TaxTMI Updates e-Newsletter
Oct 05,2026

Withholding of GST refund pending anti-evasion proceedings - Commissioner's opinion of fraud or malfeasance under Section 54(11), CGST Act - Statutory refund withholding independent of judicial stay Pending proceedings under Section 54(11), CGST Act

Withholding of export IGST refund under Section 54(11) of the CGST Act during a pending anti-evasion investigation into input tax credit claimed from allegedly non-genuine suppliers - HELD THAT: - Section 54(11) requires that the refund-generating order be subject to an appeal, further proceedings or other pending proceedings under the Act, and that the Commissioner independently form an opinion, after hearing the taxable person, that refund would adversely affect revenue on account of fraud or malfeasance. The provision is a self-contained revenue safeguard and does not depend upon a separate judicial stay. Although a proposed appeal alone would not justify withholding, the anti-evasion investigation had commenced before the withholding order and constituted pending proceedings.

Contemporaneous material concerning non-existent or non-operational suppliers, unestablished movement or receipt of goods, and the supply chain furnished the basis for the requisite opinion. In view of the appeal before the GSTAT, disputed questions concerning the genuineness of supplies and correctness of the findings were not adjudicated in writ jurisdiction. [Paras 26, 27, 29, 30, 31]

The withholding order was sustained and the writ petition was dismissed, leaving the petitioner free to urge all contentions before the GSTAT.

Final Conclusion: The writ petition was dismissed, the Court holding that the refund could be withheld under Section 54(11) during the pending anti-evasion investigation on the Commissioner's duly formed opinion of fraud or malfeasance. The petitioner was left at liberty to pursue all contentions before the GSTAT.

Exercise of writ jurisdiction against GST adjudication despite alternative statutory remedy - Bar against parallel GST proceedings - identity of subject matter - Writ challenge based on alleged breach of natural justice

HELD THAT: - The statutory bar against parallel proceedings is attracted only where the proceedings concern the same subject matter, to be identified with reference to the relevant tax period, transactions, invoices, precise input tax credit liability and allegations in the respective notices. Commonality of the supplier or the broad subject of input tax credit is insufficient. The identity of liabilities in the Central and State proceedings, as well as the objections concerning the independent finding of non-receipt of goods, invocation of the extended adjudication provision, the adequacy of hearing and consideration of the reply, involved factual and evidentiary examination suitable for the statutory appellate forum. The record did not establish an ex facie absence of jurisdiction or an undisputed breach of natural justice warranting writ interference. [Paras 77, 81, 82, 83, 85]

The writ petition was dismissed, leaving the petitioner to pursue the statutory appeal and to raise all objections therein; no opinion was expressed on the merits of the demand or the applicability of the bar against parallel proceedings to any particular liability.

Final Conclusion: The writ petition challenging the input tax credit adjudication was dismissed on account of the efficacious statutory appellate remedy. All objections, including those concerning parallel proceedings, limitation, natural justice and the merits of the demand, were left open for appellate consideration.

Extinguishment of government dues under approved insolvency resolution plan - Exercise of writ jurisdiction despite alternative statutory appeal

Extinguishment of unfiled GST claims under approved resolution plan - Effect of approval of the resolution plan on unfiled GST dues for Financial Year 2021-22 and interest for delayed GSTR-3B returns for July and August, 2021 - HELD THAT: - An approved resolution plan binds government authorities, and statutory dues relating to a period preceding its approval, which were neither lodged in the insolvency process nor provided for in the plan, stand extinguished. The plan also expressly extinguished pre-effective-date government claims, whether known or unknown, assessed or unassessed.

The distinction sought to be drawn between determination and recovery was rejected, since a demand notice initiates proceedings in respect of the extinguished claim and a resulting adjudication cannot survive independently. The CGST first-charge provision expressly yields to the IBC, whose overriding provision prevails over general GST adjudicatory powers; liquidation provisions could not revive an extinguished liability. [Paras 20, 21, 22, 26, 28]

The IGST demand with consequential interest and penalty, and the separate notice demanding interest for delayed returns, were held extinguished and quashed as proceedings initiated without jurisdiction.

Writ jurisdiction despite alternative statutory remedy - Maintainability of the writ petition despite the statutory appellate remedy against the GST order - HELD THAT: - The existence of an appellate remedy does not bar writ jurisdiction where the authority has acted wholly without jurisdiction or in disregard of binding law. As the material facts were admitted and the controversy was a pure question of law concerning the authority to initiate proceedings, relegation to an appeal with pre-deposit would serve no purpose. [Paras 24]

The writ petition was entertained notwithstanding the available statutory appeal.

Final Conclusion: The writ petition was allowed. The GST demand proceedings for Financial Year 2021-22 and the interest demand for delayed returns were quashed, the underlying dues having stood extinguished under the approved resolution plan.

Pecuniary jurisdiction to block input tax credit - Authority of the Deputy Commissioner to block input tax credit beyond the prescribed pecuniary limit

HELD THAT: - The Deputy Commissioner admitted that the blocked input tax credit exceeded the pecuniary jurisdiction conferred by the Commissioner's administrative order and that the entry was consequently corrected and unblocked.

The Court held that exercise of jurisdiction requires self-discipline and that an authority must not act to the detriment of a noticee where jurisdiction does not exist. [Paras 5, 6, 8]

The petitioner was left free to institute a fresh challenge, while the Commissioner, State Tax was directed to ascertain whether similar excesses of jurisdiction had occurred and to take appropriate remedial or disciplinary action, if warranted.

Final Conclusion: Noting the admitted excess of pecuniary jurisdiction in blocking the input tax credit, the Court directed an administrative inquiry into similar instances and required a report to be filed.

Condonation of delay in filing GST appeal - Opportunity to explain delay

Rejection of a delayed GST appeal without considering the appellant's explanation for delay - HELD THAT: - The appeal was rejected because the notice requiring a response on delay remained unanswered. As the explanation that the appellant was undergoing medical treatment was not rebutted, the Court found sufficient cause to afford one opportunity to justify the delay beyond the stipulated period. [Paras 4]

The rejection order was set aside, and the appellant was directed to submit a response to the notice; the Appellate Authority was directed to consider the explanation after affording a hearing.

Final Conclusion: The writ petition was disposed of by restoring the delayed GST appeal for consideration of the appellant's explanation for delay after an opportunity of hearing.

Effective opportunity of hearing in GST assessment - Principles of natural justice

Validity of GST assessment where the personal hearing was fixed before expiry of the time allowed to submit the reply to the show-cause notice - HELD THAT: - Fixing the personal hearing before the deadline for filing the reply did not afford an effective opportunity of hearing and resulted in breach of the principles of natural justice. See M/S MODINE THERMAL SYSTEMS PRIVATE LIMITED [2025 (6) TMI 989 - UTTARAKHAND HIGH COURT] [Paras 7, 8]

The assessment and appellate orders were quashed and the matter was remitted to the Assessing Officer from the stage of the show-cause notice, with opportunity to file a reply followed by a personal hearing.

Final Conclusion: The writ petition was disposed of by quashing the assessment and appellate orders and remitting the matter for fresh proceedings consistent with an effective opportunity of hearing.

Violation of natural justice in service of GST show cause notice

Validity of adjudication where the GST show cause notice was uploaded only under the 'Additional Notice and Orders' tab without separate intimation to the petitioners - HELD THAT: - The Court found that, as the notice was uploaded only under the specified portal tab and no separate intimation was given, the petitioners were unable to respond to it. This constituted a violation of the principles of natural justice and warranted interference. [Paras 5, 6]

The adjudication order and consequential bank attachment were quashed, and the matter was remitted for fresh adjudication on the grounds raised in appeal, after affording hearing and passing a reasoned order.

Final Conclusion: The writ petition was disposed of by setting aside the impugned adjudication and consequential attachment on account of breach of natural justice, with a direction for fresh adjudication.

Foundational allegations of fraud, wilful misstatement or suppression of facts - Section 74 notice for wrongful availment of input tax credit

Validity of the show cause notice for alleged wrongful availment of input tax credit under Section 74 of the HPGST Act, where the notice did not identify and correlate the alleged fraud, wilful misstatement or suppression of facts with the asserted default - HELD THAT: - Invocation of Section 74 requires the notice itself to disclose foundational facts establishing that the wrongful availment or utilisation of input tax credit was occasioned by fraud, wilful misstatement or suppression of facts to evade tax. A bald and alternative recital of those expressions, without specifying the precise act attributed to the taxpayer and correlating it with the allegations in the notice, does not satisfy the statutory precondition.

The Hon’ble Supreme Court, in M/s Tata Steel Limited v. Union of India [2026 (5) TMI 1438 - SC ORDER] held that a notice under Section 74 of the GST Act cannot be based only on an ITC mismatch or short payment of tax. The officer must have reasons to believe that the mismatch or short payment was caused by fraud, wilful misrepresentation, or suppression of facts. These reasons and the basic facts supporting such a conclusion must be clearly stated in the notice itself.[Paras 3, 4, 8, 9, 10]

The show cause notice was set aside, with liberty to the Authority to issue a fresh notice within 60 days; limitation shall not bar issuance of such notice within that period.

Final Conclusion: The writ petition was disposed of by setting aside the defective show cause notice and permitting a fresh notice subject to the stated limitation protection. The challenge to the legality of the provisions governing input tax credit was expressly kept open.

Bail in CGST prosecution - Presumption of innocence - Pre-trial detention not punitive - Right to speedy trial - Documentary evidence

Grant of bail in a CGST prosecution concerning alleged diversion of online-gaming merchant funds received through a payment-gateway escrow account - HELD THAT: - Pre-conviction detention is not punitive and must serve the purpose of securing the accused's attendance at trial. The investigation had been completed and the complaint filed; the evidence was documentary, the offences were triable by a Magistrate and carried a maximum sentence of five years.

In the absence of criminal antecedents, material suggesting witness tampering, flight from justice, repetition of offences, or other exceptional circumstances, continued custody was not justified, particularly when the trial was unlikely to conclude within a reasonable time. [Paras 12, 14, 15, 16, 17]

The applicant was enlarged on bail subject to conditions ensuring attendance at trial and preventing interference with evidence or witnesses.

Final Conclusion: The bail application was allowed, as continued pre-trial detention was unwarranted on the material placed before the Court. Release was made subject to stipulated safeguards.

GST appellate jurisdiction over central adjudication orders - competent appellate forum for an appeal arising from an adjudication order passed by a Central GST authority

HELD THAT: - Accepting the conceded legal position on grounds of propriety and consistency, the Court held that an appeal against an order of adjudication passed by a Central Authority must be heard by the Appellate Authority under the CGST Act and not by the State Appellate Authority. [Paras 7]

The impugned State Appellate Authority order was quashed, and the appeal was remanded to the Appellate Authority under the CGST Act for fresh disposal after personal hearing; all merits were left open.

Final Conclusion: The writ petition was disposed of by setting aside the State appellate order and remanding the appeal to the competent Central GST Appellate Authority for a reasoned decision in accordance with law.

Ex parte GST assessment - Opportunity to reply to show-cause notice

Assessment confirmed for want of a reply to the GST show-cause notice for the tax period 2019-20 - HELD THAT: - As the assessment had been confirmed without a reply to the show-cause notice, and the petitioner undertook to deposit 50% of the IGST and cess demand after adjusting amounts already recovered, an opportunity was granted to submit a reply with supporting documents. [Paras 7, 8, 9, 10, 11]

The matter was remitted for a fresh order on merits, subject to the stipulated deposit and filing of reply; failing compliance, the respondent may recover the tax in accordance with law after due notice.

Final Conclusion: The writ petition was disposed of by remitting the assessment for fresh adjudication subject to the petitioner's compliance with the prescribed conditions.

Personal hearing under section 75(4) of the CGST Act - Mandatory grant of personal hearing before passing an adverse order under section 75(4) of the CGST Act - HELD THAT: - Section 75(4) operates in two independent contingencies, separated by the word "or": a hearing must be afforded when requested by the person chargeable with tax or penalty, and also where the proper officer proposes to pass an adverse order. The latter requirement applies irrespective of whether a reply has been filed.

The Madhya Pradesh High Court in M/s Technosys Security System Pvt. Ltd. [2023 (12) TMI 362 - MADHYA PRADESH HIGH COURT] held that Section 75(4) of the GST Act mandates a hearing before an adverse order, even if no reply is filed by the taxpayer.[Paras 4, 5, 6]

As no effective opportunity of personal hearing was granted, the impugned order was set aside and the matter remanded to the Adjudicating Authority for fresh decision in accordance with law after affording such hearing.

Final Conclusion: The writ petition was disposed of by setting aside the impugned order and remanding the matter for fresh adjudication after an effective personal hearing. All rights and contentions on merits were left open.

GST registration cancelled on the ground that the petitioner is holding another GST registration as a tax deductor at source/tax collector at source - HELD THAT:- The impugned cancellation of GST registration was quashed and the matter remitted for fresh orders on merits, with liberty to cancel any alternate GST registration held as tax deductor or tax collector.

Anticipatory bail in alleged GST fraud - Criminal antecedents

Grant of anticipatory bail in a case alleging fraudulent passing of input tax credit and defrauding of GST revenue by an applicant having involvement in six other similar cases - HELD THAT: - The Court noted that the applicant was associated with six other cases of a similar nature and that the present case concerned alleged defrauding of the exchequer through GST fraud. These circumstances rendered the applicant ineligible for anticipatory bail. [Paras 6]

The anticipatory bail application was rejected.

