TaxTMI Updates e-Newsletter
Oct 19,2026

Forum shopping and suppression of material facts in bail proceedings - Urgent vacation listing without adequate notice

Forum shopping in bail proceedings - Suppression of material facts - Effect of pursuing parallel remedies for bail or release, while withholding adverse orders from the Court considering the bail petition - HELD THAT: - The respondent simultaneously pursued bail or release before different fora while the bail petition was pending and failed to disclose rejection of the later bail application and refusal of interim release in the writ proceedings. Such pursuit of parallel remedies without adequate disclosure constituted forum shopping, suppression of material facts and abuse of process, displaying absence of the good faith required for invoking discretionary bail jurisdiction. [Paras 25, 26, 29, 30]

The bail petition was revived for fresh consideration on merits; the bail already granted was not cancelled at that stage, but was continued as interim bail pending further orders.

Urgent vacation listing without adequate notice - Propriety of obtaining urgent listing of a pending bail petition during court vacation despite an earlier direction allowing time for the appellant to file objections.- HELD THAT: - In the absence of a specific returnable date during vacation or a direction to list before the Vacation Bench, the bail petition ought ordinarily to have been listed after reopening of the Court. Securing its vacation listing through a memo without adequate notice to the appellant was held to be an attempt to steal a march and mislead the Court. [Paras 27, 29, 30]

This irregularity was a further ground for setting aside the disposal of the bail petition and remitting it for fresh determination, with interim bail continuing meanwhile.

Final Conclusion: The appeal was disposed of by setting aside the disposal of the bail petition and reviving it for fresh consideration on merits. The respondent remains on interim bail on the earlier terms pending further orders.

Alternative statutory remedy in GST proceedings - Disputed questions of fact - Maintainability of a writ petition challenging a common GST order concerning alleged availment of input tax credit on fake and bogus invoices, when a statutory appeal is available and factual disputes require adjudication - HELD THAT: - While we are in agreement with the order passed by the High Court [2026 (7) TMI 2040 - DELHI HIGH COURT] relegating the petitioners to adopt alternative remedy, the Appellate Authority may entertain the appeal by considering the application for condonation of delay in filing the appeal liberally.

Special Leave Petition stands disposed of.

Principles of natural justice in appellate proceedings - Validity of the appellate order rejecting the appeal after the Department introduced additional documents and the petitioner objected to their consideration - HELD THAT: - The Court held that where documents not forming part of the original proceedings are introduced at the appellate stage and an objection is raised, the objection must be considered and the affected party afforded an opportunity of hearing. Passing the appellate order without such opportunity rendered the decision procedurally unfair.

A Coordinate Bench in Anandeshwar Traders [2021 (1) TMI 1091 - ALLAHABAD HIGH COURT] and Khan Enterprises [2023 (9) TMI 276 - ALLAHABAD HIGH COURT] had opined that additional documents cannot be introduced at the appellate stage by the Department as the said right is available to the assessee only.[Paras 9, 10]

The appellate order was vitiated for breach of natural justice, set aside, and the matter was remitted to the appellate authority for a fresh order within two months.

Final Conclusion: The petition was partly allowed. The appellate order was set aside and the appeal was remitted for fresh consideration after affording due opportunity of hearing.

Writ jurisdiction - alternative statutory remedy - Show-cause notice - absence of ex facie want of jurisdiction - Challenge to show-cause notice for want of jurisdiction

Maintainability of a writ petition challenging GST show-cause notices and a summary order where statutory remedies are available - HELD THAT: - The Court found no ex facie absence of jurisdiction in the impugned notices. Writ jurisdiction cannot ordinarily be invoked to interrupt statutory proceedings where the noticee can raise jurisdictional and other defences before the competent authority and, if aggrieved by the outcome, pursue the statutory appellate remedy. No extraordinary or exceptional circumstance warranting bypass of those remedies was established.

The Supreme Court in Satyawati Tondon[2010 (7) TMI 829 - SUPREME COURT] strongly deprecated the practice of filing Article 226 petitions merely to obtain interim relief and subsequently delaying proceedings through various means, emphasizing that such misuse of writ jurisdiction must be discouraged. [Paras 7, 8, 9, 10, 11]

The petition was dismissed with liberty to respond to the show-cause notice and avail statutory remedies, including appeals; all merits contentions were left open.

Final Conclusion: The writ petition was dismissed on the ground that statutory remedies could not be bypassed in the absence of an ex facie jurisdictional defect or exceptional circumstances. The petitioner was left free to pursue those remedies, with all merits contentions kept open.

Condonation of delay in statutory GST appeals - Delay in filing the petitioners' statutory GST appeals, rejected by the appellate authority as barred by limitation without consideration of the stated circumstances - HELD THAT: - The Court noted that the memoranda of appeal attributed the delay to the serious illness and death of the proprietor's spouse, which disrupted the conduct of the firm's affairs. Proceeding on the parties' concession that the Revenue could be compensated by costs and that the appeals should be heard on merits, the Court did not adjudicate the underlying merits. [Paras 12, 14, 16, 17, 18]

The appellate orders were set aside, the delay was condoned, and the appeals were remitted for fresh decision on merits within the stipulated period, subject to payment of costs; failing such payment, the petitioners would not receive the benefit of the order.

Final Conclusion: Upon the parties' concession, the appellate rejection orders were set aside and the delayed appeals were restored for adjudication on merits, subject to payment of costs. The Court left all merits open for the appellate authority.

Input tax credit-limitation under section 16(4) of the CGST Act - Service of show cause notice-effective mode of service

Input tax credit-limitation under section 16(4) of the CGST Act - Denial of input tax credit as barred by limitation under section 16(4) of the CGST Act. - HELD THAT: - The Court noted that the issue had already been dealt with in a common order of the Court, in which the departmental order on that issue had been quashed. The impugned order was therefore liable to be quashed to the extent it concerned the time-barred input tax credit claim. [Paras 9]

The impugned order was quashed insofar as it related to denial of input tax credit under section 16(4) of the CGST Act.

Service of show cause notice-effective mode of service - Validity of the adjudication on issues other than the input tax credit limitation issue where notices were uploaded on the common portal without effective service and opportunity of hearing. - HELD THAT: - Where no response was received and the statute provided alternative modes of service, the respondent was required to adopt an effective mode of service instead of repeatedly uploading notices and reminders on the common portal. The failure to do so resulted in want of opportunity to the petitioner. [Paras 8, 9]

For the remaining issues, the impugned order was set aside and remanded for fresh consideration, subject to the agreed pre-deposit, filing of reply, and effective notice of personal hearing.

Final Conclusion: The order denying input tax credit on the limitation issue was quashed. The balance of the adjudication was set aside and remanded for fresh consideration after compliance with the stipulated conditions and grant of an effective opportunity of hearing.

Sanction, release and disburse the differential 6% Goods and Services Tax (GST) amount along with applicable statutory interest to the petitioner for the civil construction works executed under the Mukhyamantri Nagariya Alpaviksit Evam Malin Basti Vikas Yojana

HELD THAT:- On admission, respondent No. 3 was directed to pay the differential 6% GST within three weeks, and the writ petition was disposed of.

Duplicate assessment orders for GSTR-3B and annual-return mismatch - Validity of two assessment orders dealing with the same mismatch between the petitioner's GSTR-3B returns and Annual Return - HELD THAT: - On comparison, the Court found that both orders dealt with the same mismatch and that one of them contained a minor error. [Paras 3, 4]

One of the duplicated orders was quashed. The other was set aside and remanded for reconsideration after verification of recovery of the SGST demand, subject to the stipulated alternative condition if such recovery had not been made.

Final Conclusion: The writ petitions were disposed of by quashing one duplicate assessment order and remanding the other for fresh consideration on the stated conditions.

GST liability, including return requirements and liability for interest and penalty, arising from works contracts transitioning from the VAT regime - HELD THAT:- The writ petition was disposed of in terms of earlier orders [2026 (10) TMI 1150 - KARNATAKA HIGH COURT] concerning GST adjustment in works contracts.

Effective service of GST notices through RPAD - Principles of natural justice in GST adjudication

Effective service of GST notices through RPAD - Principles of natural justice in GST adjudication - Validity of GST adjudication where statutory notices and hearing intimations were uploaded only under the additional-notices tab on the portal, without service through RPAD. - HELD THAT: - The notices were uploaded on the portal and were not physically served. Although reminders were stated to have been sent through SMS and email, service through RPAD, apart from electronic mode, was regarded as mandatory/advisable for proper and effective service. The absence of such service deprived the petitioner of an effective opportunity to submit its explanation and supporting records, resulting in breach of natural justice. [Paras 7, 8]

The impugned adjudication and consequential Form GST DRC-07 were set aside and remanded for fresh consideration, conditional upon deposit of 10% of the disputed tax; the petitioner was permitted to file objections and documents, after which a clear 14-day notice of personal hearing must be issued and an order passed on merits.

