TaxTMI Updates e-Newsletter
Sep 30,2026

Restoration of GST registration cancelled for non-filing of returns - Restoration of GST registration cancelled for non-filing of GSTR-3B and GSTR-1 returns - HELD THAT: - Cancellation of GST registration has severe civil consequences as it disables the assessee from carrying on business.

This Court is bound by the Division Bench judgement Subhankar Golder [2024 (5) TMI 1262 - CALCUTTA HIGH COURT] and Subhendu Dutta [2026 (7) TMI 2031 - CALCUTTA HIGH COURT] wherein holds that where the cancellation is for non-filing the assessee should be given one opportunity to file return and pay dues.

The second proviso to Rule 23(1) supports restoration upon such compliance without insisting on a separate revocation application, while protecting revenue through payment of tax, interest, penalty and late fees. [Paras 11, 12, 13, 14]

The cancellation order was set aside subject to filing of the pending returns and payment of dues within the stipulated time; the portal was directed to be opened, and the registration was directed to be restored upon compliance.

Final Conclusion: The writ petition was allowed, and the cancelled GST registration was directed to be restored upon timely filing of the pending returns and payment of the statutory dues.

Anti-profiteering methodology in real estate projects - Actual availment of pre-GST CENVAT credit - GST on profiteered amount - Judicial review of anti-profiteering determinations

Anti-profiteering methodology in real estate projects - Project-level ITC savings - Validity of the post-remand methodology for determining the additional ITC benefit in the residential project - HELD THAT: - The earlier direction rejected an ITC-to-turnover comparison because turnover does not correspond with accrual of ITC during the life of a real estate project. The revised exercise quantified ITC against project expenditure represented by purchase value, determined the project-level saving and distributed it on a per-square-foot basis over the total project area and sold area. Purchase value was not used as a proxy for turnover or for linking benefit to buyer realisations. The methodology was therefore materially different from the rejected turnover-based method and was fair, reasonable and consistent with the binding direction. [Paras 31, 33, 34, 35, 59]

The methodology adopted by the DGAP and affirmed by GSTAT was upheld as compliant with the remand directions.

Actual availment of pre-GST CENVAT credit - Additional ITC on input services - Treatment of unavailed pre-GST CENVAT credit on input services while determining the post-GST ITC benefit - HELD THAT: - The anti-profiteering inquiry concerns the economic benefit actually accruing to the supplier, not credit that might theoretically have been claimed. The statutory returns showed that no CENVAT credit had actually been availed in the pre-GST period, whereas post-GST ITC had been availed. An unavailed pre-GST credit could not be notionally treated as having reduced the earlier tax incidence so as to offset the actual post-GST benefit. The distinction between inward goods and input services did not warrant exclusion of the ITC on services. [Paras 38, 40, 41, 42, 60]

No notional adjustment for the unavailed pre-GST CENVAT credit was permissible, and the ITC on input services was rightly included in the additional benefit.

GST on profiteered amount - Interest on anti-profiteering liability - Inclusion of GST collected on the additional realisation and interest in the anti-profiteering liability - HELD THAT: - GST collected on the enhanced price resulting from profiteering forms part of the amount required to be passed on, since such additional collection defeats the intended benefit to consumers. The direction for interest followed the statutory scheme, and no independent jurisdictional infirmity was shown. [Paras 57, 58]

The addition of GST to the profiteered amount and the direction for payment of interest to the homebuyers were upheld.

Judicial review of anti-profiteering determinations - Scope of writ review over the Tribunal's fact-based anti-profiteering determination after remand - HELD THAT: - Writ jurisdiction does not permit substitution of the Court's own factual computation for that of the specialised adjudicatory authority where the binding directions have been followed and material submissions have been considered. Interference may arise from non-consideration of a material contention or a manifest legal or jurisdictional error, but not from mere disagreement with a conclusion reached upon consideration of the material. [Paras 53, 55, 56, 61, 62]

No patent jurisdictional error, manifest illegality or non-compliance with the remand directions was established.

Final Conclusion: The writ petition was dismissed, the Court holding that the project-level computation, treatment of actually availed ITC, and consequential GST and interest directions disclosed no ground for interference in writ jurisdiction.

Denial of Natural justice - absence of a personal hearing and adequate reasons

Validity of the transfer-pricing order where the assessee's written replies were considered but no personal hearing or reasons addressing its contentions were disclosed - HELD THAT: - Though the impugned order indicated consideration of the assessee's replies, it did not disclose that a personal hearing had been afforded. The order was cryptic, contained no reasons, and did not deal with the contentions raised in the replies. [Paras 6, 8]

The impugned order was set aside and the authorities were directed to pass a reasoned order after dealing with all contentions and affording a personal hearing; the time for passing the assessment order was extended.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order and directing fresh reasoned determination after personal hearing.

Reimbursement of GST which has been deposited by the petitioner, but the said representations have not been decided - HELD THAT:- The Executive Engineer was directed to consider and decide the petitioner's representations concerning reimbursement of GST under the work contracts, in accordance with law, within six weeks.

Effective opportunity of personal hearing in GST adjudication - Principles of natural justice denied

Validity of GST adjudication where the date fixed for personal hearing preceded the deadline for filing a reply to the show-cause notice - HELD THAT: - Fixing the personal hearing before expiry of the time granted for submission of reply rendered the opportunity ineffective and resulted in breach of the principles of natural justice.

Coordinate Bench in M/s Modine Thermal Systems Private Limited [2025 (6) TMI 989 - UTTARAKHAND HIGH COURT] relied in support of the submission that the date of personal hearing could not be prior to the date fixed for submission of reply to the Show Cause Notice.[Paras 7, 8]

The order-in-original and appellate order were quashed, and the matter was remitted to proceed from the show-cause notice stage after permitting a reply and thereafter fixing a personal hearing.

Final Conclusion: The writ petition was disposed of by quashing the impugned adjudication and appellate orders for breach of natural justice and remitting the matter for fresh proceedings from the show-cause notice stage.

Recovery of GST demand during pendency of appeal - Statutory stay after cumulative appellate pre-deposits - Recovery from the Electronic Cash Ledger despite the claimed cumulative appellate pre-deposits under sections 107(6) and 112(8) of the GST enactment

HELD THAT: - The statutory mandate that recovery of the balance demand is deemed stayed upon payment of the prescribed appellate deposit was not disputed. Without deciding whether the petitioner had in fact made the requisite deposits or whether any excess recovery had occurred, the Court directed independent consideration of the representation after personal hearing. Any recovery found to exceed the cumulative statutory pre-deposits is required to be refunded or recredited under section 112(9). [Paras 7, 8, 9]

The representation was directed to be decided by a reasoned and speaking order within the stipulated period; excess recovery, if found, must be refunded or recredited, with the merits left open.

Final Conclusion: The writ petition was disposed of with directions for independent determination of the representation and conditional refund or recredit of any excess recovery. The merits of the underlying dispute were not adjudicated.

GST demand beyond show cause notice - Mandatory limit on adjudication - Confirmation of GST tax demand and penalty in excess of the amounts proposed in the show cause notice

HELD THAT: - Section 75(7) was held mandatory. The adjudicating authority is statutorily forbidden from confirming a demand exceeding that proposed in the show cause notice; an order doing so is without jurisdiction. [Paras 3, 4, 5]

The adjudication order was set aside and the matter remitted for a fresh order after affording opportunity of hearing.

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

Adjudication of the GST assessment in view of the petitioner's stated discharge of tax liability and plea of overlapping demands - specific case of the petitioner appears to be that an almost identical demand in respect of the last three items was also confirmed by the jurisdictional tax officer, namely, the Deputy State Tax Officer-1

HELD THAT: - Taking account of the petitioner's statement that the tax liability had been discharged and that the last three demand components had also been assessed by the jurisdictional officer, the Court did not decide the merits and directed fresh consideration subject to a stipulated deposit of interest and penalty. [Paras 8, 9, 10, 11]

The impugned assessment was quashed and remitted for fresh decision on merits after notice, subject to deposit of the interest and penalty imposed under the earlier jurisdictional assessment; on default, recovery could proceed in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the impugned assessment and directing conditional fresh adjudication.

Expired e-way bill - relevance of intention to evade tax under section 129 - invocation of section 129 - Intention to evade tax -

Validity of invoking section 129 for transport of goods under expired e-way bills where tax invoices accompanied the consignment and no tax evasion or discrepancy was found - HELD THAT: - Section 129 was invoked solely because the validity of the e-way bills had not been extended. The Board's instructions distinguish minor procedural violations from serious substantive breaches. As the consignment was accompanied by invoices charging integrated tax and other documents, physical verification disclosed no discrepancy, and the authorities found no tax evasion, the reasonableness of the explanation for expiry required consideration. Intention to evade tax was a relevant factor, and its absence rendered invocation of section 129 unjustified on the facts. [Paras 10, 11, 12, 13, 14]

The levy of integrated tax and penalty under section 129 was held invalid; the appellate order was set aside and the appeal was allowed.

Final Conclusion: The appeal was allowed, and the tax and penalty demand arising solely from movement under expired e-way bills was set aside.

Employee canteen recoveries under statutory canteen obligation - scope of supply - Input tax credit on statutorily mandated employee canteen services

Employee canteen recoveries - scope of supply - Employer-provided perquisites - Salary deductions from employees towards subsidised canteen meals at the factory, R&D facility and corporate office - HELD THAT: - The canteen facilities at the factory and R&D facility were required under the Factories Act, while the corporate-office canteen was required under the Gujarat Shops and Establishments legislation. The facilities were provided under the applicant's Canteen Facility Policy. Applying the clarification that contractual perquisites supplied by an employer to employees are not subject to GST, the Authority held that the recoveries from employees availing food did not constitute supply under section 7 of the CGST Act. [Paras 13, 14, 17]

No GST is payable on the amounts recovered from employees towards the canteen facilities.

Input tax credit on mandatory employee canteen services - Restricted credit to employer-borne canteen cost - Availability of input tax credit on GST charged by the canteen service provider for mandatory canteen facilities at the factory, R&D facility and corporate office - HELD THAT: - The proviso to section 17(5)(b), as clarified, applies to the whole of that clause and permits credit where provision of the relevant goods or services to employees is obligatory under law. Since provision of the canteen facilities was statutorily mandated, credit was available; however, it could extend only to the cost borne by the applicant and not to the proportion embedded in the meal cost recovered from employees. [Paras 15, 17]

Input tax credit is available only to the extent of the cost of canteen services borne by the applicant, with proportionate credit attributable to employee recoveries disallowed.

Final Conclusion: The employee recoveries towards the mandatory subsidised canteen facilities were held not to constitute supply. Input tax credit on the canteen service was allowed only to the extent of the cost borne by the applicant.

Clean slate principle in sale of corporate debtor as a going concern - Reassessment based on alleged cessation of interest liability - Order u/s 148A beyond show-cause notice

Clean slate principle in sale of corporate debtor as a going concern - Reassessment of a company sold in liquidation as a going concern on a clean slate for alleged pre-existing interest liability - HELD THAT: - The company had been sold as a going concern on a clean-slate basis, under which past liabilities and investigations stood extinguished.

We find that the controversy arising in the present petition stands squarely covered by the common oral judgment dated 30.06.2026 rendered by a Division Bench of this Court in the petitioner’s own case [2026 (7) TMI 435 - GUJARAT HIGH COURT] whereby the reopening of the assessment of the petitioner for the earlier Assessment Years, premised on the very same alleged cessation of interest liability and on the identical set of facts, came to be quashed and set aside. This Court, in the said judgment, after referring to the decision of KRBL Limited [2023 (9) TMI 1293 - GUJARAT HIGH COURT] which in turn placed reliance on the settled legal position enunciated in the case of Ghanshyam Mishra & Sons (Private) Limited vs. Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT] held that the purchaser of a corporate debtor as a going concern is entitled to a “clean slate” and that the past liabilities cannot be foisted upon such purchaser. [Paras 9, 13]

The alleged past liability could not furnish a valid basis for reopening the assessment.

