TaxTMI Updates e-Newsletter
Oct 01,2026

Maintainability of Writ petition against order as appealable under Section 107(1) of the Act of 2017

HELD THAT:- Taking into consideration that the order is appealable under Section 107(1) of the Act of 2017, we are not inclined to entertain the instant writ petitions.

Accordingly, the present writ petitions stand dismissed. However, the petitioners will be at liberty to raise all the questions before the appellate authority in appeal, which will be considered and decided expeditiously by the authority, in accordance with law.

Order under challenge appealable order under Section 107(1) of Central Goods and Services Tax Act, 2017 - HELD THAT:- The writ petition was disposed of with liberty to avail the statutory appellate remedy; the appellate authority was directed to consider the contentions in accordance with law within a reasonable period.

Restoration of cancelled GST registration

GST registration cancellation for non-response to show-cause notice - Restoration of GST registration cancelled, and revocation subsequently rejected, for failure to reply to the respective show-cause notices - HELD THAT: - The Court held that the controversy was covered by an earlier order of the Court and applied the stipulations prescribed therein for restoration of registration. [Paras 6, 7]

The GST registration was permitted to be restored subject to compliance with the applicable stipulations.

Conditional fresh adjudication of GST penalty for supplies without invoices and invoices without receipt of goods - Fresh consideration of the tax and penalty demand for the tax period 2024-25, where the petitioner had neither replied to the show-cause notice nor attended the personal hearings - HELD THAT: - Though the petitioner had not responded to the notice or availed the hearing opportunities, the Court remitted the matter for fresh consideration upon a cash-ledger deposit of 10% of the disputed tax and filing of a reply with supporting documents. The impugned order was directed to be treated as an addendum to the show-cause notice. [Paras 10, 12, 13, 14, 15]

On compliance, the respondent shall pass a fresh order on merits after notice; on default, recovery may proceed in accordance with law.

Final Conclusion: The registration was directed to be restored subject to the stipulated conditions, while the tax and penalty demand for 2024-25 was remitted for fresh adjudication subject to the prescribed deposit and reply.

Regularisation of belated input tax credit - Fresh consideration of GST demand - Reconsideration of the demand arising from belated availment of input tax credit in light of the statutory amendment regularising such availment

HELD THAT: - As the amendment to the GST enactments statutorily regularised belated availment of input tax credit, the impugned demand and rectification order required fresh consideration. The claim remains subject to fulfilment of the other conditions prescribed under the Act and the Rules. [Paras 4, 5, 6]

The impugned order and rectification order were quashed and the matter remitted for fresh adjudication, subject to deposit of half of the disputed tax relating to demands other than those under section 16(4), filing of a reply with supporting documents, and notice before a fresh order.

Final Conclusion: The writ petition was disposed of by remitting the matter for fresh consideration in light of the statutory regularisation of belated input tax credit, subject to the stipulated deposit and compliance conditions.

Refund claims based on an alleged inverted duty structure - Factual determination of cotton yarn manufacture or trading for inverted duty structure refund

Inverted duty structure refund for cotton yarn-manufacture versus trading - Need for determination of whether cotton yarn was manufactured from cotton fibre, packing material and consumables or merely traded before deciding refund claims under the inverted duty structure - HELD THAT: - The eligibility of the refund claims depended upon verification of the factual basis of the claim. The authority was required to examine the documents to determine whether the petitioner had merely traded in cotton yarn or had manufactured and cleared cotton yarn after procuring the stated inputs. [Paras 13, 14]

The impugned orders were quashed and the refund claims were remitted to the second respondent for examination and fresh final orders.

Final Conclusion: The impugned refund-rejection and appellate orders were quashed, and the refund claims for the stated periods were remitted for factual verification and fresh orders.

Inverted-duty refund claim-reliance on quashed GST circular - sustainability of rejection of an inverted-duty refund claim for cotton-yarn clearances on the basis of a departmental circular that had earlier been quashed

HELD THAT: - The impugned appellate order was founded on a circular which had previously been quashed. The actual nature of the inputs procured and the manufacture and clearance of cotton yarn required examination before entitlement to refund could be determined. [Paras 8]

The appellate order was quashed and the matter remitted for fresh examination; if the petitioner establishes eligibility, the refund shall be granted.

Final Conclusion: The writ petitions were disposed of by quashing the appellate order and remitting the refund claims for fresh examination of the inputs used in the manufacture and clearance of cotton yarn.

Cross-examination of third-party statements relied on in assessment - Principles of natural justice

Denial of cross-examination of persons whose statements were relied on to deny input tax credit - HELD THAT: - Although the right of cross-examination is not absolute in every case, fairness requires that an assessee be afforded an opportunity to cross-examine persons whose statements the Assessing Authority treats as credible and materially relies upon for conclusions adverse to the assessee. The statements were not eschewed but formed the direct basis of the adverse findings. [Paras 14, 15, 16, 17]

The assessment and the order under appeal were set aside, and the Assessing Authority was directed to afford reasonable opportunity for cross-examination and thereafter reframe the assessment in accordance with law.

Final Conclusion: The writ appeals were allowed, and the assessment was remitted for fresh consideration after affording the assessee an opportunity to cross-examine the relied-on persons.

Transitional input tax credit through Form GST TRAN-1 and TRAN-2

Entitlement to file or revise Form GST TRAN-1 and TRAN-2 for claiming transitional input tax credit pursuant to the extended filing facility - HELD THAT: - The Supreme Court's directions [2022 (7) TMI 1232 - SC ORDER] permitted any aggrieved registered assessee to file or revise the relevant forms during the stipulated extended window, followed by verification of the claim on merits after reasonable opportunity. As that relief was the same as that granted in the impugned order, no interference was warranted. [Paras 5]

The relief granted to the dealer was sustained and the writ appeal was dismissed.

Final Conclusion: The writ appeal was dismissed, since the relief under the impugned order stood covered by the Supreme Court's directions permitting filing or revision of the transitional-credit forms.

Statutory personal hearing in GST adjudication - Reasoned GST adjudication order - Duplicate e-way bills - evidentiary effect of non-cancellation

Personal hearing u/s 75(4) - Validity of the GST adjudication based on duplicate e-way bills where the taxable person had expressly requested a personal hearing before an adverse order was passed - HELD THAT: - A written request for hearing coupled with a proposed adverse decision required a real and effective opportunity of hearing. The record did not establish that the original adjudicating authority afforded a post-reply hearing. Subsequent hearings before appellate forums did not automatically cure the denial of the statutory hearing at the original stage, particularly when the disputed factual basis of the alleged additional taxable movement required examination. [Paras 24, 47]

The denial of personal hearing vitiated the adjudication; the demand based on the duplicate e-way bills was set aside and remitted from the post-reply stage for fresh adjudication after a meaningful personal hearing.

Reasoned order u/s 75(6) - Adequacy of reasons in the original order sustaining GST demand from duplicate e-way bills - HELD THAT: - An adjudication order must state the relevant facts and the basis of the decision. Mere assertion that the taxpayer's reply was unsatisfactory, without examining the explanation of a single supply, the asserted cause of duplicate generation, the evidentiary consequence of the e-way bills, and the basis for inferring an additional taxable transaction, did not satisfy the requirement of a reasoned order. [Paras 28, 47]

The original order was independently vitiated by inadequate reasons, and the adjudicating authority was directed to pass a speaking order upon fresh consideration.

Duplicate e-way bills - non-cancellation under Rule 138(9) - Evidentiary relevance of failure to cancel one of two e-way bills generated for the same invoice and vehicle - HELD THAT: - The cancellation mechanism under Rule 138(9) was relevant to testing the explanation that one e-way bill was unintended and did not represent a separate movement; its consideration did not introduce a new charge where the show-cause notice itself alleged duplicate e-way bills and tax non-payment. Although the rule is permissive, non-cancellation is a material circumstance and is not rendered irrelevant; however, it cannot be treated in isolation as conclusive of an additional taxable movement or supply. Its effect must be assessed cumulatively with the primary evidence and surrounding circumstances. [Paras 35, 36, 37, 38]

The legal and evidentiary consequence of non-cancellation was left for determination in the fresh adjudication, without any final finding on whether the second e-way bill represented an additional taxable movement or supply.

Pre-show-cause intimation under Rule 142(1A) - Effect of non-issuance of pre-show-cause intimation before issuance of the GST show-cause notice - HELD THAT: - After the relevant amendment, Rule 142(1A) is enabling in character. Since the show-cause notice was issued after that amendment, non-issuance of the pre-show-cause intimation did not furnish an independent ground for remand. [Paras 39]

The fresh adjudication was not ordered on account of non-issuance of the pre-show-cause intimation.

Final Conclusion: The appeal was partly allowed by setting aside the demand concerning the duplicate e-way bills and remitting the matter for limited fresh adjudication under the existing show-cause notice. The relief already granted in respect of the other invoice remained undisturbed, and the merits of the alleged additional taxable movement or supply were left open.