Final Conclusion: The writ petition was disposed of by setting aside the impugned GST order for ineffective service and breach of natural justice, subject to the stipulated pre-deposit and fresh adjudication after hearing the petitioner.

IGST refund on exported goods under a manual shipping bill - Jurisdiction of Customs officer to process IGST refund

Jurisdiction to process IGST refund claimed on goods exported under a manual shipping bill - HELD THAT: - Rule 96(3) assigns processing of refund of IGST paid on exported goods to the Customs system or the proper officer of Customs upon receipt of information regarding a valid return in Form GSTR-3B. As the GST Department itself stated that it lacked jurisdiction to sanction such refund, Customs could not decline the claim on the ground that it fell within the GST Department's jurisdiction. [Paras 9]

The Customs authority was directed to process the refund claim and sanction the admissible refund with applicable interest in accordance with law.

Final Conclusion: The writ petition was allowed, directing the Customs authority to process the claim for IGST refund on the exported goods and sanction the admissible refund with applicable interest in accordance with law.

GST registration cancellation - Cancellation of GST registration for alleged non-commencement of business, voluntary opt-out and non-conduct of business from the declared place-fresh adjudication after the registrant's reply

HELD THAT: - Accepting that the controversy involved factual issues, the Court did not adjudicate the grounds for cancellation. It directed that the registrant be permitted to reply to the show-cause notice, treating the impugned cancellation order as an addendum, and that the matter thereafter be decided afresh on merits after affording a hearing. [Paras 7, 8, 9, 10]

The cancellation order was quashed and the matter remitted for fresh decision, subject to the stipulated reply and hearing; on non-compliance, the authority may proceed to recover tax in accordance with law.

Final Conclusion: The writ petition was disposed of by quashing the GST registration cancellation and directing fresh adjudication after receipt of the registrant's reply.

Cancellation of GST registration - non-filing of returns by the petitioner - petitioner has sought to file an application for revocation of cancellation of GST registration, the GST portal did not permit the petitioner as being beyond the time limit prescribed for submission

HELD THAT:- We are inclined to allow liberty to the petitioner to approach the competent authority within a period of two weeks from today for submission of application for revocation of cancellation of GST registration online and if it is not being accepted for any technical reason, then to submit it in physical form.

Belated GST return after best judgment assessment - Validity of the best judgment assessment for non-filing of the GST return, where the return was filed after expiry of the condonable period with payment of tax, interest and late fee

HELD THAT: - Having regard to the marginal delay in filing the return and the discharge of tax, interest and late fee, the Court considered it appropriate to permit scrutiny of the belated return under the applicable GST enactment. [Paras 5, 6]

The impugned order was quashed and the matter remitted for scrutiny of the belated return and further action in accordance with law; the intervening period was directed to be excluded for computing limitation under the applicable GST provisions.

Final Conclusion: The writ petition was disposed of by quashing the best judgment assessment and remitting the matter for scrutiny of the belated return.

Transitional credit of unavailed CENVAT credit on capital goods - Transitional credit of Central Excise duty on goods cleared for export before GST - Interest on wrongly availed transitional credit - Penalty for wrongly availed transitional credit

Transitional credit of unavailed CENVAT credit on capital goods - Admissibility of transitional credit of duty paid on capital goods imported before GST but received after the appointed day. - HELD THAT: - Section 140(2) permits transition of unavailed CENVAT credit on capital goods not carried forward in a return under the existing law, if it was admissible under both the existing and GST laws. The provision does not bar credit merely because the capital goods were received after GST came into force, nor does it restrict transition through TRAN-1 to only fifty per cent of the eligible credit. The prescribed particulars could be furnished even where no credit had been availed or utilised under the existing law. [Paras 18, 19]

The transitional credit on the capital goods was held admissible.

Transitional credit of Central Excise duty on goods cleared for export before GST - Admissibility of transitional credit of Central Excise duty paid on goods cleared for export before GST and exported after introduction of GST. - HELD THAT: - Table 7(a) applies to transitional credit on inputs, whereas the claim did not concern inputs. Section 140 contains no provision permitting transition of Central Excise duty paid on goods cleared for export before GST merely because export occurred thereafter. Transitional credit cannot be claimed by treating Section 140 as a residuary provision. No accrued right under the existing law was established, since the entitlement to transitional credit arose only under, and subject to, the GST law. Recovery under the GST law was consequently valid because the credit was claimed under Section 140. [Paras 22, 23, 24, 25, 26]

The transitional credit relating to the export clearances was disallowed.

Interest on wrongly availed transitional credit - Liability to interest on the transitional credit held inadmissible. - HELD THAT: - Interest is legally recoverable where tax or wrongly availed input tax credit is recoverable from the taxpayer. [Paras 27]

Interest was held payable on the inadmissible transitional credit and was directed to be recalculated accordingly.

Penalty for wrongly availed transitional credit - Sustainability of penalty for wrongly availed transitional credit disclosed in TRAN-1. - HELD THAT: - Section 73 applies where input tax credit has been wrongly availed or utilised for reasons other than fraud, wilful misstatement or suppression of facts. Disclosure of the claim in TRAN-1 did not preclude imposition of the statutory penalty. [Paras 28, 29]

Penalty was sustained at ten per cent of the disallowed transitional credit and reduced correspondingly.

Final Conclusion: The appeal was partly allowed: transitional credit on the capital goods was allowed, while the credit claimed in respect of the export clearances was disallowed. Interest and penalty were confined to the inadmissible credit.

Set-off of amalgamating company's losses - Carry forward of loss after amalgamation - Eight-year limitation for carry forward of loss - Succession to business - amalgamated company entitlement under the Kerala Agricultural Income Tax Act, 1991 to set off the losses of the amalgamating company against its own income - review petiotion

HELD THAT: - Having examined the review petitions, we find no grounds made out for review of the judgment [2026 (4) TMI 925 - SUPREME COURT]

The review petitions are, accordingly, dismissed.

Application u/s 197 seeking the ‘nil’ withholding tax certificate - petitioner claims that costs cross charges are reimbursement of costs on cost-to-cost basis and the same are not chargeable to tax under the Act - AO concluded that the services rendered by the petitioner to its AE are technical services and the charges paid are taxable as FTS.

HELD THAT:- We are not inclined to interfere with the impugned Judgment and order passed by the High Court [2025 (6) TMI 497 - DELHI HIGH COURT]. The Special Leave Petition is, accordingly, dismissed.

. It is clarified that the order impugned will not preclude the Revenue from examining the taxability of the receipt in normal course of assessment under the Act.

Costs on production of essential evidence under Section 311 CrPC - Imposition of costs while allowing the Department's application to summon a complainant witness and place additional documents on record under Section 311 CrPC - HELD THAT: - Section 311 CrPC confers discretion to summon, examine, recall or re-examine a witness, and imposes a duty to do so where the evidence is essential to a just decision. Its object is to secure the truth and a just disposal, rather than to assist either side. As the Magistrate had found the documents necessary for deciding the facts in issue and their proof indispensable after taking them on record, imposition of costs for allowing the application was unnecessary in the circumstances.

In Zahira Habibulla H. Sheikh v. State of Gujarat [2004 (4) TMI 629 - SUPREME COURT] the Court held that Section 311 Cr.P.C. empowers the court to summon or examine witnesses whenever necessary to discover the truth, ensure a fair trial, and deliver a just decision, irrespective of the failure of either party to produce necessary evidence.[Paras 7, 8, 9, 10]

The costs imposed as a condition for allowing the application were set aside.

Final Conclusion: The appeals were allowed and the orders imposing costs on the Department were set aside.

Reassessment beyond three years - statutory requirement of fresh material - Audit objection - change of opinion - Writ jurisdiction against reassessment proceedings

Writ jurisdiction against reassessment proceedings - Alternative remedy - Maintainability of writ petitions challenging reassessment notices as being without jurisdiction, notwithstanding the statutory appellate remedy and, in one case, completion of reassessment - HELD THAT: - A challenge to the jurisdiction to issue a reassessment notice may be examined in writ jurisdiction on admitted material. The availability of an alternative remedy is not an absolute bar in an appropriate case, and completion of reassessment during pendency of the writ petition does not render the challenge infructuous, since an invalid notice would deprive the consequential assessment of its foundation. [Paras 5, 13]

The writ petitions were maintainable.

