates were purchased and resold independently, and the resulting differential represented trading profit or loss rather than commission or consideration for a service. Since the factual and legal position remained unchanged from the appellant's earlier final orders [2019 (2) TMI 678 - CESTAT CHENNAI] and [2019 (3) TMI 2116 - CESTAT CHENNAI] which had attained finality, their ratio was held applicable. [Paras 2, 3, 4]

The margin from trading of cargo slots was held outside Business Auxiliary Service; the impugned order was set aside and the appeals were allowed with consequential benefits.

Final Conclusion: The appeals were allowed, holding that the margin earned through independent trading of cargo slots at specifically agreed rates was not taxable under Business Auxiliary Service.

Judicial discipline - reference by a Bench of lesser strength - Constitution of a Larger Bench - power of the President - Reference jurisdiction - subsistence of a live appeal

Judicial discipline - binding precedent - Constitution of a Larger Bench - power of the President - Power of a Bench of lesser strength to seek a reference against decisions of Benches of greater strength, and competence of the President to constitute a three-Member Larger Bench - HELD THAT: - A Bench of lesser strength cannot differ from, dissent from or overrule a decision of a Bench of greater strength. It may entertain a doubt only by recording the points of doubt and requesting the President to place the matter before a Bench of larger quorum. The statutory power to constitute Benches vests in the President and is not restricted by the strength of either the referring Bench or the Bench whose decision is doubted. A three-Member Bench was therefore competent to examine a reference concerning Division Bench decisions. [Paras 35, 36]

The objection to the constitution of the Larger Bench was rejected.

Propriety of a reference to a Larger Bench - Reference jurisdiction - live appeal - Propriety of the reference on limitation governing a service-tax refund claimed by a Special Economic Zone unit after the appeal had already been remanded - HELD THAT: - The reference disclosed no conflicting Tribunal view, while recording six consistent decisions, including Division Bench decisions, on the same issue. It was framed as a disagreement by a Single Member rather than a permissible doubt, without identifying any overlooked statutory provision, binding precedent or apparent error in the earlier decisions. Further, the appeal had already been finally disposed of by remand on limitation; consequently, no live lis remained to which an opinion of the Larger Bench could be applied, and an answer would have been advisory.

In Joint Commissioner of Income Tax, Surat v. Saheli Leasing and Industries Ltd. [2010 (5) TMI 9 - SUPREME COURT] the Hon’ble Supreme Court laid down that a reference to a Larger Bench must point out the particular provision having a bearing on the issue that was not taken note of, or the error apparent, or the earlier decision having direct bearing which was not noticed or in which a contrary view was taken. A reference that names six decisions and then proceeds to frame four questions at large, without saying what is wrong with any of them and why, leaves the Larger Bench to rehear the whole issue afresh. That is the very mischief which the discipline of precedent exists to prevent, and it converts the reference procedure into an appeal in disguise.[Paras 39, 40, 41, 43, 44]

The reference was held improper and the questions were returned unanswered; the existing uniform Tribunal decisions continued to bind Benches of lesser strength and departmental authorities.

Final Conclusion: The objection to the constitution of the Larger Bench was rejected, but the reference was held improper and its questions were returned unanswered. The merits of the refund controversy were left open, while the existing uniform Tribunal rulings remained binding.

Refund of duplicate service tax payment - Unjust enrichment in refund of duplicate service tax - Interest on delayed refund

Refund of duplicate service tax payment - Unjust enrichment in service tax refund - Refund of service tax paid twice under reverse charge for the same FY 2008-09 liability, despite non-reporting of the initial payment in the ST-3 return and the objection of unjust enrichment - HELD THAT: - The challans and contemporaneous records established that the earlier payment had discharged the relevant liability and that the subsequent payment had no corresponding fresh taxable liability. Non-reporting of the earlier payment in the ST-3 return, or payment under a wrong accounting head or service category, did not negate payment into the Government account. The reconciliation, auditor's certificate and audited accounts showed that the duplicate amount was neither availed nor utilised as CENVAT credit, continued as recoverable from the Department, and was not passed on to customers. In the absence of contrary evidence from the Department, the burden regarding unjust enrichment stood discharged. [Paras 11, 12, 13, 15, 16]

The duplicate service tax payment was held refundable under Section 11B, and the Revenue's challenge to the refund failed.

Interest on delayed refund - Consequential interest on the refund of the duplicate service tax payment. - HELD THAT: - Once the refund was held admissible, statutory interest followed where the refund was not sanctioned within the prescribed period, subject to Section 11BB as applicable to service tax. [Paras 17]

Consequential interest on the admissible refund was allowed in accordance with Section 11BB.

Final Conclusion: The assessee's appeal was allowed and the Revenue's appeal was dismissed. The refund of duplicate reverse-charge service tax, with statutory interest in accordance with law, was sustained.

Taxability of outbound tour operator services - Cancellation charges as compensatory receipts - Reimbursement of air-ticket costs in package tours - Extended limitation in absence of suppression

Taxability of outbound tour operator services - Service-tax liability on international package-tour bookings consumed outside India - HELD THAT: - The Tribunal found that the outward booking service was consumed by the tourist outside Indian territory and was therefore not liable to levy and collection of service tax. The facts of the present case are squarely covered by the decision of M/s. COX and Kings Limited [2023 (10) TMI 1388 - CESTAT MUMBAI - LB] [Paras 7]

The demand of service tax on outward bookings was held unsustainable.

Cancellation charges as compensatory receipts - Levy of service tax on booking cancellation charges collected by the tour operator. - HELD THAT: - Booking cancellation charges were held to be compensation and not consideration for any service. Their collection did not amount to provision of taxable tour operator service. See Comet Car Sales & Service Pvt. Ltd. [2024 (11) TMI 667 - CESTAT AHMEDABAD] [Paras 7]

No service tax was chargeable on the cancellation charges.