Reasoned and speaking appellate orders - Remand where first appellate grounds remain undecided - Validity of the first appellate orders that did not address the appellants' grounds or cited authorities, and the appropriate course where the original adjudication was also challenged for lack of effective opportunity to respond to the notice and relied-upon documents

HELD THAT: - Recording cogent reasons is an indispensable requirement of quasi-judicial decision-making. The first appellate authority merely affirmed the original orders in identical terms, without considering any of the material grounds or authorities relied upon by the appellants; this amounted to failure to exercise the appellate jurisdiction vested in it. Although an appellate forum should ordinarily decide the merits, a merits determination in these circumstances would curtail the parties' effective appellate remedy. As the original orders were passed ex parte and the appellants' objections concerning the notice, relied-upon documents and personal hearing required consideration, remand to the original adjudicating authorities was necessary. [Paras 31, 32, 33, 34, 35]

The appellate and original orders were set aside and the matters were remitted for fresh adjudication after identification and availability of relied-upon documents, reasonable opportunity to reply and an effective personal hearing, followed by reasoned orders.

Final Conclusion: The appeals were allowed by remand, the impugned appellate and original orders being set aside for fresh adjudication in accordance with the prescribed procedural safeguards.

Service of GST notices through Common Portal - Condonation of delay in GST appeals under writ jurisdiction

Delayed GST appeal against an input tax credit demand where the proceedings were uploaded on the common portal without the assessee having effective knowledge thereof - HELD THAT: - The Court accepted the view that a show-cause notice cannot be deemed sufficiently served merely because it was uploaded on the Common Portal where its receipt was not acknowledged and no reply was filed. Though the appellate authority remained bound by the statutory limitation, the reasons preventing timely filing of the appeal were beyond the petitioner's control, and refusal to adjudicate the appeal on merits would cause grave injury and prejudice. [Paras 7, 9, 10, 11]

The delay was condoned, the appellate order dismissing the appeal as time-barred was set aside, and the appellate authority was directed to entertain the fresh appeal and decide it on merits without raising limitation.

Final Conclusion: The writ petition was disposed of by condoning the delay in filing the GST appeal, setting aside the limitation dismissal, and directing adjudication of the appeal on merits.

Bar on parallel GST proceedings on the same subject matter - Opportunity of hearing in ex parte GST adjudication - Constitutional validity of input tax credit conditional upon payment of tax by supplier

Bar on parallel GST proceedings on the same subject matter - Applicability of the statutory bar on parallel GST proceedings to demand proceedings concerning alleged wrongful availment and passing on of input tax credit - HELD THAT: - The statutory bar operates only where proceedings under the State enactment were initiated earlier and both proceedings concern the same subject matter. The State proceedings arose from reconciliation of turnover declared in GSTR-3B returns, whereas the impugned proceedings were founded on distinct allegations, material and defaults, including issuance of invoices without corresponding supply of goods and passing on of input tax credit. Since the subject matters were not the same, it was unnecessary to determine which proceedings were initiated first. [Paras 9, 10, 11, 12, 13]

The challenge that the show-cause notice and the order-in-original were non est on account of parallel proceedings was rejected.

Opportunity of hearing in ex parte GST adjudication - Alleged breach of natural justice in the ex parte adjudication of the GST show-cause notice - HELD THAT: - Repeated notices of hearing were sent by speed post and through the registered e-mail address. The petitioner neither appeared on the scheduled dates nor filed a detailed reply, its response merely seeking further time and a personal hearing. A person who failed to avail the opportunities afforded could not contend that it had been left unheard. [Paras 14]

No violation of the principles of natural justice was established.

Constitutional validity of input tax credit conditional upon payment of tax by supplier - Constitutional validity of the statutory condition requiring payment of tax by the supplier for entitlement to input tax credit - HELD THAT: - The provision had been upheld by a High Court, and that view had been affirmed by the Supreme Court in a speaking order. In view of the settled position, no ground existed to take a different view. [Paras 15]

The constitutional challenge to the statutory input tax credit condition was rejected.

Final Conclusion: The writ petition was not entertained in view of the available statutory appellate remedy, with liberty to raise all objections before the Appellate Authority. No opinion was expressed on the merits of the demand in either proceeding.

Cancellation of GST registration for non-disclosure of bank details - Curable procedural non-compliance under GST law - Opportunity to cure GST registration non-compliance -

HELD THAT: - The Court held that cancellation of GST registration has severe civil consequences and that the object of GST law is compliance rather than punishment. As the allegation was confined to non-disclosure of bank details and multiple registrations linked to a joint bank account, and not to fraud, fake invoices, circular trading or tax evasion, the lapse was capable of being cured by furnishing correct bank details and supporting documents. The petitioner's willingness to file returns and discharge statutory dues warranted an opportunity to establish bona fides before the competent authority.

When assessee expresses bonafide willingness to file return and pay outstanding dues with interest and penalty, a liberal and pragmatic approach is warranted as held in Kanaklal Sutradhar [2024 (7) TMI 672 - CALCUTTA HIGH COURT] and Basudeb Karmakar [2026 (9) TMI 1995 - CALCUTTA HIGH COURT]. It is not the case of respondent that petitioner is involved in any fraudulent transaction, creation of fake invoices, circular trading or any dubious means to evade tax. The allegation is confined to non-disclosure of bank details and multiple registrations on single Joint Bank Account, which according to petitioner was due to separation from his brother and failure to update record.[Paras 7, 8, 9]

The cancellation order was quashed and the question of restoration was remitted for a reasoned determination after hearing, without adjudication on the merits. On establishment of bona fides, registration was to be restored subject to filing pending returns and payment of outstanding statutory dues.

Final Conclusion: The writ petition was disposed of by quashing the cancellation order subject to compliance and directing fresh consideration of the petitioner's bona fides and eligibility for restoration.

Section 74 proceedings for input tax credit mismatch - Invocation of section 74 in respect of mismatch between input tax credit claimed in GSTR-3B returns and that reflected in GSTR-2A

HELD THAT: - On examining the show cause notice and the impugned order, the Court found that the ingredients for invoking section 74 were not satisfied. Reconsideration was consequently required under section 73. [Paras 4, 7]

The impugned order was set aside and the matter remanded for fresh proceedings under section 73, subject to remittance of half the tax demand and reasonable opportunity to contest the matter on merits.

Final Conclusion: The impugned order was set aside and the input tax credit mismatch matter remanded for reconsideration under section 73, subject to remittance of half the tax demand.

Validity of Assessment Order - petitioner has also been asked to pay interest and penalty under Sections 50 ad 73 of the respective GST enactments - case of the petitioner is that on zero rated supply, the petitioner is entitled to refund in terms of Section 16(2) of IGST r/w 54 of CGST/TNGST Act

HELD THAT:- No procedural irregularity committed by the respondent while passing the impugned order. Therefore, this Writ Petition is liable to be dismissed.

At this distant point of time, the time for filing the Appeal has also expired. Considering the fact that more than 25% of the disputed tax has already been recovered, we are inclined to give liberty to the petitioner to file a statutory Appeal within a period of thirty (30) days from today, subject to the petitioner satisfying that indeed, 33% of the disputed tax, namely, a sum of Rs. 1,10,233/-, has been recovered on 29.07.2026.

In case the petitioner files an Appeal together with a certificate from the respondent that the aforesaid sum has been recovered, the Appellate Authority shall dispose of the Appeal on merits, in accordance with law, without reference to limitation.

Stay of disputed income-tax demand - reasoned exercise of discretion

Rejection of the application for stay of recovery of disputed income-tax demand solely on pendency of appeal and non-payment of the prescribed percentage of demand - HELD THAT: - A stay application could not be rejected mechanically by merely referring to the pending appeal, absence of a stay order and non-payment under the applicable circular. The authority was required to record consideration of the merits relevant to grant or refusal of stay; the impugned order was non-speaking and unreasoned in that respect. [Paras 12, 13, 16, 17]

The rejection order was set aside and the matter was remitted to the competent authority for a fresh reasoned order within one month, without adjudication on the merits of the dispute.

Final Conclusion: The rejection of the stay application was set aside and the competent authority was directed to reconsider it afresh within one month, without any expression on the merits.

Review jurisdiction - discovery of new evidence and due diligence

Review of the dismissal of the assessee's appeal concerning an unexplained bank credit on the basis of purportedly new sale deeds and a Tribunal order - HELD THAT: - Discovery of new evidence can support review only where the applicant establishes that, despite due diligence, it was not within knowledge or could not have been produced earlier.

In Malleeswari [2025 (9) TMI 1806 - SUPREME COURT] the Supreme Court summarized the scope of review jurisdiction and emphatically held that a review proceeding is not an appeal in disguise and that rehearing of a matter on merits or substituting a view is impermissible.

The sale deeds and Tribunal order relied on were available in public records during the original proceedings, and no due diligence was shown. The attempt to reassess the factual explanation for the bank credit therefore amounted to an impermissible rehearing in review and disclosed no error apparent on the record. [Paras 9, 10, 11, 12]

The purported new material did not warrant review, and the review application was dismissed.

Final Conclusion: The review application was dismissed, no error apparent on the face of the record having been established.

Jurisdictional facts for reassessment following search - Interim stay of reassessment proceedings concerning cash disclosed by the petitioner as cash sales

HELD THAT: - Although, for the relevant assessment year, a notice under the reassessment provision could be issued following a search without recourse to the earlier search-assessment procedure or the preliminary procedure otherwise applicable, the Court noted that the seized cash had been disclosed by the petitioner in its return and its ownership had also been accepted in the director's assessment. The Tribunal had directed its adjustment as self-assessment tax after determination of the tax liability. The impugned notice neither referred to the seized cash nor asserted the jurisdictional fact for treating it as information evidencing income escaping assessment. The matter therefore required consideration. [Paras 15, 16, 17, 18, 21]

Proceedings pursuant to the reassessment notice were stayed pending final hearing. List this case for final hearing on 15.12.2026.