Reassessment beyond three years - fresh documentary material - Audit objection - change of opinion - Validity of reassessment notices issued beyond three years from the relevant assessment years solely on audit objections, without newly obtained books of account, documents or evidence revealing escapement of income - HELD THAT: - For reopening after three years, the Assessing Officer must possess and disclose in the order under section 148A(d) books of account, other documents or evidence satisfying the statutory precondition. An audit objection may constitute information for initiating consideration under section 148, but it remains an opinion and does not by itself qualify as the requisite documentary material under section 149(1)(b). It cannot convert reassessment into a review of a concluded assessment on the same material. The Assessing Officer must independently examine the objection and obtain qualifying material; re-examination of disclosed records, including records available in a limited scrutiny assessment, amounts only to a change of opinion. [Paras 5, 11, 13]

The reassessment notices, orders under section 148A(d), and consequential proceedings were held barred by limitation and without jurisdiction.

Excise duty refund under an industrial incentive scheme - capital receipt - Taxability of excise duty refund received under the industrial incentive scheme for establishing a new industrial undertaking - HELD THAT: - The Court held that the issue stood settled against the Revenue: the excise duty refund received under the industrial incentive scheme was a capital receipt. The authorities relied upon by the Revenue were distinguished as arising under a different legal regime or on different jurisdictional facts. [Paras 5]

The excise duty refund was held to be a capital receipt not chargeable to tax.

Depreciation on goodwill arising from amalgamation - Reopening of completed assessments in respect of depreciation claimed on goodwill created upon amalgamation - HELD THAT: - Goodwill arising on amalgamation falls within the statutory expression covering business or commercial rights of similar nature and is an asset eligible for depreciation. Where the depreciation claim had been allowed in scrutiny assessment, an audit objection expressing a different view, without new material, could not sustain reassessment. [Paras 11]

Reassessment on the claim of depreciation on amalgamation goodwill was held impermissible.

Final Conclusion: The writ petitions were allowed. The impugned reassessment notices, orders under section 148A(d), and consequential proceedings for 2015-16, 2017-18 and 2018-19 were quashed as time-barred and without jurisdiction.

Provisional attachment of fixed deposits - Conditional release of lien - Release of the lien over fixed deposits provisionally attached under the Income-tax Act, subject to securing the outstanding revenue demand

HELD THAT: - The Court noted that, under the prevailing CBDT circular, a deposit of 20% of the demand would ordinarily secure a stay in appeal. As the Department had no in-principle objection to releasing the lien while safeguarding revenue, the Court considered a deposit of 25% of the total outstanding demand appropriate, coupled with an undertaking against transfer or creation of third-party rights in the petitioner's assets. [Paras 15, 16]

On furnishing a post-dated cheque for 25% of the outstanding demand and the required undertaking, the Assessing Officer was directed to lift the lien over the fixed deposits or recall the provisional attachment order and communicate the same to the concerned bank.

Final Conclusion: The writ petition was disposed of by directing conditional release of the lien over the fixed deposits upon payment security and an undertaking preserving the petitioner's assets.

Jurisdiction of prescribed income-tax authority to issue notice u/s 143(2) - Premature writ challenge to assessment notices - Centralised assessment proceedings

Jurisdiction of the prescribed income-tax authority to issue a notice under section 143(2) where the assessee's case was centralised with another Assessing Officer - HELD THAT: - Section 143(2) expressly recognises both the Assessing Officer and the prescribed income-tax authority. The assessee admitted that the issuing officer had been notified by the Board as the prescribed authority and neither challenged the notification nor asserted that its case lay outside its scope. The expression "as the case may be" does not confine the prescribed authority to a residual role, make its power conditional upon the unavailability of the Assessing Officer, or exclude centralised cases from its operation.

The decision in Ambience (P) Ltd. [2024 (10) TMI 599 - DELHI HIGH COURT] supports this view. The Delhi High Court held that an officer authorised under Rule 12E could issue notices under Section 143(2), rejecting the contention that only the Assessing Officer or officers of the National Faceless Assessment Centre could do so. We respectfully agree, as the notification in the present case operates on the same principle. [Paras 18, 19, 20, 23]

The notice issued by the prescribed income-tax authority was not without jurisdiction merely because the case stood centralised with a different Assessing Officer.

Writ jurisdiction against notices seeking assessment information - Maintainability of a writ challenge to notices under sections 142(1) and 143(2) at the stage of assessment proceedings - HELD THAT: - The notices merely called for information and enabled examination of the return; they neither determined liability nor prejudiced any right. The assessee could raise its jurisdictional objections and produce evidence before the Assessing Officer, and statutory appellate remedies would be available if an adverse assessment were made. Writ jurisdiction is not intended to supervise preliminary steps in an assessment. [Paras 21, 22, 23]

No interference was warranted at the show-cause stage, and the assessee was left to pursue the assessment proceedings and statutory remedies.

Final Conclusion: The writ petition was dismissed, the prescribed authority's notice being held competent and no writ interference being warranted at the information-seeking stage. Statutory appellate remedies after completion of assessment remained open.

Adjustment of pre-scheme tax payment under the Income Declaration Scheme, 2016

Credit of pre-scheme payment relatable to declared undisclosed income - Adjustment of voluntary tax payments made before commencement of the Income Declaration Scheme, 2016, where attributable to the undisclosed income declared under the Scheme - HELD THAT: - Section 187 requires complete payment by the notified date but contains no prohibition against crediting a payment already made if it is relatable to the income disclosed under the Scheme. The voluntary payment, though deposited under the self-assessment-tax head before the Scheme came into force, was linked to the disclosed income for the relevant assessment year and was reflected in the declaration and proof of payment. In the light of the Scheme's treatment of credit for prepaid taxes and the judicial view that relatable prepaid tax retains its character as tax, the payment was required to be adjusted towards the tax, surcharge and penalty payable under the Scheme. [Paras 8]

The prior payments were directed to be adjusted under the Scheme; the declarations were consequently treated as supported by full payment, and Form No.4 was directed to be issued.

Final Conclusion: The petitions were allowed, the prior payments were directed to be adjusted towards the liability under the Income Declaration Scheme, 2016, and Form No.4 was directed to be issued.

Speaking appellate order under section 250(6) - Ex parte dismissal of income-tax appeal

Validity of ex parte dismissal of the appeal against reassessment additions for unexplained bank credits and investment in immovable property, without adjudication on merits - HELD THAT: - An appellate authority is obliged to decide the points arising in appeal on merits and record its decision with reasons as required by section 250(6). Mere non-compliance with notices by the assessee did not justify a cryptic affirmation of the reassessment order without addressing the issues, making necessary enquiries, or calling for the assessment records. Though the assessee was also responsible for its non-compliance, an ex parte decision, if made, had to be on merits and by a reasoned order. [Paras 6]

The appellate order was set aside and the matter remanded for fresh adjudication after opportunity to both parties; the assessee was directed to comply with notices, failing which the appeal could be decided ex parte on merits in accordance with section 250(6).

Final Conclusion: The ex parte and non-speaking appellate order was set aside for breach of the statutory duty to give a reasoned decision on merits, and the appeal was restored for fresh adjudication.

Unexplained expenditure based on seized diary entries - Reversal of labour expenditure and unexplained money - Section 80-IA deduction for bank-guarantee fixed-deposit interest

Unexplained expenditure u/s 69C - Seized diary entries - Foundational fact of incurring expenditure - Addition for unexplained expenditure based on cash entries recorded in a diary seized from the residence of the Managing Director - HELD THAT: - Section 69C could be invoked only after the Revenue established that the assessee had actually incurred expenditure outside its books. The diary entries and the statement concerning site payments did not, by themselves, establish that every cash entry represented unrecorded expenditure, particularly when cheque entries in the same diary had been accepted as recorded in the books. The Revenue neither disproved the explanation of cash availability from disclosed accounts nor identified any specific unrecorded expenditure supported by independent corroborative material. Telescoping could address the source of a payment but could not establish the primary fact of incurring unexplained expenditure. [Paras 28, 29, 68, 75, 83]

The additions sustained under section 69C were vacated for the relevant assessment years.

Unexplained money u/s 69A - Reversal of labour expenditure - Accounting genesis of cash balance - Recharacterisation of additional income offered on withdrawal of unsubstantiated labour expenditure as unexplained money - HELD THAT: - The reversal entry, crediting additional income and restoring cash earlier credited on booking labour expenditure, did not introduce fresh money from an unexplained source; it merely nullified the earlier recorded cash outflow. The accounting genesis of the resulting cash balance was identifiable from the books. The inability to substantiate labour expenditure and the consequent offer of additional income did not establish acquisition of money not recorded in the books, which is the premise for section 69A. [Paras 40, 41, 42, 43, 76]

The additions under section 69A were vacated for AY 2016-17 and AY 2017-18; the recharacterisation and consequential taxation under section 115BBE for AY 2017-18 were also vacated.