Final Conclusion: Having regard to the alleged GST fraud and the applicant's involvement in six similar cases, the Court rejected the application for anticipatory bail.

Statutory appellate remedy against GST demand - Challenge to GST demand where the assessee had claimed that the supplies comprised exempt fuelwood and charcoal

HELD THAT: - The Court observed that the defence had not been properly substantiated in the adjudication proceedings and that the appropriate remedy was an appeal before the Appellate Authority. Since a substantial part of the confirmed demand had already been recovered, the assessee was granted an opportunity to pursue that remedy. The apparent incorrect reference to Form GSTR-8A was left for clarification by the assessee before the Appellate Authority with supporting documents. [Paras 9, 11]

The writ petition was disposed of with liberty to file an appeal within the stipulated period, and the Appellate Authority was directed to decide it without reference to limitation.

Final Conclusion: The assessee was relegated to the statutory appellate remedy, with protection against limitation upon filing the appeal within the time granted.

Disallowance under section 14A in absence of exempt income - Revenue expenditure on compensation for tenancy rights

HELD THAT:- No appeal has been carried from the order Morgan Stanley India Securities Pvt. Ltd.2020 (2) TMI 489 - BOMBAY HIGH COURT] which has been followed by the Division Bench of the High Court of Judicature at Bombay [High Court] in the impugned order [2026 (1) TMI 1689 - BOMBAY HIGH COURT] we see no reason to interfere with the impugned judgment and order of the High Court; hence, the special leave petition stands dismissed.

Monetary limits for Revenue appeals - Exception to monetary limits in revision proceedings

Maintainability of Revenue appeals arising from revision proceedings where the tax effect is below the monetary threshold - HELD THAT: - Although proceedings arising from revision may, in principle, fall within an exception to the CBDT circular governing monetary limits for Revenue appeals, that exception cannot operate so as to disregard the tax effect in every case. The general policy against pursuing Revenue litigation below the prescribed threshold remained relevant; the dispute concerned a standalone land-sale transaction and involved neither repeated transactions nor multiplicity of proceedings. [Paras 7, 8, 9, 10]

The appeals were dismissed as being below the monetary limit, leaving the proposed questions of law open for determination in an appropriate case involving a substantial dispute.

Final Conclusion: The Revenue appeals for the stated assessment years were dismissed on account of the low tax effect. The questions of law were left open.

Reassessment proceedings - disposal of objections before scrutiny - Reassessment proceedings - four-week interval after rejection of objections

Reassessment proceedings - disposal of objections before scrutiny - Validity of a notice under section 143(2) issued in reassessment proceedings before disposal of the assessee's objections to reopening - HELD THAT: - A return furnished in response to a reopening notice is to be processed as a return under the regular assessment procedure. Since a notice under section 143(2) initiates scrutiny of that return, it amounts to proceeding with the assessment. The Assessing Officer must first furnish the recorded reasons and dispose of objections to reopening by a speaking order, as such objections may establish that the jurisdictional conditions for reassessment are absent. [Paras 20, 21, 22, 23, 26]

The notice under section 143(2), having been issued before the recorded reasons were furnished and before the objections were disposed of, was set aside.

Reassessment proceedings - four-week interval after rejection of objections - Validity of a notice under section 142(1) issued before expiry of four weeks from rejection of objections to reopening - HELD THAT: - Where objections to reopening are rejected, the Assessing Officer cannot proceed further for four weeks from service of the order, so as to preserve the assessee's opportunity to challenge that order. The notice under section 142(1) was issued before expiry of that period and was consequently contrary to the prescribed reassessment procedure.

As the said Notice was issued even prior to the expiry of the period of 4 weeks after the passing of the order rejecting the objections of the Petitioner. The issuance of this Notice is clearly in violation of the law laid down in Asian Paints Ltd. [2008 (7) TMI 237 - BOMBAY HIGH COURT] and hence cannot be sustained.[Paras 24, 25, 26]

The notice under section 142(1) was set aside, and all action taken in furtherance of the two notices was quashed.

Final Conclusion: The writ petition was allowed to the limited extent of quashing the notices issued under sections 143(2) and 142(1), together with consequential action. The challenge to the reopening notice and all other contentions were left open.

Revision u/s 264 - failure to exercise revisional jurisdiction - Reasoned revisional order

Exercise of revisional jurisdiction on the assessee's claim for deduction despite non-cooperation during reassessment proceedings - HELD THAT: - The revisional power under section 264 is wide and requires the Revisional Authority to examine the assessee's case on merits, make or cause necessary inquiry, and accept or reject the claim for recorded reasons. The assessee's failure to respond to reassessment notices did not absolve the Authority from considering the revision on merits. The impugned order merely referred to such non-cooperation and the assessment order, without examining the claim or furnishing reasons. [Paras 4, 5, 6, 7, 8]

The revisional order was quashed and the revision was remanded for fresh adjudication on merits by a speaking order after hearing the assessee; the merits of the deduction claim were left open.

Final Conclusion: The writ petition was allowed to the extent that the non-speaking revisional order was set aside and the revision remanded for fresh decision on merits.

Two PAN cards issued to one person/assessee -petitioner’s case that he holds only one PAN and that he has neither applied for nor acquired the second PAN nor has he ever used the same to carry out any transaction much less the transaction mentioned in the impugned assessment order.

HELD THAT:- The Department was directed to produce the original records concerning the two PAN cards, including verification details and profiles, and to furnish the reasons and relevant application, if any, for deactivation of one PAN card.

Reassessment proceedings - sanction by specified authority - TOLA extension of time for reassessment sanction

Validity of the order u/s 148A(d) and the consequential reassessment notice for AY 2016-17, where sanction was obtained from the Principal Commissioner after expiry of the extended period available to the authority under Section 151(i) - HELD THAT: - The authority competent to grant sanction is determined by the time at which the reassessment notice is issued, and sanction by the prescribed authority is a jurisdictional precondition for issuance of the notice.

Where the three-year period expired during the period covered by TOLA, the authority under Section 151(i) could grant sanction only up to the extended date; thereafter, sanction of the higher specified authority under Section 151(ii) was mandatory. Since sanction was obtained from the Principal Commissioner, an authority under Section 151(i), after that period had expired, the statutory requirement was not met. [Paras 9, 10, 11, 12]

The order under Section 148A(d), the reassessment notice and all consequential proceedings were quashed for want of jurisdiction.

Final Conclusion: The writ petition was allowed, and the order under Section 148A(d), the reassessment notice and all consequential proceedings were quashed.

Failure to give effect to appellate tax order - Continued seizure of bank locker

Implementation of the Tribunal's order in the petitioner's tax dispute despite prolonged non-action by the Assessing Officer - HELD THAT: - The Court noted that the grievance regarding implementation of the Tribunal's order had remained unaddressed for a prolonged period. It required the Assessing Officer to objectively consider the grievance upon the affidavit and supporting documents produced by the petitioner, without awaiting original records or insisting on certified copies. [Paras 5, 6, 7]

The Assessing Officer was directed to grant a personal hearing and pass appropriate order(s) giving effect to the Tribunal's order within the stipulated time.

Continued seizure of bank locker after the tax dispute had been finalised by the Tribunal - HELD THAT: - The Court observed that continued seizure of the locker served no purpose, particularly when there was no demand, and that seizure of a locker by itself did not aid recovery. It therefore directed a supervised opening, verification and itemisation of the locker contents. [Paras 5, 8, 9]

The locker was directed to be opened in the presence of the petitioner, the Assessing Officer and the bank manager, with videography and preparation of an inventory; no article could be removed, though the locker keys were to be handed over to the petitioner.

Final Conclusion: The Assessing Officer was directed to promptly give effect to the Tribunal's order after hearing the petitioner, and supervised verification of the seized locker was ordered subject to conditions.

Condonation of delay in filing return of income under section 119(2)(b) - Effect of pending assessment appeal on condonation application

Validity of rejection of the application to condone a 25-day delay in filing the return of income for claiming deduction under section 80IBA, after completion of assessment and during pendency of the assessment appeal. - HELD THAT: - The power to condone delay in filing the return rested with the Board, whereas the Commissioner of Income-tax (Appeals) had no such power. Consequently, pendency of the appeal against the assessment order could neither deprive the assessee of the statutory remedy under section 119(2)(b) nor restrict judicial review of the rejection of that remedy. Following the earlier decision concerning the assessee on a materially similar COVID-related delay, the Court rejected the Revenue's objection founded on the pending assessment appeal. [Paras 6, 10, 11, 12]

The impugned rejection was quashed in terms of the earlier decision, and the Commissioner of Income-tax (Appeals) was directed to examine the disallowance of the deduction on merits in accordance with law.

Final Conclusion: The writ petition was allowed and the rejection of the condonation application was set aside, without adjudicating the merits of the deduction claim, which was left for consideration in the pending appeal.

Transfer-pricing comparability - turnover filter - Cash profit level indicator - depreciation adjustment - Operating expenditure-provision for bad and doubtful debts - Business perquisite-assets supplied by associated enterprise

Turnover filter in transfer-pricing comparability - Transactional Net Margin Method - Exclusion of high-turnover companies as comparables for determining the arm's length price of software development services under the Transactional Net Margin Method - HELD THAT: - Comparability under the Transactional Net Margin Method must be determined through a FAR analysis, and the size of a company is relevant to its suitability as a comparable. The turnover filter adopted for excluding high-turnover entities was consistent with the governing precedent. [Paras 12, 13]

The turnover-based exclusion of the comparables was upheld and no substantial question of law arose.

Cash profit level indicator - Depreciation adjustment in transfer-pricing analysis - Computation of the profit level indicator after excluding depreciation where depreciation costs materially differed from those of comparable companies - HELD THAT: - The difference in depreciation resulted from variations in asset types, technology and investment levels between the assessee and the comparables. Consistently with the applicable precedent, exclusion of depreciation was accepted for comparing the real profit level indicators. [Paras 15, 16]

The cash profit level indicator approach was sustained and no substantial question of law arose.

Provision for bad and doubtful debts as operating expenditure - Profit level indicator computation - Treatment of provision for bad and doubtful debts as operating expenditure for computing the profit level indicator - HELD THAT: - There is no basis in the Rules to exclude provision for bad and doubtful debts from operating expenses unless it represents an extraordinary item. As no material established that the provision was extraordinary, it was rightly treated as a normal business expense linked to sales. [Paras 17, 18]

The treatment of the provision as operating expenditure was upheld and no substantial question of law arose.

Business perquisite from assets supplied by associated enterprise - Taxability of free-use testing equipment - Taxability as a business perquisite of testing equipment supplied without charge by an associated enterprise where the assessee acquired no ownership or independent benefit from the equipment - HELD THAT: - The equipment belonged to the associated enterprise and was supplied for testing software developed for that enterprise. The assessee neither acquired title nor claimed depreciation, and the equipment was to be returned or otherwise disposed of after its use; consequently, no taxable benefit accrued to the assessee. [Paras 19, 21]

The deletion of the addition was sustained and no substantial question of law arose.

Final Conclusion: The Revenue's appeals were dismissed, as no substantial question of law arose on the transfer-pricing and business-perquisite issues.

Expeditious disposal of statutory appeal against reassessment - Adjustment of refund against reassessment demand pending appeal

Expeditious disposal of statutory appeal against reassessment - Delay in disposal of the statutory appeal challenging the reassessment for A.Y. 2016-17 - HELD THAT: - Although the jurisdictional objections to the reassessment were prima facie meritorious, the Court did not adjudicate them and considered that the balance of convenience lay in an early disposal of the pending appeal, particularly in view of the jurisdictional issues raised. [Paras 6, 7]

The appellate authority was directed to hear and decide the appeal expeditiously and, in any event, within 12 weeks.

Adjustment of refund against reassessment demand pending appeal - Adjustment of the refund for A.Y. 2025-26 against the reassessment demand for A.Y. 2016-17 despite the pre-deposit and pendency of the appeal - HELD THAT: - As the petitioner had already made the stipulated pre-deposit, the Court directed restoration of amounts adjusted against the demand in excess of that pre-deposit, with interest as permissible in law, and protected the petitioner from further adjustment pending disposal of the appeal. [Paras 8, 9, 10]

The excess adjusted amount was directed to be refunded within the stipulated period, and no further adjustment against the demand was permitted until disposal of the appeal.

Final Conclusion: The writ petition was disposed of with directions for time-bound disposal of the appeal, refund of the excess amount adjusted against the disputed demand, and restraint on further adjustment pending the appeal.

Mandatory personal hearing in faceless assessment - Adequate response time to final show-cause notice in faceless assessment

Validity of the faceless assessment where the assessee's specific request for a personal hearing was not granted - HELD THAT: - Section 144B(6)(viii) requires a personal hearing before assessment where it is specifically sought by the assessee. As the requested hearing was not granted, the assessment was passed in breach of the statutory procedure and the principles of natural justice. [Paras 6, 8, 9]

The assessment, consequential demand and penalty proceedings, including the subsequent penalty order, were quashed and the matter was remitted for fresh assessment after granting a personal hearing.