Final Conclusion: The reassessment proceedings were stayed pending final hearing of the writ petition.

Principles of natural justice in reassessment proceedings - Non Adequate opportunity to respond to a post-notice information request

Validity of the order under section 148A(3) and the consequential notice under section 148 where the petitioner was not afforded adequate opportunity to respond to the information sought by the Revenue - HELD THAT: - The Court found that the petitioner had not been given an adequate opportunity to respond to the Revenue's request for information. The resulting violation of the principles of natural justice rendered the order under section 148A(3) unsustainable. [Paras 6, 7, 8]

The order under section 148A(3) and the consequential notice under section 148 were quashed. The petitioner was directed to furnish the requested details within the stipulated time, following which it must be granted a hearing before any fresh order is passed.

Final Conclusion: The writ petition was disposed of by quashing the impugned order and consequential notice for breach of natural justice, while leaving all merits and legal contentions open in the fresh proceedings.

Computation of limitation where the prescribed last day is a holiday - Mandatory Dispute Resolution Panel procedure

Timeliness of the assessee's objection to the Dispute Resolution Panel where the thirtieth day fell on a Sunday, and the validity of final assessment made without the Panel's directions - HELD THAT: - Where the last day of the statutory period for filing objections fell on a Sunday, the objection filed on the next working day was deemed to have been filed within time under the rule for computation of time. The procedure under section 144C is mandatory; upon a timely objection, the Assessing Officer could not make the final assessment without directions of the Dispute Resolution Panel, which are binding. [Paras 8, 9, 10]

The rejection of the objection as time-barred and the consequential final assessment were quashed; the Dispute Resolution Panel was directed to decide the objection on merits after hearing the assessee, and the penalty proceedings were stayed until disposal of those proceedings.

Final Conclusion: The writ petition was disposed of by quashing the final assessment and requiring adjudication of the timely objection by the Dispute Resolution Panel. Consequential penalty proceedings were not to continue pending such adjudication.

Sanction by specified authority for reassessment beyond three years - Validity of reassessment proceedings for A.Y. 2017-18 where sanction, after expiry of three years from the end of the assessment year, was granted by the Principal Commissioner instead of the authority specified for such cases

HELD THAT: - Under the amended reassessment regime, where more than three years have elapsed from the end of the relevant assessment year, sanction must be granted by the higher specified authority under Section 151(ii), and not by an authority falling under Section 151(i). Since the sanction and consequential notice were issued after expiry of that period, approval by the Principal Commissioner was incompetent.

We are supported in our view by the decision in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] has clearly held that for A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) the authority specified under Section 151(i) can grant sanction only upto 30th June 2021.[Paras 9, 10, 11]

The sanction was invalid; consequently, the order under Section 148A(d), the notice under Section 148, the order disposing of objections, and consequential proceedings were quashed.

Final Conclusion: The writ petition was allowed and the reassessment proceedings were set aside for want of sanction from the statutorily competent specified authority.

Recovery of disputed tax demand pending first appeal - Reasoned departure from CBDT 20% recovery norm - Refund adjustment exceeding CBDT 20% recovery norm

HELD THAT: - The CBDT instructions prescribe recovery of 20% of the disputed demand as the ordinary condition for stay during the first appeal. Departure is permissible only for recorded reasons, including lack of prima facie sustainability of the assessee's case or exceptional circumstances. As the stay order itself recorded recovery exceeding that threshold and no reasons for departure were recorded, continued retention of the excess, or further refund adjustment during the subsistence of stay, would defeat the protection granted by the stay. [Paras 6, 7]

The Revenue may retain 20% of the disputed demand as security; after verification of aggregate recoveries and adjustments, any excess shall be refunded with applicable interest within six weeks. The merits of the assessment and pending appeal were left open.

Final Conclusion: The writ petition was disposed of by directing verification of recoveries and refund, with applicable interest, of any amount recovered beyond 20% of the disputed demand during pendency of the first appeal.

Limitation for correction of TDS statements - Employer's default in remitting TDS - Employee's protection from employer's TDS default

Limitation for correction of TDS statements - Non-filing of TDS returns - Applicability of the limitation for amendment of TDS statements where the employer had not filed an original statement or return - HELD THAT: - The prescribed time limit for amendment or correction of a TDS statement could not justify refusal to file an original TDS statement or return. As no earlier statement or return was shown to have been filed, the employer's reliance on the limitation for correction was rejected. [Paras 11, 18]

The employer was directed to file the requisite TDS statements and returns in accordance with the statutory provisions.

Employer's default in remitting TDS - Employee's protection from employer's TDS default - Assessee in default - Consequences of an employer's deduction of TDS without depositing it or filing the requisite returns, for the employee and the defaulting employer - HELD THAT: - An employer deducting TDS acts as an agent of the Income Tax Department for deduction, collection and remittance. An employer who fails to deposit the deducted tax or file the returns is an assessee in default, and the statutory recovery mechanism, including the charge upon its assets, must be invoked by the competent authority. The employee cannot be penalised for that employer's default. [Paras 13, 15, 16, 17, 19]

The Commissioner was directed to verify the filed TDS statements and address the employee's grievance, while taking such action as necessary to secure compliance by defaulting employers.

Final Conclusion: The limitation plea founded on amendment of TDS statements was rejected where no original return had been filed, and statutory action was directed against employers who had defaulted in remitting deducted TDS.

Section 14A and Rule 8D disallowance where exempt-income investments are from own funds -

HELD THAT: - Following the earlier decision on identical questions [2026 (6) TMI 611 - MADRAS HIGH COURT] the Court held that, where the financials established availability of sufficient surplus funds and the investments were not made from interest-bearing borrowings, no expenditure could be disallowed or estimated on a proportionate basis for earning the exempt income. [Paras 3, 4]

The questions were answered in favour of the assessee, and the appeals were allowed.

Final Conclusion: Following the earlier decision on identical questions, the Court allowed the appeals and answered the questions in favour of the assessee.

Subsequent statutory amendment to the proviso to Section 147A - Validity of the Tribunal's order for assessment year 2016-2017 in the light of the subsequent amendment to the proviso to Section 147A

HELD THAT: - The Tribunal's order preceded the amendment, which had not even been placed before Parliament when the Tribunal decided the matter. The Tribunal had applied the legal position then governed by jurisdictional High Court decisions; its finding could therefore not be held contrary either to the law then prevailing or to the record. [Paras 3, 4, 5]

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

Final Conclusion: The Revenue's appeal was rejected for want of any substantial question of law.

Rectification of final assessment order for non-implementation of DRP directions - Permanent establishment of non-resident through Indian subsidiary - Reimbursement of costs as fees for included services under India-USA DTAA

Rectification of final assessment order for non-implementation of DRP directions - Validity of rectification of the final assessment order which inadvertently omitted to give effect to the DRP's directions - HELD THAT: - The directions of the DRP are binding and the final assessment order must conform to them. However, neither the DRP mechanism nor the rectification provision bars correction of a patent and obvious mistake in such an order. Since the directions had been reproduced in the assessment order but were inadvertently not given effect in computation, the error was apparent from the record and was rectified within the statutory period. [Paras 9, 10, 11, 12]

The rectification was valid, and the final assessment order was not rendered invalid on account of the inadvertent omission.

Permanent establishment of non-resident through Indian subsidiary - Attribution of business profits to permanent establishment - Existence of a permanent establishment in India through the Indian subsidiary and consequent attribution of business profits - HELD THAT: - On identical facts, the co-ordinate benches in the assessee's earlier years had rejected the Department's stand that the Indian subsidiary constituted the assessee's permanent establishment. Following those determinations, the Tribunal held that no permanent establishment existed in India. [Paras 18]

No part of the business profits was taxable in India on this basis, and the related addition was deleted.

Reimbursement of third-party costs without mark-up - Make available test for fees for included services - Taxability of back-to-back reimbursement of third-party expenses received from the Indian associated enterprise as fees for technical or included services - HELD THAT: - The material, including the remand report, established that the assessee acted only as an intermediary between service providers and the Indian associated enterprise, receiving reimbursement equal to the costs incurred without any mark-up. Further, the Department did not establish either that the services were technical or consultancy services or that technical knowledge, skill, know-how, process, plan or design had been made available to the recipient as required under the India-USA DTAA. [Paras 26]

The cost reimbursement could not be treated as fees for included services, and the addition was deleted.

Arm's length price of corporate guarantee commission - Determination of the arm's length price of corporate guarantee commission without examining the assessee's benchmarking - HELD THAT: - The transfer pricing authorities had estimated the guarantee commission without evaluating the benchmarking undertaken by the assessee. A straightjacket formula cannot be adopted for determining the arm's length price of a corporate guarantee without examining the relevant facts and the taxpayer's benchmarking. [Paras 31, 32]

The issue was remanded to the Assessing Officer for fresh adjudication after examining the assessee's benchmarking, without adjudication on the appropriate rate.

Final Conclusion: The appeal was partly allowed: the rectification of the final assessment order was sustained, the additions relating to permanent establishment profits and cost reimbursement were deleted, and the corporate guarantee issue was remanded for fresh adjudication.