Interest on fixed deposits maintained for bank guarantees - Direct nexus with eligible infrastructure business - Deduction under section 80-IA - Eligibility of interest earned on fixed deposits maintained as margin or security for bank guarantees relating to infrastructure projects for deduction under section 80-IA. - HELD THAT: - The character of interest could not be determined merely from its immediate source, namely the fixed deposit. Where fixed deposits are maintained as margin or security for obtaining bank guarantees necessary to secure or execute eligible infrastructure contracts, they have a direct and proximate nexus with the eligible business and are not independent investments of surplus funds. Interest on deposits made merely to earn income from idle surplus funds stands on a different footing. [Paras 69, 77, 84, 91, 97]

The Assessing Officer was directed to include such interest in computing the deduction under section 80-IA for AY 2015-16 to AY 2020-21, subject to verification that the fixed deposits were maintained as margin or security for bank guarantees of the eligible infrastructure projects and not as independent investments of surplus funds.

Final Conclusion: The assessee's appeals were allowed. The additions founded on uncorroborated diary entries and on reversal entries were vacated, while interest on bank-guarantee fixed deposits was directed to be considered for deduction subject to verification of the deposits' business purpose.

Registration of public charitable trusts u/s 12AB - Irrevocability and dissolution clauses in trust deeds - Approval for donations to charitable trusts under section 80G

Rejection of renewal registration of a public charitable trust for absence of irrevocability and dissolution clauses in its trust deed - HELD THAT: - A public charitable trust is deemed irrevocable by operation of law unless its instrument expressly provides a power of revocation. Therefore, absence of an express irrevocability clause or a dissolution clause specifying the disposition of net assets could not constitute a ground to reject registration under section 12AB, particularly where the trust was carrying on voluntary charitable activities. [Paras 8]

The rejection was quashed and registration was directed to be granted in accordance with law.

Approval for donations to charitable trusts under section 80G - Denial of approval for charitable donations solely because the trust's registration had been refused - HELD THAT: - The approval had been refused only as a consequence of rejection of registration. Once the foundation for refusing registration was quashed and registration was directed to be granted, the consequential rejection of approval could not survive. [Paras 9]

The order denying approval was quashed and set aside.

Final Conclusion: The orders refusing registration and consequential approval were quashed; registration was directed to be granted, and both appeals were allowed.

Repeated non-compliance in assessment proceedings - Final opportunity to adduce evidence - Grant of a final opportunity to substantiate unsecured loans and sundry creditors and the claimed business expenditure after repeated non-compliance before the assessing and first appellate authorities

HELD THAT: - The Tribunal found that the assessee had failed to furnish the required details and supporting evidence despite repeated opportunities during assessment and had similarly failed to prosecute the first appeal or produce the material proposed to be relied upon. Nevertheless, considering the substantial additions and the request for an opportunity to place relevant evidence before the Assessing Officer, the Tribunal held that the interest of justice warranted one final opportunity. Since the non-participation was deliberate and could not be encouraged, the indulgence was required to be conditional upon costs. [Paras 19, 20, 21, 23]

The impugned order was set aside and the entire matter was restored to the Assessing Officer for de novo consideration, subject to payment of costs to the Prime Minister's Relief Fund and production of proof of payment. The assessee was granted a final opportunity to cooperate and furnish all supporting material; on further unjustified non-compliance, the Assessing Officer may proceed in accordance with law on the available record.

Final Conclusion: The appeal was allowed for statistical purposes and the assessment was remanded for fresh adjudication subject to the stipulated costs and the assessee's full cooperation.

Revision u/s 263 - lack of enquiry and inadequate enquiry - Minimum alternate tax - fair-value loss on Ind-AS preference-share investments - Minimum alternate tax - unwinding interest on contractually mandated road-overlay provision

Revision u/s 263 - lack of enquiry and inadequate enquiry - Validity of revision u/s 263 in respect of the computation of book profit for Ind-AS adjustments - HELD THAT: - The assessment record established that the Assessing Officer had raised repeated queries and examined the assessee's explanations, workings and supporting material concerning the notional fair-value loss on preference-share investments and unwinding interest on the overlay provision, including the computation of book profit. Revisionary jurisdiction cannot be exercised merely because the Principal Commissioner considers further or more elaborate verification necessary after the Assessing Officer has made adequate enquiry, applied his mind and adopted a permissible view. Cases followed Malabar Industries Limited [2000 (2) TMI 10 - SUPREME COURT] and the decision in the case of Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] [Paras 22, 23]

The assumption of jurisdiction under section 263 was invalid and the revision order was quashed.

Minimum alternate tax - fair-value loss on preference-share investments - Ind-AS financial instruments - Adjustment of notional loss on initial recognition of unlisted preference-share investments in computing book profit - HELD THAT: - For an Ind-AS-compliant company, marked-to-market loss on financial instruments classified at fair value through profit or loss and recognised in the profit and loss account does not require adjustment under the book-profit provisions. The loss arose from recognition of the preference-share investments at discounted fair value and therefore fell within that clarification. [Paras 26]

The notional loss was rightly not added back in computing book profit.

Minimum alternate tax - unwinding interest on road-overlay provision - Ascertained liability - Adjustment of unwinding interest on the road-overlay provision in computing book profit - HELD THAT: - The concession agreement imposed a contractually mandated and quantified obligation to undertake periodic road renewal. The yearly unwinding represented time-value accretion of that known future obligation and satisfied the requirements of a present obligation, probable outflow of resources and reliable estimate. It was consequently an ascertained liability. The specific statutory framework governing book profit of Ind-AS-compliant companies prevails, to the extent of its operation, over the general adjustment provision. [Paras 27, 28, 29]

The unwinding interest was not liable to be added back in computing book profit.

Final Conclusion: The assessee's appeal was allowed, the revision order was quashed and the assessment order was restored. The book-profit computation was also held to be correct on merits.

Section 54 exemption - mandatory deposit of unutilised capital gains

Entitlement to exemption for capital gains invested in two conjoined residential units where the unutilised balance was not deposited in the Capital Gains Account Scheme before furnishing the return under section 139(1) - HELD THAT: - The Tribunal held that the word "shall" in section 54(2) made deposit of the unutilised capital gain in the Capital Gains Account Scheme mandatory. Since the balance was neither utilised nor so deposited by the return-filing date, and the assessee failed to distinguish the binding jurisdictional decision, payments made after that date could not qualify, notwithstanding that the adjacent units were accepted as one residential unit. [Paras 8]

The restriction of exemption to capital gains utilised up to the return-filing date in respect of both conjoined units was confirmed.

Consequential interest under sections 234B and 234D - Levy of interest under sections 234B and 234D. - HELD THAT: - The Tribunal held that the interest levies were consequential and mandatory. [Paras 11]

The challenge to the interest levies was dismissed.

Final Conclusion: The appeal was dismissed, with the section 54 exemption restricted to qualifying utilisation up to the return-filing date and the consequential interest levies sustained.

Revision u/s 263 of limited-scrutiny assessment - Revision initiated on Assessing Officer's proposal and audit objection - Interest on enhanced compensation under section 28 of the Land Acquisition Act - difference of opinion - matter referred to third member

Revision under section 263 of limited-scrutiny assessment - Validity of revision of an assessment selected for limited scrutiny without conversion into complete scrutiny - HELD THAT: - The Accountant Member held that the assessment had been selected for limited scrutiny and was not converted into complete scrutiny in accordance with the applicable instructions. The Third Member noted that the Judicial Member had recorded no dissent on this ground and agreed that the revisionary order could not be sustained.

The revisional order was held invalid on account of the assessment not having been converted into complete scrutiny.

Revision initiated on AO's proposal and audit objection - Validity of revision proceedings initiated on the Assessing Officer's proposal founded on an audit objection - HELD THAT: - The Accountant Member held that the power of revision requires the Principal Commissioner to call for and examine the assessment record and form the requisite opinion; an Assessing Officer's proposal is not the record of proceedings from which such satisfaction may arise. As the revision was triggered by the Assessing Officer's proposal to settle the audit objection, the jurisdictional preconditions were held not satisfied. The Third Member agreed, observing that there was no dissent by the Judicial Member on this issue.

The revision founded on the Assessing Officer's proposal and audit objection was held illegal and void.