Validity of the faceless assessment where less than the minimum response time stipulated in the NFAC SOP was afforded for replying to the final show-cause notice - HELD THAT: - The NFAC SOP requires a minimum seven-day response period to secure observance of natural justice, subject to curtailment where necessitated by the assessment limitation date. No reason was shown for providing a shorter period; the time allowed was consequently inadequate and independently warranted interference under Article 226. [Paras 7, 8, 9]

The assessment and consequential proceedings were quashed, with a direction for fresh assessment after permitting the assessee to file further submissions within the time granted on remand.

Final Conclusion: The writ petition was allowed. The faceless assessment and consequential demand and penalty proceedings were quashed for denial of the requested hearing and inadequate response time, and the matter was remitted for fresh assessment subject to the directed opportunities.

Interim protection against recovery of the refund withheld u/s 245(2) pending adjudication of the writ petition.

HELD THAT:- Amendment to challenge withholding of the refund was permitted; pending response, the Department was restrained from recovering the refund from the petitioner's bank account, and the fixed deposit was directed to remain unutilised.

Approval for reassessment proceedings - application of mind - Consideration of assessee's response under section 148A(b)

Validity of approval for reassessment proceedings where the sanctioning authority did not consider the assessee's response to the notice under section 148A(b) - HELD THAT: - The assessee had filed a response, yet the approval proceeded on the premise that no response had been filed. The approval contained no reflection of consideration of that response and was therefore mechanical. As the order under section 148A(d) was founded on such approval, it stood vitiated. [Paras 4, 5, 6]

The order under section 148A(d) and the consequential notice under section 148 were set aside. Fresh proceedings were permitted from the stage of receipt of the assessee's response, to be considered in accordance with law and subject to the directions on issuance of notice and limitation.

Final Conclusion: The writ petition was disposed of by setting aside the reassessment order and notice for want of a valid, non-mechanical approval, while preserving the respondents' right to proceed afresh in accordance with law.

Stay of reassessment demand pending appeal - High-pitched assessment - Prima facie consideration of limitation challenge in stay proceedings

Validity of rejection of stay of the reassessment demand pending appeal where the limitation challenge had prima facie substance and the assessment was high-pitched - HELD THAT: - The stay order did not deal, even prima facie, with the petitioner's material contentions merely because the appeal was pending. The limitation issue, raised before the appellate authority, went to the root of the matter and disclosed prima facie substance, though its final determination was left to the appellate authority. Further, the assessment was high-pitched, and the finding of financial capacity based on gross turnover overlooked the petitioner's returned income. In these peculiar circumstances, unconditional protection against recovery was warranted. [Paras 9, 10]

The rejection of stay was quashed, and recovery of the entire reassessment demand was stayed until disposal of the pending appeal; the appellate authority was requested to decide the appeal expeditiously.

Final Conclusion: The writ petition was allowed to the extent that the impugned stay-rejection order was set aside and the reassessment demand was stayed pending disposal of the appeal. The appellate authority is to decide the appeal independently on its merits.

Return in reassessment proceedings filed beyond period specified in notice - Mandatory notice under Section 143(2) in reassessment proceedings

Return in reassessment proceedings filed beyond period specified in notice - Legal effect of a return filed after the thirty-day period stipulated in a reassessment notice for Assessment Year 2014-15 - HELD THAT: - The Department did not dispute that, for the relevant assessment year, no statutory embargo rendered the return non est merely because it was filed beyond the period specified in the notice. The subsequent communication proceeded on the erroneous premise that no return had been filed, demonstrating that the authority had failed to examine the return on record. [Paras 8, 12]

The return could not be disregarded as non est and was required to be treated as having been filed in the reassessment proceedings.

Mandatory notice u/s 143(2) in reassessment proceedings - Validity of the reassessment assessment without statutory notice u/s 143(2) after filing of the return in response to notice u/s 142(1) - HELD THAT: - The Department was unable to contest that, in the circumstances, notice under Section 143(2) was mandatory and that no such notice had been issued or served. The assessment could not stand in the face of that uncontroverted procedural defect. [Paras 14, 15]

The impugned orders were set aside and the writ application was allowed.

Final Conclusion: The writ application was allowed and the impugned orders were set aside.

Provisional release of seized conveyance - reasonable security conditions - Alternative statutory remedy - exercise of writ jurisdiction

Alternative statutory remedy - exercise of writ jurisdiction - Maintainability of the writ petition challenging conditions for provisional release of a seized barge despite the statutory appellate remedy - HELD THAT: - Though an appellate remedy was available, the conditions imposed for provisional release were found ex facie excessive and unreasonable. The Court therefore considered it appropriate to entertain the writ petition rather than relegate the petitioner to the appellate remedy. [Paras 11, 13]

The writ petition was entertained notwithstanding the alternative statutory remedy.

Provisional release of seized conveyance-proportionate bank guarantee - Validity of the bank-guarantee condition imposed for provisional release of a barge seized in connection with an alleged fuel transfer - HELD THAT: - The discretion to require security for provisional release must be exercised reasonably on relevant material, having regard to the nature of the alleged offence, the goods, value of the conveyance, revenue exposure, potential fine or penalty, and the applicant's role. The differing valuation material and the substantially less onerous security condition imposed for release of M.V. Angara, from which the fuel was seized, made the impugned bank-guarantee requirement unreasonable and excessive. [Paras 14, 15]

The bank guarantee was reduced from Rs. 6 crore to Rs. 50 lakh; the remaining conditions for provisional release were retained.

Final Conclusion: The writ petition was partly allowed. The bank-guarantee condition for provisional release of the barge was reduced to Rs. 50 lakh, while all other conditions remained intact.

Immediate suspension of Customs Broker licences - Binding departmental timelines for preventive suspension - Unexplained delay in preventive suspension

Validity of immediate suspension under Regulation 16(1) of Customs Broker licences where the departmental suspension timelines were substantially exceeded without satisfactory explanation - HELD THAT: - Regulation 16(1) confers an exceptional preventive power, not an ordinary disciplinary power. Pendency or contemplation of an enquiry, or the gravity of allegations alone, does not establish the necessity for immediate action. "Immediate" does not mean instantaneous, but requires reasonable promptness after sufficient material becomes available. The overall chronology, including the progress of investigation, receipt of the offence report and the licensing authority's action thereafter, must disclose a genuine need for urgent suspension.

Circular No.9/2010-Customs continued to bind the Department, being consistent with the 2018 Regulations; while reasonable deviation from its timelines was permissible, substantial delay required satisfactory explanation.

The considerable and unexplained delays in completing investigations and/or passing suspension orders in the batch showed that the statutory requirement of immediate action had not been satisfied. The merits of the underlying allegations were not examined. [Paras 47, 48, 49, 52, 53]

The orders of immediate suspension and the consequential continuation orders were set aside, leaving the competent authority free to proceed in accordance with law on the merits of the allegations.

Final Conclusion: All writ petitions were allowed and the suspension orders under Regulation 16(1), together with the consequential continuation orders under Regulation 16(2), were set aside. The petitioners may continue their business subject to applicable law, without prejudice to further proceedings on the underlying allegations.

Prospective operation of exemption notification - Provisional release of imported highly specialised equipment

Consideration of provisional release of imported secondhand digital multifunction print and copying machines where the bills of lading predated the amendment relied upon by the customs authorities - HELD THAT: - An amendment to an exemption notification, unless expressly retrospective, operates prospectively and cannot govern imports covered by bills of lading issued before its commencement. The earlier common order in Taanish Enterprises, M/s. Maruti Enterprises, M/s. Best Mega International And Others [2025 (7) TMI 1350 - MADRAS HIGH COURT] concerning provisional release of similar imported goods applied, no distinguishing feature having been shown. [Paras 6, 7]

The customs authorities were directed to consider the request for provisional release under Section 110A in accordance with law and, upon compliance with the conditions imposed, to release the goods provisionally; the adjudication proceedings were left to be decided independently on their merits.

Final Conclusion: The writ petition was disposed of with directions for consideration and conditional provisional release of the imported goods, without prejudice to the independent adjudication under the Customs Act, 1962.

Proper officer for customs show cause notice - Exercise of writ jurisdiction at show cause notice stage

Validity of the customs show cause notice issued by the Assistant Commissioner, SIIB, on the ground that the issuing officer was not the proper officer - HELD THAT: - The Court treated the jurisdictional question as concluded in Commissioner of Customs v. Canon India Pvt. Ltd., [2021 (3) TMI 384 - SUPREME COURT] which held the concerned officer to be the proper authority. The challenge to the notice on that ground therefore did not survive. [Paras 5, 6]

The objection to the competence of the issuing officer was rejected.

Exercise of writ jurisdiction at show cause notice stage - Alternative remedy in customs adjudication - Exercise of writ jurisdiction against the customs show cause notice before adjudication, including the effect of acceptance of the closure report in the connected investigation - HELD THAT: - The effect of acceptance of the closure report upon the show cause notice, and the factual allegations underlying the notice, required factual determination and evidence before the competent authority. Applying the principles stated in Whirlpool Corpn. v. Registrar of Trade Marks [1998 (10) TMI 510 - SUPREME COURT] the Court held that, once the jurisdictional challenge failed, the matter did not fall within the exceptional circumstances warranting writ interference at the notice stage. [Paras 8, 9, 10]

The writ petition was disposed of without adjudicating the factual merits, with liberty to file a fresh response to the show cause notice and pursue remedies available in law after adjudication.

Final Conclusion: The challenge to the show cause notice on the ground of lack of authority failed, and the factual disputes were left for adjudication under the statutory process. The petitioner was permitted to respond to the notice and avail remedies in accordance with law.

Customs misdeclaration and attempted export of prohibited red sander wooden logs - Sentencing under Section 135(1)(ii) where prohibited goods are not shown to attract Section 123 of the Customs Act

Customs misdeclaration - Attempted export of prohibited red sander wooden logs - Criminal liability for misdeclaration of red sander wooden logs as granite cobble stones for export. - HELD THAT: - The Court found no perversity in the concurrent findings that the petitioner was guilty of misdeclaration and the offences under Sections 132 and 135 of the Customs Act. It further held that the allegations attracted the violations under Sections 135(1)(a), 135(1)(b) and 135(1)(c). [Paras 8, 9]

The findings of guilt and convictions were confirmed.

Applicability of Section 135(1)(ii) sentencing - Modification of custodial sentence for Customs offences - Applicable punishment and modification of sentence for the Customs offences involving red sander wooden logs. - HELD THAT: - As the prosecution had not established that the prohibited goods were covered by Section 123 of the Customs Act, the Court held that the applicable punishment was that prescribed under Section 135(1)(ii), carrying a maximum imprisonment of three years, rather than the higher punishment applicable to goods attracting Section 123. Having regard to the period already spent in custody and the overall circumstances, the custodial sentence warranted modification. [Paras 9, 10, 11]

The imprisonment was reduced to the period already undergone, subject to payment of revised fines and the stipulated default sentences.

Final Conclusion: The revision was allowed to the limited extent of modifying the sentence. The convictions were maintained, while the custodial sentence was reduced to the period already undergone subject to revised fines and default sentences.

Special Advance Authorisation imports of polyester knitted fabrics - effect of Minimum Import Price condition - Duty exemption under Special Advance Authorisation

Eligibility of polyester knitted fabrics imported under a valid Special Advance Authorisation for duty exemption notwithstanding the Minimum Import Price condition - HELD THAT: - Paragraph 4.04A of the Foreign Trade Policy permits duty-free import of fabrics under the Special Advance Authorisation Scheme for manufacture and export of apparel. The DGFT notification extending the Minimum Import Price condition expressly recognised imports by Special Advance Authorisation holders, subject to the stipulated condition concerning sale in the Domestic Tariff Area. Hence, the Minimum Import Price condition, by itself, could not negate eligibility for the exemption. The impugned order failed to consider the Special Advance Authorisation, Paragraph 4.04A and the notification specifically governing such authorisation holders. [Paras 14, 15, 16, 17]

The denial of duty exemption was unsustainable; the confiscation and consequential redemption fine and penalty were set aside, and release of the goods was directed in accordance with law.

Final Conclusion: The writ petition was allowed, the impugned order was set aside, and the goods were directed to be released. A detention certificate for waiver of demurrage and container detention charges was also directed to be issued.

Prospective operation of customs exemption notification - Provisional release of imported second-hand highly specialised equipment

Reliance on an amended exemption notification to decline consideration of provisional release of imported second-hand highly specialised equipment covered by earlier Bills of Lading - HELD THAT: - In the absence of an express provision giving retrospective operation, a statutory notification operates prospectively. Since the Bills of Lading preceded commencement of the amendment, the amendment could not govern those imports or be invoked to refuse consideration of provisional release. The earlier common order M/S. TAANISH ENTERPRISES, M/S. MARUTI ENTERPRISES, M/S. BEST MEGA INTERNATIONAL AND OTHERS [2025 (7) TMI 1350 - MADRAS HIGH COURT] concerning provisional release of similar goods disclosed no distinguishing feature warranting a different view. [Paras 6, 7]

The authorities were directed to consider the request for provisional release in accordance with law and, upon compliance with the conditions imposed, release the goods provisionally, subject to independent adjudication proceedings.

Final Conclusion: The writ petition was disposed of with a direction to consider provisional release without applying the subsequent amendment to imports covered by earlier Bills of Lading.