Application of charitable income for scholarships to Indian students pursuing overseas education - Scope of inquiry at registration of charitable institutions

Application of charitable income outside India - Scholarships to Indian students for overseas education - Scholarships disbursed in India in Indian currency to Indian students for higher education abroad as application of income outside India and as activity beyond the trust's educational objects - HELD THAT: - The scholarship amounts were admittedly remitted through banks in India in Indian currency to Indian students, and there was no material to show that the activity fell outside the trust's educational objects. A student's subsequent pursuit of studies abroad did not convert the domestic disbursement into application of income outside India under section 11(1)(c); the stated concerns regarding the scholarship-selection criteria also did not justify refusal of registration. [Paras 13]

The objection based on foreign application of income was rejected, and the scholarship activity was held to be within the trust's educational objects.

Scope of inquiry at registration under section 12AB - Commissioner's power at the stage of renewal of charitable registration and approval to examine alleged application of income outside India and payments to specified persons - HELD THAT: - At the registration stage, the inquiry is confined to the genuineness of the trust's activities and compliance with legal requirements material to achieving its objects. Invoking sections 11(1)(c) and 13(1)(c) to scrutinise utilisation of income entered the arena of assessment, where such matters may be examined. No material showed failure to satisfy the registration requirements, and the unchanged objects and activities warranted continuity of registration. [Paras 17, 18]

The rejection of registration and consequential approval was set aside, and registration under section 12A(1)(ac)(ii) with consequent approval under section 80G was directed to be granted.

Final Conclusion: Both appeals were allowed; the impugned refusals were set aside, and registration with consequential approval was directed to be granted within four weeks of receipt of the order.

Unexplained election expenditure - corroboration of seized notebook entries - Statutory presumption regarding seized documents - Year of assessability of election-campaign expenditure

Unexplained election expenditure - corroboration of seized notebook entries - Statutory presumption regarding seized documents - Attribution to the assessee of alleged election expenditure reflected in a notebook seized from commission-agent business premises - HELD THAT: - The notebook neither named nor otherwise linked the assessee with the alleged payments and was seized from premises used for a separate commission-agent grain-trading business. The presumption concerning seized documents did not establish that the notebook belonged to the assessee. As no independent inquiry was made from the persons named in the notebook, or other verification undertaken to correlate its entries with the assessee, the entries remained unproved. An addition for unexplained expenditure could not rest on such uncorroborated material. [Paras 8, 9, 10, 16, 18]

The addition for alleged election expenditure under section 69C was deleted on merits.

Year of assessability of election-campaign expenditure - Assessment year in which the alleged election-campaign expenditure could be assessed - HELD THAT: - The relevant notebook entries recording alleged receipts or payments were undated. The election campaign and polling, as well as the search in which the notebook was found, fell in financial year 2019-2020; the few March 2019 dates in the notebook concerned meeting schedules and not the alleged payments or receipts. Thus, even if the entries represented election expenditure, they could fall only in Assessment Year 2020-21 and not in Assessment Year 2019-20. [Paras 19]

Independently, the addition was held not assessable in Assessment Year 2019-20 and was deleted.

Final Conclusion: The appeal was allowed. The addition for alleged election expenses was deleted both on merits and, independently, because it was not assessable in Assessment Year 2019-20.

Supervisory permanent establishment under India-Japan DTAA - Taxability of offshore supplies completed outside India - Seconded-employee salary reimbursement - No estoppel against statute

Supervisory permanent establishment - Project-wise duration test - Existence of a Supervisory Permanent Establishment in respect of supervisory services rendered to Indian customers, including an automobile dealer - HELD THAT: - Article 5(4) requires cumulatively that supervisory activities in India exceed six months and be in connection with a building site, construction, installation or assembly project. The duration test must be applied project-wise, without aggregating the presence of different employees or counting overlapping days more than once. The material did not establish either the prescribed duration for the other customers or a qualifying project in the case of the automobile dealer; mere presence of expatriates or rendition of technical services was insufficient. [Paras 18, 19, 20, 21, 29]

No Supervisory Permanent Establishment arose in India, and no income, including loan agreement fee added solely on that footing, was attributable to such establishment.

Offshore supply profits - Territorial nexus of income - Taxability in India of offshore supplies of traded goods, capital goods, raw materials and spares completed outside India - HELD THAT: - The supply contracts were concluded outside India, title and property in the goods passed outside India, consideration was received outside India, and the Indian buyers imported the goods in their own capacity on a principal-to-principal basis. No material supported the Assessing Officer's view that the offshore supplies formed a composite arrangement with supervisory services. As no supply operations were carried out in India, the resulting profits did not accrue or arise in India. [Paras 23, 29]

Profits from the offshore supplies were not taxable in India, and the Revenue's challenge to the relief granted was dismissed.

Seconded-employee salary reimbursement - No estoppel against statute - Taxability of cost-to-cost reimbursement of salaries of expatriates seconded to an Indian entity - HELD THAT: - The expatriates had been seconded to the Indian entity, their salaries were recovered on a cost-to-cost basis without markup, and the transfer-pricing authorities did not dispute that character. Such reimbursement represented salary costs of employees working for the Indian entity and did not constitute fees for technical services or taxable income of the foreign entity. A receipt not chargeable under law cannot become taxable merely because it was erroneously offered in the return. [Paras 25, 26, 29]

The salary reimbursement was directed to be excluded from taxable income.

Final Conclusion: The assessee's appeals were partly allowed, and the Revenue's cross-appeals were dismissed for all the assessment years concerned.

Revision of assessment on an erroneous and prejudicial order - Interest disallowance for short deduction of tax at source

HELD THAT: - Following the jurisdictional High Court precedent FUTURE FIRST INFO. SERVICES PVT. LTD. [2022 (7) TMI 748 - DELHI HIGH COURT] the Tribunal held that where tax has been deducted, though allegedly at a lower rate, disallowance of the payment cannot be made under section 40(a)(i). The statutory recourse for a shortfall in deduction is proceedings under section 201. Consequently, the Assessing Officer's failure to disallow the interest could not render the assessment order erroneous and prejudicial to the interests of the Revenue. [Paras 10, 11]

The revisionary direction to disallow the interest was dismissed, the consequential directions were treated as consequential, and the appeals were allowed.

Final Conclusion: The revisionary intervention, being founded on a legally unavailable disallowance for short deduction of tax at source, was unsustainable. Both appeals were allowed.

Detention of person jewellery in excess of the quantity permissible under the Indian Customs Baggage Rules, 2026 - case of the petitioners that they had visited India in connection with a marriage function and that the jewels carried by them were not intended either to be smuggled into India or to be sold after being smuggled.

HELD THAT:- The writ petitions were disposed of permitting the petitioners to seek return of the seized jewellery from the customs authority, which was directed to adjudicate the application; a minor penalty for the admitted infraction could be imposed with their consent.

Customs scrutiny of RBI remittances under rupee export scheme - Duty drawback where exports do not reach intended destination - Confiscation of goods already exported

Recovery of drawback for non-realisation of export proceeds - RBI remittances under rupee export scheme - Recovery of drawback on the premise that RBI remittances received for exports to Russia under the rupee trade scheme were unrelated to the exports - HELD THAT: - The remittances were made by RBI through the exporter's bank under the special rupee export arrangement. In the absence of material showing that RBI had treated the remittances as erroneous or reversed them, Customs could not conclude that they were unrelated to the exports. Such a conclusion would necessarily impute an erroneous adjustment of the sovereign debt arrangement to RBI and its Russian counterpart; any doubt as to the remittances required examination by RBI. [Paras 23, 24, 25, 26, 27]

The finding that the remittances were unrelated to the exports was unsustainable, and recovery of drawback on that basis could not be sustained.

Duty drawback on completed exports - Export destination and drawback entitlement - Entitlement to drawback where goods had left India but were alleged not to have reached the intended destination in Russia - HELD THAT: - Drawback is determined by the nature of the exported goods and not by the country or port of destination. Recovery for non-realisation is governed by the specific conditions of the Drawback Rules. Export is complete when the goods leave the territorial waters of India and title passes to the buyer; subsequent diversion or landing at another destination does not defeat the exporter's entitlement to drawback.

Drawback is admissible for exports and export is complete once the goods leave the territorial waters of India and the title in the goods passes to the buyer as held by the Supreme Court in Sun Industries [1988 (4) TMI 49 - SUPREME COURT] [Paras 31, 32, 35, 36, 37]

The denial and recovery of drawback could not be sustained even on the assumption that the goods had been landed at intermediary ports rather than in Russia.

Confiscation of goods already exported - Penalty consequential upon confiscability - Liability of goods already exported to confiscation and the consequential penalties for alleged acts rendering them confiscable - HELD THAT: - Section 113 applies to export goods which are to be taken out of India, and not to goods which have already been exported. Such goods were no longer liable to confiscation, particularly as the Customs Act did not, during the relevant period, extend beyond India. Since penalties under section 114 were imposed for acts or omissions said to have rendered the goods liable to confiscation, they could not survive once confiscability failed. [Paras 41, 42]

The finding of confiscability and all consequential penalties were set aside.

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

Release of seized imported machines and spare parts - continued detention of the seized machines and spare parts - Statutory period for notice in respect of seized goods - Entitlement to release of seized imported machines and spare parts where no notice was issued within the statutory period and no provisional-release order existed for those goods

HELD THAT: - Section 110(2) requires return of seized goods if notice is not issued within the prescribed period, subject only to a timely extension under its first proviso. Provisional release does not suspend that consequence; moreover, the provisional-release order in the present case did not cover the machines and spare parts.