Interest under section 28 of the Land Acquisition Act as enhanced compensation - Erroneous and prejudicial assessment order - Taxability of court-awarded interest under section 28 of the Land Acquisition Act on enhanced compensation for compulsorily acquired agricultural land and its effect on revision - HELD THAT: - The Judicial Member held that the post-amendment provisions governing interest on compensation or enhanced compensation required taxation under the head income from other sources and, following the Delhi High Court view, upheld the revision. The Accountant Member held that interest awarded under section 28 is an accretion to the value of the land and forms part of enhanced compensation, whereas interest for delayed payment under section 34 is distinct. The Third Member agreed with the Accountant Member that the amendments concerning taxation of interest on receipt did not alter the character of the section 28 receipt as compensation. The Third Member further held that, even assuming a contrary view, the controversy was debatable and the assessment could not be regarded as erroneous for revision.

By the majority view, the assessment accepting the claim was not erroneous and prejudicial to the interests of the Revenue, and the revisional order was unsustainable.

Final Conclusion: By the majority opinion of the Accountant Member and the Third Member, the revisional order was held unsustainable. The assessee's appeal was consequently allowed.

Protective assessment of accommodation-entry deposits - Estimation of commission income from accommodation-entry activity - Appellate enhancement without notice

Protective assessment of accommodation-entry deposits - Validity of the protective addition of cash deposited in the assessee's bank account used for providing accommodation entries - HELD THAT: - The Department had treated the beneficiaries of the accommodation entries as the real tax evaders and had initiated action against them, while commission additions were made in the hands of persons involved in operating the arrangement. There was consequently no uncertainty as to the persons in whose hands the underlying transactions were liable to be assessed, and failure to bring the proper amount to tax in the proper hands could not justify a protective addition in the assessee's hands. Further, where no books of account were maintained, the bank passbook or statement could not be treated as the assessee's books for invoking section 68. [Paras 7]

The protective addition of the cash deposits was held unsustainable and deleted.

Estimation of commission income from accommodation-entry activity - Appellate enhancement without notice - Commission income for permitting use of the commodity-exchange licence and bank account in accommodation-entry activity, including the appellate enhancement of such income - HELD THAT: - The assessee had admittedly allowed use of her licence and bank account for the accommodation-entry activity, and the varying commission rates stated by the operator justified the Assessing Officer's adoption of an average rate. The appellate enhancement, however, rested only on a subjective estimate, without supporting evidence and without prior notice to the assessee. [Paras 8]

The commission addition made by the Assessing Officer was sustained, but the enhancement made in appeal was quashed.

Final Conclusion: The appeal was partly allowed. The protective addition of bank deposits was deleted, the estimated commission addition was sustained, and the appellate enhancement was quashed.

Seeking release of the gold chain of the Petitioner, weighing 152 grams seized by the Customs Department - no SCN issued to the petitioner - violation of principles of natural justice - HELD THAT:- In view of the decision of this Court in Union of India Vs. Jatin Ahuja [2025 (10) TMI 1285 - SUPREME COURT] the instant Special Leave Petitions are dismissed.

IGST valuation of duty-free DFIA imports - Effective customs duty versus tariff rate

IGST valuation of duty-free DFIA imports - Effective customs duty versus tariff rate - Computation of IGST on polyester viscose fabrics imported under a DFIA-whether the nil Basic Customs Duty available under the exemption notification, rather than the tariff-rate duty, is to be added to the imported goods' value. - HELD THAT: - For IGST valuation, only customs duty chargeable on the imported goods is includible. The Tribunal found that the DFIA exemption rendered the claimed BCD nil; the Bills of Entry also recorded duty debit as zero, and the DFIA required disclosure of the value and quantity of the imported goods rather than debit of duty. Consequently, tariff-rate BCD could not be notionally added after disregarding the available exemption. The Revenue's cited decision concerned interest on delayed IGST payment and was distinguishable. [Paras 6, 7, 8, 9]

The rejection of the appellant's appeals was set aside, and the appeals were allowed.

Final Conclusion: The tariff-rate BCD could not be added for computing IGST where the DFIA exemption made the duty chargeable nil. The impugned order was set aside and the appeals were allowed.

Consequential penalty on Chartered Engineers for alleged undervaluation - Survival of penalties imposed on Chartered Engineers for alleged undervaluation of imported second-hand printing machinery after the underlying demand proceedings were set aside

HELD THAT: - The Tribunal noted that the confirmed demand, interest and penalties against the main appellants had already been set aside as legally unsustainable. The penalties on the Chartered Engineers, founded on the same allegation of undervaluation, therefore could not survive. [Paras 18, 19]

The penalties imposed on the appellants were set aside and the appeals were allowed with consequential relief in accordance with law.

Final Conclusion: The penalties imposed on the Chartered Engineers did not survive after the underlying demand and related penal proceedings were set aside. Their appeals were accordingly allowed.

Statements recorded u/s 108 - admissibility in customs adjudication - Penalty for alleged receipt of confiscable gold - knowledge of liability to confiscation

Admissibility of statements in customs adjudication - Reliance on third-party statements for imposing customs penalty where the makers were not examined in chief - HELD THAT: - Where a statement recorded u/s 108 is introduced in adjudication, the statutory safeguards under Section 138B must be observed. Since examination-in-chief of the makers of the statements was not conducted, those statements could not be relied upon against the appellants. [Paras 6]

The third-party statements could not be relied upon against the appellants.

Penalty for dealing with goods liable to confiscation - Knowledge of liability to confiscation - Penalty under Section 112(b) on alleged intended recipients of seized gold without independent evidence of conscious dealing or knowledge of confiscability - HELD THAT: - There was no independent evidence establishing that the appellants were recipients of, or otherwise concerned with, the seized gold. Penalty under Section 112(b) requires proof that the person knew or had reason to believe that the goods were liable to confiscation; such knowledge cannot be presumed merely from an allegation that the person was to receive the goods. [Paras 6]

The penalties under Section 112(b) were held unsustainable and were set aside.

Final Conclusion: The appeals were allowed and the penalties imposed under Section 112(b) were set aside.

Burden of proof of smuggled character of non-notified betel nuts - Inconclusive expert opinion on territorial origin of betel nuts - Burden of proof of smuggling of non-notified betel nuts

Confiscation of betel nuts alleged to be of Myanmar origin and consequential penalties, in the absence of proof of their smuggled character - HELD THAT: - The transport documents showed consignors in Mizoram and consignees in West Bengal, and the interception did not establish cross-border movement. The ARDF report, stating that the samples "seems to be of North East including Myanmar region", did not conclusively establish Myanmar origin. In any event, as betel nuts are non-notified goods under Section 123, the burden remained on the Revenue to establish smuggling; statements, assumptions and presumptions did not discharge that burden. See SUBODH DAS ETC. [2024 (2) TMI 915 - SC ORDER] [Paras 18, 19, 20, 21, 22]

The absolute confiscation of the betel nuts and the penalties imposed on the appellants were set aside as Revenue has failed to discharge their burden of proving that the goods in question are smuggled one.

Final Conclusion: The Revenue having failed to prove that the seized betel nuts were smuggled goods, the confiscation and penalties were set aside and the appeals were allowed.

Classification of composite car radio-DVD receivers - Principal-function test under Note 3 to Section XVI - Rule 3(c) where principal function is indeterminate - Burden of proof in tariff reassessment

Composite-machine classification - Principal-function test under Note 3 to Section XVI - Applicability of Note 3 to Section XVI to a car AM/FM radio receiver integrated with a DVD player - HELD THAT: - Heading 8527 contemplates a radio receiver combined with sound recording or reproducing apparatus, whereas heading 8521 does not cover radio reception. The goods therefore combine, in a common housing, machines described under different headings. As neither heading supplies a contrary context, they are composite machines governed by Note 3 to Section XVI and must initially be classified according to their principal function. [Paras 12, 14, 15]

The goods are composite machines to which Note 3 to Section XVI applies, and their classification turns on the principal function of the apparatus.

Burden of proof in tariff reassessment - Product advertisements in tariff classification - Revenue's proof that video reproduction was the principal function of the composite car radio-DVD receiver for classification under CTI 8521 90 90 - HELD THAT: - The Revenue bore the burden of establishing by cogent evidence that video reproduction was the principal function. Product literature and market presentation may corroborate a conclusion drawn from the nature and operation of the goods, but cannot by themselves establish classification. The Revenue relied only on promotional descriptions, without examining the construction or circuitry of the unit, comparing the components or their relative role, obtaining a contrary technical opinion, or adducing trade evidence. The respondent's unrebutted technical material, together with the undisputed radio-reception capability and vehicle-specific design, could not be displaced by promotional material alone. [Paras 20, 21, 22, 23, 24]

The Revenue failed to establish video reproduction as the principal function, and classification under CTI 8521 90 90 was not warranted.