Reassessment based on alleged cessation of interest liability - Reopening on surmises and conjectures - Reopening founded on the supposition that the assessee might have claimed deduction of unpaid interest and that the corresponding liability had ceased - HELD THAT: - The reopening was founded on conjecture rather than verified material, although the assessee's profit and loss accounts could have been examined to verify whether any interest deduction had been claimed. Further, the order under section 148A itself recorded that the liability had not ceased; that finding eliminated the foundation for treating the alleged interest liability or loan waiver as escaped income. [Paras 10, 11]

No case of escaped income survived on the alleged cessation of interest liability.

Order u/s 148A beyond show-cause notice - Breach of principles of natural justice - Introduction of an allegation of bogus purchases in the order u/s 148A when the show-cause notice proposed reopening only for alleged cessation of interest liability - HELD THAT: - An order under section 148A must remain confined to the grounds stated in the show-cause notice. The introduction of a new and unrelated allegation of bogus purchases, without notice or opportunity of hearing, breached natural justice and demonstrated non-application of mind. [Paras 12]

The order under section 148A was vitiated by its departure from the show-cause notice.

Final Conclusion: The writ petition was allowed, and the reassessment notice and the order under section 148A for A.Y. 2022-23 were quashed and set aside.

Revision u/s 263 for alleged lack of inquiry into unsecured loans - Distinction between lack of inquiry and inadequate inquiry

Invocation of revisionary jurisdiction under section 263 in respect of unsecured loans where assessment inquiry had been made - HELD THAT: - The Court accepted the Tribunal's factual finding that the assessee had furnished documents and evidence in response to the Assessing Officer's queries and that inquiries had been made during assessment. The extent of inquiry is within the Assessing Officer's domain; consequently, an existing inquiry cannot justify revision merely because the Commissioner considers it inadequate or considers further inquiry necessary. An assessment order is not erroneous and prejudicial to the interests of the Revenue merely because another view is possible or the assessment order is not more elaborately reasoned.

Tribunal referred to the decision of Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] wherein, it is held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass an order under Section 263 of the Act, merely because the Commissioner has different opinion in the matter and that only in cases where there is no inquiry, the power under Section 263 of the Act can be exercised. The Tribunal also referred to the decision of the Hon’ble Apex Court in case of Malabar Industries Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] [Paras 4, 5, 6, 7, 8]

The Tribunal's order setting aside the revisionary order was upheld, and no substantial question of law arose.

Final Conclusion: The appeal was dismissed, the Court holding that the assessment had involved inquiries into unsecured loans and therefore did not warrant revision under section 263 on a charge of inadequate inquiry.

Reassessment on unverified Insight portal information - Roving and fishing inquiry in reassessment

Validity of reassessment proceedings founded on Insight portal information allegedly linking the ceramic dealer to transactions with an Angadiya, without disclosure or verification of petitioner-specific material - HELD THAT: - The notice and the preliminary reassessment order did not disclose any material or transaction particulars connecting the assessee with the alleged escaped income. No material was supplied despite the assessee's request, and the AO made no effort to verify the genuineness of the Insight portal information.

The uncontroverted record of verbatim notices carrying the same alleged transaction amount against similarly situated ceramic dealers further showed absence of petitioner-specific application of mind. Information from the Insight portal, without verified material establishing such nexus, cannot sustain a roving and fishing reassessment inquiry. [Paras 6, 7, 8]

The reassessment notice and the preliminary reassessment order were quashed and set aside.

Final Conclusion: The writ petition was allowed and the reassessment notice and preliminary reassessment order were quashed for want of disclosed, verified material linking the assessee to the alleged escaped income.

Penalty u/s 271(1)(c) for transfer pricing adjustment - good faith and due diligence under Explanation 7

Levy of penalty for a transfer pricing adjustment arising from differing application of TNMM and the profit level indicator under Explanation 7 to section 271(1)(c) - HELD THAT: - The Court accepted the Tribunal's finding that the assessee had adopted TNMM, a prescribed method, and had disclosed the filters, comparables and operating-margin computation in its transfer pricing study report. The adjustment resulted from debatable interpretational differences concerning the profit level indicator and treatment of operating items, while neither the TPO nor the CIT(A) found that the arm's length price was computed outside the statutory provisions or that the study lacked good faith and due diligence. The conditions necessary for penalty under Explanation 7 were therefore not satisfied.

Tribunal referred to and relied upon the decision of Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] and other decisions and held that a mere difference in opinion on a debatable issue should not attract a penalty. [Paras 19, 20]

Deletion of the penalty was sustained, no substantial question of law arising.

Final Conclusion: The Revenue's appeal was dismissed, as no substantial question of law arose from the Tribunal's deletion of penalty on the transfer pricing adjustment.

Validity of notice u/s 143(2) issued to deceased assessee - Jurisdictional validity of assessment

Validity of assessment initiated by a notice u/s 143(2) issued in the name of a deceased assessee, despite the Department having been informed of the death by the legal heir who filed the return - HELD THAT: - Where the return had been filed by the legal heir after intimating the Department of the assessee's death, the notice was required to be issued to that legal heir. A notice issued in the name of the deceased assessee was invalid and amounted to absence of a valid notice under section 143(2), depriving the Assessing Officer of jurisdiction to proceed with the assessment.

This Court in case of Yash Nirupam Nanavaty L/R of Late Asha Nirupam Nanavaty [2026 (9) TMI 267 - GUJARAT HIGH COURT] held in view of the settled legal position that the notice for re-assessment issued against a dead person is invalid, void ab initio and without jurisdiction, we are of the opinion that no such notice, under Section 148 of the Act, could have been issued and no such order, rejecting such objections, could have been passed by the Assessing Officer as the same are without jurisdiction [Paras 4, 6]

The Tribunal's finding that the assessment proceedings lacked jurisdiction was upheld; no substantial question of law arose.

Final Conclusion: The appeal was dismissed, as the assessment initiated through a notice issued to the deceased assessee was without jurisdiction.

Addition for unexplained foreign bank deposits - internal transfer of pre-existing funds

Addition for unaccounted deposits in the HSBC, Geneva account where the deposits were claimed to represent funds transferred from an ABN AMRO Bank account - HELD THAT: - The concurrent factual findings established that the funds standing in the ABN AMRO Bank account had accumulated earlier and were transferred to the HSBC account, without any fresh deposit being introduced during the relevant financial year. In the absence of cogent evidence that the HSBC deposits represented unaccounted funds, the addition could not rest on presumption alone. [Paras 5, 6, 7]

Deletion of the substantive and protective additions was upheld, as no substantial question of law arose.

Final Conclusion: The appeals were dismissed, the Court affirming the deletion of the additions on the basis of concurrent findings that the impugned deposits were transfers of pre-existing funds.

Charitable trust exemption - furnishing Form No. 10B belated but within extended return-filing date - Procedural timing of audit-report filing

HELD THAT: - The requirement of furnishing the audit report along with the return cannot be applied rigidly where the due date for filing the return stood extended and the audit report was accepted before that extended date.

Filing the audit report is a substantive requirement, but its time and manner of submission are procedural; where Form No. 10B was available before assessment, the statutory requirement stood satisfied. The condonation mechanism was only an additional remedy and did not preclude grant of the substantive exemption. [Paras 14, 16, 17]

The rejection of the condonation application was quashed, and the Revenue was directed to accept Form No. 10B for A.Y. 2019-20 and grant the claimed exemption.

Final Conclusion: The writ petition was allowed. The Revenue was directed to accept Form No. 10B for A.Y. 2019-20 and grant the exemption.

Taxability of interest on State Government funds - Revenue character of signature bonus on transfer of developed power projects

Taxability of interest on State Government funds - Taxability of interest arising from funds advanced by the State Government - HELD THAT: - On the appellant's uncontroverted submission that the identical issue had been decided in its favour for the earlier assessment year, the Court followed that determination that the interest belonged to the State Government and not to the assessee. [Paras 5]

The interest was held not taxable in the hands of the assessee, and the first question was answered in its favour.

Capital or revenue character of signature bonus for developed power projects - Characterization of signature bonus received for transferring developed power projects to implementing entities - HELD THAT: - The concurrent findings established that the assessee's regular business comprised development of power projects for transfer to implementing entities and that it incurred expenditure on surveys, testing and approvals. The signature bonus was consequently connected with the ordinary business activity, and the claim that it had no connection with the work undertaken by the assessee was rejected. [Paras 6, 7]

The signature bonus was sustained as a revenue receipt, and the second question was answered in favour of the Revenue.

Final Conclusion: The appeal was partly allowed: the interest addition was deleted, while inclusion of the signature bonus as revenue receipt was sustained.

Reassessment - parallel proceedings on identical additions

Validity of reassessment on additions identical to those in the original search assessment while tax appeals concerning that assessment remained pending - HELD THAT: - The additions in the reassessment were identical to those in the original assessment. The appellate authority had adjudicated the original assessment on merits as well as technical grounds, and the resulting tax appeals were pending.

The precedent relied upon by the Revenue Krishna Developers & Company [2017 (8) TMI 241 - GUJARAT HIGH COURT] concerned an assessment annulled solely on a technical ground without adjudication on merits and was therefore inapplicable. Parallel reassessment would directly bear upon the pending tax appeals and could not be sustained. [Paras 11, 12]

The reopening notice and consequential reassessment orders were quashed, without any adjudication on the merits of the additions pending in the tax appeals.

Final Conclusion: The writ petitions were allowed and the reassessment proceedings founded on identical additions were quashed. The merits of the additions remain for determination in the pending tax appeals.

Deduction u/s 80P(2)(d) for interest on investments with co-operative banks

HELD THAT: - The Court applied the settled position following ASHWINKUMAR ARBAN CO OPERATIVE SOCIETY LTD. [2024 (11) TMI 971 - GUJARAT HIGH COURT] that a co-operative bank is itself a co-operative society for the purposes of section 80P(2)(d). The exclusion under section 80P(4) operates against a co-operative bank claiming deduction and does not deprive another co-operative society of deduction on interest earned from investments with that bank. [Paras 6]

No substantial question of law arose; the deduction was rightly allowed and the Revenue's appeal was dismissed.

Final Conclusion: The appeal was dismissed, as the Tribunal's allowance of deduction under section 80P(2)(d) on interest earned from investments with co-operative banks raised no substantial question of law.

SEZ-unit profit deduction on voluntary transfer-pricing adjustment - Ad hoc disallowance of expenditure relating to exempt dividend income - Deductibility of year-end foreign-exchange loss - Functional comparability of ITeS service providers

SEZ-unit profit deduction on voluntary transfer-pricing adjustment - Entitlement to deduction for SEZ-unit profits on the voluntary transfer-pricing adjustment disclosed in the return - HELD THAT: - The prevailing Tribunal decisions and the jurisdictional High Court decision [2007 (11) TMI 444 - ITAT BANGALORE] supported the deduction on a voluntary transfer-pricing adjustment. Mere pendency of a special leave petition against that view did not warrant a departure in the absence of a contrary Supreme Court judgment. [Paras 11]

The deduction under section 10AA on the voluntary transfer-pricing adjustment was sustained and the Revenue's ground was dismissed.

Ad hoc disallowance of expenditure relating to exempt dividend income - Validity of the ad hoc disallowance of expenditure relating to exempt dividend income from mutual-fund investments made and redeemed during the year - HELD THAT: - The deletion followed earlier orders in the assessee's own case, subsequently confirmed in proceedings for later years. The Revenue did not place any contrary view of a higher forum to justify interference. [Paras 15]

The deletion of the ad hoc disallowance under section 14A was upheld.

Deductibility of year-end foreign-exchange loss - Deductibility of the foreign-exchange loss recognised on the balance-sheet date - HELD THAT: - Exchange loss arising on the balance-sheet date was held to be an allowable business expenditure. The Commissioner (Appeals) had correctly followed the governing judicial decisions. [Paras 17]

The deletion of the disallowance of foreign-exchange loss was sustained.