Since no notice concerning those goods was issued within one year of seizure, their continued detention was illegal and unsustainable. [Paras 7, 8]

The appellant was held eligible for release of the machines and spare parts; the lower authority was directed to release them, subject to execution of a bond equivalent to their value.

Final Conclusion: The continued detention of the seized machines and spare parts was held illegal for want of notice within the statutory period. Their release was directed subject to execution of a bond equivalent to their value.

Admissibility of Section 108 statements in customs adjudication - Admissibility of call-detail records and WhatsApp chats - Penalty for alleged abetment of gold smuggling by customs staff

Statements recorded u/s 108 - Cross-examination u/s 138B - Evidentiary use of the appellant's and witnesses' statements in penalty adjudication without compliance with the procedure under Section 138B of the Customs Act - HELD THAT: - A statement recorded during inquiry becomes relevant in adjudication only after its maker is examined, the adjudicating authority determines its admissibility in the interests of justice, and the affected person is afforded cross-examination.

Additional Director General (Adjudication) vs. Its My Name Pvt. Ltd. [2020 (6) TMI 72 - DELHI HIGH COURT] examined the provisions of Sections 108 and 138B of the Customs Act. The department placed reliance upon the statements recorded under Section 108 of the Customs Act. The Hon’ble High Court held that the procedure contemplated under Section 138B(1)(b) has to be followed before the statements recorded under Section 108 of the Customs Act can be considered as relevant.

As the crucial witnesses were neither examined nor made available for cross-examination despite request, the statutory procedure was not followed. [Paras 18, 19, 20, 21]

The statements were held inadmissible, rendering the penalty founded solely upon them unsustainable.

Call-detail records and WhatsApp chats - statutory certification - Reliance on uncertified call-detail records and WhatsApp chats to establish collusion in smuggling of foreign-origin gold - HELD THAT: - The call records disclosed no contents of any conversation and showed no calls between the appellant and the co-noticee during the material period; the number of calls alone could not warrant an adverse inference. The call records and WhatsApp chats also lacked the statutory certification required for their evidentiary use. [Paras 9, 10, 11]

The electronic material could not furnish reliable evidence of collusion against the appellant.

Penalty for abetment of gold smuggling - Duty of a customs Havildar at passenger screening - Penalty u/s 112(b) for alleged failure by a customs Havildar to act on a DFMD alert concerning a passenger carrying foreign-origin gold - HELD THAT: - The DFMD was found to have malfunctioned on the day in question. The appellant was neither a proper officer authorised for passenger screening nor assigned DFMD duty, and omission or negligence in duty could not by itself prove abetment. No nexus with the seized gold or any dealing with it of the nature contemplated by Section 112(b) was established. [Paras 12, 13, 15, 16]

The penalty could not be sustained on the alleged omission at the DFMD.

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

Penalty on Customs Broker for attempted export of Red Sanders - Abetment of smuggling - Penal liability of a Customs Broker for attempted export of Red Sanders where the charge rested on failure to verify the authenticity of the IEC holder

HELD THAT: - The Tribunal found that the allegation against the Customs Broker was confined to non-verification of the IEC holder under the Customs Brokers Licensing Regulations. The original authority had found that the Broker obtained and verified KYC and IEC documents, co-operated with the investigation, and that no documentary or other evidence established prior knowledge, active collusion, or assistance in the attempted export of Red Sanders. Abetment requires a positive act, and no evidence showed that the Broker had assisted the attempted smuggling. [Paras 12, 13]

The penalty imposed under Section 114 was set aside; the Customs Broker's appeal was allowed and the Revenue's appeal seeking penalty under Section 114AA was dismissed.

Final Conclusion: The penalty on the Customs Broker was set aside for want of evidence of knowledge, collusion or abetment in the attempted export of Red Sanders. The Revenue's appeal was dismissed.

Tariff classification of formulated natural Astaxanthin preparations - Dietary-supplement preparations versus vegetable-origin colouring matter

Classification of five formulated natural astaxanthin grades derived from Haematococcus pluvialis and intended for dietary supplements, foods and beverages, as vegetable-origin colouring matter under Tariff Item 3203 00 20 or as food preparations under Tariff Item 2106 90 99 - HELD THAT: - Under GRI 1, classification is governed by the terms of the headings and the relevant Notes. Heading 3203 covers products of vegetable or animal origin used mainly as colouring substances; Note 3 to Chapter 32 covers preparations of a kind used for colouring material or for making colouring preparations. The product specifications and Safety Data Sheets described the goods as formulated astaxanthin complexes for dietary supplements, foods and beverages, without identifying a colouring function. Their standardisation, stabilisation, emulsification, micro-encapsulation and dispersibility features established their nutritional and functional character, with colour being incidental. As the goods were not more specifically covered elsewhere and answered the description of formulated ingredients for human dietary supplements and food preparations, they fell within Heading 2106. [Paras 5]

The five grades were held not classifiable under Tariff Item 3203 00 20 and were classified under residual Tariff Item 2106 90 99; customs duty is payable at the rate applicable to that tariff item under the law in force.

Final Conclusion: The five formulated AstaReal natural astaxanthin grades were ruled to be food preparations under Tariff Item 2106 90 99, and not food colours or colouring matter under Tariff Item 3203 00 20.

Forensic audit of banks' transactions with judgment debtors - Scope of the forensic audit directed in relation to 17 banks and their transactions with FHL, FHHPL and the judgment debtors - HELD THAT: - The audit directions were to be construed in the context of commercial transactions and relationships between FHL, FHHPL, the judgment debtors and the banks. They did not authorise a fishing and roving inquiry into the banks' entire affairs. [Paras 2]

The forensic audit was clarified to be confined to the specified transactions and relationships.

Final Conclusion: The Special Leave Petitions were disposed of with clarification of the limited scope of the forensic audit directions.

Oral agreements between companies - Rejection of plaint on disputed authority of company representative

Validity of oral agreements between companies - Effect of repeal of statutory requirement for written corporate contracts - Validity of an oral agreement between companies under the Companies Act, 2013 - HELD THAT: - The earlier statutory requirement concerning contracts by companies was repealed and was neither saved nor re-enacted in the Companies Act, 2013. Section 21 concerns the authority to sign a document on behalf of a company and cannot be construed as prohibiting an oral agreement. In the absence of a statutory bar, the general law of contract, which recognises oral agreements, applies. [Paras 8, 9, 10, 11, 12]

The plaint could not be rejected merely because the agreement pleaded between the companies was oral.

Order VII Rule 11-disputed authority of company representative - Rejection of a plaint on the alleged absence of written authority of a company representative to execute the agreement - HELD THAT: - Since the plaint specifically pleaded that the representative was authorised by the company, the correctness and validity of that assertion required adjudication upon evidence and could not be determined at the stage of considering an application under Order VII Rule 11 CPC. [Paras 13]

The ground based on the alleged absence of an authority letter was rightly rejected at the threshold.

Final Conclusion: The revision petition was dismissed, and the refusal to reject the plaint was upheld.

Consent terms in oppression and mismanagement proceedings - Binding effect of consent terms - Effect of the joint settlement upon the appeal challenging the findings of oppression concerning amendments to the articles of association and the rights issue

HELD THAT: - The parties jointly placed the settlement terms, supported by their respective affidavits, before the Appellate Tribunal. Accepting the settlement, the Appellate Tribunal treated the consent terms as part of its decision and disposed of the appeal on that basis, without independently adjudicating the merits of the challenged findings. [Paras 17, 18, 19, 20]

The appeal was allowed and the impugned order, insofar as it held the amendments to the articles of association and the rights issue to be oppressive, was quashed by consent; the parties were held bound by the settlement terms governing their inter se rights, liabilities and conduct.

Final Conclusion: The appeal was allowed pursuant to the parties' consent terms, and the impugned order was quashed. The settlement terms govern the parties' inter se rights, liabilities and conduct.

Forfeiture of deposits under liquidation e-auction terms - Successful bidder's default in payment of balance sale consideration - Triple Test for forfeiture - Forfeiture of the earnest money deposit and other amounts paid by the successful bidder upon failure to pay the balance sale consideration under a liquidation e-auction

HELD THAT: - Though Schedule I capped the earnest money deposit at 10% of the reserve price and did not expressly provide for forfeiture, the e-auction notice, accepted without protest, expressly stipulated forfeiture of the entire amount paid, including the earnest money deposit, upon default in payment of the balance sale consideration. The bidder had participated on an 'as is where is' basis despite disclosure regarding the unavailable title deeds and could not rely on that circumstance after failing to make payment within the stipulated period. The Triple Test did not assist the bidder: there was no material substantiating financial capacity, and the asserted external impediment was an afterthought. Forfeiture was consequently the necessary result of cancellation of the bid for default. [Paras 16, 17, 19, 21, 22]

The forfeiture of the earnest money deposit and the other deposit made under the e-auction terms was upheld, and refund was declined.

Final Conclusion: The appeal was dismissed, and the forfeiture of the amounts deposited by the successful bidder under the liquidation e-auction was sustained.