Rule 3(c) where principal function is indeterminate - Acceptance of self-assessed tariff classification - Classification of the composite car radio-DVD receiver and eligibility for the claimed customs-notification benefit where no principal function was established - HELD THAT: - Where the principal function of a composite machine cannot be determined, General Interpretative Rule 3(c) requires classification under the heading occurring last in numerical order among those equally meriting consideration. Between headings 8521 and 8527, heading 8527 occurs last. Independently, upon the Revenue's failure to prove the proposed reclassification, the self-assessed classification under CTI 8527 29 00 had to prevail. The broad proposition that any additional feature would necessarily leave the goods within heading 8527 was not accepted; an additional feature shown to perform the principal function may take the goods outside that heading. No such case was established here, and the notification benefit had been denied solely because of the failed reclassification. [Paras 25, 26, 27, 28]

Classification under CTI 8527 29 00 was sustained, and the consequential customs-notification benefit followed.

Final Conclusion: The Revenue appeal was dismissed. Classification under CTI 8527 29 00 and the consequential customs-notification benefit were sustained.

Penalty proceedings against a Customs Broker for alleged regulatory contraventions - validity of proceedings initiated beyond the prescribed period for issuance of notice- Mandatory limitation for notice against Customs Broker - Receipt of offence report - Mandatory ninety-day notice period -

HELD THAT: - The ninety-day period for issuance of notice is mandatory. In the absence of a disclosed date of receipt of the offence report, the Department's knowledge of the alleged contraventions through its own customs notice and, in any event, the adjudication thereof, was to be treated as the relevant starting point. The subsequent notice under the Customs Brokers Licensing Regulations was issued beyond ninety days even from the later event. [Paras 10, 12]

The mandatory requirement was breached; the proceedings were vitiated and the penalty could not survive.

Final Conclusion: The penalty order was set aside and the appeal was allowed. The contentions on merits were left unexamined.

Interest waiver for ICEGATE technical glitches

Refund of interest on import duty - ICEGATE technical glitches - Refund of interest paid on import duty where payment was delayed in reflecting on ICEGATE because of technical glitches, although the Bills of Entry were filed after the cut-off under the Customs (Waiver of Interest) 3rd Order - HELD THAT: - The Tribunal followed the Rajasthan High Court decision, which treated the advisory as acknowledging that the ICEGATE technical glitches continued beyond the stipulated cut-off. Since rejection of the refund claims rested solely on the fact that the Bills of Entry were filed after that cut-off, the High Court decision of M/S GRAIN ENERGY PVT. LTD. [2025 (5) TMI 421 - RAJASTHAN HIGH COURT] was held squarely applicable. [Paras 8, 9, 10]

The orders rejecting refund of interest were set aside and the appeals were allowed with consequential relief according to law.

Final Conclusion: The appeals were allowed, and the denial of refund of interest paid due to the ICEGATE technical glitches was set aside.

Centralised monitoring of model-wise import cap - Provisional release of used digital multifunction print and copying machines - Provisional release of used digital multifunction print and copying machines withheld for alleged breach of the model-wise import cap - HELD THAT: - The Tribunal held that the controversy was governed by its final precedent on identical imports. In the absence of a centralised mechanism for monitoring the model-wise cap on an all-India basis, and as bond and bank guarantee had been furnished for the entire consignments, there was no valid basis to withhold any part of the goods. The Commissioner (Appeals) had correctly followed the binding precedent, which had attained finality. Case followed M/S. ATUL AUTOMATION PRIVATE LIMITED, M/S. ACE OFFICE SOLUTIONS, M/S. TEQNOZO CERAMICS PRIVATE LIMITED AND M/S. MECH AND TECH [2025 (12) TMI 1081 - CESTAT KOLKATA] [Paras 10, 11]

The orders directing provisional release against Provisional Duty Bond and Bank Guarantee were upheld, and the Revenue appeals were dismissed.

Final Conclusion: The Revenue appeals were dismissed and the impugned orders for provisional release of the machines against the stipulated security were upheld.

True market value in liquidation auction sale - Stamp duty on insolvency liquidation sale certificate

Determination of stamp duty on the sale certificate for land, building and plant and machinery sold in an e-auction conducted by the liquidator under the insolvency liquidation process - HELD THAT: - The sale was conducted pursuant to the liquidation order of the adjudicating authority by following the prescribed process of independent valuation, fixation of reserve price, public e-auction and reporting of progress to the Tribunal. The expression "Civil Court" in Article 16 could not be construed narrowly so as to exclude an auction undertaken by a liquidator appointed by the NCLT acting as the adjudicating authority under the insolvency framework. Such an open and transparent process, resulting in a bid above the reserve price, furnished the true value of the assets. The ASR-based mechanism could not displace the auction value in the absence of a good reason to conclude that the true value had been intentionally reduced or suppressed to evade stamp duty. [Paras 52, 53, 54, 55, 56]

The auction value stated in the sale certificate was held to be the true market value for stamp duty, and registration of the deed was directed on that basis.

Final Conclusion: The petition was allowed, with stamp duty directed to be charged on the auction value recorded in the liquidator's sale certificate and the conveyance directed to be registered accordingly.

Release of assets seized under PMLA - Release of vehicles, cash, jewellery, fixed deposits and deposited land title deeds held in connection with the money-laundering investigation after provisional attachment of other properties

HELD THAT: - In view of the Directorate's statement that the seized assets were no longer part of the investigation and that the alleged proceeds stood secured through provisional attachment of other properties, release of the seized assets was warranted. The land parcels whose title deeds had been deposited were stated not to form part of the provisional attachment. [Paras 12, 13, 14, 15]

The seized assets and the deposited title deeds were directed to be released forthwith, without any expression on the merits of the provisional attachment or the pending proceedings.

Final Conclusion: The challenge to the expired summons was treated as infructuous. The petition was disposed of by directing release of the seized assets and title deeds, while leaving the merits of the provisional attachment and pending proceedings open.

Prior hearing before cognizance of Enforcement Directorate complaint under PMLA - Temporal applicability of BNSS to post-commencement PMLA complaints

Prior hearing before cognizance of Enforcement Directorate complaint under PMLA - Temporal applicability of BNSS to post-commencement PMLA complaints - Cognizance of an Enforcement Directorate complaint under the PMLA filed after commencement of the BNSS without affording the accused an opportunity of hearing. - HELD THAT: - The proviso to Section 223(1) of the BNSS places an embargo on taking cognizance of an offence on a complaint without first hearing the accused. An Enforcement Directorate complaint under the PMLA is governed by the procedural provisions applicable to complaints; consequently, Chapter XVI of the BNSS applied where the complaint was filed after the BNSS came into force. The authorities relied upon for application of the repealed Code were distinguishable on their factual premise. [Paras 7, 8, 9, 10]

The cognizance order was held illegal and was set aside, along with the consequential order dismissing the discharge petition; the complaint was restored for proceedings in accordance with law.

Final Conclusion: The criminal revision was partly allowed, and the cognizance order and consequential dismissal of the discharge petition were set aside.

Works contract service - turnkey projects - value of materials supplied - taxable value of services - composite contract - VAT on goods supplied

HELD THAT:- The appeal was dismissed, no ground being found to interfere with the impugned order.[2026 (2) TMI 14 - CESTAT KOLKATA]

Service tax on legal services rendered by an individual advocate - Jurisdictional validity of demand based solely on Form 26AS

Service-tax demand against a practising advocate based solely on Form 26AS - Failure to consider statutory framework governing legal services - Jurisdictional validity of service-tax proceedings against a practising advocate founded solely on Form 26AS without consideration of the statutory framework governing legal services - HELD THAT: - The respondents had confirmed the demand solely on the basis of Form 26AS without examining the nature of the services corresponding to the receipts or considering the statutory framework applicable to legal services rendered by an individual advocate. Such failure rendered the proceedings without jurisdiction. The issue was also held to be squarely covered by an earlier decision of the Court [2024 (2) TMI 355 - BOMBAY HIGH COURT]. [Paras 4, 5, 6]

The petition was allowed, and the impugned show-cause notice, order confirming demand and recovery proceedings were quashed.

Final Conclusion: The challenged service-tax proceedings and consequential recovery against the practising advocate were quashed, and the petition was allowed.