Functional comparability of ITeS service providers - Exclusion of Universal Print Systems Ltd., TCS e-Serve Ltd., BNR Udyog Ltd., Infosys BPO Ltd. and Excel Infoways Ltd. as comparables for the assessee's ITeS transactions - HELD THAT: - The exclusions rested on functional differences, inadequate segmental information and, where applicable, failure of the employee-cost filter. BNR Udyog Ltd. was functionally dissimilar because of its medical transcription, billing and coding activities. Earlier comparability decisions may be followed where the relevant functional analysis and circumstances remain unchanged, subject to either side demonstrating distinguishing facts; the Revenue failed to do so. [Paras 20, 21, 22, 23, 24]

The exclusion of the challenged companies from the ITeS comparability set was upheld.

Final Conclusion: The Revenue's appeal was dismissed, affirming the SEZ-unit deduction, deletion of the ad hoc exempt-income disallowance and foreign-exchange loss disallowance, and exclusion of the challenged comparables.

Addition u/s 68 - unexplained credits in relevant previous year - Unsecured loans - opening balances

Addition u/s 68 in respect of unsecured-loan balances brought forward from an earlier year, rather than credits received during the relevant previous year - HELD THAT: - Section 68 applies to sums credited in the books during the relevant previous year, and opening balances brought forward from earlier years cannot be subjected to addition in the current year. The assessee established through its records that the loans had been received in an earlier year and reflected in its books, while the Assessing Officer acted solely on Investigation Wing information without independent verification. [Paras 8]

The addition under section 68 was deleted and the assessee's ground was allowed.

Final Conclusion: The assessee's appeal was allowed and the addition under section 68 was deleted.

Unexplained cash credits - unsecured loans - Discharge of onus under section 68 - Reliance on retracted third-party statements

Unexplained cash-credit additions for unsecured loans from corporate lenders alleged to be accommodation-entry providers-sufficiency of proof of identity, creditworthiness and genuineness - HELD THAT: - The lower authorities had treated the loans as accommodation entries principally on a third-party search statement. That statement stood retracted, and the subsequent striking-off of certain lender companies did not discredit loans advanced and repaid while they were active. The assessee produced the lenders' returns, financial statements identifying the assessee as borrower, confirmations and bank statements showing availability of funds and repayment. This discharged the initial onus under section 68. The Assessing Officer made no independent verification by issuing summons or otherwise and brought no contrary material on record; additions resting on investigation information and presumptions could not therefore be sustained. The enhanced requirement concerning the creditor's source of funds was applicable only from assessment year 2023-24 and did not govern the years in question. [Paras 13, 14, 15, 26, 27]

The additions under section 68 for the unsecured loans were deleted for all the three assessment years.

Final Conclusion: The additions under section 68 were deleted for all three assessment years and the appeals were allowed. The reopening grounds were left open.

Penalty u/s 271AAB - specificity of statutory notice - Defective notice for search-related penalty - Reasonable opportunity in penalty proceedings

Validity of notices initiating penalty for undisclosed income found in search proceedings u/s 271AAB, where the applicable statutory clause and rate were not specified - HELD THAT: - As section 271AAB attracts the procedural requirement of section 274, the notice must disclose the precise charge so as to afford a meaningful opportunity of hearing. A valid notice was required to identify the applicable clause of section 271AAB and the corresponding rate of penalty. The notices merely referred to undisclosed income and proposed penalty under section 271AAB, without specifying the relevant conditions or charge; they were consequently vague, defective and invalid.

We, therefore respectfully following the judgment of Kulwant Singh Bhatia [2018 (5) TMI 960 - MADHYA PRADESH HIGH COURT], R. Elangovan [2018 (4) TMI 1553 - ITAT CHENNAI] and Ravi Mathur [2018 (6) TMI 1128 - ITAT JAIPUR] and in the given facts and circumstances of the case wherein the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of Section 271AAB of the Act makes the alleged notice defective and invalid [Paras 5, 7, 14, 15]

The defective notices and consequential penalty proceedings were quashed, and the penalty was deleted; the challenge on merits was rendered infructuous.

Final Conclusion: The appeal was allowed by deleting the search-related penalty on the ground that the statutory notices failed to specify the applicable charge under section 271AAB. The merits of the levy were left unexamined as academic.

Deductibility of delayed employees' PF/ESI contributions

Rectification based on alleged typographical error in Form 3CD - HELD THAT: - The asserted reporting error in the tax audit report required factual verification. The Tribunal therefore did not adjudicate the claimed error on merits. [Paras 7]

The issue was remanded to the Assessing Officer for verification, and the related grounds were allowed for statistical purposes.

Deductibility of delayed employees' PF/ESI contributions - employees' PF/ESI contributions deposited after the prescribed due dates but before filing of the return - HELD THAT: - Employees' contributions deposited after the due dates prescribed under the respective welfare enactments are not deductible merely because they were paid before the return-filing due date. The Tribunal found that the contributions had not been deposited within the prescribed due dates and sustained the disallowance.

Reliance of the Hon’ble Jurisdictional Delhi High Court in the case of CIT vs AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] And other ITAT decisions is no longer valid as these decisions predate the decision of Checkmate Services P. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)] has authoritatively laid down the law that disallowance u/s 36(1)(va) for employee’s contribution to ESI/PF, that was deposited by assessee- employer after due date prescribed in PF/ESCI Acts but before due date of filing under section 139(1) is valid. [Paras 10]

The disallowance of delayed employees' PF/ESI contributions was sustained and the related grounds were dismissed.

Final Conclusion: The appeal was partly allowed: the Form 3CD reporting issue was remanded for verification, while the disallowance of delayed employees' PF/ESI contributions was sustained.

Proof of benami transaction - Provisional attachment of alleged benami property - Cross-examination in summary benami proceedings

Provisional attachment of alleged benami property - Same-day notice and attachment - Validity of the same-day issuance of show-cause notice, approval and provisional attachment of alleged benami properties - HELD THAT: - Section 24 does not prescribe any intervening period between issuance of notice and provisional attachment. Its sequence permits the Initiating Officer, upon apprehension of alienation and after obtaining prior approval, to attach the property; prompt action on the same day did not render the procedure mechanical or unlawful. [Paras 21]

The provisional attachment was held to have been made in compliance with Section 24.

Cross-examination in summary benami proceedings - Entitlement to cross-examine witnesses whose statements were relied upon in the summary benami proceedings - HELD THAT: - No request for cross-examination had been made. In summary proceedings, cross-examination is not available as of course unless a case requiring it is made out. [Paras 22]

No denial of an opportunity of cross-examination was established.

Proof of benami transaction - Financial capacity of alleged benamidar - Confirmation of provisional attachment on the ground that the appellant's acquisition of the properties was benami - HELD THAT: - The asserted compensation receipt was transferred to the alleged beneficial owner and was therefore unavailable as a source for the purchases. The appellant did not establish the source for earlier land acquisitions claimed to have generated sale proceeds. His limited disclosed means, non-filing and discrepancies in income-tax returns, mismatch between declared financial position and property dealings, and repeated bank transactions with the alleged beneficial owner and related persons supported the finding that the purchases were benami. Financial capacity of the alleged benamidar was relevant in transactions involving substantial property dealings. [Paras 24, 25, 26, 27, 28]

The finding of benami transactions and confirmation of the provisional attachment were sustained.

Final Conclusion: The appeal was dismissed, the Tribunal sustaining the confirmation of provisional attachment after finding compliance with the statutory procedure and sufficient material to establish benami transactions.

Interest on customs duty consequent upon redemption of confiscated goods - Writ jurisdiction despite alternative statutory remedy

Interest on redemption liability - Computation from determination of liability - Computation of interest on customs-duty liability consequential to redemption of confiscated imported Used Oil from the original assessment of the Bill of Entry rather than from determination of that liability in confiscation proceedings - HELD THAT: - Liability to duty and charges consequent upon confiscation and redemption is distinct from the original assessment of the Bill of Entry. While such liability is to be assessed and determined through the statutory machinery and statutory interest follows where delayed payment is attracted, a liability determined upon culmination of confiscation proceedings cannot retrospectively be treated as payable from an earlier assessment founded on a different declaration and classification. Departmental delay does not by itself extinguish statutory interest; however, interest cannot be levied for a period during which the liability sought to be subjected to interest had not been determined.

The relief which follows in the present case flows principally from the statutory scheme of Sections 125 and 28 of the Act, as explained by the Supreme Court in Navayuga Engineering [2024 (7) TMI 1221 - SUPREME COURT]. [Paras 43, 44, 45, 46, 47]

The interest computation was unsustainable insofar as it covered the period from the original assessment in May 2015 up to 28.02.2023. The respondent was directed to recompute interest, if otherwise payable, from determination of the liability under the adjudication order, after accounting for the subsequent reassessment and payments or appropriations already made.

Writ jurisdiction despite alternative statutory remedy - Maintainability of the writ petition challenging only the period adopted for computing consequential interest despite an appellate remedy against the adjudication order - HELD THAT: - The petition did not seek reconsideration of the findings on classification, confiscation, redemption fine or penalties. As the material facts were undisputed and the limited dispute concerned application of the statutory scheme to the computation of consequential interest, availability of an appellate remedy against the adjudication order did not warrant dismissal of the petition. [Paras 49]

The writ petition was entertained for issuing a limited direction for recomputation of interest.

Final Conclusion: The petition was partly allowed and the EDI interest computation was set aside insofar as it charged interest for the period before determination of the liability in the confiscation proceedings. A fresh statutory computation was directed, without disturbing the adjudication order.

MEIS benefits - inadvertent procedural error in electronic shipping bills - Entitlement to MEIS benefits where the exporter selected 'Y' only for the first item in each electronic shipping bill but declared its intent to claim rewards

HELD THAT: - In a very recent judgment, the Hon'ble Apex Court in the case of Shah Nanji Nagsi Exports Private Limited [2025 (9) TMI 418 - SUPREME COURT] it is held that “once the exports are genuine and they fall under the notified category, the inadvertent mistakes of procedure cannot be treated as fatal, and the rejection of benefit of the beneficial scheme to the writ petitioner by the policy relaxation committee can be interfered with”.

The Court held that entitlement under a beneficial export-incentive scheme cannot be defeated solely by an inadvertent procedural lapse where the exports are genuine and fall within the notified category. The failure to select 'Y' against every item was not fatal when the intent to claim MEIS rewards was otherwise declared. The objection regarding absence of physical examination was held to be insignificant, particularly as Customs had not challenged the writ order and selection of 'Y' for the first item in every shipping bill did not affect the possibility of examination. [Paras 17]

The procedural lapse was condoned, and the appeal challenging the directions for processing the MEIS claim was dismissed.

Final Conclusion: The writ appeal was dismissed, and the directions enabling processing of the exporter's MEIS claim were sustained.

Successive revocation of Customs Broker licence - Failure to adjudicate penalty in appeal

Successive revocation of Customs Broker licence - Validity of a second revocation of a Customs Broker licence already revoked under an earlier order - HELD THAT: - Once the licence had already been revoked, a further order revoking the same licence was beyond the statutory provisions. Even where more than one cause for revocation exists, those causes ought to form part of the same proceedings; a second revocation order cannot be made without prejudice to the earlier order. [Paras 4]

The second revocation of the already revoked licence was held to be impermissible.

Adjudication of penalty in Customs Broker licensing proceedings - Failure to decide the challenge to penalty imposed in the second licensing proceedings - HELD THAT: - The Tribunal disposed of the appeal on the premise that the earlier revocation had been upheld, but did not adjudicate the separate issue of penalty imposed under the later order. That issue remained to be decided notwithstanding the earlier revocation. [Paras 5, 6]

The Tribunal's order was set aside and the matter remanded for adjudication of the penalty issue in accordance with law.

Final Conclusion: The Tribunal's order was set aside, and the matter was remanded solely for deciding the penalty imposed in the later licensing proceedings.

Premature demand before expiry of EPCG export obligation - Revenue neutrality of IGST payment and input tax credit

Effect of the CESTAT's finding that IGST-demand proceedings for alleged non-fulfilment of EPCG export obligation were premature, despite its additional observations on revenue neutrality - HELD THAT: - After recording that initiation of proceedings was premature, the CESTAT ought to have left the matter for consideration by the Revenue in accordance with law. Its observations on revenue neutrality were based on the assessee's data and remained subject to verification by the Revenue; they did not preclude fresh verification and a decision in accordance with law. [Paras 6, 7]

No interference was warranted with the CESTAT order, while preserving the Revenue's liberty to verify the data afresh and decide the matter in accordance with law.