Anti-Dumping Duty on castings incorporated in wind-turbine gear boxes

Levy of Anti-Dumping Duty on imported wind-turbine gear boxes, as distinct from castings forming part thereof - HELD THAT: - The notification imposes duty on castings for wind operated electricity generators, including castings forming part of a sub-assembly, equipment or component. This enlarges the forms in which castings may be subjected to duty, but does not authorise levy on the complete equipment or component. The unchallenged Tribunal interpretation to that effect had attained finality and was binding on the Customs authorities; subsequent assessments of identical imports were also consistent with that interpretation. [Paras 15, 16, 17]

The final assessment levying Anti-Dumping Duty on the Gear Boxes was held without statutory authority and set aside; the self-assessment was directed to be accepted, with consequential release of the bond and bank guarantees.

Final Conclusion: The writ petition was allowed and the final assessment was set aside to the extent it subjected the Gear Boxes to Anti-Dumping Duty.

Seizure of gold - reasonable belief of foreign origin - Burden of proving smuggled character of gold

Seizure of gold - reasonable belief of foreign origin - Legality of the Customs seizure of gold handed over by GRPS without an independently formed reasonable belief that it was of foreign origin and smuggled - HELD THAT: - The seizure records disclosed no foreign markings on the gold, and the solitary mark "W" did not establish foreign origin. Customs merely accepted the seizure made by GRPS without forming subjective satisfaction on objective material. Mere recovery of gold or suspicion of smuggling could not constitute the reasonable belief required for seizure. [Paras 11, 12, 13, 14, 15]

The seizure was held arbitrary and legally unsustainable for want of the requisite reasonable belief.

Burden of proving smuggled character of gold - Confiscability of gold and penalty liability where unrefuted purchase records evidenced domestic procurement and conversion into gold pieces - HELD THAT: - The claimant's purchase invoices and supporting records were not discarded by the Revenue and were therefore admissible. Those materials discharged the burden under Section 123 of the Customs Act, whereupon the onus shifted to the Revenue to establish that the gold was smuggled; that onus was not discharged. [Paras 16, 17, 18]

The Revenue having failed to establish smuggling, the gold was held not liable to confiscation, was directed to be released, and no penalties were imposable.

Final Conclusion: The impugned order was set aside and the appeals were allowed. The gold was directed to be released and the penalties were not sustained.

Refund of Special Additional Duty - sale of imported goods as such - Deemed manufacture - sterilisation, repacking and relabelling of medical examination gloves

Eligibility for refund of Special Additional Duty on imported non-sterile medical examination gloves after sterilisation, repacking and relabelling for retail sale - HELD THAT: - The conditions requiring invoices and payment of VAT on the "said goods" and "such imported goods" were read together as confining the refund to the imported goods themselves, sold without being subjected to manufacture. Sterilisation, repacking and relabelling of the gloves constituted deemed manufacture under the Third Schedule, and the payment of Central Excise duty on the processed goods confirmed their clearance as manufactured goods.

The retail sale of sterilised surgical gloves therefore could not be treated as sale of the imported gloves. Case followed Proflex Systems Versus Commissioner of Customs [2017 (3) TMI 216 - GUJARAT HIGH COURT] as upheld by SC [2017 (8) TMI 93 - SC ORDER] [Paras 5, 6, 7, 10, 12]

The appellants were ineligible for Special Additional Duty refund; the impugned orders were sustained and the appeals dismissed.

Final Conclusion: The impugned orders rejecting Special Additional Duty refunds or recovering refunds erroneously granted were sustained, and all the appeals were dismissed.

Reason to believe for town seizure of gold as smuggled goods - Reverse burden under Section 123 for confiscation of town-seized gold

Confiscation of town-seized gold alleged to be of foreign origin, where the claimant established licit procurement through an invoice reflected in the GST portal - HELD THAT: - The invoice and the corresponding GST portal record sufficiently established licit procurement of the gold. Since the gold was seized in town and its purity was below 99.9%, there were no reasons to believe that it was of foreign origin for effecting seizure. The obligation under Section 123 stood discharged, shifting the burden to Revenue, which failed to prove that the gold was smuggled. [Paras 12, 13, 14]

The gold was held not liable to confiscation; the confiscation orders were set aside insofar as the appellant was concerned and release of the gold was directed. No penalty was imposable on the appellant.

Final Conclusion: The appeal was disposed of by setting aside the confiscation orders insofar as the appellant was concerned and directing release of the gold, while upholding the dropping of penalty.

Customs valuation - importer's written acceptance of reassessment - Customs valuation - rejection of declared transaction value on NIDB data

Written acceptance of customs reassessment - Statutory right to challenge reassessment - Effect of the importer's written acceptance of enhanced assessable value on the statutory right to challenge reassessment - HELD THAT: - The waiver contemplated by section 17(5) is confined to the proper officer's obligation to issue a speaking order on reassessment. It cannot be construed as an abandonment of the importer's statutory right to question the formation of opinion or the merits of reassessment. The decision in Niraj Silk Mills [2024 (11) TMI 1361 - DELHI HIGH COURT] was held to govern the controversy. [Paras 20, 22]

The written acceptance did not preclude the importer from challenging the enhancement of value.

Rejection of declared transaction value - NIDB-based valuation enhancement - Rule 12(2) communication of grounds - Validity of rejection of the declared transaction value and enhancement of value on unsubstantiated contemporaneous import or NIDB data - HELD THAT: - Before rejecting the declared value, the proper officer must form and record a reasonable doubt as to its truth or accuracy and, when required, communicate the grounds in writing under rule 12(2). As recognised in Century Metal Recycling Pvt. Ltd.[2025 (2) TMI 1276 - CESTAT CHANDIGARH] that mandatory requirement cannot be bypassed or waived. A valuation addition founded solely on NIDB data requires independent and cogent material; the acceptance letters did not disclose the alleged contemporaneous-import details, leaving the Revenue's basis for enhancement unsubstantiated. [Paras 18, 19, 22]

The reassessment and the consequential appellate orders were held unsustainable; the appeals were allowed with consequential relief in accordance with law.

Final Conclusion: The appellate orders sustaining enhancement of the declared value solely on the importer's written acceptance were set aside. All appeals were allowed with consequential relief in accordance with law.

Classification of DC-to-DC converters as static converters for IGST - IGST rate on DC-to-DC converters under the applicable notification entry -

HELD THAT: - DC-to-DC converters convert direct current from one voltage level to another and are a type of electric power converter. They fall within the classification of static converters under Customs Tariff Item 8504 40 and are covered by Entry 375 of Notification No. 01/2017-IT(RT). [Paras 11]

The imported goods were held eligible for IGST at 18% under Entry 375; the Revenue's appeal was dismissed.

Final Conclusion: DC-to-DC converters were held classifiable as static converters under Customs Tariff Item 8504 40 and covered by Entry 375 of the applicable notification. The Revenue's appeal was dismissed and the cross-objection was disposed of.

Classification of liquid crystal display panels used in automotive instrument clusters - Specific tariff heading prevailing over vehicle-parts classification

Classification of liquid crystal display panels imported for assembly into automotive instrument clusters as liquid crystal devices under CTI 9013 8010 or as motor-vehicle parts under CTI 87089900/87141090 - HELD THAT: - The Tribunal held that LCD panels are specifically covered by CTI 9013 8010. Applying the principle laid in Secure Meters Ltd. [2015 (5) TMI 241 - SUPREME COURT] that a specific tariff description prevails and Chapter 90 Note 2(a), goods included in a Chapter 90 heading retain classification in that heading even when used as parts in another article; their sole or principal use in automotive instrument clusters did not justify their classification as vehicle parts. [Paras 21, 22]

The declared classification under CTI 9013 8010 was upheld; classification under CTI 87089900/87141090 and, consequently, the differential duty, interest and penalties were held unsustainable.

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

Classification of embedded Wi-Fi, cellular and GNSS modules as parts of communication apparatus - Basic customs duty exemption for embedded modules not forming parts of cellular mobile phones or smart watches

Classification of embedded Wi-Fi, cellular and GNSS modules as parts of communication apparatus - Sole or principal use test for machine parts - Classification as parts of apparatus for the transmission or reception of data under Tariff Item 8517 79 90 - HELD THAT: - The modules have no separate identifiable function and cannot operate independently unless incorporated into a host apparatus with a PCB, antenna and power source; cellular modules additionally require a SIM/eSIM and host control. Applying the twin test, they are parts and not complete apparatus. Being designed for sole or principal use with apparatus of Heading 8517, they fall under that heading by application of Section Note 2(b) to Section XVI. The specific description for such parts prevails over the general description for electronic integrated circuits under Heading 8542; as the modules are neither aerials nor populated printed circuit boards, they fall under the residuary Tariff Item 8517 79 90.

We relied upon the ruling of the Customs Authority for Advance Rulings, New Delhi in M/s Hewlett-Packard Enterprise India Pvt. Ltd. [2025 (12) TMI 1405 - CUSTOMS AUTHORITY FOR ADVANCE RULINGS, NEW DELHI] wherein modules classifiable under Tariff Item 8517 79 90 were held to be covered by SI. No. 5 of Notification No. 57/2017- Cus. dated 30.06.2017 and eligible for the 'Nil' rate of basic. customs duty. The said ruling supports the applicant's contention that the benefit of the notification is available to eligible modules falling. under Tariff Item 8517 79-90, provided the exclusions specified in the notification are not attracted. [Paras 6]

The Wi-Fi, cellular communication and navigation/positioning modules were held classifiable as parts under Tariff Item 8517 79 90.

Basic customs duty exemption for embedded modules not forming parts of cellular mobile phones or smart watches - Eligibility of embedded Wi-Fi, cellular communication and navigation/positioning modules for the basic customs duty exemption under Sl. No. 5 of Notification No. 57/2017-Cus - HELD THAT: - The notification grants a nil rate to goods under Tariff Item 8517 79 90, except parts of cellular mobile phones or wrist wearable devices and inputs or sub-parts for manufacturing such excluded parts. The modules are standardised embedded components intended for industrial, commercial and infrastructure apparatus, and are neither parts of the excluded consumer devices nor inputs or sub-parts for their manufacture. [Paras 6]

The modules were held eligible for the nil rate of basic customs duty, subject to fulfilment of the applicable conditions, procedural requirements and verification at import.

Final Conclusion: The proposed embedded modules were ruled classifiable under Tariff Item 8517 79 90 and eligible for the nil rate of basic customs duty under the applicable exemption notification, subject to the prescribed conditions and verification.

Membership threshold and waiver for oppression and mismanagement proceedings in a company without share capital - Burden of proof of disputed written member consents

Maintainability of the oppression and mismanagement petition where the waiver application was filed after the petition and the written consents relied upon for satisfying the membership threshold were disputed - HELD THAT: - The petition had itself pleaded the factual basis for satisfying the statutory threshold and relied on written consents drawn from the voter list used for the company's election. As the appellant did not challenge the validity of that voter list, the consents exceeded one-fifth of the eligible voting members; consequently, no waiver was required and the later application, filed as a precaution, did not render the petition incompetent.

The appellant, having alleged forged or invalid consents, bore the burden of proving that assertion and could not require the Tribunal to undertake suo motu forensic verification in the absence of supporting material or testimony from any consenting member. The membership requirement is a discretionary regulatory safeguard against frivolous litigation and must receive a purposive, rather than restrictive, construction; at the waiver stage, merits and issues dependent upon merits are not to be adjudicated. [Paras 18, 19, 20, 21, 22]

The grant of waiver and the continuation of the oppression and mismanagement proceedings were sustained.

Final Conclusion: The appeal was dismissed, there being no legal or factual infirmity in the order granting waiver and permitting the petition to proceed on merits.

Reasoned interim orders - Natural justice in interlocutory proceedings - Opportunity of hearing -

Validity of interim relief in an oppression and mismanagement petition granted without an effective opportunity to contest the interlocutory application and without recorded reasons - HELD THAT: - Mere non-filing of a reply to the main petition or the interlocutory application could not, by itself, justify interim relief affecting material rights. The Tribunal was required to afford an effective opportunity to controvert the application and to record reasons demonstrating the basis for the interim relief; failure to do so violated the principles of natural justice and the requirements governing adjudication under the Companies Act.

The objection concerning the statutory shareholding threshold and absence of waiver was left for consideration in the fresh determination. [Paras 7, 8, 9, 10, 11]

The impugned interim order was quashed and the interlocutory application was remitted for fresh decision after granting the appellant an effective hearing and considering its objections.

Final Conclusion: The appeal was allowed, and the interim application was remitted for fresh adjudication in accordance with natural justice and by a reasoned order.

Fraudulent and collusive initiation of CIRP - Recall of admission for absence of jurisdictional debt - Continuation of CIRP as an in rem proceeding

Fraud on jurisdictional facts in insolvency proceedings - Recall of CIRP for collusive initiation - Power of the Adjudicating Authority to recall admission of a Section 9 insolvency application founded on fraudulent and collusive jurisdictional facts - HELD THAT: - The existence of debt is a jurisdictional fact for assumption of jurisdiction under the Code. Persons invoking the insolvency process owe a public-law duty not to deceive or mislead on such facts. Where debt was fraudulently portrayed to procure commencement of CIRP and moratorium, fraud and collusion vitiated the very foundation of jurisdiction and could not sustain the proceedings. [Paras 13, 22, 27, 28, 30]

The Adjudicating Authority was held entitled to recall the admission and dismiss the Section 9 application initiated by the collusive operational creditor.