Limitation for service tax demand - Works contract service - Service tax exemption for SIM distributorship commission - Sale of VAT-paid goods

Limitation for service tax demand - Works contract service - Service tax liability on works-contract supplies to the Sintex entities after exclusion of the time-barred demand - HELD THAT: - The demand preceding 01.10.2016 was held unsustainable on limitation, the show-cause notice having been issued beyond the extended period. The appellant was held liable for service tax on the works-contract service only for 01.10.2016 to 30.06.2017, at 33% of the gross amount received. [Paras 6, 8, 12]

Service tax with interest was sustained for the stated period and rate; no penalty was imposable.

Service tax exemption for SIM distributorship commission - Service tax liability on commission earned from Vodafone SIM distributorship - HELD THAT: - The commission was covered by the exemption under Sl. No. 29(f) of Notification No. 25/2012-ST. [Paras 9]

The entire demand relating to SIM distributorship commission was set aside.

Sale of VAT-paid plastic dustbins and portolet toilets - Service tax liability on supply of plastic dustbins and portolet toilets to local bodies and State Governments - HELD THAT: - The invoices established that the transactions were sales of goods on which VAT had been paid and did not involve provision of any service. [Paras 11]

The service-tax demand on such supplies was set aside.

Final Conclusion: The appeal was disposed of by sustaining service tax with interest on the works-contract service for 01.10.2016 to 30.06.2017 at 33% of the gross amount received. The demands relating to SIM distributorship commission and VAT-paid supplies were set aside, and no penalty was imposed.

Works contract services - Goods component in taxable value - VAT payment - Valuation of works contract services rendered with materials where VAT had not been paid on the goods component - HELD THAT: - The services were undisputedly works contracts. The value of goods used in such contracts had to be excluded, either on actual or presumptive basis, and service tax could be levied only on the service component. Non-payment of VAT did not justify subjecting the goods component to service tax; any liability for VAT was a matter for the State Government. [Paras 8]

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

Final Conclusion: Service tax could not be charged on the goods component of the works contracts merely because VAT had not been paid on those goods. The impugned order was set aside.

Sale of water vis-a -vis assignment of right to use natural resources - Revenue neutrality and extended limitation

Sale of water vis-a -vis assignment of right to use natural resources - Characterisation of the agreement for industrial water supply as a sale of water or as assignment of the right to use a natural resource - HELD THAT: - The Tribunal held that an arrangement under which an industrial consumer draws water directly from a water body and makes its own arrangements for conveyance is essentially for supply of water, and not merely for access to or assignment of a right to use the water resource. It found no reason to depart from its earlier view on such agreements. [Paras 9]

The agreement was held to be one for sale of water and not assignment of a right to use natural resources; consequently, the service-tax demand was unsustainable on merits.

Revenue neutrality and extended limitation - Invocability of the extended period for service tax on industrial water charges where tax paid under reverse charge would be available as CENVAT credit - HELD THAT: - Any service tax paid under reverse charge would have been immediately available to the appellant as CENVAT credit for payment of central excise duty on its final products. The transaction was therefore revenue-neutral, and the demand could not be sustained by invoking the extended period. [Paras 10, 11]

The demand was held unsustainable on limitation as well.

Final Conclusion: The appeal was allowed and the impugned order was set aside with consequential relief, as the agreement constituted sale of water and the demand was also barred by limitation.

Reference to a still Larger Bench - Reference to a still larger Bench on interest payable on refunds of duty or tax deposits owing to conflicting decisions of Benches of greater strength

HELD THAT: - The Bench noted divergent decisions on the applicability of the statutory refund provisions to voluntary and involuntary deposits, and on the commencement and rate of interest on refund. As the conflicting views were expressed by Benches of greater strength, the Bench held that it could not resolve the questions and that a still larger Bench was required. [Paras 4, 5]

The questions were referred to the President for constitution of a still larger Bench; they were not adjudicated on merits.

Final Conclusion: In view of conflicting decisions of Benches of greater strength, the referred questions concerning statutory refunds and interest were placed before the President for constitution of a still larger Bench. No merits determination was made.

Personal penalty on Director for issue of invoices without supply of goods - Penalty on Director under rule 26(2) - Admissibility of witness statements under section 9D

Validity of penalty under Rule 26(2) of the Central Excise Rules, 2002 on a Director for alleged issue of invoices without supply of M.S. goods, where no notice was issued to the company - HELD THAT: - The Tribunal held that proceedings for penalty against the Director could not be sustained when the company, whose alleged transactions were in question, had not been issued a show-cause notice and the Director was not its authorised signatory. Rule 26(2) attracted liability only where a person issued, or abetted the issue of, invoices without delivery of goods; the impugned order contained no finding that the Director had committed either act. Reversal of credit by the purchasers did not establish the Director's guilt, and truck-owner statements could not be relied upon without compliance with the mandatory procedure under section 9D. There was also no evidence of the Director's connivance or abetment.

In the case of Sampad Narayan Mukherjee [2019 (6) TMI 977 - CALCUTTA HIGH COURT] highlighted the importance of Section 138B of the Customs Act which is in pari materia with Section 9D of the Central Excise Act and held that it is mandatory to follow the procedures prescribed in Section 9D to rely upon the statements. [Paras 9, 11, 12, 14, 15]

The penalty was held legally unsustainable and was set aside.

Final Conclusion: The penalty imposed on the Director under Rule 26(2) was set aside, and the appeal was allowed with consequential relief in accordance with law.

Limitation for recovery of CENVAT credit - Limitation for recovery of CENVAT credit availed on 18 invoices where the Department had previously raised the objection in audit

HELD THAT: - The Department was aware of the disputed credit through the audit objection, while the show-cause notice was issued more than two years later. The credit had been recorded in the input-duty register attested by the Superintendent, some invoices were produced, and there was no allegation that the goods had not been received. Applying the cited Tribunal decision on limitation, the demand was held time-barred. [Paras 9, 11]

The impugned order was set aside and the appeal was allowed as barred by limitation, with consequential relief in accordance with law.

Final Conclusion: The impugned order was set aside and the appeal allowed on the ground that the demand for CENVAT credit was time-barred. Consequential relief was directed in accordance with law.

CENVAT credit of concessional CVD on imported coal - Inapplicability of domestic excise-duty credit restriction to Customs-notification CVD

CENVAT credit of CVD on imported steam coal - Restriction confined to excise duty on domestically manufactured coal - Admissibility of CENVAT credit of concessional CVD paid on imported steam coal under Customs Notification No. 12/2012-Cus. despite the restriction governing excise duty on specified domestically manufactured coal - HELD THAT: - The additional customs duty was paid on imported coal under the Customs notification and not as excise duty on domestically manufactured coal under the Central Excise exemption notification. The restriction contained in the proviso to Rule 3(1)(i) could not be imported into the distinct entitlement to credit of CVD under Rule 3(1)(vii); the concessional CVD paid under the Customs notification was therefore directly creditable. See M/S. RUNGTA MINES LIMITED [2025 (10) TMI 1035 - CESTAT KOLKATA] [Paras 5, 6]

The CENVAT credit was admissible; the appellate order was upheld and Revenue's appeal was rejected.

Final Conclusion: The Tribunal upheld the order allowing CENVAT credit of the CVD paid on imported coal and rejected Revenue's appeal.

VAT remission as investment-linked industrial subsidy - Extended limitation-absence of suppression

Inclusion of VAT remission in transaction value - Investment-linked industrial incentive - Inclusion in the transaction value of 99% VAT retained under Assam's investment-linked industrial incentive in respect of water storage tanks and MS pipes - HELD THAT: - Eligibility for the benefit was linked to capital investment and commencement of commercial production, and was restricted by the investment ceiling and entitlement period. Though tax payable was first determined, 99% thereof was statutorily remitted; such retained amount constituted a State industrial subsidy and was not an additional amount paid by buyers by reason of, or in connection with, the sale.

The issue is also supported by M/s. United Packagers [2025 (4) TMI 242 - CESTAT KOLKATA] wherein 99% VAT retention under an Assam industrial incentive was held to be a State subsidy, not includible in the assessable value. The same principle applies here, as the 99% VAT retention benefit is a time-bound, investment-linked State incentive and not sale consideration received from customers.[Paras 7]

The retained VAT remission was not includible in the assessable value; the demand of duty and consequential interest and penalty were unsustainable.

Extended limitation-suppression of facts - Equal penalty for intent to evade duty - Invocation of the extended period and imposition of equal penalty for alleged non-inclusion of the retained VAT benefit in assessable value - HELD THAT: - The VAT retention was known to the Department during audit, and the particulars sought by it had been furnished before issuance of the show-cause notice. As suppression of facts with intent to evade duty was not established, the extended period was unavailable and the equal penalty could not be sustained. [Paras 7]

The demand could not be confirmed by invoking the extended period, and the equal penalty was set aside.