Effect of one-time settlement during liquidation - Forfeited earnest money deposit in liquidation estate - Liquidator's remuneration from liquidation estate - Waterfall distribution of liquidation proceeds - Financial creditor status of personal guarantor settling corporate debt

Effect of one-time settlement during liquidation - Effect of the personal guarantor's one-time settlement with the sole financial creditor on the continuing liquidation and transfer of the corporate debtor's assets - HELD THAT: - The prior unchallenged order had made clear that a bilateral settlement could not take the corporate debtor out of liquidation except through the statutorily recognised routes. The settlement, therefore, did not affect the liquidation proceedings. The asset transfer ratified by the Adjudicating Authority was nevertheless left undisturbed, since the auctions had failed, the consideration exceeded the reserve price and the highest bid, and no party had challenged that part of the order; although the transaction was not strictly in accordance with the Code and the Regulations, it furthered value maximisation. [Paras 13, 14]

The one-time settlement did not terminate or alter the liquidation process, and the ratified transfer of assets was not interfered with.

Forfeited earnest money deposit in liquidation estate - Entitlement of the financial creditor to retain the forfeited earnest money deposit received before settlement of its claim - HELD THAT: - The forfeited deposit, though previously distributed to the financial creditor and the erstwhile liquidator, remained an asset of the liquidation estate. Once the financial creditor accepted the settlement and issued an account-closure certificate, its claim stood fully satisfied and the amount received by it had to return to the liquidation estate for distribution among stakeholders. Its earlier recorded no-objection to such return had also attained finality. [Paras 15]

The financial creditor could not retain the forfeited deposit, which was required to be restored to the liquidation estate for distribution in accordance with law.

Liquidator's remuneration from liquidation estate - Entitlement of the erstwhile liquidator to remuneration and expenses from the liquidation estate - HELD THAT: - The record showed that the erstwhile liquidator had undertaken proceedings before the Adjudicating Authority, defended the corporate debtor before the High Court, conducted successive auctions, and processed claims. His fee had been fixed during the corporate insolvency resolution process and its continuation during liquidation had been directed in an earlier appellate order. The computation was not rebutted, and his continuance as liquidator had not been challenged. [Paras 16]

Payment of the reduced remuneration allowed to the erstwhile liquidator from the liquidation estate was upheld.

Waterfall distribution of liquidation proceeds - Financial creditor status of personal guarantor settling corporate debt - Distribution of the remaining forfeited deposit to the admitted operational creditor and the personal guarantor's asserted priority as a financial creditor - HELD THAT: - The operational creditor's claim had been filed during the corporate insolvency resolution process, updated after liquidation commenced, admitted by the liquidator, and reported to the Adjudicating Authority and the Board; it could not therefore be rejected as unverified. Settlement of the corporate debtor's debt by the personal guarantor did not make him a financial creditor in the absence of assignment of debt or substitution of the financial creditor. As purchaser of the assets, he had no claim against the liquidation estate, and as promoter he ranked last in distribution. The financial creditor's contention that the guarantor should separately meet liquidation expenses and the operational claim was also rejected, since the settlement was not in accordance with the Code and the financial creditor had declared its claim fully satisfied. [Paras 17, 18, 19]

The balance of the forfeited deposit was liable to be distributed to the admitted operational creditor under the statutory waterfall, and the personal guarantor could claim any residue only after satisfaction of all claims.

Final Conclusion: All appeals were dismissed. The transfer of assets was left undisturbed, while restoration and statutory distribution of the forfeited deposit from the liquidation estate, including payment of liquidation remuneration and the admitted operational claim, were sustained.

Central Sales Tax dues - secured creditor status - Statutory first charge - scope of State tax-recovery machinery

Treatment of Central Sales Tax dues as secured debt on the basis of Section 9(2) of the CST Act read with the statutory first charge under Section 48 of the GVAT Act - HELD THAT: - Section 9(2) adopts the State sales-tax machinery for assessment, collection and enforcement of Central Sales Tax dues; it neither creates a charge on the dealer's assets nor imports the substantive first charge created under Section 48 of the GVAT Act. The Tribunal further regarded the 2026 Explanation to Section 3(31) of the Code as clarificatory and applicable to pending proceedings, excluding an interest arising merely by operation of law from the ambit of security interest. In any event, the claim failed independently because the CST Act contained no charge-creating provision. [Paras 41, 42, 43, 45, 46]

The admitted CST claim was not secured debt and was not entitled to secured-creditor treatment under the resolution-plan waterfall.

Final Conclusion: Both appeals were dismissed, the Central Sales Tax dues having been held not to be secured debt or entitled to secured-creditor treatment under the resolution plan.

Commercial wisdom of Committee of Creditors in replacing resolution professional - Expunction of adverse remarks affecting professional reputation

Commercial wisdom of Committee of Creditors in replacing resolution professional - Replacement of the Resolution Professional pursuant to the Committee of Creditors' decision - HELD THAT: - A Resolution Professional has no vested right to continue in office. While the Resolution Professional must act independently and cannot be required to act contrary to the Code or the Regulations, the majority decision of the Committee of Creditors to seek replacement falls within its commercial wisdom, subject to statutory and procedural compliance. [Paras 19]

The direction replacing the appellant as Resolution Professional was upheld.

Resolution professional's remuneration and CIRP expenses - Claim of the former Resolution Professional for professional fees and CIRP expenses - HELD THAT: - The payable fees depended on the work performed and the Committee of Creditors' willingness regarding the applicable scale, while reimbursement of expenses required examination of relevant facts and objections. These matters required determination by the Adjudicating Authority after hearing the concerned parties. [Paras 19]

The claim was left open for adjudication by the NCLT in accordance with law.

Expunction of adverse remarks affecting professional reputation - Retention of adverse observations concerning the former Resolution Professional's alleged delay in acting on the request for replacement. - HELD THAT: - Although the observations were made in the context of the alleged delay, they bore upon the appellant's professional reputation. Having regard to the circumstances, their retention was held unnecessary. [Paras 19]

The adverse remarks in the impugned order were expunged.

Final Conclusion: Both appeals were disposed of by upholding the replacement of the Resolution Professional, expunging the adverse remarks, and leaving the claims for fees and CIRP expenses to the NCLT for adjudication.

Publication of Form G subject to CoC-approved eligibility criteria - Liquidation on expiry of CIRP without a resolution plan - Pending fraudulent-initiation application and liquidation - Suspended board's right to hearing in liquidation - Commercial wisdom of the Committee of Creditors

Form G publication and CoC-approved eligibility criteria - Publication of Form G for inviting prospective resolution applicants without prior CoC approval of the eligibility criteria - HELD THAT: - Section 25(2)(h) requires that the criteria for prospective resolution applicants be laid down with the approval of the Committee of Creditors. The commercial wisdom of the CoC has been repeatedly held by the Hon'ble Supreme Court to occupy a position of primacy in matters of this kind including Essar Steel [2019 (11) TMI 731 - SUPREME COURT]

Since Form G operationalises the invitation governed by those criteria, publication cannot proceed without such approval. The mandatory language of Regulation 36A(1) governs the timing of publication and does not dispense with the antecedent approval requirement. [Paras 53, 54, 56]

The Adjudicating Authority rightly treated prior CoC approval as a precondition to publication of Form G.

Mandatory liquidation on expiry of CIRP - Discretion to decline liquidation under Section 33(1)(a) after expiry of the CIRP period without receipt of a resolution plan - HELD THAT: - Section 33(1)(a) employs imperative language and requires liquidation once the CIRP period has expired and no resolution plan has been received. The exceptional latitude concerning CIRP timelines cannot be converted into a general power to disregard the statutory consequence because of CoC disagreement or lack of diligence within the process, particularly where no stakeholder sought extension or exclusion of time. [Paras 58, 59, 60]

Liquidation under Section 33(1)(a) was rightly ordered, and the conduct of stakeholders did not justify withholding that consequence.

Going concern status and residual assets - Finding that the corporate debtor was not a going concern despite the existence of residual assets - HELD THAT: - The status of a going concern depends upon continuing business operations, personnel, revenue generation and trading activity, not merely upon retention of assets. Asset holdings, including assets subject to litigation, attachment or third-party custody, did not establish a functioning enterprise; no material showed that the corporate debtor continued operational activities after commencement of CIRP. [Paras 63, 64]

The finding that the corporate debtor was not a going concern was sustained.

Effect of pending Section 65 application on liquidation - Effect of a pending application alleging fraudulent or malicious initiation of CIRP on liquidation under Section 33(1)(a) - HELD THAT: - Section 65 is directed to penalising fraudulent or malicious initiation of insolvency proceedings and is not, by its terms, a mechanism for annulling an admission order that has attained finality. Although timely allegations of fraudulent initiation may bear upon continuation of CIRP, the mere pendency of a belated application does not automatically suspend the power to conclude proceedings independently ripe for liquidation under Section 33(1)(a). [Paras 67]

The pending application under Section 65 did not bar the liquidation order.

Suspended board's hearing rights in liquidation - Effect of non-impleadment of the suspended board in liquidation proceedings under Section 33(1)(a) - HELD THAT: - The suspended board's right to participate in CoC meetings does not confer an unqualified right to be impleaded in every CIRP application. A proceeding under Section 33(1)(a) turns on the objective facts of expiry of the CIRP period and non-receipt of a resolution plan. On the facts, the appellant's prolonged non-engagement and earlier non-cooperation, coupled with the full appellate hearing and absence of prejudice capable of affecting the result, excluded any ground for remand on natural justice. [Paras 69, 70, 71]

Non-impleadment of the suspended board did not vitiate the liquidation order.