Continuation of CIRP after fraudulent initiation - Collective and in rem character of CIRP - Continuation of CIRP commenced on a collusive Section 9 application after admission and participation of other creditors - HELD THAT: - Upon admission, CIRP ceases to be a dispute confined to the initiating creditor and the corporate debtor; it becomes an in rem, collective process in which other creditors acquire statutory interests and the process is conducted by the resolution professional under the supervision of the Committee of Creditors and the Adjudicating Authority. Fraud by the original applicant therefore does not invariably require termination of a mature CIRP. The original applicant must be excluded, and the Adjudicating Authority must determine whether continuation would serve the statutory purpose with integrity, transparency and confidence, after considering the views of the resolution professional, the Committee of Creditors and other stakeholders. [Paras 46, 47, 48, 49, 50]

The order terminating CIRP was set aside and the proceedings were restored for the Adjudicating Authority to decide whether they should continue; if continued, they are to be concluded expeditiously.

Final Conclusion: The appeals were partly allowed, the appellate order terminating CIRP was set aside, and the CIRP was restored. The Adjudicating Authority must determine, after hearing the relevant stakeholders, whether continuation serves the statutory objectives notwithstanding the fraudulent and collusive initiation.

Clean-slate doctrine under the Insolvency and Bankruptcy Code - Displaced-person eligibility under the Model Rehabilitation Policy

Clean-slate doctrine - Extinguishment of non-plan claims - Enforceability of rehabilitation-policy and project-agreement claims against the erstwhile corporate debtor and its successor after approval of a resolution plan - HELD THAT: - Upon approval of the resolution plan, claims not forming part of it stood extinguished and could not be continued against the corporate debtor or the successful resolution applicant. The overriding effect of the Insolvency and Bankruptcy Code admits no exception for a welfare-oriented rehabilitation-policy claim or an agreement with project-affected persons.

In Committee of Creditors of Essar Steel Ltd.[2019 (11) TMI 731 - SUPREME COURT] the Supreme Court held that a successful resolution plan cannot be confronted with undecided or 'hydra-head' claims of pre-resolution stage, after the plan is accepted.

In Ghanashyam Mishra [2021 (4) TMI 613 - SUPREME COURT] the Supreme Court held that upon approval of a resolution plan, all claims included therein become binding, while claims not forming part of the plan stand extinguished. No proceedings can thereafter be maintained in respect of such claims. Thus, a rehabilitation policy or agreement with project-affected/displaced persons cannot create an exception, and Section 238 of the IBC gives the Code overriding effect over any inconsistent law, policy or agreement.[Paras 8, 9, 10]

The relief claimed was held unenforceable against the erstwhile corporate debtor and its successor.

Displaced-person eligibility - Limits of writ review of factual findings - Entitlement to Model Rehabilitation Policy benefits where the claimant was found not to have resided in the acquired area for the prescribed period - HELD THAT: - The Collector's conclusion that the petitioner was not a displaced person was founded on the material on record, including the finding that he had not resided in the area under acquisition for one year before the relevant date. In the absence of any apparent or jurisdictional error, writ jurisdiction could not be exercised as an appellate forum to reappreciate that material. [Paras 11, 12]

No ground for interference with the Collector's rejection of rehabilitation benefits was made out.

Final Conclusion: The writ petition was dismissed, the claimed relief being unenforceable against the corporate debtor and its successor under the approved resolution plan, and no jurisdictional error being found in the rejection of rehabilitation benefits.

Binding effect of approved resolution plan - Leasehold transfer under approved resolution plan - Waiver of lease-transfer dues

Validity of the demand for transfer fees, arrears and other dues for mutation and transfer of industrial leases despite an approved resolution plan expressly waiving such liabilities - HELD THAT: - An approved resolution plan is binding upon all stakeholders, including governmental authorities. Clause 8.4.3 of the approved plan granted unconditional permission for change in control of the leasehold land and waived arrears of rent, fees, transfer charges, interest and penalties. The subsequent demand for transfer of the leases was therefore inconsistent with the binding resolution plan and the settled clean-slate principle. [Paras 19, 20]

The demand was quashed, and the authorities were directed to mutate the petitioner's name and transfer the leases in accordance with the approved resolution plan and law.

Final Conclusion: The petition was allowed, the impugned demand was quashed, and mutation and lease transfer were directed in terms of the approved resolution plan.

Landowner's status as co-promoter under RERA - Execution of unchallenged RERA recovery certificate during CIRP - NCLT jurisdiction over CIRP-related execution objections

Landowner's status as co-promoter under RERA - The status of landowners who entered into a Joint Development Agreement with the developer for purposes of liability under the Real Estate (Regulation and Development) Act, 2016 - HELD THAT: - The statutory definition of promoter, including its Explanation, treats the persons undertaking development and sale as promoters jointly responsible for obligations under the Act. A landowner permitting development through a Joint Development Agreement consequently does not remain a mere owner and cannot contend that proceedings under the Act concern the developer alone. [Paras 24, 25]

The petitioners were held to be promoters or co-promoters for the purposes of the RERA obligations arising from the development arrangement.

Execution of unchallenged RERA recovery certificate during CIRP - NCLT jurisdiction over CIRP-related execution objections - Maintainability of a writ challenge to a public auction notice issued to enforce an unstayed RERA recovery certificate on the ground that the developer is undergoing Corporate Insolvency Resolution Process - HELD THAT: - The auction notice was only a consequential execution step under a recovery certificate that had neither been challenged nor stayed. Although the overriding effect of the Insolvency and Bankruptcy Code applies in case of inconsistency, it does not automatically invalidate every proceeding under another enactment. Questions concerning the insolvency estate, applicability of moratorium, effect of the recovery certificate and necessary protective directions fall within the National Company Law Tribunal's domain in the pending CIRP; the writ court could not assume that statutory role merely because CIRP was pending. [Paras 31, 32, 33, 34, 35]

No interference with the auction notice was warranted; the petitioners were left at liberty to seek appropriate relief before the National Company Law Tribunal.

Final Conclusion: The writ petition was dismissed as the recovery certificate remained enforceable and the auction notice was merely an execution measure. Any CIRP-related protection was left to be sought before the National Company Law Tribunal.

Restoration of appeals withdrawn pursuant to one-time settlement - No party may take advantage of its own wrong - Failure of settlement attributable to the applicants

Restoration of personal-guarantor appeals dismissed as infructuous upon acceptance of a one-time settlement, where the settlement subsequently failed owing to default by the principal borrower and guarantors - HELD THAT: - The liberty reserved while dismissing the appeals was construed as permitting revival only where the settlement or OTS failed because of default by the Bank. It was not intended to enable the appellants to revive the appeals where the stipulated settlement obligations were not honoured by the principal borrower and guarantors. A party in default cannot take advantage of its own wrong. [Paras 27, 28]

The restoration applications were dismissed, as the liberty to revive the appeals was unavailable where the settlement failed due to default by the principal borrower and guarantors.

Final Conclusion: The applications seeking revival of the appeals were dismissed because the failure of the one-time settlement was attributable to the applicants' side and could not found a claim for restoration.

Mandatory liquidation upon expiry of CIRP without resolution plan - Section 33(1)(a) liquidation independent of CoC liquidation resolution - CoC commercial wisdom subject to statutory CIRP timelines

Liquidation of the corporate debtor on expiry of the CIRP without receipt of a resolution plan or a valid extension, despite failure of the separate CoC liquidation resolution and post-expiry expressions of interest - HELD THAT: - Section 33(1)(a) operates independently of liquidation by a CoC resolution under Section 33(2). Upon expiry of the CIRP without receipt of a resolution plan under Section 30(6) and without a valid extension, liquidation is the mandatory statutory consequence. The failure of the separate liquidation proposal to obtain the requisite vote did not create a legal deadlock or prevent liquidation under Section 33(1)(a). Commercial wisdom operates within the statutory framework and cannot revive an expired CIRP; a post-expiry CoC decision seeking directions, subsequent expressions of interest, or MSME eligibility cannot substitute for a plan submitted and processed within the prescribed period. [Paras 73, 75, 76, 77, 78]

The statutory conditions under Section 33(1)(a) having been fulfilled, liquidation was mandatory and the liquidation order was upheld.

Final Conclusion: The appeal was dismissed and the liquidation order was affirmed. Expiry of the CIRP without an approved resolution plan or a valid extension attracted the mandatory consequence under Section 33(1)(a).

Recall of ex parte order - Delay in recall application filed pursuant to granted liberty

Recall of the ex parte order against the appellant and consideration of its reply, where the recall application was dismissed as delayed despite having been filed pursuant to liberty granted by the Adjudicating Authority - HELD THAT: - The Tribunal found that the appellant stood on facts identical to those considered in the earlier appellate order [2026 (10) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] Acreage Properties Pvt. Ltd.. The delay resulted from the earlier application having sought recall of the subsequent order rather than the original ex parte order, and the later recall application was filed pursuant to liberty granted for that purpose. Treating the application as considerably delayed was therefore hyper-technical. [Paras 7, 8]

The impugned order was set aside; the ex parte order was recalled to the extent of the appellant, whose reply was directed to be taken on record and who was permitted to participate in the proceedings.

Final Conclusion: The appeal was allowed, the ex parte order was recalled only as against the appellant, and the appellant was permitted to contest the pending proceedings.

Further investigation after filing of a money-laundering complaint - Commencement of criminal trial on framing of charge

Whether the investigating agency (Enforcement Directorate) can start further investigation during pendency of the case before the Court without permission or leave of the Criminal Court where the case is pending? - HELD THAT: - Explanation (ii) to section 44(1) of the PMLA recognises the continuing statutory power of the authorised agency to conduct further investigation and bring further oral or documentary evidence on record. Further investigation, unlike re-investigation, is a continuation of the earlier investigation. The requirement of permission under the proviso to section 193 of the BNSS applies during trial; trial commences upon framing of charge. As charges had not been framed, the trial had not commenced and prior leave of the Court was not required for the impugned further investigation. [Paras 30, 31, 32, 33, 34]

No interference was warranted with the further investigation initiated through the notices issued to the petitioner.

Final Conclusion: The writ petition was dismissed, and no restraint was imposed on the further investigation initiated through the impugned notices.

Appellate scrutiny of bail under the Prevention of Money Laundering Act - Cancellation of bail and setting aside of bail order

Challenge to regular bail in a money-laundering case on the ground that the statutory twin conditions had not been met - HELD THAT: - An appeal seeking to set aside an order granting bail is distinct from cancellation of bail. The former is confined to examining whether the order is illegal, perverse, arbitrary, founded on irrelevant material, or reflects failure to consider relevant factors; cancellation concerns post-bail conduct or supervening circumstances.

Bail-stage scrutiny cannot extend to a threadbare adjudication of the evidence. The Special Court had passed a detailed order considering the material relating to proceeds of crime, the non-commencement of trial, and the imposition of conditions.

ASHOK DHANKAD VERSUS STATE OF NCT OF DELHI AND ANR.[2025 (8) TMI 1709 - SUPREME COURT] clarifies the position further as to the difference between cancellation of bail and setting aside of the bail order in appeal.

Its order therefore reflected application of mind, and the mere contention that the twin conditions were not made out could not justify setting it aside. [Paras 10, 11]

No ground to interfere with or set aside the order granting bail was established.

Final Conclusion: The petition challenging the order granting regular bail was dismissed. No ground to set aside the bail order was made out.

Secured creditor's due diligence for release of mortgaged properties from PMLA attachment - Applicability of RBI guidelines to loans against third-party fixed deposits

Release of mortgaged properties from PMLA attachment - Due diligence by secured creditor - Release from PMLA attachment of properties mortgaged to a bank claiming to be a bona fide secured creditor - HELD THAT: - In the absence of direct proceeds of crime, property held by accused persons, their relatives, associates or employees may be attached as value thereof. While a cautious approach is required in respect of mortgaged property where the bank has no role in the offence and has exercised due diligence at the loan-disbursal and recovery stages, the attached properties were found linked to the cooperative society's account and owned by family members of the accused. The bank had not pursued recovery when the loan accounts became irregular and became active only after the provisional attachment order; regular fund flows between the society and the bank, and the prior association of its office-bearers with the society, warranted further investigation. [Paras 5, 6]

Release of the mortgaged properties was declined and the appeal was dismissed, with liberty to the bank to seek appropriate relief before the Special Judge under sections 8(6) to 8(8) of the PMLA.

RBI guidelines on loans against third-party fixed deposits - Applicability of RBI guidelines on non-performing asset treatment to overdraft facilities secured by third-party fixed deposits - HELD THAT: - The RBI guidelines relied upon concern advances against the borrower's own fixed deposits, NSCs, KVPs or life policies. The facilities in question were secured by third-party fixed deposits, and one such fixed deposit was found to have been created from the cooperative society's funds. [Paras 5]

The claim based on the RBI guidelines was rejected as inapplicable.

Final Conclusion: The appeal was dismissed, leaving the bank at liberty to pursue its claim for auction of the attached properties before the Special Judge in accordance with the PMLA. The Tribunal clarified that its observations would not affect the merits of the trial.