Final Conclusion: The appeal was allowed, and the impugned demand of duty, interest and equal penalty was set aside with consequential relief.

Deposits during excise investigation - Interest on refund of excise pre-deposit

Characterisation of investigation deposits - Pre-deposit u/s 35F - Characterisation of amounts paid during excise investigation before assessment or adjudication, and their treatment upon refund after the demand was set aside - HELD THAT: - An amount credited under the excise-duty head does not become duty merely by reason of its accounting treatment. Duty must be assessed and due; payments made during investigation, before any assessed or adjudicated liability, are deposits. The Act does not authorise compelling payment in anticipation of a liability that may arise after investigation and adjudication. Since the amount remained unrecovered despite the appeal and was treated as pre-deposit for maintaining the appeal, its character was not altered by the request for consequential refund. [Paras 38, 40, 41, 42, 43]

The investigation payment was held to be a deposit under section 35F, and not excise duty refundable under section 11B.

Interest on refund of pre-deposit - Statutory interest under section 35FF - Entitlement to interest on refund of the investigation deposit treated as pre-deposit, including the claim for a non-statutory rate of interest - HELD THAT: - Interest payable or recoverable in tax matters is governed exclusively by the applicable statutory provision and cannot be enhanced on equitable considerations. As the refunded amount was a pre-deposit, the provision governing interest on refund of pre-deposit applied, rather than the provision governing delayed refund of duty. [Paras 14, 20, 21, 41, 44]

Interest was directed to be paid under section 35FF at the applicable statutory rate from the date of deposit until refund; the claim for a non-statutory rate was rejected.

Final Conclusion: The appeal was partly allowed by treating the amount deposited during investigation as pre-deposit under section 35F and directing payment of statutory interest on its refund under section 35FF.

CENVAT credit for taxable output services under centralised registration - Cross-utilisation of CENVAT credit - Input service credit distribution under Rule 7 - Place of removal-branch and marketing offices - Extended limitation for CENVAT credit recovery - Penalty for irregular CENVAT credit

Input services used for taxable output services - Cross-utilisation of CENVAT credit - Centralised service tax registration - Input Service Distributor registration - Admissibility of CENVAT credit on rent, telephone, courier, security and housekeeping services used at service stations covered by the centralised service tax registration, and its utilisation for payment of excise duty - HELD THAT: - Though the disputed services did not satisfy the manufacturer limb of the definition because they were consumed after sale of the motorcycles, they satisfied the distinct limb applicable to a provider of output service. The service stations rendered taxable repair and maintenance services under the appellant's centralised registration, and the services were received and used in providing those output services. Centralised registration identified the single registered provider and the place of accounting; it was not the source of eligibility. Once validly taken, the credit formed part of a common pool and could be used for excise duty without one-to-one correlation. An ISD mechanism applies where an office distributes credit to another unit; it did not require the centrally registered provider, which itself received, accounted for and paid the invoices, to distribute credit to itself. The later mandatory distribution requirement for an ISD did not alter that position. [Paras 28, 29, 31, 33, 37]

The service-station credit was admissible, and its accounting at Tiruvottiyur and utilisation for excise duty were permissible notwithstanding absence of ISD registration.

Place of removal-branch and marketing offices - Input services for clearance of final products - Admissibility of CENVAT credit on renting, advertisement and sales-promotion services used at branch and marketing offices from which the motorcycles were sold - HELD THAT: - The appellant's assertion that motorcycles were sold from its branch and marketing offices was neither examined nor controverted. Such premises could fall within the statutory expression 'place of removal', and services used for clearance up to that place, including advertisement, sales promotion and storage, were covered by the manufacturer limb of the definition. The decision concerning a buyer's premises did not answer the claim relating to the manufacturer's own offices. The notices also did not segregate this component or make a specific allegation as to the use of the services. [Paras 34, 35, 37]

The demand concerning credit attributable to the branch and marketing offices was unsustainable on merits.

Input service credit distribution under Rule 7 - ISD credit-proof of common use - Recovery of ISD credit distributed to Tiruvottiyur for services alleged to be common to the motorcycle factory and the spare-parts unit - HELD THAT: - The requirement of pro rata distribution applied only where the services were used in more than one unit. The notice assumed common use without establishing that foundational fact, and a turnover-based apportionment adopted to meet an audit objection was not evidence of actual usage. Further, the eligibility and quantum of the input credit were undisputed, and the ISD's availment and distribution had not been questioned at the ISD end. Before the subsequent amendment making distribution mandatory, Rule 7 did not compel proportionate distribution of all credit among every unit. [Paras 39, 40]

Recovery of the ISD credit from Tiruvottiyur was not sustainable on merits.

Extended limitation for CENVAT credit recovery - Suppression with intent to evade - Revenue neutrality - Invocation of the extended limitation period for recovery of ISD credit and credit taken on invoices pertaining to other factories, based on audit detection and post-audit reversals - HELD THAT: - Extended limitation required deliberate withholding of information with intent to evade, not mere detection in audit. The credit had been disclosed in returns to the extent required, the audit objections arose from the appellant's records, and the reversals were intimated to the Department with the appellant's reasons. The subsequent reversal did not establish an intent to evade. The credits were of tax actually paid and were availed by other eligible units after reversal; the arrangement was revenue neutral. The arguable character of the Rule 7 controversy also excluded wilful contravention. [Paras 42, 43, 44, 45, 46]

The extended period was not invocable; the ISD credit and the credit pertaining to the other factories covered by the notice were barred by limitation, and the service-station demand was additionally barred to the extent beyond the normal period.

Interest and penalty for irregular CENVAT credit - Statutory ceiling on penalty - Sustainability of interest and penalties consequent upon denial of the disputed CENVAT credits and invocation of extended limitation - HELD THAT: - No interest could arise on credit validly taken, and interest demands founded on time-barred recovery could not survive. The premise of fraud, suppression or wilful misstatement with intent to evade duty failed, rendering the penalty imposed on that basis unsustainable. The penalty imposed under the provision applicable to the later demand also exceeded the statutory maximum. [Paras 47, 48]

The demands for interest and all penalties were set aside.

Final Conclusion: The appeals were allowed and the impugned orders were set aside. Credit earlier reversed at Tiruvottiyur and availed by the other units cannot be re-availed at Tiruvottiyur or claimed by way of refund.

Judicial review of administrative action - relevance of subsequent events - Additional Tier 1 Bonds - write-down under Basel III framework - Statutory reconstruction scheme - limits on Administrator's authority

Judicial review of administrative action - Subsequent events - relevance of subsequent financial developments to the challenge against the write-down of the AT-1 Bonds - HELD THAT: - The validity of an administrative action must be tested with reference to the facts and law prevailing when the action was taken. Subsequent changes in the bank's financial position could not displace adjudication of the legality of the Administrator's decision to write down the Bonds. [Paras 15, 16]

The challenge required determination on its merits as at the date of the write-down.

Statutory reconstruction scheme - Additional Tier 1 Bonds - write-down authority - Administrator's authority to write down the AT-1 Bonds after the Reconstruction Scheme omitted the provision authorising their write-down - HELD THAT: - The deliberate omission, from the final Reconstruction Scheme, of the provision in the Draft Scheme for write-down of the Bonds, after consideration of stakeholders' objections and the proposed conversion, showed that the Central Government intended not to alter the Bonds through the Scheme. The general savings provision preserving existing instruments did not specifically empower the Administrator to write down the Bonds after reconstruction; such authority could not be implied through an omnibus clause. [Paras 37, 38, 40, 41, 42]

The Administrator's write-down of the AT-1 Bonds was impermissible and ultra vires the Master Circular read with the Reconstruction Scheme.

Point of non-viability trigger - AT-1 Bonds - write-down before reconstruction - Regulatory power of the Reserve Bank of India - Validity of the Administrator's write-down of the AT-1 Bonds under the Master Circular and the Information Memoranda - HELD THAT: - Under the Master Circular, the direction that AT-1 instruments be converted or written down 'before reconstitution' required the write-down to occur before the Reconstruction Scheme took effect, not at any stage during implementation of the Scheme. At the point of non-viability, the power to determine and effect write-down vested in the RBI. An Administrator appointed to exercise the powers of the Board of Directors could not assume the RBI's distinct regulatory power, particularly when the RBI had not itself exercised it. [Paras 70, 72, 73, 75, 77]

The write-down effected by the Administrator after the Reconstruction Scheme came into force was contrary to the Master Circular and the Information Memoranda.

Final Conclusion: The appeals were dismissed, affirming the setting aside of the Administrator's write-down of the AT-1 Bonds. Annual coupon payments were directed to remain governed by the Information Memoranda.