CoC commercial wisdom on further resolution efforts - Failure to pursue alternatives short of liquidation after recurring CoC deadlock concerning further resolution efforts - HELD THAT: - Publication of Form G and further resolution efforts were repeatedly considered by the CoC but did not secure the requisite support. The Appellate Tribunal could not substitute its assessment for the commercial judgment of the CoC. The prolonged unresolved deadlock, absence of a resolution plan and cessation of business operations supported recourse to liquidation under the time-bound statutory scheme. [Paras 73, 74]

No failure to consider viable alternatives short of liquidation was established.

Final Conclusion: The appeal was dismissed, and the order directing liquidation of the corporate debtor was sustained.

Trust as an artificial juridical person under FEMA - Three-year limit for rupee borrowings from non-resident Indians - Effect of omission of Section 6(3) of FEMA - Mens rea for civil penalties under FEMA

Effect of omission of Section 6(3) of FEMA - Effect of the omission of Section 6(3) of FEMA on proceedings initiated before the omission was notified - HELD THAT: - The complaint and show-cause notice had been issued before the notification bringing the omission into effect. The ruling cited by the appellant concerned proceedings initiated after that notification and was therefore inapplicable. [Paras 9]

The omission of Section 6(3) did not invalidate the proceedings.

Trust as an artificial juridical person under FEMA - Borrowings recorded in books of account - Applicability of FEMA to a charitable trust receiving funds from its non-resident trustees that were recorded as borrowings - HELD THAT: - The inclusive definition of "person" under FEMA encompasses every artificial juridical person not otherwise specified. A trust and its trustees are legally distinct, and the differing definition under the Consumer Protection Act could not govern FEMA. The transfers were recorded as borrowings in the books of the trust and its educational institutions, notwithstanding the asserted charitable purpose. [Paras 10]

The trust was held to be a person under FEMA and the amounts were treated as borrowings.

Three-year limit for rupee borrowings from non-resident Indians - Non-repatriable rupee loans - Contravention of Regulation 4 where rupee loans from non-resident trustees were not repaid within three years - HELD THAT: - The non-repatriable character of the loans did not dispense with the requirement of repayment within three years, since repayment could have been made by credit to the lender's NRO or NRSR account without repatriation. The subsequently produced accountant's certificate did not negate the contravention. [Paras 11]

The contravention of the borrowing restrictions under FEMA and the Regulations was affirmed.

Mens rea for civil penalties under FEMA - Penalty for contravention of FEMA borrowing restrictions - Whether absence of guilty intention and the charitable purpose of the funds rendered the contravention venial and precluded penalty? - HELD THAT: - A contravention of the statutory and regulatory obligations under FEMA constitutes a breach of civil obligation attracting penalty once established. Section 13(1) contains no requirement of willfulness, deliberateness or intention; consequently, mens rea was not an essential element. The authority relied upon by the appellant concerning criminal or quasi-criminal proceedings was held inapplicable. [Paras 13, 14, 15]

The plea that the breach was venial was rejected, but the appeal was partly allowed by reducing the penalty.

Final Conclusion: The Tribunal upheld the applicability of FEMA and the finding of contravention of the borrowing restrictions, rejected absence of intent as a defence, and partly allowed the appeal by reducing the penalty.

Restoration of attached property during trial under the PMLA - Claimant status of a homebuyers' association - Distinct operation of PMLA restoration and IBC insolvency processes - Monitoring of Greenopolis homebuyer claims and attached assets

Restoration of attached property during trial under the PMLA - Claimant status of a homebuyers' association - PMLA restoration and IBC insolvency processes - Validity of the PMLA Court's restoration order made on an application by a homebuyers' association in relation to attached assets not belonging to the corporate debtor. - HELD THAT: - Restoration of attached property during trial is governed by the statutory conditions under the PMLA and the Restoration Rules. A homebuyers' association, being neither a purchaser nor a person that had itself suffered a quantifiable loss, could not qualify as a claimant with a legitimate interest in the attached properties. Restoration under the Rules could arise only after framing of charge, a stage not reached in the proceedings. The IBBI circular could apply only where assets of the corporate debtor had been attached; it could neither govern assets of former promoters and other persons nor override the PMLA scheme. The IRP consequently had no statutory role in restoration proceedings concerning such assets, and the undertaking furnished in proceedings concerning a single homebuyer could not operate in rem for all homebuyers. The previous interim directions, founded on the contrary understanding, were likewise misconceived. [Paras 117, 118, 122, 123, 124]

The impugned restoration order was set aside, and the related interim orders were recalled and vacated.

Monitoring of homebuyer claims and attached assets - Verification of genuine homebuyers - Non-interference with CIRP proceedings - Constitution and limited remit of a monitoring committee for verification of Greenopolis homebuyers and compilation of information concerning assets attached in the PMLA proceedings. - HELD THAT: - In view of the number of claimants and competing claims over the attached assets, a monitoring committee was required to streamline the process and provide tangible relief to victim homebuyers. The committee was directed to verify genuine homebuyers irrespective of whether payments had been made to either developer, and to maintain an updated list of attached assets, their claimed ownership, attachment status, pending challenges and valuation. The Court deferred detailed directions on restoration or liquidation, since the attachment status and competing proprietary claims required to be ascertained. The committee's work would not interfere with the CIRP, and the IRP was assigned no role in the committee's proceedings. [Paras 130, 132, 135, 136, 137]

A monitoring committee was constituted with a confined verification and information-gathering remit; liquidation or other disposal of attached assets was deferred pending further directions.

Final Conclusion: The impugned PMLA restoration order and the related interim orders were set aside. A monitoring committee was constituted to verify genuine homebuyers and compile information on attached assets, while liquidation was deferred and the CIRP was kept outside the committee's remit.

Money Laundering - cognizance of the offences u/s 3 and 4 of the PMLA, 2002 was taken without adhering to the mandatory requirement of sanction u/s 197 of the Code of Criminal Procedure, 1973 corresponding to Section 218 of the Bharatiya Nagarik Suraksha Sanhita, 2023

HELD THAT:- In view of the correct statement of law recorded by the High Court in paragraph 9 of the impugned judgment [2025 (12) TMI 1737 - JHARKHAND HIGH COURT], we see no ground to entertain this special leave petition. The same is, accordingly, dismissed.

However, it is clarified that all relevant issues and contentions from both sides are left open, and the trial shall proceed uninfluenced by any observations made in the impugned order, particularly those contained in paragraphs 7 and 8 thereof.

Relied-upon documents in property-attachment appeals - Costs for belated filing of documents

Relied-upon documents in property-attachment appeals - Taking on record the respondent's relied-upon documents in appeals concerning continuation of property attachment - HELD THAT: - The documents sought to be produced were those relied upon by the respondent in its complaint and were relevant to determining whether the attachment should continue during pendency of the complaint. [Paras 8, 9]

The refusal to take the documents on record was set aside, and the documents already filed were directed to be treated as taken on record.

Costs for belated filing of documents - Sustainability of costs imposed for belated applications to place documents on record - HELD THAT: - The documents were always within the appellants' knowledge and possession, but the applications to place them on record were moved only when the appeals were listed for final hearing. [Paras 10]

The costs imposed by the Tribunal were maintained.

Final Conclusion: The refusal to take the documents on record was set aside and the documents were treated as on record; the costs imposed for their belated production were maintained.

Seizure and retention of property prima facie connected with proceeds of crime - Natural justice-prejudice from defective service of notice

Seizure and retention of property connected with proceeds of crime - Property held by persons not accused of scheduled offence - Validity of retention of jewellery seized from a joint family residence in a money-laundering investigation, despite the claim that it belonged to a family member not accused in the scheduled offence and the absence of a transaction-wise trail - HELD THAT: - The relevant inquiry is whether the property is connected with, or requires examination in relation to, proceeds of crime; it is not confined to property held by a person named as an accused in the scheduled offence. The material regarding interlinked accounts, movement of funds and payments for jewellery supported the requisite prima facie nexus. Recovery from a joint family residence and absence of identification of individual payments for each item of jewellery did not displace that satisfaction at the stage of retention and adjudication. [Paras 11, 13, 15, 16]

Retention of the seized jewellery was upheld, the material being sufficient to sustain the prima facie satisfaction required under the PMLA.

Natural justice - prejudice from defective service of notice - Effect of alleged non-service of the show-cause notice in proceedings confirming retention of seized property - HELD THAT: - The appellant participated in the proceedings and had an opportunity to present a defence. As no specific prejudice resulting in failure of natural justice was established, the alleged irregularity in initial service did not vitiate the adjudication. [Paras 14]

The alleged defect in service of notice did not warrant setting aside the impugned order.

Final Conclusion: The appeal challenging confirmation of retention of the seized property was dismissed, no infirmity in the impugned order having been established.

Extended period of limitation for service tax demand - Suppression of facts for invocation of extended limitation

Validity of invoking the extended limitation period for service tax demand on construction and works contract activities for 2015-16 - HELD THAT: - Upon consideration of the original order and the documents on record, the Tribunal found that fraud, wilful misstatement or suppression of facts could not be alleged against the appellant. The demand could therefore be raised only within the normal limitation period u/s 73 of the Finance Act, 1994; the notice issued for 2015-16 was wholly time-barred. [Paras 4]

The demand, consequential interest and penalty were set aside on limitation.