Service tax proceedings against a non-existent transferor company after amalgamation

HELD THAT: - The Court held that proceedings initiated against a non-existent entity are a nullity in law. Since the show cause notice had been issued to the transferor company after it had ceased to exist upon amalgamation, the proceedings were contrary to the settled legal position. The merits of the service tax demand, including matters concerning the status of the companies and registration, were not adjudicated.

In the present case the respondent authority has issued a show cause notice to the non-existent entity which is in contravention to the principles laid down in Maruti Suzuki India Limited [2019 (7) TMI 1449 - SUPREME COURT][Paras 26, 27, 28]

The impugned adjudication order was quashed, and the petitioner was directed to submit a comprehensive representation for independent and reasoned consideration by the authority after personal hearing, without any adjudication on the merits of the demand.

Final Conclusion: The writ petition was disposed of by quashing the impugned adjudication order and directing independent consideration of the petitioner's representation after hearing. The service tax demand was left open on merits.

Alternative remedy and writ jurisdiction - Judicial discipline and binding appellate orders - Governmental authority exemption for public distribution infrastructure - Post-harvest storage infrastructure exemption

Alternative remedy and writ jurisdiction - Maintainability of the writ petition against service-tax adjudication despite the availability of a statutory appellate remedy - HELD THAT: - The availability of an alternative remedy does not oust the plenary writ jurisdiction. Where the controversy raises pure questions of law without disputed facts, the writ petition may be entertained notwithstanding the unavailed appellate remedy. Having regard also to the prolonged pendency of the litigation, relegating the Corporation to the statutory remedy was held inappropriate. [Paras 7, 8, 9]

The objection to the maintainability of the writ petition was rejected.

Judicial discipline and binding appellate orders - Binding effect of an unstayed first-appellate order on departmental adjudication of the same service-tax exemption controversy - HELD THAT: - Subordinate revenue authorities are required, as a matter of judicial discipline, to follow orders of the higher appellate authority unless they are stayed or set aside.

Supreme Court in “Union of India Vs. Kamlakshi Finance Corpn.,” [1991 (9) TMI 72 - SUPREME COURT] held that lower revenue authorities must follow the decisions of higher appellate authorities. They cannot ignore or act contrary to those decisions while deciding similar matters.

The learned single Judge had held that the appellant Department is bound by the order it suffered before the Commissioner (Appeals), Coimbatore dated 09.01.2019. We are in agreement with the said conclusion of the learned single Judge, since it is an admitted fact that the said order in appeal is challenged by the Department before the CESTAT and it is pending in the said Tribunal in Appeal No.ST/40546/2019, without any interim stay in favour of the appellant department. [Paras 10, 11, 12]

The refusal to follow the operative appellate order was contrary to judicial discipline and vitiated the original adjudication.

Governmental authority exemption for public distribution infrastructure - Eligibility of a State public distribution corporation for governmental-authority exemption in respect of construction of scientific storage godowns - HELD THAT: - The Corporation was established by the State Government with the requisite governmental participation. Its non-profit activities of procuring, storing and distributing foodgrains through the public distribution system were held to advance poverty alleviation and social and economic development, being functions entrusted to municipalities. It consequently satisfied the requirement of a governmental authority, and the construction was for public distribution purposes rather than commerce or industry. [Paras 20, 22, 23]

The construction services qualified for exemption under Clause 12A(a) of the Mega Exemption Notification.

Post-harvest storage infrastructure exemption - Eligibility of scientific storage godowns constructed for storing procured paddy for exemption as post-harvest storage infrastructure - HELD THAT: - The decisive test is the objective, design and immediate actual use of the infrastructure when the service is provided. The godowns were constructed principally to store paddy procured from farmers for the public distribution system. A hypothetical future or auxiliary use for other commodities could not retrospectively defeat the exemption, particularly when the scientific storage godowns were used for post-harvest storage of paddy or rice. [Paras 24, 25, 26]

The construction of the scientific storage godowns was entitled to exemption under Clause 14(d) of the Mega Exemption Notification.

Final Conclusion: The writ appeal was dismissed. The service-tax demand and consequential interest and penalties on the works-contract construction of the scientific storage godowns remained quashed.

Sponsorship service - reciprocal obligation for brand visibility - Burden of proving taxable character of charitable contributions - Extended limitation-absence of suppression of facts

Sponsorship service - reciprocal obligation for brand visibility - Burden of proving taxable character of charitable contributions - Levy of service tax under the reverse-charge mechanism on the bank's charitable contributions treated as sponsorship services - HELD THAT: - Financial support in the form of donations or gifts falls outside sponsorship where the recipient is under no obligation to provide anything in return. The burden lay on the revenue, which sought to bring the contributions within the charging provision, to establish the true character of the transactions. A voluntary acknowledgement by the recipient, or a description of the payment as sponsorship in records, does not establish taxable sponsorship. Only the contributions supported by board resolutions requiring display of the bank's logo evidenced an obligation to provide brand visibility; no such obligation was shown for the remaining transactions. [Paras 7, 8, 9, 10]

Only the contributions carrying an express logo-display stipulation constituted sponsorship; the demand on the other charitable contributions was unsustainable.

Extended limitation - absence of suppression of facts - Invocation of the extended limitation period for service-tax demand on the contributions found to constitute sponsorship - HELD THAT: - The extended period under the proviso to Section 73(1) could be invoked only upon credible material establishing fraud, collusion, wilful misstatement or suppression of facts. As the department produced no material showing such misconduct by the assessee, the proceedings initiated after expiry of the normal limitation period were time-barred. [Paras 11]

The demand, including that relating to the two transactions constituting sponsorship, was barred by limitation.

Final Conclusion: The appeal was allowed and the Tribunal's order upholding service-tax demand, interest and penalties on sponsorship services was set aside. The remaining contributions were not shown to be taxable sponsorship, and the demand in respect of the two taxable sponsorship transactions was time-barred.

Duplication of service-tax demand under separate show-cause notices

Duplication of demands confirmed by separate orders pursuant to two show-cause notices issued on the same date for the same service-tax period - HELD THAT: - As the two show-cause notices had resulted in separate orders confirming identical demands for the same period, fresh adjudication was necessary to determine whether the demand subsequently confirmed was one and the same as that covered by the impugned order. [Paras 6, 7]

The impugned order was remitted for fresh adjudication; the petitioner was directed to submit a consolidated reply with supporting documents, and the respondent was directed to decide the matter on merits after notice.

Final Conclusion: The writ petition was disposed of by remitting the impugned demand for fresh consideration of the possible duplication with the subsequently confirmed demand.

Service-tax exemption for foreign commission agency services - compliance with notification filing deadline - Penalty for failure to pay service tax following denial of exemption - statutory computation

Service-tax exemption for foreign commission agency services - mandatory filing condition - Entitlement to service-tax exemption for foreign commission agency services used for exported shoes where the prescribed half-yearly return was filed after the notification-specific deadline - HELD THAT: - Though a belated return was not invalid under the Service Tax Rules, the exemption notification independently made timely filing of the half-yearly return a condition for availment. The unchallenged condition requiring filing within 15 days of completion of the relevant period was binding, and delayed filing was fatal to the exemption claim. [Paras 15, 16, 17, 21]

The denial of exemption for the shipping bill covered by the belated return was upheld.

Penalty for failure to pay service tax following denial of exemption - statutory computation - Validity of the penalty computed for failure to pay service tax following denial of the claimed exemption - HELD THAT: - The penalty had been computed by applying rates inconsistent with the provision governing the default, which prescribed a different daily or monthly measure and an overall ceiling. The levy could therefore not be sustained. [Paras 23]

The penalty was set aside.

Final Conclusion: The exemption denial was upheld because the half-yearly return did not satisfy the notification-specific filing condition. The penalty was set aside as it had been computed contrary to the governing provision.

Classification of mining-area transportation as Goods Transport Agency service rather than Mining Service - Small-scale exemption for Management, Maintenance and Repair Service and Supply of Tangible Goods Service - Unreasoned confirmation of service tax demand for April 2013 to March 2014 - Penalty for non-payment of service tax-absence of suppression with intent to evade - Penalty for delayed filing of service tax returns

Classification of mining-area transportation as Goods Transport Agency service rather than Mining Service - Classification of composite mining-area transportation, coal handling and allied activities as Goods Transport Agency service rather than Mining of Mineral, Oil or Gas Service - HELD THAT: - Transportation was the principal activity under the work orders, while the other activities were incidental or ancillary. A composite service must be classified according to its essential character, and ancillary activities performed in the course of road transportation form part of the transportation service. The services were therefore classifiable as Goods Transport Agency service; corporate recipients are liable under reverse charge where consignment notes are issued, whereas transportation without consignment notes falls in the negative list. [Paras 10]

The demand under Mining of Mineral, Oil or Gas Service, with consequential interest and penalty under Section 78, was set aside.

Small-scale exemption for Management, Maintenance and Repair Service and Supply of Tangible Goods Service - Eligibility for small-scale exemption on Management, Maintenance and Repair Service and Supply of Tangible Goods Service after excluding transportation receipts - HELD THAT: - After excluding transportation receipts, the combined turnover from the remaining taxable services was within the small-scale exemption threshold in all relevant financial years except Financial Year 2010-11. Tax was chargeable only on the turnover exceeding the threshold in Financial Year 2010-11 and on the entire turnover in Financial Year 2011-12; the turnover for Financial Year 2012-13 remained within the threshold. [Paras 11]

The service tax demand with interest was confined to the taxable turnover for Financial Years 2010-11 and 2011-12.

Unreasoned confirmation of service tax demand for April 2013 to March 2014 - Sustainability of the service tax demand for April 2013 to March 2014 in the absence of any adjudicatory finding - HELD THAT: - The impugned order recorded no finding supporting this demand. If the demand related to Mining of Mineral, Oil or Gas Service, it could not survive the classification finding; if it related to another service, the appellant was entitled to small-scale exemption for that financial year. [Paras 12]

The demand for April 2013 to March 2014 was set aside.

Penalty for non-payment of service tax-absence of suppression with intent to evade - Penalty for non-payment of service tax on Management, Maintenance and Repair Service and Supply of Tangible Goods Service where suppression with intent to evade was not established - HELD THAT: - Suppression with intent to evade payment of tax was not established in respect of the surviving demand. No penalty was consequently imposable on that demand, and the separate penalty for non-payment of tax was also unsustainable. [Paras 11]

No penalty was held imposable on the surviving demand, and the penalty under Section 76 was set aside.

Penalty for delayed filing of service tax returns - Penalty for delayed filing of service tax returns. - HELD THAT: - The penalty was imposed for delay in filing returns and was sustained on that basis. [Paras 11]

The penalty under Section 77 was upheld.

Final Conclusion: The mining-service demand and the unreasoned later-period demand were set aside. The remaining demand was confined to the taxable turnover for Financial Years 2010-11 and 2011-12 with interest; penalties were deleted except the penalty for delayed filing of returns.

Manpower recruitment or supply service - Secondment of overseas employee - Extended period of limitation for suppression of facts

Secondment of overseas employee as manpower supply - Employer-employee relationship - Taxability of the foreign company's temporary assignment of its employee to the appellant as Manpower Recruitment or Supply Agency Service - HELD THAT: - The memorandum identified the expatriate as an employee of the foreign company and provided for a short-term assignment to the appellant. The foreign company had thereby temporarily supplied its employee. The taxable character depended on the activity of the service provider and its relationship with the service recipient; the relationship between the seconded employee and the recipient was immaterial. Deduction of tax at source from salary payments and issuance of Form-16 did not alter that conclusion.

Latest judgment of the Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd. [2022 (5) TMI 967 - SUPREME COURT] rules the field.[Paras 8, 9, 10, 11]

The temporary deputation was held to constitute Manpower Recruitment or Supply Agency Service, and the demand was sustainable on merits.

Extended period of limitation for suppression of facts - Departmental audit - Invocation of the extended period for the demand on overseas manpower-supply services alleged to have been suppressed from ST-3 returns - HELD THAT: - Following its earlier ruling in PRECISION EQUIPMENTS CHENNAI PVT. LTD. [2026 (6) TMI 530 - CESTAT CHENNAI], the Tribunal proceeded on the basis that suppression requires deliberate withholding of material facts and that a reasoned finding is necessary to sustain the extended period; mere detection through audit is insufficient. [Paras 15, 16]

The extended period was held unavailable, and the appeal was allowed on limitation alone.

Final Conclusion: While the temporary deputation was held taxable as manpower supply on merits, the appeal was allowed solely because the extended period of limitation was unavailable.

Government grants-in-aid as consideration for taxable service - Extended limitation - suppression with intent to evade service tax - Revenue neutrality of reverse-charge service tax

Government grants-in-aid as consideration for taxable service - Service provider-client relationship - Taxability of Government grants-in-aid as consideration for Business Exhibition Service - HELD THAT: - The agreements neither required the appellant to render Business Exhibition Service to the Governments nor showed any invoice or quid pro quo payment for a taxable service. The grants were subject to utilisation and accounting requirements and were therefore in the nature of reimbursement of specified expenditure, not consideration received for a service. Taxable value can comprise only the amount charged as consideration for the taxable service rendered. [Paras 8, 10, 12, 14, 15]

The service tax demand on the Government grants-in-aid was set aside on merits.