Final Conclusion: The appeal was disposed of without interference with the CESTAT order, subject to clarification that the Revenue may undertake fresh verification of the data and decide the matter in accordance with law.

EPCG exemption-procedural conditions on EOU debonding - Entitlement to EPCG exemption on capital goods upon exit from the EOU scheme despite non-registration of the EPCG authorisation at the port of import, alleged non-production of the authorisation for debit, and the form of undertaking furnished

HELD THAT: - Where the assessee exited the EOU scheme and transitioned to the EPCG scheme after furnishing the required particulars, obtaining the requisite no-objection and exit approvals, and undertaking to fulfil the export obligation, registration of the authorisation at the port of import was merely procedural. The authorisation had been furnished to the departmental authorities and was available for debit, while the undertaking given at debonding to discharge any future duty shortfall sufficiently complied with the notification requirement. In the absence of any dispute regarding fulfilment of the substantive EPCG conditions and export obligation, such procedural lapses could not justify denial of the exemption. [Paras 7, 8, 9, 10]

No substantial question of law arose from the Tribunal's order allowing the EPCG exemption; the Revenue's appeal was dismissed.

Final Conclusion: The appeal was dismissed, as the Tribunal's allowance of EPCG exemption on the facts of the assessee's EOU debonding disclosed no substantial question of law.

Penalty on Director for misclassification of imported removable or exchangeable disc drives - Liability of the Director to penalty under section 112(a) for the importer's alleged misclassification of removable or exchangeable disc drives

HELD THAT: - The Tribunal treated the absence of actual confiscation and of redemption fine, the goods having been unavailable at adjudication, as leaving no legal basis to fasten penal liability under section 112(a). It also noted that the duty demand and penalties imposed on the importer under the same order had already been set aside.

Referring to he order of the Tribunal in the case of Rashi Peripherals Private Limited [2019 (12) TMI 1710 - CESTAT MUMBAI] we do not find any merits in the impugned order passed by the learned Commissioner, to the extent it had imposed penalty on the appellant under Section 112(a) ibid. [Paras 7, 8, 9]

The penalty imposed on the Director under section 112(a) was held unsustainable and set aside.

Final Conclusion: The penalty on the Director for the alleged misclassification was held unsustainable, and the appeal was allowed.

Preferential tariff exemption - certificate-specific verification of origin - Redemption fine for goods unavailable for confiscation

Preferential tariff exemption on nylon fishing nets under certificates of origin - Retroactive verification of certificates of origin - Denial of preferential customs exemption for nylon fishing nets on the basis of unverified or unrelated Certificates of Origin - HELD THAT: - The Malaysian verification report concerned a different Certificate of Origin number and could not establish any contravention in respect of the appellant's certificate; no enquiry had been conducted concerning the other Malaysian certificate. Likewise, the Thai enquiry did not concern the appellant's Certificates of Origin, and verification relating to certificates of another importer could not be used to fasten duty liability. In the absence of evidence impeaching the appellant's certificates, denial of the claimed exemption was unsustainable. [Paras 10, 11, 13, 14, 15]

The demand and interest, together with the consequential penalty under Section 114A, were set aside.

Redemption fine where goods are unavailable for confiscation - Imposition of confiscation and redemption fine when the imported goods were unavailable for confiscation - HELD THAT: - The goods were admittedly unavailable for confiscation. Applying the cited authorities decisions SHIV KRIPA ISPAT PVT. LTD.[2009 (1) TMI 124 - CESTAT MUMBAI - LB] and M/S RISHI SHIP BREAKERS [2009 (9) TMI 974 - BOMBAY HIGH COURT] which distinguish goods released on bond or undertaking from goods not so available, the Tribunal held that confiscation and redemption fine could not be sustained. [Paras 16]

The confiscation and redemption fine were set aside.

Final Conclusion: The appeal was allowed; the demand, interest and penalty, and the confiscation and redemption fine, were set aside with consequential relief in accordance with law.

Strict construction of customs exemption for electronic paver finishers - Extended limitation for misdeclaration of imported goods - Personal penalty on Director for customs misdeclaration

Customs exemption for electronic paver finishers - Strict construction of exemption notification - Eligibility of imported electronic sensor pavers, capable of paving beyond five metres only with bolt-on extensions, for customs exemption applicable to paver finishers for laying bituminous pavement seven metres and above. - HELD THAT: - The notification was construed strictly: the imported paver itself had to satisfy the prescribed paving-width requirement when presented for import. The machine had paving capacity only up to five metres without bolt-on extensions, and the invoice did not disclose the asserted supply of such extensions.

Apex Court in the case of CC (Import) Mumbai Vs M/s. Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT (LB)] has categorically held that whenever a benefit of Exemption Notifications sought to be availed, the burden is on such Assessee to prove that it complied with the conditions prescribed in such notifications and when there being any scope for any intendments.

The notification could not be enlarged by reading into it eligibility based on separately attached extensions; nor could a variance between the purchase order and the imported goods be fastened on Customs. [Paras 15, 17, 19]

The importer failed to establish fulfilment of the exemption condition, and denial of the customs exemption was upheld.

Extended limitation for misdeclaration of imported goods - Invocation of the extended period for recovery of customs duty on account of misdeclaration of the imported paver machine's paving capability - HELD THAT: - The Bill of Entry did not specifically disclose the machine's paving capability. This was held to constitute a clear misdeclaration, and any dispute between the importer and supplier concerning the goods ordered and supplied was immaterial to Customs. [Paras 20]

Invocation of the extended period and the demand against the importing company were upheld.

Personal penalty on Director for customs misdeclaration - Personal penalty on the Director for misdeclaration in the import of paver machines in the absence of a specific allegation or finding regarding his role - HELD THAT: - Neither a specific allegation concerning the Director's role nor a finding identifying any act or omission by him resulting in the misdeclaration was recorded. The reasons supporting the personal penalty were therefore unsustainable. [Paras 21]

The personal penalty imposed on the Director was deleted.

Final Conclusion: The exemption denial and extended-period demand against the importing company were upheld. The Director's appeal was partly allowed solely by deletion of the personal penalty.

Reasonable belief for seizure of gold kadas - Confiscation of gold kadas - Seizure and confiscation of semi-finished gold kadas recovered at a domestic airport on the allegation of smuggling

HELD THAT: - Customs had alleged smuggling without investigation. The Tribunal held that the gold kadas, having 17.81 karat purity, could not be termed smuggled gold, which was stated to have 99.9% purity; further, the recovery was not at an international airport or in a customs area. The requisite reasonable belief for seizure was therefore absent. [Paras 6, 7, 8, 9]

The seizure provision was held inapplicable; the gold kadas were not liable to confiscation, were directed to be released, and no penalty was imposable.

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

Confiscation of non-notified goods - Burden of proving smuggled character of goods - Penalty consequent upon confiscation -

Confiscation of seized black pepper and socks as smuggled goods, and the consequential penalties imposed on the appellants - HELD THAT: - As black pepper and socks were not notified goods under section 123 of the Customs Act, the burden lay on the Revenue to establish that they were smuggled. The Revenue failed to discharge that burden; consequently, the goods were not liable to confiscation. [Paras 6, 7]

The confiscation was set aside and, since the goods were not liable to confiscation, the penalties were also unsustainable.

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

FOB price as cum-duty value for exports up to 31.12.2008 - Rectification of mistake apparent from record

Rectification of the Final Order dismissing the appeal on export-duty valuation of shipping bills filed before 31.12.2008, owing to non-consideration of the applicable Board Circular and the prior decision in the applicant's own case - HELD THAT: - The applicable Circular expressly continued, until 31.12.2008, the practice of treating the FOB price as the cum-duty price. The undisputed dates of the shipping bills were apparent from the record and required no fresh evidence.

The earlier dismissal, which declined cum-duty valuation without considering the Circular and the prior precedent directly applying it to pre-cut-off exports, therefore disclosed a mistake apparent from the record. Rectification to give effect to the governing Circular and precedent was held not to amount to review; decisions applying the changed valuation regime from 01.01.2009 were distinguishable. [Paras 8, 9, 10, 11, 13]

The Final Order was rectified; the declared FOB value was directed to be treated as the cum-duty price, the assessable value to be worked backwards therefrom, and the customs appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The rectification application was allowed, and the earlier dismissal of the customs appeal was replaced by an order allowing the appeal with consequential relief in accordance with law.

Liability of financial institution nominee director for company default - Statutory protection for nominee director - Liability for non-compliance with deposit repayment order -

Criminal liability of a nominee and independent director appointed by a financial institution for the company's non-compliance with an order directing repayment of deposits - HELD THAT: - A director appointed by the financial institution under the financing arrangement was protected from liability incurred merely by reason of such directorship or for acts or omissions done in good faith in discharge of the directorial duties. The applicant was a nominee and independent non-executive director, had no material relationship or transaction with the company or its management, and was not involved in its day-to-day affairs, invitation of deposits, or repayment thereof. All directors could not therefore be held liable for breach of the deposit repayment order. [Paras 5]

The criminal complaint and consequential proceedings were quashed as against the applicant.

Final Conclusion: The application was allowed and the criminal proceedings for alleged non-compliance with the deposit repayment order were quashed as against the nominee and independent director.

Abeyance of company and insolvency proceedings pending statutory examination - Continuation of pending oppression and mismanagement proceedings and liquidation proceedings while the Central Government's examination of the investigation report remained incomplete

HELD THAT: - The Court considered that the proceedings initiated pursuant to its earlier direction required completion and submission of a report before the NCLT proceeded further. While recognising the need for timely completion of liquidation to protect financial creditors, it held that a limited abeyance was necessary pending conclusion of the governmental proceedings. [Paras 13, 14, 15]

The NCLT was directed to keep the pending proceedings in abeyance for three months; upon submission of the report, it was to pass appropriate orders.

Final Conclusion: The writ petition was disposed of by directing a temporary abeyance of the pending company and insolvency proceedings until completion of the governmental process and submission of its report to the NCLT.

Oppression and mismanagement - reasoned adjudication - Perjury proceedings-natural justice and reasoned findings - Clean hands in equitable jurisdiction

Oppression and mismanagement - reasoned adjudication - adjudication of allegations of oppression and mismanagement arising from the proposed transfer of group assets and intellectual property, conversion of alleged debt, allotment of shares and dilution of minority shareholding - HELD THAT: - The Adjudicating Authority was required to examine, on the entire material, whether the impugned restructuring and its cumulative consequences amounted to oppression of minority shareholders or conduct prejudicial to the company. Its failure to return adequate and specific findings on the material allegations, including the discounted allotment, disputed debt, asset transfer and alleged continuing conduct, rendered the dismissal unsustainable. A commercial justification advanced for the restructuring could not dispense with that adjudicatory duty. The appellate finding was confined to the need for reconsideration and did not determine the merits of the allegations. [Paras 113, 122, 123, 124, 126]

The dismissal of the company petition was set aside and the matter remanded for fresh consideration of all material allegations; status quo regarding the company's and its subsidiaries' shareholding, assets and liabilities was restored pending such adjudication.

Clean hands in equitable jurisdiction - Finding that the shareholders had approached the Tribunal without clean hands on account of alleged misrepresentation concerning deferment of the general meeting and dissent notes - HELD THAT: - The correspondence concerning deferment of the meeting and the meeting minutes, transcript and dissent notes were capable of more than one interpretation and required examination as a whole. A conclusion that the shareholders had deliberately misrepresented facts, particularly when employed as an independent ground for denying equitable relief, had to rest on clear and cogent findings supported by the record. [Paras 119, 120, 121]

The adverse finding on lack of candour was held unsupported on the material considered and shall not operate against the shareholders in the fresh adjudication.