Air-ticket reimbursements in domestic package tours - Inclusion of reimbursed air-ticket costs in the taxable value of domestic package tours - HELD THAT: - we find that as per the judgment of Hon’ble Supreme Court in the matter of M/s. Inter Continental Consultants and Technocrafts Pvt. Ltd [2018 (3) TMI 357 - SUPREME COURT] reimbursement of ticket charges from the customers cannot be subjected to service tax. [Paras 7]

The cost of air tickets was excluded from the service-tax demand.

Extended limitation in absence of suppression - Invocation of the extended period for service-tax demand for 2007-2009 where returns had been filed and fraud, suppression or wilful negligence was not alleged - HELD THAT: - As the relevant returns had been filed before issue of the show-cause notice and there was no basis to allege fraud, suppression or wilful negligence to evade tax, the extended period could not be invoked. [Paras 7]

The demand for the entire period from 2007-2009 was barred by limitation.

Final Conclusion: The Tribunal held the service-tax demand unsustainable on the merits and barred by limitation. The appeal was allowed with consequential relief in accordance with law.

Service tax abatement after reversal of CENVAT credit - Eligibility for service tax abatement on composite civil construction services after reversal of CENVAT credit with interest

HELD THAT: - The Department did not specifically dispute that the CENVAT credit availed by the appellant had been reversed and that interest for the delayed reversal had been paid. Following the coordinate Bench view, the bar against abatement ceased to apply upon such complete reversal with applicable interest. Case followed M/S. OLD WORLD HOSPITALITY LIMITED [2017 (2) TMI 1176 - CESTAT NEW DELHI] [Paras 4, 5]

The appellant was held entitled to abatement of 67% under Notification No. 1/2006-S.T. and liable to service tax only on the remaining gross value.

Final Conclusion: The denial of abatement was set aside and the appeal was allowed.

Regular bail for alleged cess and excise-duty evasion - Quantification of duty evasion from seized machinery - Unsubstantiated apprehension of reoffending as a ground to deny bail

Eligibility for regular bail in alleged illegal manufacture and sale of pan masala and zarda, involving suspected cess and excise-duty evasion quantified with reference to seized machinery - HELD THAT: - The Court held prima facie that recovery and seizure of machinery alone did not provide a scientific basis to compute suspected cess or duty evasion. The statutory computation rule had not been challenged, and the observation was confined to the bail application, leaving the trial court free to independently assess the evidence. The apprehension that the accused would repeat the alleged activity lacked an explicit basis, particularly in view of the admitted absence of antecedents and the seizure of the machinery. [Paras 7, 8, 9]

Regular bail was granted subject to execution of bond and furnishing of surety, without prejudice to an independent determination by the trial court.

Final Conclusion: The applicant was granted regular bail, with the prima facie observations confined to the bail adjudication and not determinative of the trial.

Penalty for dealing with confiscation - liable excisable good - Proof of personal involvement in clandestine clearance -

Penalty on the appellant for alleged involvement in clandestine manufacture and clearance of pan masala and scented jarda tobacco - HELD THAT: - Rule 26 is attracted only where evidence establishes that the person acquired possession of, or was concerned in the specified dealings with, excisable goods while knowing or having reason to believe that they were liable to confiscation. The record established only that the appellant had assisted in procuring laminates and other goods and had extended a loan; it did not connect him with any activity specified in Rule 26. The impugned order also failed clearly to distinguish his alleged role from that of the supervisor bearing a similar name, while the inculpatory statement of that supervisor stood retracted. There was consequently no evidentiary basis for the personal penalty. Case followed Rakesh Kumar Garg [2015 (12) TMI 592 - DELHI HIGH COURT], Junaid Kudia [2024 (3) TMI 570 - SC ORDER] [Paras 9, 10, 11]

The penalty imposed on the appellant under Rule 26 was held unsustainable and the impugned order was set aside to that extent.

Final Conclusion: The appeal was allowed and the penalty imposed on the appellant was set aside, without interference with the remaining portions of the impugned order.

CENVAT credit on outward transportation to buyer's premises - Eligibility to CENVAT credit of transportation charges for goods supplied to the buyer's place where the freight was borne by the manufacturer - HELD THAT: - As the appellant supplied the goods to the buyer's place and itself bore the transportation charges, the credit on such charges was correctly availed. [Paras 6, 7]

The denial of CENVAT credit was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The impugned denial of CENVAT credit on transportation charges was set aside.

Composite appeal against common judgment in consolidated suits - Curability of procedural defects in appeal memoranda

Maintainability of a composite first appeal by the same plaintiff against a common judgment and separate decrees in two suits consolidated and tried together - HELD THAT: - Where the suits had been consolidated, common evidence recorded and a common judgment delivered, the composite appeal, accompanied by certified copies of both decrees, requisite court fees and a specific prayer against both decrees, satisfied the requirements for an appeal. The proviso to Order XLI Rule 1 permits dispensation with an additional copy of a common judgment. The absence of a separate memorandum for each decree was a defect of form, not substance, and was curable; nor did res judicata arise when both decrees rested on the same judgment that was challenged in appeal. A substantive right of appeal could not be defeated for such a procedural deficiency without an opportunity to cure it. [Paras 13, 15, 16, 19, 20]

The composite appeal was maintainable. The High Court's contrary order was set aside and the second appeals were restored for fresh adjudication on merits, with all merits contentions left open.

Final Conclusion: The appeals were allowed; the High Court's judgment was set aside and the second appeals were restored for merits adjudication.