Extended limitation - suppression with intent to evade service tax - Bona fide belief - Invocation of the extended period for service tax on disclosed Government grants-in-aid in the absence of suppression - HELD THAT: - The appellant had recorded the receipt and expenditure of the grants in its books and was registered and paying service tax on other services. In view of the reimbursable nature of the grants and the supporting precedents, it could entertain a bona fide belief that no tax was payable. Suppression with intent to evade tax was not established. [Paras 16]

The demand on grants-in-aid was also set aside as time-barred.

Revenue neutrality of reverse-charge service tax - Extended limitation in reverse-charge liability - Extended-period demand for reverse-charge service tax on legal, cab and other received services where the entries were recorded and the liability was revenue neutral - HELD THAT: - Though the reconciliation statements could not be verified item by item, any reverse-charge tax payable would have been available as Cenvat credit, rendering the position revenue neutral. As the relevant entries were recorded in the books, suppression could not be alleged. [Paras 18, 20]

The reverse-charge service tax demand was set aside as time-barred.

Final Conclusion: The appeal was allowed, and the demands on Government grants-in-aid and under reverse charge were set aside, with consequential relief in accordance with law.

Reverse-charge service tax on royalty under mining leases executed before 01.04.2016 - Negative-list benefit for pre-existing mining leases

Liability to reverse-charge service tax on royalty for mining leases claimed to have been executed before 01.04.2016 - HELD THAT: - The Tribunal held that, under the view taken in the cited decisions, a mining lease executed before 01.04.2016 entitles the assessee to the benefit of Section 66D of the Finance Act, 1994, with no reverse-charge service-tax liability on royalty. Since the lease agreements had not been produced before the authorities below, their date of execution required factual verification by the adjudicating authority. [Paras 3, 4, 5, 6]

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

Final Conclusion: The appeal was allowed by remand for verification of whether the mining lease agreements were executed before 01.04.2016, which is determinative of the service-tax liability and penalty.

Rule 6 of the Cenvat Credit Rules, 2004 - job-work services exempt under Notification No. 8/2005-ST

Entitlement to Cenvat credit on input and input services used for job-work services exempt under Notification No. 8/2005-ST, where the client used the processed goods in dutiable final products - HELD THAT: - The exemption applied only where goods produced from materials supplied by the client were returned for use in manufacture of goods on which appropriate excise duty was payable. As the client's final products were admittedly cleared on payment of duty, the job-work activity remained eligible for Cenvat credit under the Cenvat Credit Rules. The restriction under Rule 6 was consequently inapplicable. Case followed M/S INDUSTRIAL HEAT TREATERS [2017 (12) TMI 1210 - CESTAT MUMBAI] [Paras 5, 6]

The demand for reversal of Cenvat credit was unsustainable; the impugned order was set aside and the appeal was allowed with consequential relief.

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

CENVAT credit on Pig Iron and M.S. Scrap allegedly received without physical delivery - Admissibility of Section 14 statements u/s 9D of the Central Excise Act, 1944 - Electronic evidence from a third-party hard disk u/s 36B of the Central Excise Act, 1944 - Vehicle-registration discrepancies as proof of non-transportation of inputs - Personal penalty on Director for fraudulent CENVAT credit

Denial of CENVAT credit on inputs under registered-dealer invoices - Denial of CENVAT credit on Pig Iron, M.S. Scrap and related inputs allegedly received without physical delivery under invoices issued by registered dealers - HELD THAT: - Irregularities in the upstream invoice trail could not, without evidence that the appellant knew of or participated in such manipulation, conclusively establish non-receipt of goods. No cogent financial or documentary trail showed cash flowback from the dealers to the appellant. Further, despite undisputed manufacture and duty-paid clearance of finished goods, the investigation identified neither an alternate source of raw materials nor a stock deficit or input-output mismatch inconsistent with receipt and consumption of the disputed inputs. [Paras 18, 19, 24]

The CENVAT credit demand, consequential interest and penalty on the appellant-company were set aside.

Admissibility of third-party statements under Section 9D - Reliance on statements of dealers recorded under Section 14 to prove that invoices were issued without supply of goods - HELD THAT: - Except where a statutory exception is established, a statement recorded during investigation can prove the truth of its contents only after its maker is examined as a witness before the adjudicating authority and the authority determines that the statement should be admitted in the interests of justice. The record disclosed neither compliance with this mandatory procedure nor a finding that any statutory exception applied. [Paras 20]

The third-party statements were held inadmissible as substantive evidence against the appellant.

Admissibility of electronic records under Section 36B - Reliance on electronic data extracted from a hard disk seized from premises associated with a third party to establish fictitious CENVAT invoice transactions - HELD THAT: - Section 36B requires statutory conditions, including a certificate identifying the electronic record, describing its production and giving particulars of the device. No such certificate was obtained, prepared or annexed in respect of the seized hard disk. Recovery of electronic data from a third party did not by itself establish the authenticity, integrity or correctness of entries concerning the appellant. [Paras 21]

The hard-disk data was held inadmissible as substantive evidence against the appellants.

Proof of non-transportation of industrial inputs - Alleged non-transportation of Pig Iron, M.S. Scrap and related inputs based on selected VAHAN portal vehicle-registration results and an untested transporter statement - HELD THAT: - The vehicle discrepancies arose only from selected checks and did not establish non-transportation invoice by invoice. A recipient accounting for goods in statutory records was not required to independently verify registration credentials of vehicles arranged by suppliers or transporters. Public-database queries could not displace factory-entry and consumption records without physical verification or other independent evidence; the transporter statement was also not admissible without compliance with Section 9D. [Paras 22]

The allegation of non-transportation and non-receipt founded on such material was rejected.

Penalty on Director under Rule 26 of the Central Excise Rules, 2002 - Personal penalty on the Director for alleged involvement in fraudulent availment of CENVAT credit by the appellant-company - HELD THAT: - Rule 26 requires positive, transaction-specific evidence of mens rea, active participation and knowing dealing with goods liable to confiscation; corporate designation alone is insufficient. With the principal demand set aside, and in the absence of admissible evidence establishing personal knowledge or overt involvement, the requisite basis for personal penalty was absent. [Paras 25]

The personal penalty imposed on the Director was set aside.

Final Conclusion: The demand for CENVAT credit, consequential interest and penalty on the appellant-company, as well as the personal penalty on its Director, were set aside. The appeals were allowed with consequential relief.

Electronic evidence in clandestine removal proceedings - Cross-examination of investigation witnesses in excise adjudication

Electronic evidence in clandestine removal proceedings - Statutory certificate requirement for electronic records - Admissibility of the CD data and computer printouts relied upon to establish clandestine manufacture and clearance of TMT bars - HELD THAT: - Electronic records cannot be relied upon merely because they have been produced; the prescribed statutory conditions, including the requisite certificate, must be fulfilled. The limited dispensation where every possible effort has been made to obtain a third-party certificate was inapplicable. In the absence of the requisite certificate, the electronic data and printouts, including the alleged purchase, production and sales figures, were inadmissible and had to be discarded. [Paras 8, 18, 19, 21, 22]

The demand determination based on the discarded electronic records was set aside and remanded for re-quantification solely from independently admissible evidence; the discarded data shall not be used to determine the quantity of clandestine manufacture or clearance.

Investigation statements in clandestine removal proceedings - Cross-examination and prejudice in quasi-judicial adjudication - Evidentiary value of investigation statements supporting unaccounted procurement and removal despite denial of cross-examination - HELD THAT: - Cross-examination is not an absolute right, and denial thereof does not automatically exclude statements unless specific prejudice is established. The statements were unretracted, no material showed that they were involuntary, and no witness-specific prejudice from non-cross-examination was demonstrated. The statements of suppliers, transporters, purchasers and the managing director could therefore be considered with independently admissible invoices, transport, weighment and statutory records; however, they could not by themselves sustain quantities derived exclusively from the excluded electronic data.

Decision of the Tribunal in JD Ispat (P) Ltd. [2026 (3) TMI 430 - CESTAT NEW DELHI] also supports the approach that, after excluding disputed/ ineligible evidence, the remaining independently established documentary evidence has to be examined on its own merits. [Paras 17, 18, 19, 21, 23]

The admissible statements and independent documentary or circumstantial evidence may be considered in re-quantification of independently established transactions, with consequential interest and penalties to be redetermined in accordance with any duty liability ultimately established.

Final Conclusion: The demand determination founded on the electronic data was set aside and the matter remanded for fresh quantification on independently admissible statements and documentary or circumstantial evidence. Consequential interest and penalties are to be redetermined with the duty liability, if any, ultimately established.

Eligibility of credit under Rule 6(6)(vii) of the Cenvat Credit Rules - Partial customs-duty exemption - Supplies to expansion of an existing Mega Power Project under International Competitive Bidding

Entitlement to exclusion from the credit-reversal and payment requirements for exempt clearances where excisable goods were supplied, under International Competitive Bidding, for expansion of an existing Mega Power Project and the corresponding imported goods enjoyed concessional basic customs duty and exemption from additional customs duty - HELD THAT: - The certificates on record established that the supplies were for expansion of an existing Mega Power Project under International Competitive Bidding. The Tribunal held that exemption from customs duty includes partial exemption and is not confined to complete exemption.

As held in the matter of Jacsons Thevera [1991 (2) TMI 140 - SUPREME COURT] exemption from duty of customs would not only mean complete exemption, it also includes partial exemption also. The goods therefore fell within the exception contemplated for such project supplies, rendering the requirements under Rule 6(1) to Rule 6(4) inapplicable. [Paras 17, 18]

The impugned order was set aside and the appeal was allowed with consequential relief in accordance with law.

Final Conclusion: The Tribunal held that partial customs-duty exemption satisfied the relevant condition for supplies to the certified expansion of the Mega Power Project under International Competitive Bidding. The appeal was consequently allowed.

Clandestine manufacture and removal - burden of proof - Third-party private and electronic records - independent corroboration

Clandestine clearance based on loose and electronic records - Electronic evidence - provenance and nexus - Alleged clandestine clearance of Chewing Tobacco based on loose handwritten sheets recovered at Varanasi and WhatsApp printouts retrieved during the Delhi search - HELD THAT: - The loose sheets neither identified the respondent nor described the goods, their quantity or origin, and there was no evidence linking their entries to manufacture or clearance by the respondent. There was also no corroboration through unaccounted inputs, excess production, electricity consumption, transport, buyers or receipt of sale proceeds. The WhatsApp printouts lacked a demonstrated retrieval, preservation and integrity trail, while their authorship and nexus with the respondent were not established. The material could at best warrant further investigation and could not prove clandestine clearances.

The Hon’ble Allahabad High Court in Continental Cement Company vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] stressed that clandestine removal is a serious charge which has to be established by sufficient and tangible evidence and that relevant circumstances such as procurement of raw material, manufacture, electricity consumption, labour, transportation, buyers and flow of sale proceeds assume importance.[Paras 11, 12, 13, 14, 15]

The demand, with consequential interest and penalty founded on those alleged clearances, could not be sustained.

Third-party electronic records - corroboration - Clandestine clearance - proof beyond distribution statements - Alleged clandestine manufacture and clearance based on Tally data maintained in the fictitious account of "Jai Bajrang Bali" on a laptop recovered from third-party premises at Prayagraj - HELD THAT: - The laptop was not recovered from the respondent's factory or registered premises, and the Tally records did not bear the respondent's name. The identity, ownership, custody and preservation of the device, as well as the source and authorship of its entries, remained unproved. The omitted relied-upon statement and Panchnama could not be treated as inconsequential, since they were material to the quantification and the noticee was entitled to the underlying documents. Un-retracted statements could at most show a marketing or distribution connection; they did not cure the defects in the electronic record or establish clandestine production and removal. No independent evidence correlated the entries with unaccounted inputs, production, transport, buyers or consideration. [Paras 38, 39, 40, 41, 42]

The Tally data could serve only as an investigative lead and could not sustain the demand for alleged clandestine clearances.

Third-party transport records - successive presumptions - Clandestine clearance - corroborative evidentiary chain - Alleged clandestine manufacture and clearance inferred from printed-laminate entries in File No.17 recovered from the premises of a third-party transporter - HELD THAT: - File No.17 was neither recovered from nor shown to have been maintained by the respondent. Its authorship, authenticity, custody and connection with the respondent were not established, and the investigation did not resolve material questions concerning the control and records of the transporter. There was no evidence of actual delivery or receipt of laminate at the respondent's factory, its consumption in manufacture, production of unaccounted goods, their transportation, identified buyers or flow of consideration. The attribution of laminate on an assumed ratio, followed by assumed manufacture and removal, amounted to successive presumptions founded on an unverified third-party record. [Paras 55, 56, 57, 58, 59]

The laminate-based demand lacked legally admissible corroborative evidence, and the concurrent findings rejecting it required no interference.

Final Conclusion: Revenue's appeal was dismissed and the concurrent findings were affirmed, as the alleged clandestine clearances rested on unverified records and uncorroborated presumptions rather than a proven evidentiary chain.

Denial of CENVAT credit on alleged non-receipt of goods

Denial of CENVAT credit solely on shortages of raw materials found in statutory records, where the stock was stated to be held as work-in-progress and supported by work log sheets - HELD THAT: - The authorities had not considered the work log sheets produced to explain that the stock was lying in work-in-progress. In those circumstances, shortages of raw materials could not, without further investigation, establish that the goods had not been received by the appellant. [Paras 6]

The denial of CENVAT credit was unsustainable; the impugned order was set aside and the appeals were allowed with consequential relief.