Perjury proceedings-natural justice and reasoned findings - Order allowing the perjury application alleging misrepresentation by the shareholders and a creditor - HELD THAT: - An adverse finding or direction on perjury requires a fair opportunity to meet the precise allegations. The order neither identified the particular false statement attributable to each concerned person nor recorded the material and rationale establishing falsity. It also failed to determine whether any statement was made on oath or before the Tribunal, whether the alleged falsity was intentional, and whether the requirements for further action were met. Mere reference to the application in the proceedings was not a meaningful opportunity to answer allegations carrying penal consequences. [Paras 115, 116, 117, 118]

The order allowing the perjury application, insofar as it operated against the shareholders and the creditor on allegations of perjury or misrepresentation, was set aside.

Final Conclusion: The appeal was allowed. The impugned dismissal and the order allowing the perjury application were set aside, the company petition was remanded for fresh adjudication, and status quo was restored pending that determination.

Committee of Creditors as a statutory entity - juristic personality and right to litigate - Legal Character of the COC and it’s Right to Litigate - functional recognition versus jurisprudential status - representation by the Resolution Professional - necessity and propriety of impleading parties

HELD THAT:- Upon consent of all parties, and in view of the first respondent's no-objection, the Court did not adjudicate the underlying question whether the Committee of Creditors was a necessary party. The earlier orders [2025 (8) TMI 1874 - NATIONAL COMPANY LAW TRIBUNAL, BENGALURU] were set aside to enable its impleadment and hearing in the pending application. [Paras 5, 6]

It is directed that [2025 (4) TMI 2134 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] which is reserved for orders, be placed on board of the NCLT on any date within two weeks from today and the appellant CoC be impleaded therein. The appellant may also be heard expeditiously, and we direct the NCLT to dispose of the matter as expeditiously as possible.

Interim protection of auction purchaser's interest - Entitlement to interim status quo and stay pending appeal against cancellation of an e-auction sale and the sale certificate issued to the auction purchaser

HELD THAT: - The Tribunal found no good ground for further interim directions or stay, particularly since an operative restraint order in the civil proceedings already protected the subject property. The earlier notice had not been accompanied by ad interim protection, and the appellant's alternative claim for restitution also remained part of the appeal. [Paras 22, 26]

The application for interim status quo and stay was declined; however, any further action by the parties was made subject to further orders of the Tribunal.

Final Conclusion: The request for additional interim protection was rejected in view of the operative restraint in the civil proceedings. Subsequent actions concerning the subject property remain subject to further orders in the appeal.

Restoration of application dismissed for non-prosecution due to counsel's default - Limitation for restoration proceedings under insolvency law

Sufficient cause arising from deliberate default of counsel - Substitution of counsel where vakalatnama continues - Restoration of the distribution licensee's application for electricity-consumption charges, dismissed for non-prosecution because of prior counsel's deliberate non-appearance and failure to furnish consent for substitution - HELD THAT: - The former counsel's deliberate failure to pursue the matter could not be attributed to the appellant. Since the existing vakalatnama continued on record, the ethical restriction on engagement of a successor advocate without the former counsel's consent or the Tribunal's permission constituted a genuine impediment. The explanation disclosed sufficient cause, and a litigant was not to be denied adjudication because of its counsel's intentional default. [Paras 26, 29, 33, 48, 49]

The appellant had established sufficient cause for restoration and could not be penalised for the intentional default of its former counsel.

Application of Limitation Act to insolvency interlocutory proceedings - Condonation of delay in restoration application - Delayed restoration of the application for electricity-consumption charges dismissed for non-prosecution under Rule 48 of the NCLT Rules - HELD THAT: - The thirty-day period contemplated by Rule 48(2) did not expressly bar entertainment of a recall application after its expiry. Section 238A applied the Limitation Act, as far as may be, to proceedings under the Code, including interlocutory restoration proceedings; consequently, Section 5 enabled consideration of delay upon sufficient cause. A separate application for condonation was not indispensable where the restoration application itself set out the explanation for delay. [Paras 45, 46, 47, 51, 52]

The rejection solely on the ground that restoration was sought after thirty days was unsustainable; the impugned order was quashed, the dismissal for non-prosecution was recalled, and the underlying application was restored for consideration on merits.

Final Conclusion: The appeal was allowed. The refusal to restore the application and the dismissal for non-prosecution were set aside, and the claim for electricity-consumption charges was restored for determination on merits.

Deemed relinquishment of security interest in liquidation - Performance bank guarantees and underlying FDRs as liquidation estate

Inclusion of performance bank guarantees and underlying FDRs securing EPCG export obligations in the liquidation estate following the customs creditor's failure to elect non-relinquishment within the prescribed period - HELD THAT: - Regulation 21A deems a secured creditor to have relinquished its security where it does not intimate its election to realise the security within 30 days of liquidation commencement. The creditor's subsequent claim in Form C could not displace that statutory presumption. The guarantees were neither invoked nor renewed, and the security stood relinquished in law; consequently, the amount underlying the guarantees formed part of the liquidation estate.

The Appellant has relied on various judgments which are not directly relevant to the present facts and circumstances. The case of Punjab National Bank versus Supriyo Kumar Chaudhuri & Ors. [2022 (9) TMI 751 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] and Monitoring Agency of Anush Finlease & Construction Pvt. Ltd. Vs State Bank of India [2021 (10) TMI 1474 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] is related to Bank Guarantee against the margin money and not related to the performance of obligations. The case of Ansal Engineering Projects Ltd. [1996 (7) TMI 586 - SUPREME COURT] is pertaining to Arbitration Act and not under this IB Code.[Paras 65, 68, 69, 70, 71]

The direction to return the original bonds and remit the FDR amounts to the liquidation account was upheld.

Final Conclusion: The appeal was dismissed, and the directions for release of the FDR amounts to the liquidation account were affirmed.

Suspended director's authorised representation at Committee of Creditors meetings - Disclosure of resolution plans subject to confidentiality undertaking - Procedural prejudice in corporate insolvency resolution process

Written authorisation for suspended director's representative - Confidentiality undertaking - Validity of excluding the suspended director's representative from deliberations on resolution plans at the 20th Committee of Creditors meeting for want of written authorisation and a confidentiality undertaking - HELD THAT: - The Judicial Member treated compliance with the requirements as a condition precedent, whereas the Technical Member regarded the omission as curable in view of the representative's earlier participation. Concurring with the Judicial Member, the Third Member held that Regulation 21(2) applies to every participant, including a non-voting representative of a suspended director, and that written authorisation and confidentiality safeguards serve the substantive purpose of protecting commercially sensitive resolution-plan deliberations. Earlier participation without formal authorisation could not waive those requirements when resolution plans were under consideration; the suspended director remained entitled to attend personally or through a duly authorised representative. No adjournment for later regularisation was obligatory, and absence of the representative did not invalidate the meeting. [Paras 115, 116, 117, 118, 119]

The exclusion of the representative was justified and did not vitiate the 20th Committee of Creditors meeting.

Disclosure of resolution plans - Confidentiality undertaking - Legality of furnishing the resolution plan and connected documents after receipt of the confidentiality undertaking but before conclusion of the voting process - HELD THAT: - The Judicial Member considered post-undertaking disclosure sufficient, while the Technical Member held that pre-meeting disclosure was integral to meaningful participation. Agreeing with the Judicial Member, the Third Member held that the Supreme Court precedent [2019 (2) TMI 97 - SUPREME COURT] recognises a confidentiality undertaking as a legitimate safeguard and does not mandate unconditional disclosure or prescribe a particular time for obtaining it. The material was supplied promptly after the undertaking and before closure of voting; no substantive representation by the appellant was shown to have been prevented or disregarded. [Paras 122, 123, 124, 125]

Disclosure after receipt of the confidentiality undertaking did not contravene the right of suspended directors to receive resolution-plan material.

Validity of Committee of Creditors proceedings - Procedural prejudice in corporate insolvency resolution process - Whether the 20th, 21st and 22nd Committee of Creditors meetings and the approved resolution plan warranted interference on the alleged procedural irregularities? - HELD THAT: - The Judicial Member held that the later meetings remained sustainable and the challenge disclosed no actionable prejudice; the Technical Member considered the asserted defect in the 20th meeting to have a cascading effect on the subsequent process. The Third Member endorsed the former view, holding that the appellant had a substantive opportunity to consider the material and make representations before voting concluded, without establishing any denial of that opportunity. As the resolution plan had been approved and implemented, its disturbance on a non-prejudicial procedural objection would be inconsistent with the time-bound and value-preserving framework of the Code. The connected appeal disclosed no independent ground for interference, and the costs as modified by the Judicial Member were sustained. [Paras 130, 131, 132, 133, 134]

The proceedings of the Committee of Creditors, the approved resolution plan, and dismissal of the interlocutory applications were not liable to interference.

Final Conclusion: The Third Member concurred with the Judicial Member that no ground existed to invalidate the Committee of Creditors process or disturb the approved and implemented resolution plan. The appeals were to be disposed of in accordance with the resulting majority opinion, with the modified costs maintained.

Enlargement on bail - Alleged violation of re-arrest procedure - Confessional statement relied upon by prosecution - Habitual offender and misuse of bail - Expedited trial and conclusion of prosecution evidence within six months - HELD THAT:- For the reasons mentioned in the letter dated 15.06.2026 sent by Special Judge (PMLA Act) CBI Cases No.3, Jaipur Metro-I, two months’ more time from today is extended to conclude the trial.

Miscellaneous Application is, accordingly, disposed of.

Seeking anticipatory bail in case of the Directorate of Enforcement (DoE) for offence under Sections 3&4 of the Prevention of Money Laundering Act (PMLA) - Custodial interrogation - Obstruction of investigation - Applicability of Twin Conditions laid down under Section 45 PMLA - Economic Offences - Proceeds of Crime - Reasonable Grounds - Tampering with Evidence.

HELD THAT:- We do not find any ground to interfere with the impugned order passed by the High Court[2026 (4) TMI 8 - DELHI HIGH COURT]. However, we grant a period of six weeks to the petitioner to surrender before the concerned Trial Court. After such surrender, liberty is given to the petitioner to file an application seeking regular bail.

As and when the said application for regular bail is preferred, the Trial Court shall consider the same, expeditiously.

Simultaneous pronouncement of judgments in PMLA and predicate-offence proceedings

Continuation of the PMLA proceedings subject to simultaneous pronouncement of judgment with the case arising from the predicate offence - HELD THAT: - The earlier directions [2025 (3) TMI 1586 - SC ORDER], [2026 (9) TMI 1996 - SC ORDER] were clarified to permit continuation of the PMLA proceedings, while requiring that judgment therein be pronounced simultaneously with the judgment in the predicate-offence case. [Paras 3]

The earlier orders were modified and clarified accordingly, and the miscellaneous application was disposed of.

Final Conclusion: The PMLA proceedings may continue, but judgment therein shall be pronounced simultaneously with the judgment in the predicate-offence case.

Criminal proceedings for recovery of contractual dues - Scheduled offence as foundation for money-laundering proceedings - Non-arraying of developer company as accused - Multiple sale of allotted apartment - Homebuyers' payments as deposits under depositor-protection law - Provisional attachment of alleged proceeds of crime

Criminal proceedings for recovery of contractual dues - Quashing of criminal proceedings arising from non-payment of excavation and civil-work dues under contractual arrangements - HELD THAT: - The predominant object of the complaint was recovery of the alleged outstanding contractual amount. Allegations of threats and cheating could not alter the essential character of a monetary claim arising from a civil transaction. Criminal process cannot be employed as a coercive mechanism for recovery of contractual dues. [Paras 19]

The proceedings arising from the private complaint were quashed as an abuse of process.

Technical quashing of predicate FIR - Scheduled offence pending by criminal complaint - Sustainability of the 2022 ECIR and summons after the predicate FIRs were quashed on settlement and technical grounds - HELD THAT: - The quashment of one predicate crime followed settlement, while the other was set aside for procedural non-compliance without adjudicating the allegations on merits. The underlying private complaint containing the scheduled-offence allegations remained pending. Money-laundering proceedings do not become foundationless where the scheduled-offence allegations survive in a pending criminal complaint and the accused has not been finally exonerated on merits. [Paras 20]

The challenge to the 2022 ECIR and the consequential summons was rejected.