Final Conclusion: The appeal was allowed and the impugned order was set aside solely on the ground that the service tax demand was barred by limitation.

Service tax demand on unsubstantiated service turnover - Small service provider exemption for photography services

Service tax demand on unsubstantiated service turnover - Sustainability of service tax demand on photography business receipts after exclusion of sales turnover supported by VAT audit records - HELD THAT: - The acknowledged VAT audit report recorded turnover from sale of cameras and allied goods and payment of VAT thereon. In the absence of documentary material supporting the lower authorities' different figure for sales turnover, the computation of the taxable-service component from the income-tax return was held to be unsubstantiated. [Paras 4]

The service tax demand founded on that computation could not be sustained.

Small service provider exemption for photography services - Eligibility for the small service provider exemption in respect of the balance photography-service receipts - HELD THAT: - On the accepted sales turnover, the residual business income represented receipts from taxable services. Since, the appellant had availed the benefit of the Notification dated 20.06.2012 and did not pay any service tax on the remaining amount, claim of such benefit as per the Notification No. 33/2012 dated 20.06.2012 is proper and justified. [Paras 4]

The balance service receipts were held exempt from service tax.

Final Conclusion: The impugned order confirming the service tax demand was set aside and the appeal was allowed.

Utilisation of CENVAT credit under reverse charge - Limitation for service-tax interest demand

Utilisation of CENVAT credit under reverse charge - Extended limitation for service-tax demand - Entitlement of a service recipient to use CENVAT credit for discharging service tax under reverse charge and the consequent applicability of the extended period of limitation - HELD THAT: - The Tribunal held that utilisation of CENVAT credit by the recipient of taxable service for payment of service tax under reverse charge was permissible. Such utilisation could not justify invocation of the extended period under the proviso to section 73; consequently, the notice issued beyond the normal period of eighteen months was time-barred. [Paras 5]

The appellant was held entitled to the benefit of limitation.

Limitation for service-tax interest demand - Applicability of the limitation governing the principal service-tax demand to an interest demand for delayed payment - HELD THAT: - The Tribunal adopted the principle that recovery of interest must adhere to the same limitation period as recovery of the principal amount. Since the extended period was unavailable, the interest demand could not be sustained.

Co-ordinate Bench of this Tribunal in the case of Secure Hospitality and Insurance Service Pvt. Ltd. [2026 (3) TMI 1766 - CESTAT MUMBAI] by relying upon the judgement of T.V.S. Whirpool Ltd [1996 (4) TMI 232 - CEGAT, MADRAS] has held that the period of limitation for issuance of the show cause notice should also applicable in the case of the demand of interest.[Paras 5, 6]

The interest demand was set aside as barred by limitation.

Final Conclusion: The appeal was partly allowed, the interest demand having been set aside as time-barred, while the unpressed challenge to the penalty remained undisturbed.

Service tax exemption for statutory licences and permissions - Limitation of reverse-charge service tax demand where CENVAT credit is immediately available

Service tax exemption for statutory licences and permissions - Exemption of fees paid to governmental authorities for licences, permissions, registrations, safety checks and certifications required for carrying on the appellant's business - HELD THAT: - The requirement of registration, licence or permission had to be assessed in the context of whether the appellant could lawfully carry on its business without obtaining it. As the department produced no evidence that the business could have been conducted without making the payments to the governmental authorities, the services were covered by the exemption under Notification No. 25/2012-ST. [Paras 7]

The impugned service tax demand was unsustainable as the payments were exempt.

Limitation of reverse-charge service tax demand where CENVAT credit is immediately available - Limitation of the service tax demand under reverse charge where any tax paid would have been immediately available as CENVAT credit - HELD THAT: - Since service tax paid under the reverse charge mechanism would have been immediately available to the appellant as CENVAT credit, the demand could not sustain on limitation. [Paras 8]

The demand was independently held unsustainable on limitation.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief, the demand being unsustainable both on exemption and limitation.

Appellate forum for intermediary and export-of-service classification - High Court appellate jurisdiction over intermediary and export-of-service classification

Maintainability of a High Court appeal against the Tribunal's determination, in a CENVAT credit refund claim, that marketing promotional and after-sales services supplied to an overseas entity were not intermediary services and qualified as export of services - HELD THAT: - The statutory appellate scheme bars a High Court appeal where the Tribunal's order determines a question related to the rate of duty or value for assessment, including taxability or excisability. Applying that principle, the Court held that the Tribunal's determination of the nature of the services as intermediary or export services concerned their classification, excisability and value, and therefore fell within the class of matters appealable to the Supreme Court. [Paras 13]

The appeal was dismissed as not maintainable before the High Court, with liberty to the appellant to approach the Supreme Court in accordance with law.

Final Conclusion: The appeal was dismissed as the Tribunal's determination was held to fall within the statutory appellate jurisdiction of the Supreme Court rather than that of the High Court.

Statutory allocation of appellate jurisdiction in assessment-related service classification disputes

Jurisdictional bar on High Court appeals in rate or valuation matters - Intermediary services and export of services-appellate forum - Maintainability of a High Court appeal against the Tribunal's determination that marketing, promotional and after-sales services rendered to an overseas entity were not intermediary services and qualified as export of services - HELD THAT: - The statutory scheme makes the appellate jurisdictions mutually exclusive: questions relating to the rate of duty or value for assessment, including matters directly and proximately connected with classification, taxability or excisability, are excluded from the High Court's jurisdiction and lie before the Supreme Court.

Tribunal's determination of whether the services were intermediary services or export services was held to concern their classification, excisability and value for assessment and therefore fell within the statutory exclusion. [Paras 9, 10, 12, 13, 15]

The appeal was held not maintainable before the High Court and was dismissed, with liberty to the appellant to approach the Supreme Court in accordance with law.

Final Conclusion: The appeal was dismissed as not maintainable before the High Court, the dispute being held to fall within the Supreme Court's appellate jurisdiction.

Maximum packing speed for pan masala packing machines for payment of centrale excise duty - Redetermination of capacity after alteration of packing machine

Permissibility of reducing the maximum packing speed of a pan masala packing machine by alteration for manufacture of the same goods at the same retail sale price - HELD THAT: - The Rules make the maximum speed at which a packing machine can be operated a relevant factor for capacity and duty determination. Rule 6(6) permits fresh declarations for specified changes, including maximum speed on commencement of manufacture at a new retail sale price; it does not permit reduction of the speed of the same machine for the same goods merely through alteration. As the machine's admitted maximum speed was above 751 pouches per minute, the altered operating speed could not govern its statutory capacity. [Paras 12, 13]

The machine was held classifiable 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 impugned appellate order was set aside. The machine's maximum packing speed was determined as 751 pouches per minute and above for duty purposes.

Manufacture and excisability of modified motor vehicles - Extended limitation for excise duty demand - Penalty for wilful suppression of facts - Penalty on Executive Director for excise duty evasion

Manufacture of modified fully built motor vehicles - Chassis-based excise exemption - Excisability of body-building and modifications made to fully built passenger and cargo motor vehicles, and consequential eligibility for the claimed chassis-based exemption - HELD THAT: - Excise duty is chargeable on goods in the form in which they are cleared. Where fully built motor vehicles were received and subsequently modified, it was necessary first to determine whether the activities of refining or remaking the existing vehicles amounted to manufacture. If manufacture was claimed by virtue of the Chapter Note, it was also necessary to determine whether the activity involved building a body on the chassis in the form received. The impugned order did not determine these foundational questions of manufacture and excisability. [Paras 4]

The matter was remanded without adjudication on merits for fresh determination of manufacture, excisability and the admissibility of the claimed exemption.

Extended limitation for excise duty demand - Wilful suppression of facts - Invocation of the extended period for excise duty demand arising from the classification, exemption and valuation disputes - HELD THAT: - The appellant was registered, regularly filed prescribed returns, and its records were subjected to departmental assessment, scrutiny and audit. Similar clearances had been made in the past without objection. A subsequent change in the departmental view could not establish active suppression or a deliberate intent to evade duty, particularly when the appellant entertained a bona fide belief regarding exemption. The extended period requires a positive and deliberate act of suppression or misstatement with intent to evade duty. [Paras 4]

The extended period was held unavailable, and any duty determined on remand was confined to the normal period of limitation.

Penalty for wilful suppression of facts - Penalty for short-payment of excise duty - Penalty on the manufacturer for alleged misclassification, wrongful exemption and undervaluation with intent to evade excise duty - HELD THAT: - The conditions for penalty for short-payment of duty on account of fraud, collusion, wilful misstatement or suppression with intent to evade are the same conditions that permit recourse to the extended period. As no legally sustainable finding of such deliberate conduct could be maintained, the statutory foundation for the penalty failed. [Paras 4]

The penalty imposed on the manufacturer under Section 11AC was set aside.

Penalty on Executive Director for excise duty evasion - Penalty on the Executive Director under Rule 26 for the alleged evasion of excise duty by the manufacturer - HELD THAT: - In the absence of fraud, collusion, suppression or misstatement with intent to evade duty, no case for imposition of personal penalty was made out. [Paras 4]

The penalty imposed on the Executive Director under Rule 26 was set aside.

Final Conclusion: The appeal of the manufacturer was allowed, with remand for fresh adjudication of manufacture, excisability and exemption within the normal limitation period. The extended-period demand and the penalties on the manufacturer and its Executive Director were not sustained.