Final Conclusion: The appeals were allowed after holding that the alleged shortages, unexplained by reference to the unconsidered work-in-progress records, could not justify denial of CENVAT credit.

CENVAT credit on consumables used in job-worked dutiable goods - Job-worked goods not treated as exempted goods

Entitlement to CENVAT credit on consumables used in the manufacture of job-worked dutiable goods cleared without payment of duty to the principal manufacturer - HELD THAT: - Rule 6(2) applies where an assessee manufactures both dutiable and exempted goods. Job-worked goods remained dutiable goods notwithstanding their clearance without payment of duty to the principal manufacturer; they could not be treated as exempted goods merely for that reason. The restriction under Rule 6(2) was therefore inapplicable to the credit on consumables used for the job-work activity. [Paras 4, 5, 6, 7]

The denial of CENVAT credit was set aside and the credit was held to have been correctly taken.

Final Conclusion: The denial of CENVAT credit on consumables used for job-worked dutiable goods was set aside, and the appeal was allowed with consequential relief.

Classification of batter-coated deep-fried Tasty Peanuts as namkeen under Central Excise Tariff Sub-heading 2106 90 99 - Classification of oil-fried Salted Peanuts under Central Excise Tariff Sub-heading 2008 11 00 - ISD CENVAT credit for contract manufacturing units - Penalty for interpretational classification and CENVAT credit disputes

Classification of batter-coated deep-fried Tasty Peanuts as namkeen - Classification of batter-coated and deep-fried Tasty Peanuts under Central Excise Tariff Sub-heading 2106 90 99 and entitlement to the claimed exemption - HELD THAT: - The incorporation of gram-flour batter, deep-frying in vegetable oil, and addition of salt and spices resulted in a distinct food preparation and not merely processed agricultural peanuts. Classification had to be determined from the ingredients, manufacturing process, resultant commodity and its commercial character; the product could not be equated with roasted peanuts. [Paras 13, 14]

Tasty Peanuts were held classifiable under Central Excise Tariff Sub-heading 2106 90 99 and eligible for exemption under Sl. No. 37 of Notification No. 12/2012-C.E.

Classification of oil-fried Salted Peanuts - Specific tariff entry prevailing over general or residuary entry - Classification of oil-fried Salted Peanuts under Central Excise Tariff Sub-heading 2008 11 00 and entitlement to the claimed exemption - HELD THAT: - The process was confined to frying peanuts in vegetable oil and sprinkling salt, without batter, gram flour or other ingredients effecting substantial transformation. Heading 20.08 specifically covers ground-nuts roasted in oil or fat, with or without vegetable oil, salt, flavours, spices or additives; therefore, the specific entry prevailed and recourse to Chapter 21 was impermissible. [Paras 15, 16]

Salted Peanuts were held classifiable under Central Excise Tariff Sub-heading 2008 11 00, and the claimed exemption was denied.

ISD CENVAT credit for contract manufacturing units - Admissibility of CENVAT credit distributed through ISD invoices to a contract manufacturing unit for the period preceding the express inclusion of outsourced manufacturing units - HELD THAT: - Rule 7 did not restrict credit distribution to the principal manufacturer's own units. The expression "its manufacturing units" included an authorised contract manufacturing unit manufacturing goods for the principal on payment of duty. The subsequent amendments to the ISD provisions were held to cure a lacuna and to operate from the inception of the rules. [Paras 17]

The denial of CENVAT credit was set aside and the credit was allowed.

Penalty in interpretational classification and CENVAT credit disputes - Imposition of penalties where the disputes concerned tariff classification and admissibility of ISD-distributed CENVAT credit - HELD THAT: - The controversies involved interpretation of tariff provisions and the CENVAT Credit Rules. No mala fide intent, wilful suppression, fraud, collusion or deliberate intent to evade duty, and no mens rea, were established. [Paras 18]

All penalties imposed upon the appellant were set aside.

Final Conclusion: The impugned order was modified by allowing the claimed exemption for Tasty Peanuts and the ISD-distributed CENVAT credit, while sustaining classification of Salted Peanuts under Central Excise Tariff Sub-heading 2008 11 00 and denying exemption for that product. All penalties were set aside.

Scope of appellate adjudication of dropped EOU-clearance duty demand - Excise-duty liability for cement cleared to 100% EOU

Scope of appellate adjudication of dropped EOU-clearance duty demand - Excise-duty liability for cement cleared to 100% EOU - Extent of excise-duty confirmation on cement cleared to a 100% EOU where Revenue's appeal challenged only the dropped EOU-clearance demand - HELD THAT: - Revenue's appeal before the Commissioner (Appeals) was confined to the dropped demand concerning supplies to the EOU and did not challenge the dropped demands under the other heads. The Commissioner (Appeals) therefore could not confirm the entire dropped demand. Since duty had been admitted and paid for part of the EOU clearances, duty was payable only on the balance clearances, after verification and adjustment of the payment already made. [Paras 7, 8]

The confirmation of the entire dropped demand was set aside, and the adjudicating authority was directed to verify and recover duty on the balance EOU clearances, after giving credit for duty already paid, with interest.

Penalty for wrongful excise-duty exemption on cement cleared to 100% EOU - Penalty on the duty payable for cement cleared to a 100% EOU - HELD THAT: - Having regard to the factual details, the Tribunal found it appropriate to set aside the penalty. [Paras 8]

The penalty was set aside.

Final Conclusion: The appeal was partly allowed by confining the duty demand to the unpaid balance of cement cleared to the EOU, subject to verification and adjustment of duty already paid, while setting aside the penalty.

Double taxation on subsequent sale of goods found short during VAT survey

Default assessment on stock found short during survey without considering tax paid on subsequent sales of the same goods - HELD THAT: - The department could not refute that tax had been received on subsequent sales of the goods alleged to have been found short. The question whether levy on the alleged stock shortfall would result in double taxation went to the root of the VAT Officer's jurisdiction and required consideration in the assessment. [Paras 5]

The impugned order could not be sustained, and the default assessment for May, 2010-11 was remitted to the VAT Officer for fresh consideration of the effect of subsequent sales, if any, of the goods found short.

Final Conclusion: The appeal was allowed and the default assessment was remitted for fresh adjudication after considering the effect of subsequent sales of the goods alleged to have been found short.

VAT on builders' works contracts - absence of machinery provisions for determining taxable turnover

Builders' construction pursuant to agreements to sell as works contracts - Construction undertaken by a builder pursuant to agreements to sell as a works contract exigible to VAT under the DVAT Act - HELD THAT: - Applying the authoritative Supreme Court position [2015 (8) TMI 749 - SUPREME COURT] the Court held that construction undertaken after the builder enters into an agreement with the purchaser falls within the statutory definition of a works contract. Sale of a completed building without a prior construction agreement does not fall within that category. [Paras 7]

The petitioner's activities were held covered by the definition of works contract and exigible to VAT.

VAT on builders' works contracts - absence of machinery provisions - Enforceability of a VAT demand on builders' works contracts in the absence of a rule for determining taxable turnover - HELD THAT: - Though the levy on a builder's works contract was not disputable, its enforcement required machinery for determining taxable turnover. Rule 3 prescribing that mechanism was substituted only with effect from 07.09.2006; consequently, no machinery existed for determining taxable turnover for the assessment year in question. [Paras 14, 15]

The demand and the default assessment notice for 2005-06 were held unsustainable and set aside.

Final Conclusion: The petition was allowed, and the impugned demand and default assessment notice for assessment year 2005-06 were set aside for want of machinery provisions to determine taxable turnover.

Cheque dishonour - statutory demand notice-deemed service - Precedent-per incuriam

Statutory demand notice - deemed service - Rebuttable presumption of postal service - Compliance with the statutory demand-notice requirement for cheque dishonour where the registered notice, correctly addressed to the drawer, was received by the drawer's mother - HELD THAT: - Giving notice is distinct from its personal receipt by the drawer. Dispatch by registered post to the drawer's correct address raises a rebuttable presumption of service and satisfies the requirement of giving notice; the burden then lies on the drawer to establish that the address was incorrect, that the notice was not brought to that address, or that he had no knowledge of it. The address was undisputed and was the same address at which the drawer received court summons and which he used in his proceedings. As he failed to rebut the presumption, the High Court wrongly required the complainant to prove the drawer's actual knowledge of the notice. [Paras 31, 32, 33, 34, 35]

The statutory notice requirement stood satisfied; the High Court's reversal of the concurrent conviction was set aside and the trial court's conviction was restored.

Per incuriam precedent - Binding force of a coordinate-Bench decision treating receipt of a cheque-dishonour demand notice by the drawer's wife as invalid service. - HELD THAT: - M.D. Thomas vs. P.S. Jaleel [2009 (4) TMI 1048 - SUPREME COURT] was rendered without considering binding larger-Bench authority on the presumption arising from dispatch of notice to the correct address. It also set aside the conviction without examining whether the notice was correctly addressed or whether the wife resided with the drawer, and erroneously treated a spouse as an unrelated third party. A decision rendered in ignorance of binding precedent is per incuriam and does not have binding force. [Paras 26, 27, 28, 29, 30]

The coordinate-Bench ruling was held per incuriam and incapable of being treated as binding precedent under Article 141.

Final Conclusion: The appeal was allowed. The statutory demand notice was held validly served through the unrebutted presumption of service, and the trial court's conviction was restored.

Juridical seat and venue of arbitration - Exclusive jurisdiction under Section 42 following appointment of an arbitrator - Limitation for applications to set aside an arbitral award - Territorial jurisdiction for applications to set aside arbitral awards

Territorial jurisdiction over the applications to set aside the arbitral award where arbitral sittings were held at Cuttack but the contract provided for recourse to the court where the work was executed at Sundargarh - HELD THAT: - Cuttack had not been designated as the juridical seat by the parties or in the order appointing the arbitrator. The holding of arbitral sittings there for the convenience of the arbitrator constituted only a venue and did not confer supervisory jurisdiction upon courts at Cuttack.

The appointment by a High Court exercising jurisdiction throughout the State did not restrict jurisdiction to courts situated where the High Court was located, nor could Section 42 operate on that premise. The contractual stipulation placed disputes before the court having jurisdiction where the work was executed, making the District Judge, Sundargarh competent to entertain the applications. [Paras 26, 28, 30, 31, 32]

The finding that the courts at Cuttack alone had jurisdiction was set aside, and the applications were restored to the file of the District Judge, Sundargarh for expeditious decision in accordance with law.

Limitation for applications to set aside an arbitral award - Limitation of the applications to set aside the common arbitral award - HELD THAT: - The respondent conceded that the applications had been presented within the prescribed three-month period. The finding that they were time-barred was therefore erroneous. [Paras 32]

The finding that the applications were barred by limitation was set aside.

Final Conclusion: The appeal was allowed. The High Court's findings that the applications to set aside the arbitral award were time-barred and beyond the jurisdiction of the District Judge, Sundargarh were set aside, and the applications were restored for decision in accordance with law.

Recall and setting aside of the ex-parte Order - pleadings and record and applying Sections 138 and 141 of the Negotiable Instruments Act, 1881 - As submitted that the impugned Order should be recalled, as it was passed without affording the Applicant an opportunity to present his case

HELD THAT:- This Court has considered the averments made in the Complaint of the Applicant as well as the documents on record. In doing so, the Court examined and applied the provisions of Sections 138 and 141 of the Negotiable Instruments Act, 1881, in the context of the facts of the case. Only after carefully perusing the facts and applying the relevant provisions of law, this Court passed the impugned Order.

This Court has also recorded the Applicant's absence on several dates. It may be that on some additional dates, both the parties, by consent, took adjournments; however, it cannot be denied that the Applicant sought adjournments on three occasions, namely 23rd February 2016; 27th June 2016; and 8th August 2016. On subsequent dates, it appears that the matter was adjourned for paucity of court time or on joint request. Applicant was not represented on the date on which the matter was heard and the Order came to be passed. The case is of the year 2014. There is no infirmity in the Order, and no cogent reason is made out justifying recall of the said Order.

Thus, the interim application is dismissed.

Judicial review of disciplinary proceedings -Disciplinary misconduct by Chartered Accountant - alleged unauthorised access to an income-tax account

Interference under Article 226 with the closure of a disciplinary complaint alleging unauthorised access to and alteration of an income-tax account by a Chartered Accountant - HELD THAT: - Judicial review is confined to the legality of the decision-making process and does not permit the Court to reappreciate evidence or substitute its view for that of the disciplinary authority. The Board considered the circumstances in which access to the laptop and the one-time password was provided and found no material establishing mala fide intent or deliberate facilitation. Although absence of a fiduciary relationship does not by itself exclude misconduct, it was material because the prima facie opinion proceeded on the premise that the Chartered Accountant was the petitioner's tax consultant, a relationship denied by both parties. The Board's conclusion was also based on lack of cogent evidence, and not merely on the pendency of criminal proceedings. [Paras 10, 12, 14, 15, 16]

The Board's view was a plausible one on the material before it; consequently, no ground for interference in writ jurisdiction was made out.

Final Conclusion: The writ petition was dismissed, the Court declining to interfere with the Board's decision to close the disciplinary complaint.