Non-arraying of developer company as accused - Effect of failure to arraign the developer company as an accused in an FIR alleging failure to hand over a fully paid apartment - HELD THAT: - Although the statutory scheme governing offences by companies ordinarily contemplates prosecution of the company together with persons responsible for its affairs, the company was specifically named in the complaint and the allegations prima facie disclosed cognizable offences. Its non-arraying was a curable omission and could not warrant quashing of the crime at its threshold. [Paras 21]

The quashing petition was rejected; the jurisdictional police were left at liberty to array the company as an accused and continue the investigation in accordance with law.

Multiple sale of allotted apartment - Cheating in real-estate allotment transactions - Quashing of an FIR alleging resale and multiple mortgaging of an apartment allotted to a home buyer after receipt of loan proceeds - HELD THAT: - The complaint alleged that the developer received the consideration through a tripartite financing arrangement, neither delivered possession nor refunded the amount, and subsequently sold the allotted apartment to another purchaser. Such allegations, including the alleged multiple mortgages and continuing loan burden, travelled beyond a mere contractual breach and prima facie disclosed criminality requiring investigation. [Paras 22]

The prayer to quash the crime was rejected and the investigation was permitted to proceed.

Homebuyers' payments as deposits under depositor-protection law - Real-estate developer as financial establishment - Applicability of depositor-protection law to amounts received from home buyers against the promised construction and delivery of flats. - HELD THAT: - The statutory concept of deposit is of broad and inclusive amplitude, covering receipt of money liable to be returned in cash, kind or by a specified service, subject to express exclusions. The substance of the transaction, rather than its nomenclature, is decisive. Payments received by a developer from flat purchasers against the obligation to construct and deliver flats can therefore constitute deposits, and the recipient can fall within the description of a financial establishment. [Paras 23]

The challenge to the invocation of the depositor-protection law was rejected.

Subsistence of scheduled offence for money-laundering investigation - Sustainability of the 2025 ECIR where the scheduled offences, including a CBI-registered predicate crime, continued to subsist. - HELD THAT: - The predicate proceedings had not been extinguished on merits, and the CBI-registered crime arose from an investigation directed in proceedings concerning allegations in builder-home buyer financing arrangements. As the scheduled offences remained alive and were yet to be investigated and tried, the ECIR could not be treated as foundationless. [Paras 24]

The challenge to the 2025 ECIR on the ground of absence of a predicate offence was rejected.

Provisional attachment of alleged proceeds of crime - Alternative statutory remedy under money-laundering law - Interference with provisional attachment of properties alleged to represent proceeds of crime before statutory adjudication. - HELD THAT: - A provisional attachment is an interim statutory measure, not a final determination that the attached property is proceeds of crime. The statutory mechanism provides for adjudication of the attachment and a further appellate remedy. Questions concerning the nexus of the properties with the alleged criminal activity and their character as proceeds of crime were therefore matters for the statutory forums and could not be prejudged in writ jurisdiction. The allegations of diversion and layering of funds also warranted an unhindered investigation. [Paras 24]

The challenge to the provisional attachment was rejected, leaving the petitioners to pursue the statutory remedies.

Final Conclusion: The proceedings instituted for recovery of contractual work dues were quashed. The remaining writ petitions, including challenges to the criminal investigations, ECIRs and provisional attachment, were dismissed, leaving attachment-related issues to the statutory adjudicatory mechanism.

PMLA attachment of proceeds of crime vis-a -vis prior mortgage - Bona fide secured creditor-due diligence

Attachment under the PMLA of land mortgaged to a bank claiming a prior security interest and having initiated enforcement under the SARFAESI Act - HELD THAT: - The PMLA and the SARFAESI Act operate in distinct fields; in matters concerning money-laundering and proceeds of crime, the PMLA prevails, though a prior charge is not rendered void merely by attachment. A prior mortgage or enforcement action under the SARFAESI Act cannot, by itself, invalidate a PMLA attachment. A secured creditor claiming release must establish its bona fides and, where its interest was acquired after or around the criminal activity, adequate due diligence.

The Hon'ble Supreme Court in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)] while explaining Section 2(1)(u) of the PMLA, has held that "proceeds of crime" is the core ingredient for invocation of the provisions of the PMLA and that the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence.

The date of registration of the FIR was not determinative, since the underlying criminal activity was found to have preceded the mortgage. The Bank produced no evidence sufficient to establish adequate due diligence in respect of land connected with the alleged scheduled-offence transactions. [Paras 10, 14, 15, 16, 17]

The attached land was not released from the PMLA attachment or permitted to be auctioned; the Bank was left at liberty to pursue its claim before the Special Court under section 8(8) of the PMLA.

Final Conclusion: The appeal was dismissed, with liberty to the Bank to pursue its claim to the attached property before the Special Court under section 8(8) of the PMLA.

Attachment of equivalent value of unavailable proceeds of crime - Confirmation of provisional attachment of the Trust's properties as equivalent value of grant funds alleged to have been diverted instead of being used for distribution of aids and appliances to disabled persons

HELD THAT: - The Tribunal held that purchase invoices and bank statements did not establish distribution of the aids and appliances. The appellants failed to produce material proving distribution to beneficiaries, while the documents relied upon to show organisation of camps bore forged signatures and the beneficiaries denied receipt. The unexplained transfer from the Trust's account to its representative further remained unanswered. Where the proceeds of crime had been siphoned off and were unavailable, properties representing their equivalent value could be attached. [Paras 14, 15, 17, 18]

The provisional attachment, having been made against properties representing the equivalent value of the proceeds of crime, was sustained and the appeals were dismissed.

Final Conclusion: The Tribunal upheld the confirmation of provisional attachment of the Trust's properties as equivalent value of unavailable proceeds of crime and dismissed the appeals.

Service tax on court-directed deposits in intellectual property rights dispute

Service tax liability on deposits made under interim court orders pending resolution of a dispute concerning use of patented technology - HELD THAT: - The deposits did not create any vested right in favour of the patent-holder and remained subject to the outcome of the suit. As the Court had not determined that the patents had been used, and the suit ended in settlement with the interim orders vacated, the deposits could not be characterised as royalty or taxable consideration. The royalty subsequently paid under the settlement was subjected to IGST under the taxation regime then applicable.

The reliance of the appellant on Idea Mobile Communication Ltd. [2011 (8) TMI 3 - SUPREME COURT] to contend that the payment collected in compliance with the interim order retain the underline taxable character when relating to taxable services and possibility of future adjustment or refund does not alter the nature, is not applicable to the facts of this case as it is herein held that wrongly remitted sales tax would not absolve the liability to pay service tax, if otherwise payable. The nature of the payment made was yet to be determined in the case in hand and it was not adjudicated that the payment related to the taxable services between Ericsson and the respondent. No sooner the royalty was paid after the settlement, the tax due was deposited by the respondent. [Paras 7, 8, 9]

The court-directed deposits were not liable to service tax as royalty payments; no substantial question of law arose.

Final Conclusion: The appeal was dismissed, as the interim deposits were not royalty or consideration for taxable intellectual property rights service.

Statutory liquor licence fees - consideration for service - invoking extended period of limitation

Statutory liquor licence fees-consideration for service - Government services-Negative List - Retrospective service tax exemption for liquor licence fees - Service-taxability of licence fees and additional licence fees paid for the State's statutory liquor wholesale privilege - HELD THAT: - A service under Section 65B(44) requires an activity carried out by one person for another for consideration. The statutory vesting or grant of the exclusive liquor privilege did not involve any independent activity performed by the State Government for the appellant, nor any reciprocal obligation or quid pro quo. The fees were statutory imposts or the price for the State's regulatory privilege, not consideration for a service. Prior to April 1, 2016, the grant was not a support service capable of being outsourced and remained within the Negative List; the subsequent substitution of "any service" did not dispense with the threshold requirement that a taxable service must exist. Further, the retrospective statutory dispensation independently neutralised the levy for the later period.

As decided in Anheuser Busch InBev India Ltd [2021 (2) TMI 1023 - CESTAT BANGALORE] in the absence of any service corresponding to the statutory fees paid to the State Government, service tax could not be levied thereon. We find that the subsequent decision of Tamilnadu State Marketing Corporation Ltd. [2025 (5) TMI 1911 - CESTAT CHENNAI] further supports the appellant's case and reinforces the appellant's submission that an activity undertaken in exercise of authority specifically conferred by the governing State liquor legislation cannot be characterised as an ordinary commercial service exigible to service tax. [Paras 6]

The licence fees and additional licence fees were not taxable consideration for any service; the service-tax demand, interest and penalties were therefore set aside.

Extended limitation-suppression of facts - Invocation of the extended limitation period for recovery of service tax on liquor licence fees - HELD THAT: - The appellant's activities as a State undertaking regulating wholesale liquor trade were in the public domain. As suppression of facts with intent to evade tax was not established, the extended period of limitation was unavailable. [Paras 6]

The extended period could not be invoked for the service-tax demand.

Final Conclusion: The appeal was allowed and the impugned service-tax demand, interest and penalties were set aside, with consequential relief according to law.

Export of Business Auxiliary Service rendered to overseas principal - Deemed sale on rental of equipment with transfer of effective control - Revenue neutrality of reverse-charge service tax on imported software - Transfer of Cenvat credit on demerger - Denial of Cenvat credit on input services without considering supporting documents - Extended limitation for demands based on audit and disclosed records

Export of Business Auxiliary Service rendered to overseas principal - Taxability of commission earned for procuring orders for an overseas principal as Business Auxiliary Service - HELD THAT: - The recipient of the order-procurement service was situated outside India and the consideration was received in foreign exchange. The service consequently qualified as export under the applicable export-of-service regime before the introduction of the Place of Provision of Services Rules and under the recipient-location test thereafter. [Paras 11]

The commission earned for procuring orders for the overseas principal was not liable to service tax.

Deemed sale on rental of equipment with transfer of effective control - Levy of service tax on equipment rentals where possession, custody and effective control were transferred to the customers - HELD THAT: - The contractual terms placed possession, custody, control and overall supervision of the rented equipment with the customers, while VAT had been discharged on the transaction. The rental arrangement was therefore a deemed sale and not a taxable supply of tangible goods service; the conclusion also accorded with the earlier decisions in the appellant's own cases. [Paras 12]

The service-tax demand on equipment rentals was set aside.

Revenue neutrality of reverse-charge service tax on imported software - Reverse-charge service-tax demand on imported software based on balance-sheet figures - HELD THAT: - The demand rested on entries in publicly available balance sheets and there was no evidence of suppression or wilful misstatement. Any reverse-charge tax paid on the imported software would have been available as Cenvat credit, rendering the transaction revenue-neutral and excluding the extended period of limitation. [Paras 13]

The reverse-charge demand on imported software was held revenue-neutral and time-barred and was set aside.

Transfer of Cenvat credit on demerger - Denial of Cenvat credit carried forward by the demerged undertaking - HELD THAT: - Recovery of credit availed in the earlier return period was beyond even the extended limitation period. Independently, the demerged undertaking was entitled to carry forward the closing Cenvat balance, and credit reflected in the opening balance owing to absence of a separate return column, after due intimation to the Department, could not be denied. [Paras 14]

The denial of Cenvat credit transferred on demerger was set aside.

Denial of Cenvat credit on input services without considering supporting documents - Denial of Cenvat credit on input services for alleged non-production of supporting documents - HELD THAT: - The invoices, input-service tax register, sample invoices and reconciliation with the service-tax returns had been furnished but were ignored. As eligibility to the credit was undisputed, denial solely on the ground of non-submission of documents was unsustainable. [Paras 15]

The Cenvat-credit denial for want of documents was set aside.

Extended limitation for demands based on audit and disclosed records - Invocation of the extended limitation period for demands arising from audit records, service-tax returns and information disclosed by the assessee - HELD THAT: - Where proceedings were founded on audit of records and on amounts reflected in statutory returns and other information already supplied, the extended period could not be invoked. [Paras 16]

The demand for October 2011 to March 2014 was set aside as barred by limitation.

Final Conclusion: The impugned order was set aside and the appeal allowed with consequential relief, the service-tax demands and Cenvat-credit disallowances having been held unsustainable. Interest and penalty did not survive.

Extended limitation period for recovery of service tax - Form 26AS/ITR-based service-tax demand - Public-road construction exemption - works contract for road widening and footpaths

Invocability of the extended limitation period for service-tax demand based on Form 26AS, income-tax returns and the appellant's statement of receipts - Form 26AS/ITR-based service-tax demand - Wilful suppression - HELD THAT: - The show-cause notice rested on figures available from Form 26AS, income-tax returns and documents furnished by the appellant, without independent verification or due diligence. Suppression was alleged merely on assumption, without evidence of a deliberate and wilful act to evade tax; mere failure to declare did not establish wilful suppression. [Paras 7]

The extended period was held unavailable, and the demand founded on its invocation was unsustainable.

Public-road construction exemption - works contract for road widening and footpaths - Eligibility of works contract services for widening and strengthening a public road and providing footpaths, rendered to a Government authority, for the exemption relating to construction of public roads - HELD THAT: - The work orders disclosed a composite road-development project comprising widening and strengthening of the road and provision of footpaths on either side. A public road includes integral pedestrian pathways, and the footpath component could not be artificially severed from road construction for denying the exemption. The works contract services rendered to the Government authority consequently fell within the exemption for construction of public roads. [Paras 8]

The claimed exemption was allowed; the service-tax demand, interest and penalties were set aside.

Final Conclusion: The service-tax demand, interest and penalties were set aside and the appeal was allowed, as the extended period was unavailable and the works contract qualified for the public-road construction exemption.

Classification of per-trip hiring of hydrogen cylinder skid-fitted trucks - Supply of tangible goods service - Leviability to service tax under supply of tangible goods service on the per-trip hiring of trucks fitted with hydrogen cylinder skids

HELD THAT: - The Tribunal followed its earlier decisions in the appellant's own case [2023 (10) TMI 1382 - CESTAT AHMEDABAD] which treated charging on a per-trip basis as indicative of transportation rather than renting of vehicles and held the identical activity to be outside the scope of supply of tangible goods service. The consequent remand order, which found no liability under goods transport agency service, had also dropped the demand and was accepted by the department. [Paras 5, 6]

The service-tax demand confirmed under supply of tangible goods service was set aside and the appeal was allowed.

Final Conclusion: The appeal was allowed and the service-tax demand under supply of tangible goods service was set aside in accordance with the Tribunal's earlier decisions in the appellant's case.

Reverse-charge service tax on royalty under pre-existing mining leases - Verification of mining lease agreements - Reverse-charge service-tax liability on royalty paid under mining leases claimed to have been executed before 01.04.2016

HELD THAT:- As the mining lease agreements were not placed before the lower authorities, their date of execution required verification.

Applying the Tribunal's earlier decisions M/s Tirupati Build-Con Private Limited [2026 (2) TMI 432 - CESTAT NEW DELHI], S.R. Traders [2023 (5) TMI 766 - CESTAT NEW DELHI] M/s Shrawan Kumar Pathak [2024 (3) TMI 1466 - CESTAT NEW DELHI], M/s. National Aluminium Company Limited [2024 (5) TMI 621 - CESTAT KOLKATA] and Madhya Pradesh State Mining, Corporation Ltd. [2023 (4) TMI 1075 - CESTAT NEW DELHI] the Tribunal held that a mining lease executed before 01.04.2016 would entitle the assessee to the benefit of Section 66D of the Finance Act, 1994 and exclude reverse-charge service-tax liability on royalty. [Paras 4, 5, 6]

The impugned order was set aside and the matter remanded for verification of the mining lease agreements; if executed before 01.04.2016, no service tax or penalty would be payable.

Final Conclusion: The appeal was allowed by way of remand for verification of the mining lease agreements, subject to the consequence that leases executed before 01.04.2016 would exclude service-tax liability and penalty.

Utilisation of AED [GSI] credit towards basic excise duty - Refund of AED [GSI] credit on inputs used in exported tyres

Utilisation of AED [GSI] credit towards basic excise duty - Retrospective operation of CENVAT credit amendment - Eligibility to utilise AED [GSI] credit on unprocessed nylon tyre cord fabrics towards basic excise duty on tyres - HELD THAT: - Rule 57C, read with the second proviso to Notification No.5/94, confined AED [GSI] credit on inputs to payment of AED [GSI] on the final products. TCWS was exempt from AED [GSI], whereas tyres were not chargeable under that enactment; consequently, the credit could not be used to discharge basic excise duty. The subsequent notification, circular and retrospective amendment to the CENVAT Credit Rules could not confer a fresh right for the disputed period, since the amendment permitted such utilisation only for AED [GSI] paid on or after 1 April 2000. [Paras 29, 30, 32, 33, 37]

The claimed AED [GSI] credit was held unavailable for set-off against basic excise duty.

Refund of AED [GSI] credit on inputs used in exported tyres - Entitlement to refund of AED [GSI] credit on inputs used in the manufacture of exported tyres - HELD THAT: - Refund under Rule 57F(13) presupposed a valid entitlement to the credit. As the credit on the input fabrics was impermissible, the refund claim could not be sustained. [Paras 38]

The refund claim was rejected.

Final Conclusion: The Revenue's appeals were allowed, the Tribunal's orders were set aside, and the writ petition seeking their implementation was dismissed.

Remission of excise duty on goods rendered unmarketable by trademark injunction - Goods unfit for marketing or consumption

Remission of duty on Manikchand-branded pan masala and gutkha rendered unsaleable by a subsisting trademark injunction and claimed to be unfit for consumption - HELD THAT: - The Department did not dispute the subsistence of the injunction or that manufacture had thereafter shifted to another brand. Having asserted that the existing branded stock remained unusable and unfit for consumption, the assessee's claim could not be rejected merely on the Commissioner's suggestion that the goods could have been repacked, sold or exported. The Department was required to verify the actual condition of the goods; in the absence of such fact-finding, the Tribunal's conclusion that the goods were covered by the remission provision was upheld. [Paras 10, 11]

The substantial questions were answered against the Department and the Tax Appeal was dismissed; the consequential show-cause notice, founded on the rejected order denying remission, was quashed.

Final Conclusion: The Tribunal's grant of remission was affirmed. The connected writ petition was allowed and the consequential show-cause notice was quashed.

Maximum packing speed of a modified Pan Masala packing machine for capacity-based duty - Modified twin-pack FFS machine - capacity-based levy under Section 3A

HELD THAT: - Under the capacity-determination scheme, duty depends upon the maximum speed at which the packing machine can be operated, and not upon its actual speed of production. The machine had been modified from its original twin-pack configuration to pack a single product; consequently, the original manufacturer's speed quotation for the twin-pack product could not govern its capacity after modification. In the absence of reliable material establishing that the modified machine could not exceed 750 pouches per minute, and since it was operating with a single product instead of two, its maximum packing speed was held to exceed that threshold. [Paras 13, 14, 15]

The machine was held to fall in the category of 751 pouches per minute and above, and duty was payable accordingly.

Final Conclusion: The Revenue's appeal was allowed and the appellate order was set aside. The modified packing machine was to be treated as having a maximum packing speed of 751 pouches per minute and above for payment of duty.

Admissibility of investigation statements under section 9D - CENVAT credit on inputs allegedly non-receipt of inputs - Burden of proving non-receipt of inputs

CENVAT credit on inputs allegedly not received - Admissibility of investigation statements under section 9D - Burden of proving non-receipt of inputs - Disallowance of CENVAT credit on the allegation that inputs covered by dealers' invoices were not received in the factory - HELD THAT: - Statements of suppliers and transporters, not having been tested in the manner mandated by section 9D, had no evidentiary value against the appellants. The invoices, transport documents, statutory records of receipt and credit, banking-channel payments, and undisputed consumption of the inputs in manufacture of duty-paid final products constituted substantive evidence of receipt and use. In the absence of factory investigation, stock discrepancies, evidence of cash being returned, alternative sourcing of inputs, or other tangible corroborative material, the Department failed to discharge its burden of proving non-receipt; selective transporter statements and vehicle verification could not establish the charge. We rely on M/S AMBIKA INTERNATIONAL AND OTHERS [2016 (6) TMI 919 - PUNJAB AND HARYANA HIGH COURT] and M/S G-TECH INDUSTRIES [2016 (6) TMI 957 - PUNJAB & HARYANA HIGH COURT] [Paras 6]

The denial of CENVAT credit and consequential interest was set aside.

Extended limitation for irregular CENVAT credit - Wilful suppression with intent to evade duty - Invocation of the extended limitation period for the alleged irregular availment of CENVAT credit - HELD THAT: - The show-cause notice contained no specific allegation or evidence establishing fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty. Such intent being an essential condition for invoking the extended period, the extended limitation could not be applied. [Paras 6]

The demand confirmed by invoking the extended period of limitation was held unsustainable.

Penalty for alleged irregular CENVAT credit - Penalty on Director - Penalties imposed for the alleged availment of CENVAT credit without receipt of inputs, including the penalty on the Director - HELD THAT: - As the charge of irregular availment of credit was not established and no tangible, cogent, corroborative evidence supported the allegation, the foundation for penal action failed. [Paras 6]

The penalties imposed on the manufacturing appellant and the Director were set aside.

Final Conclusion: The appeals were allowed with consequential relief, and the disallowance of CENVAT credit, the extended-period demand, interest and penalties were set aside.

CENVAT credit on alleged non-receipt of sponge iron - Admissibility of investigation statements in excise adjudication

Disallowance of CENVAT credit availed on dealer invoices for sponge iron and input services on the allegation that the goods and services were not received - HELD THAT: - The invoices, statutory credit records, transport and freight documents, factory records and banking payments supported receipt and use of the inputs; manufacture of the final product and payment of duty thereon were undisputed. In the absence of factory investigation, evidence of alternative procurement, cash-back or other positive material disproving the documents, the Department failed to establish wrongful availment of credit. Further, the alleged invoice-issuing dealer was not proceeded against in the notice, and statements of suppliers and transporters could not be relied upon without following the mandatory procedure for their examination and admission in evidence under section 9D. [Paras 6]

The disallowance of CENVAT credit, along with consequential interest and penalties, was set aside.

Extended limitation for irregular CENVAT credit - Invocation of the extended limitation period for recovery of allegedly irregular CENVAT credit without a specific allegation or evidence of deliberate suppression or wilful misstatement - HELD THAT: - The show-cause notice did not set out how the assessee had suppressed facts or made a wilful misstatement with intent to evade duty. The extended period under section 11A cannot be invoked without evidence of fraud, collusion, wilful misstatement or suppression with such intent. [Paras 6]

The demand founded on the extended period of limitation was independently held unsustainable.

Final Conclusion: The appeal was allowed, and the disallowance of CENVAT credit together with consequential interest and penalties was set aside.

CENVAT credit on welding electrodes used for maintenance of manufacturing machinery

Eligibility of CENVAT credit on spool welding electrodes used for rebuilding, repair and maintenance of grinding rollers and grinding tables of a cement vertical roller mill - HELD THAT: - The electrodes were used for repair and maintenance of machinery ultimately employed in manufacture of the final product. They could therefore not be excluded from the scope of inputs merely because their use was for maintenance of the manufacturing machinery.

Similar view has been taken by this Tribunal in the case of Steel Authority of India [2024 (9) TMI 107 - CESTAT KOLKATA] [Paras 5, 7]

CENVAT credit was allowed and the denial thereof was set aside.

Final Conclusion: The appeal was allowed, with consequential relief, and the impugned denial of CENVAT credit was set aside.

Cenvat credit on inputs received under third-party customer invoices - Extended period of limitation-absence of suppression

Cenvat credit on consignee invoices - Entitlement to Cenvat credit on inputs received under invoices raised on a third-party customer but naming the manufacturer as consignee. - HELD THAT: - The invoices identified the manufacturer as consignee, and the inputs were actually received and entered in its RG 23 A records. An invoice does not become invalid for Cenvat credit merely because it also names another entity as customer, where receipt of the goods by the consignee-manufacturer is established. [Paras 8, 9, 11]

The denial of Cenvat credit was held unsustainable and was set aside.

Extended period of limitation-absence of suppression - Invocation of the extended period for denial of Cenvat credit despite disclosure of the credit in statutory records and monthly returns. - HELD THAT: - The particulars of the credit had been recorded in RG 23 A and disclosed in the monthly returns. The Revenue, therefore, failed to establish suppression by the manufacturer. [Paras 10, 11]

The extended period was unavailable and the demand could not be sustained on limitation.

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

Interest not calculated in terms of Section 42 of the Delhi Value Added Tax Act, 2004 - Preliminary objection raised by learned counsel for the respondent is that the petitioner has a statutory remedy of appeal under Section 74 of the DVAT Act.

HELD THAT:- The writ petition was disposed of as not pressed, with liberty to avail the statutory appeal against the impugned orders; the appellate authority was requested to decide an appeal filed within three weeks expeditiously.

Statutory limitation for remanded DVAT assessment - Refund of pre-deposit where DVAT demand does not subsist

Continuation of the remanded default assessment for AY 2013-14 after expiry of the one-year period under Section 34(2) of the Delhi Value Added Tax Act, and retention of the pre-deposit made for hearing of objections - HELD THAT: - The statutory time limit governed completion of the assessment proceedings pursuant to remand. Applying the position accepted in the precedent SHAILA ENTERPRISES [2016 (8) TMI 426 - DELHI HIGH COURT], the Court held that, no fresh assessment having been completed within that period, no demand subsisted. Retention of the pre-deposit consequently lacked any basis. [Paras 7, 8, 9]

The remanded assessment proceedings could not continue, and the respondent was directed to process the refund application for the pre-deposit and pay the refundable amount with interest, if any, within the stipulated period.

Final Conclusion: The writ petition was disposed of on the footing that no demand subsisted after expiry of the statutory period for the remanded assessment, with directions for processing and payment of the refundable pre-deposit with interest, if any.

Pre-deposit for statutory VAT appeal - dismissal of the first and second appeals for non-compliance with the pre-deposit condition

HELD THAT: - In view of the appellant's undertaking to participate in and cooperate with the appellate proceedings, the Court considered it appropriate to restore the first appeal for adjudication on merits without applying the pre-deposit condition. The Court expressly left the merits of the assessment and the questions of law open. [Paras 8, 10]

The orders of the First Appellate Authority and the Tribunal were set aside, and the first appeal was remanded for fresh decision on merits without considering pre-deposit, subject to compliance with the undertaking.

Final Conclusion: The tax appeal was disposed of by restoring the first appeal for decision on merits without pre-deposit, subject to the appellant's undertaking to cooperate. The questions of law and merits of the assessment were left open.

Statutory appeal from refusal of interim measures - Arbitral Tribunal's jurisdiction to grant interim measures - Remission of a statutory appeal from rejection of an application for interim measures to a subsequently constituted Arbitral Tribunal for treatment as an application for interim measures

Whether the High Court, while exercising statutory appellate jurisdiction u/s 37(1)(b) of the Arbitration and Conciliation Act, 1996 against rejection of an application under Section 9 can by consent of the parties, remit the appellate proceedings to the subsequently constituted Arbitral Tribunal and direct the Tribunal to treat such proceedings as an application under Section 17 of the Act? - HELD THAT: - Appellate jurisdiction under Section 37 is vested exclusively in the Court contemplated by Section 2(1)(e). The Tribunal's authority to grant interim measures under Section 17 does not include appellate jurisdiction over an order passed by a competent Court under Section 9; the distinct statutory sources and nature of those powers cannot be interchanged by remitting the appeal to the Tribunal.

Upon constitution of the Tribunal, the claimant could at most have been granted liberty to independently seek such interim measures under Section 17 as were available in law, with consequential protection requiring consideration in light of subsequent events and the relief specifically sought. [Paras 9, 10, 11]

The direction requiring the Tribunal to treat the pending Section 37 appeal as an application under Section 17 was set aside; all other disputes were left for adjudication by the Tribunal in accordance with law.

Final Conclusion: The appeal was disposed of by setting aside, to the stated extent, the remittance of the statutory appeal to the Arbitral Tribunal. The Tribunal was left to adjudicate the parties' remaining disputes, with liberty to raise all contentions permissible in law.

Classification of rice bran oil and de-oiled rice bran as agricultural produce - Excessive delegation in amendment of the agricultural produce Schedule - Presidential sanction for State market-law amendments - Statutory definition of sale for market-fee levy - Repugnancy between industrial regulation and agricultural market regulation

Freedom of trade and commerce under Article 301 - Presidential sanction for State market-law amendments - Constitutional validity of the amendments expanding agricultural produce and scheduling vegetable oils, notwithstanding absence of prior Presidential sanction. - HELD THAT: - A market fee on trade does not directly and immediately impede the physical movement of goods and, therefore, does not constitute a restriction on freedom of trade and commerce under Article 301. The amendments did not restrict movement of goods and fell within the State's legislative competence over intra-State trade and commerce; they were not legislation requiring prior Presidential sanction. [Paras 36, 37, 38, 39, 138]

The amendments were held intra vires and not dependent on prior Presidential sanction.

Statutory definition of sale for market-fee levy - Deemed sale upon transfer of agricultural produce - Validity of the statutory definition of sale of agricultural produce, including transfers between market areas, vis-a -vis the Sale of Goods Act. - HELD THAT: - The Sale of Goods Act lays down general principles governing contracts of sale and permits other legislation to operate in its field. The special definition of sale under the market law, read with its deeming provisions, addresses evasion of market fees by transfer or removal of agricultural produce from a market area without a sale within that area. [Paras 48, 49, 50, 51, 141]

The statutory definition of sale was held valid and not inconsistent with the Sale of Goods Act.

Classification of rice bran oil and de-oiled rice bran as agricultural produce - Excessive delegation in amendment of the agricultural produce Schedule - Inclusion of rice bran oil and de-oiled rice bran in the Schedule as agricultural produce, where the products are obtained through industrial manufacture from paddy. - HELD THAT: - The Schedule cannot enlarge the substantive definition of agricultural produce, and executive power to add scheduled items is confined by that definition. The statutory concept of processing covers the specified treatments of agricultural produce and does not extend to industrial manufacture producing a new and commercially distinct commodity. Rice bran oil and de-oiled rice bran, produced through technical extraction and refining, lose the characteristics of paddy and are manufactured products rather than processed agricultural produce. The legislative inclusion of processed products and vegetable oils did not authorise executive inclusion of such manufactured products. [Paras 136, 139, 140, 143, 146]

Rice bran oil and de-oiled rice bran were held not to be agricultural produce; the executive notifications including them in the Schedule, the consequential market-fee demands and orders were quashed, and refund of the fees paid was directed.

Market fee-availability of regulatory services - Levy of market fees on scheduled agricultural produce-whether actual receipt of services from the market committee is indispensable. - HELD THAT: - The statutory levy is attracted by agricultural produce entering or deemed to have been sold in the market area. A market committee performs regulatory and facilitative functions for the market as a whole, and the availability of those functions is sufficient; actual use of a particular service by every payer is not required. [Paras 125, 126, 127, 128, 129]

Actual receipt of services was held not to be a precondition for levy of market fees on covered agricultural produce; the conclusion did not sustain the impugned demands because the products concerned were outside that class.

Repugnancy between industrial regulation and agricultural market regulation - Applicability of the agricultural market law to rice bran products also regulated as scheduled industries under the central industrial law. - HELD THAT: - The central law regulates the manufacturing process and development of scheduled industries, whereas the State law regulates commercial dealings in agricultural produce within market areas. The enactments operate in distinct fields and do not occupy or conflict with the same regulatory field. [Paras 133, 134, 142]

No conflict between the central industrial law and the State agricultural market law was found.

Final Conclusion: The appeals were allowed. The executive inclusion of rice bran oil and de-oiled rice bran as agricultural produce and all consequential market-fee demands were invalidated, while the challenged statutory amendments and the definition of sale were upheld.

Revisional jurisdiction over concurrent conviction - Statutory presumptions and rebuttal in cheque dishonour - Proof of statutory demand notice by signed acknowledgement - Sentence and compensation for cheque dishonour

Revisional jurisdiction over concurrent conviction - Scope of revisional interference with concurrent findings sustaining a cheque dishonour conviction - HELD THAT: - Revisional jurisdiction is supervisory and cannot be exercised as a second appellate jurisdiction for a fresh appraisal of evidence. Concurrent findings may be displaced only where perversity, patent illegality, or a miscarriage of justice is shown; no such infirmity was established in the present case. [Paras 14, 15]

No ground for revisional interference with the concurrent findings of conviction was made out.

Presumption of consideration on admitted cheque execution - Rebuttal by blank-cheque defence - Effect of admitted execution of a signed cheque and the accused's blank-cheque defence on the presumptions of liability - HELD THAT: - Admission of the signed cheque, even with the assertion that it had been delivered blank, attracted the presumptions that it was issued for consideration and towards a legally enforceable liability. The inconsistent explanation regarding the underlying transaction, unsupported assertion of part payment, and absence of material showing that the cheque lacked consideration did not constitute a probable defence. The complainant was not required, at the threshold, to produce account records to establish the liability. [Paras 23, 24, 27, 29, 30]

The statutory presumptions remained unrebutted and supported the finding of an existing legally enforceable liability.

Proof of service of demand notice by signed acknowledgement - Proof of dishonour and service of demand notice in the cheque dishonour prosecution - HELD THAT: - Dishonour for insufficiency of funds stood proved by unchallenged bank evidence. The signed acknowledgement established actual service of the demand notice; consequently, no question of invoking a deemed-service presumption arose. The accused did not establish payment after receiving the notice. [Paras 31, 32, 33]

The essential requirements concerning dishonour, service of demand notice, and non-payment were duly proved.

Sentence and compensation for cheque dishonour - Propriety of custodial sentence and compensation for dishonour of cheque - HELD THAT: - Having regard to the deterrent object of the penal provision, the custodial sentence was not excessive. Compensation was justified to account for the complainant's loss of use of the money and the expense of prosecuting the complaint. [Paras 35, 37, 38]

The sentence and compensation as affirmed in appeal were upheld as adequate.

Final Conclusion: The revision was dismissed, and the concurrent conviction for cheque dishonour, together with the sentence and compensation, was upheld.

Maintainability of constitutional challenge to pre-conciliation mediation notice

Maintainability of constitutional challenge to pre-conciliation mediation notice - Maintainability of a revision under Article 227 against the Council's notice requiring participation in mediation. - HELD THAT: - A notice issued for mediation under the statutory dispute-resolution mechanism does not by itself create an adversarial lis. The lis commences only upon failure of conciliation; until then, proceedings cannot be regarded as pending before the Council so as to warrant invocation of Articles 226 or 227. [Paras 6]

The challenge to the mediation notice under Article 227 was not maintainable.

Consideration of fresh MSME claim after prior refusal to conciliate - Council's issuance of a fresh mediation notice after its earlier refusal to entertain the respondent's claim - HELD THAT: - The earlier writ petition was withdrawn after the Council represented that it would entertain the fresh claim. In that context, its subsequent issuance of the mediation notice could not be treated as a review of its prior decision. [Paras 11]

The fresh mediation notice did not amount to an impermissible review of the earlier refusal.

Statutory MSME remedy notwithstanding pending commercial suit - Maintainability of the registered supplier's claim before the Council despite pending civil proceedings arising from the same contract. - HELD THAT: - The statutory mechanism confers an independent right upon a supplier registered under the Act. The pending commercial suit therefore does not bar the Council from dealing with the claim.

The judgment in Gujarat State Civil Supplies Corporation Ltd. Vs. Mahakali Foods (P) Ltd.[2022 (11) TMI 91 - SUPREME COURT] throws a lot of light on this issue and held that the Council will be entitled to proceed further under Section 18 of the Act despite the bar contained under the Arbitration and Conciliation Act, 1996. In view of the same, there is no legal bar for the respondent to prosecute their claim before the Council.[Paras 13, 14]

The pending commercial suit did not preclude the respondent from pursuing its statutory claim before the Council.

Final Conclusion: The revision was dismissed, the mediation notice being immune from challenge at the pre-conciliation stage. The Council's consideration of the fresh claim was not a review, and the pending commercial suit did not bar the statutory remedy.